2007 (10) TMI 327

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....y are being disposed of by consolidated order for the sake of convenience. 2. The brief facts of the case are as under: The facts of the case are that the appellant is a public limited company, inter alia, engaged in the business of providing computer education and training. During the relevant assessment year it was providing computer education and training through its own centres and also through. franchisees who are providing NIIT courses under a license from appellant. One of the models being adopted by the appellant to run its business mainly in big cities was Metro Centre. Under the arrangement the franchisees were providing NIIT courses under a license from the appellant and the respective franchisees were to bring together their r....

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....nt. To ensure that the franchisees delivered the services in accordance with the methods and process provided by the appellant it was essential that the appellant collected the fees and pay the franchisees share on milestone basis. The fees shared by the appellant with the franchisees, was for the purpose of convenience in the following nomenclature viz., (1) Marketing claim. (2) Infrastructure claim. 3. The learned Departmental Representative pleaded that the AO examined the agreement in which the assessee is licensor and the other party is franchisee in detail. The assessee was having rights in respect of conduct of classes, conduct of examination and collection of the money. The assessee also provided technical know-how. The major rig....

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....e was carrying out the business for imparting education by pooling the resources with franchisee. The licensee agreement does not give any right or interest whatsoever in the premises. The infrastructure claimed is only a nomenclature given to the share of revenue that accrued to the licensee for undertaking various responsibilities and pooling various infrastructure facilities. The franchisee agreement had many other clauses like student transfer, staff movement, student admission, annual conference setting up of educational centre, maintenance of infrastructure insurance, local marketing, invoicing, accounting, student registration and day-to-day admission of the education centre. Thus, the revenue shared by the licensee was not for infra....

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....ts admitted at the centre. There was no security deposit therefore, for premises. The assessee never got the possession of the premises. There was no minimum guarantee in the agreement. Therefore, it is pleaded that the provisions of s. 194-I are not applicable. 5. After hearing the rival submissions, we hold as under: The appellant has entered into the agreement with the franchisees for running the education centre at various metro cities. The fees was shared between the assessee and the franchisee as per the clauses of the agreement. The details of provisions regarding conduct of the business were stipulated in the agreement. The dominant intention of the parties of the, agreement was to conduct the business and not mere letting out of ....