REIMBURSEMENT OF EXPENSE FOR CONDUCTING EXAMS – WHETHER LIABLE TO TDS?
As per the CBDT, the tax is to be deducted at source, out of the gross amount of the bill, including reimbursements, because reimbursements cannot be deducted out of the bill amount for the purpose of tax deduction at source.
In order to overcome the aforesaid view of the CBDT, it is advisable that a separate bill is prepared in respect of reimbursement of expenses incurred by the person raising the bill for such expenses. In other words, the amount to be reimbursed should not be included in the same bill, which the person rendering certain services, raises in respect of fees for such services.
CIT Vs The Registrar, Csjm University, Kalyanpur (Allahabad High Court)
FACTS OF THE CASE:
The facts of the case reveal that the Assessee-University conducts examinations through various colleges affiliated to it. The affiliated colleges function as the examination centre. These affiliated colleges/centers in holding the examinations incur various types of expenditure both administrative and procedural. The Assessee-University reimburses these expenses to the affiliated colleges/centers.
In the assessment years 2007-08 the Assessing Officer created the demand of Rs.52,11,038/- on account of non-deduction of tax under Section 194J of the Income Tax Act, 1961 (hereinafter referred to as the Act). The appeal of the Assessee-University was dismissed by the CIT (Appeal) whereupon further appeal was preferred to the Tribunal which has been allowed.
The Assessing Officer as well as the Appellate Authority has held that the amount so reimbursed by the Assessee-University to the affiliated colleges are in respect services of professional or technical expertise which are covered under Section 194J of the Act.
The Tribunal in considering the matter held that no doubt the payment of expenditure incurred by the affiliated colleges/centers is reimbursable but there is no involvement of professional or technical expertise. The affiliated colleges/centers do not render any technical services in conducting of the examination. The Tribunal further observed that the revenue in the past and in the subsequent years has never raised such an objection.
Thus, in the absence of any material to establish that the affiliated colleges/centers were rendering services of professional or technical nature in the matter of conducting the University’s examination, we are of the opinion that the Tribunal has not committed any error of law in holding that the tax was not deductable on such reimbursement under Section 194J(b) of the Act.
In view of the aforesaid facts and circumstances, we are of the opinion that no substantial question of law arises in this appeal worth consideration by this court.