2008 (8) TMI 480

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....The assessee is a company incorporated under the provisions of the Companies Act, 1956 to impart education. The assessee has entered into an agreement on November 10, 1999 with IITC, which is an educational institution situated at Chicago in order to impart distance education in certain faculties. As per the terms and conditions of the agreement, IITC has to impart education on certain faculties under a programme, known as Distance Education Programme for which the assessee-company has to provide infrastructure like collecting the application forms and forward the same to IITC, for the purpose of admission and after approval of admission, to collect the tuition fees and remit the same to IITC, USA and receive the education materials from II....

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...., 1990 held that IITC, USA, has no permanent establishment in India and that the fees collected by the assessee and transferred the same to IITC, USA does not attract deduction of tax at source as required under section 195 of the Act. Accordingly, the appeal was allowed and the order passed by the Assessing Officer and the Commissioner of Income-tax (Appeals), were set aside. Being aggrieved by the same, the present appeal is filed raising the following substantial question of law: "(1) Whether the Tribunal was justified in holding that the income received by IIT, Chicago from the assessee cannot be treated as an income liable to tax as per the provisions of the Indian Income-tax Act? (2) Whether the imparting distance education by t....

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....4 SCC 111 and also the judgment of the Supreme Court in T. M. A. Pai Foundation v. State of Karnataka reported in [2002] 8 SCC 481. Relying upon these judgments he contends that the distance education imparted by the IIT, Chicago cannot be treated as a business or a commerce and he further contends that in view of the Double Taxation Agreement, even if it is treated as an income since the same is earned in USA the assessee is not liable to deduct the tax at source under section 195 of the Income-tax Act. 7. He further contends that on account of the conduct on the part of the appellants in not obtaining an interim order in the present case, the assessee having transferred the entire fees collected by it on behalf of the IIT, Chicago to I....