Payments made by University to affiliated colleges for conducting examinations was not fee for technical services – ITAT

Payments made by University to affiliated colleges for conducting examinations in different centres were reimbursement and not fee for technical services u/s 194J – ITAT

ABCAUS Case Law Citation:
ABCAUS 2476 (2018) 08 ITAT

The instant appeal was filed by the assessee against the order of Commissioner of Income-tax (Appeals). 

The assessee was a University which used to collect examination fees from the students studying in the University and its affiliated colleges. In turn, the University would make such payment under the head “central charges” to the colleges where examinations were conducted.

It was the case of the Assessing Officer that such payment was made for technical services provided by the college to the university and, therefore, University was liable to make TDS on such payment under section 194J of the Act on the amount paid by the University.

Before the CIT(A) the assessee contended that there was no liability to deduct tax at source under section 194J on payment made to various colleges because these payments were reimbursement of expenses incurred by the centres which conducts examinations for the assessee university, therefore there was no legal requirement of TDS deduction u/s  194J of the Act.

However, CIT(A), upheld the findings of the Assessing Officer.

The Tribunal observed that the  assessee University conducts examinations through various affiliated colleges and these colleges serves as examination centres for the University. While conducting examinations, these affiliated colleges/centres incur various expenditures, both administrative and procedural which the assessee University pays them back and, therefore, it was in the nature of reimbursement.

The Tribunal opined that in the instant case, the payments made were clearly in the nature of reimbursement and there was no involvement of professional or technical expertise by way of which these centres receives payments. Furthermore, Revenue had never raised objection for such non deduction of TDS in any of the earlier years or succeeding years except in the relevant assessment years. Therefore, rule of consistency demands Revenue cannot take a different stand which they have already undertaken in the case of the assessee whereby no such dispute with regard to TDS deduction under section 194J was taken up by the Revenue.

Tribunal held that the said payments were merely reimbursement, the requirement of TDS did not apply.  Accordingly, the orders of the CIT(A) was set aside on this issue and allow the appeals of the assessee

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