2014 (7) TMI 255 - AT - Income Tax

Tax Appeal Dismissed: Overseas Payment for Study Expenses, Not Technical Fees

The Asst. Commissioner of Income Tax Versus M/s. Myrind School of Catering & Computer Management (P) Ltd.

The Asst. Commissioner of Income Tax Versus M/s. Myrind School of Catering & Computer Management (P) Ltd. - [2014] 33 ITR (Trib) 138 (ITAT [Chen]) Issues:1. Appeal against Commissioner of Income Tax(Appeals) order for Assessment Year 2008-09.2. Disallowance under section 40(a)(i) for non-deduction of tax at source.3. Nature of payment made to overseas institutions.4. Interpretation of Co-operation Agreement between the parties.5. Dispute on whether payment constitutes technical fees.Analysis:1. The appeal filed by the Revenue was against the order of the Commissioner of Income Tax(Appeals) for the Assessment Year 2008-09.2. The dispute primarily revolved around the disallowance under section 40(a)(i) for non-deduction of tax at source on the payment made by the assessee to overseas institutions.3. The assessee, a company engaged in education, paid an amount to international institutions for examination fees, study material, and books without deducting tax at source. The Revenue contended that the payment constituted technical fees, leading to the disallowance under section 40(a)(i).4. The Co-operation Agreement between the assessee and the overseas institution was examined to determine the nature of the payment. Articles 2 and 3 of the agreement were crucial in understanding the responsibilities and fee structure involved in the collaboration.5. The Tribunal analyzed the agreement and concluded that the payment made was towards study curriculum, including teaching materials, and not for technical services. The Tribunal found no evidence to support the Revenue's claim that the payment fell under the category of technical fees. Therefore, the appeal of the Revenue was dismissed for lacking merit.