TaxTMI 
TaxTMI 
2025 (11) TMI 553
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....n colleges/universities. As such foreign colleges/universities do not receive the fees directly, such foreign colleges/universities entered into an agreement with the assessee for receipt of the fees from the students and he payment thereto to the foreign colleges/universities. It was the submission that as the assessee is a foreign tax entity and as it does not have any branch in India, the assessee had entered into an agreement with M/s Muthoot Foreign Exchange Company Pvt. Ltd. at the such rate in respect of currency relating to the foreign colleges/universities. The students based on Indian currency after applying exchange rates M/s Muthoot Foreign Exchange Co. Pvt. Ltd., which is subsequently changed to M/s Muthoot Forex Limited transfers such amount to the assessee and during the transfer of funds from the Muthoot to the assessee, there is always positive exchange fluctuation, therefore, the transfer of funds from Muthoot Forex Ltd. to the assessee, consists of two transactions, namely, one for the entire fees which is billed by foreign colleges/universities on the students and the second portion being the exchange fluctuation less the commission charged by Muthoot Forex Ltd.....
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.... nor the work around the services if any are provided by Muthoot to the students. It was the submission that Muthoot only asks as the collection agent of the assessee. It was the submission that the assessee provides the students details to Muthoot and Muthoot only does foreign exchange conversion of the students and transfer to the assessee. It was the submission that the order of the ld.AO and that of ld.CIT(A) is liable to be reversed. 4. In reply, ld.CIT-DR drew our attention to the pages 17 to 22 of the order of the ld.CIT(A). It was the submission that the detailed nature of transaction has been brought out by the ld. CIT(A) in page 17 of his order, wherein the ld. CIT(A) has categorically found that Muthoot is using specializes the services with the assessee. It was the submission that at page 19 the ld. CIT(A) has categorically recorded various transactions and the action i.e. done by the Indian entity being Muthoot which includes the payment of technical fees owed by it to the assessee after TDS. Ld.CIT-DR drew our attention to the last paragraph and the order of the ld.CIT(A) at page 22. It was the submission that Muthoot itself did not have any necessary knowhow or te....
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....orm of foreign exchange fluctuation. Thus, as clearly there is no technology transfer or use of any proprietary technology by Muthoot which is owed by the assessee, we are of the view that the payment made by Muthoot to the assessee does not fall within the term "Royalty" for the purpose of Income Tax Act, 1961. This being so, the addition as made by the Assessing Officer and as confirmed by the ld CIT(A) stands deleted. 7. Ld AR has filed the return of income filed with the Tax Authorities in US, the schedule of gross income received by the assessee is in Annexure-B and the income relatable to Muthoot revenue in Annexure-C. The same reads as follows: Annexure B Client Name Total Revenue FY 2015 The Common Application $1,227,996.08 Boston University $750,965.84 Cornell University $525,356.20 University of Pennsylvania $445,068.60 Berklee College of Music $368,705.19 Carnegie Mellon University $359,785.13 Arizona State University $297,547.33 University of San Francisco $286,492.22 University of Illinois $277,960.69 Penn State $249,469.49 Hult International Business School $249,028.68 North Carolina Stat....
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....rsity - Philadelphia $44,468.90 University of Richmond $44,054.92 Pacific Lutheran University $43,787.95 University of Technology Sydney - Continuing Students $43,757.84 Stevenson School $43,530.61 Hawaii Pacific University $43,473.90 Northern Illinois University $43,425.73 Rice University $43,108.75 Cardigan Mountain School $41,977.45 Baylor University $41,857.00 University of San Diego $41,734.99 Phillips Exeter Academy $41,112.93 Vassar College $40,938.72 University of Colorado Denver | Anschutz Medical Campus $39,096.93 University of Vermont $38,397.61 Worcester Polytechnic Institute $38,318.91 University of Virginia $38,259.98 University of Denver $38,153.90 Darlington School $38,105.08 Binghamton University $36,941.12 Bryn Mawr College $36,467.92 Mount Holyoke College $36,435.00 Southern Methodist University $36,345.20 Wellesley College $36,299.19 University of South Florida $36,215.67 University at Buffalo $36,125.29 Wesleyan University Student Accounts Office $36,013.79 University of lowa $35,860.68 Lutheran ....
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.... San Domenico School $19,655.69 University of New Hampshire $19,451.61 Williams College $19,120.09 The College of Wooster $19,057.33 The University of Tennessee Knoxville $18,946.86 The Stony Brook School $18,804.70 OnCampus Boston $18,676.30 Wayland Academy $18,665.79 Canisius College $18,554.55 Conwell Egan Catholic High School $18,518.16 ONCAMPUS $18,422.49 Kent School $18,268.95 Georgia Southern University $18,254.52 Ross University School of Veterinary Medicine $18,194.96 Wheaton College Massachusetts $18,057.19 UOW College $17,622.80 D'Youville College $17,595.46 Averett University $17,588.05 New Hampton School $17,500.01 Virginia Commonwealth University $17,354.13 Fordham University $17,136.36 The University of Mississippi $17,129.68 Villanova Preparatory School $17,053.71 Cal Poly - San Luis Obispo $16,902.51 DigiPen Institute of Technology $16,901.64 Northfield Mount Hermon $16,861.08 Emma Willard School $16,570.50 CQUniversity Australia $16,548.03 Claremont Mckenna College - Tuition $16,186.73 S....
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....$10,852.43 SUNY Potsdam $10,751.10 Lee Academy $10,646.47 Maryland Institute College of Art $10,605.67 Plymouth State University (US) $10,547.84 Martin Luther School $10,526.11 Fairleigh Dickinson University - New Jersey $10,462.75 Minerva University $10,457.20 University of Pennsylvania Law School - LLM Deposits $10,281.95 University of Mary Hardin-Baylor $10,208.05 University of Missouri - Columbia $10,195.15 Chapel Hill-Chauncy Hall School $10,135.33 University of Maryland - College Park $10,056.69 Columbia College - Chicago $10,046.75 La Lumiere School $10,040.68 NABA Nuova Accademia di Belle Arti $10,036.80 Berkeley College $10,036.11 Linfield University $9,911.96 Lasell University $9,911.51 Grand River Academy $9,818.62 Saginaw Valley State University $9,763.25 Kendall College $9,647.80 Lindenwood University $9,433.93 University of Arkansas - Fayetteville $9,427.81 Barry University $9,313.90 California State Polytechnic University, Pomona $9,310.27 The King's Academy (Tennessee) $9,254.99 The Hotchkiss School - Summ....
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.... School $6,691.23 University of Southern Queensland $6,627.56 Miller School of Albemarle $6,619.33 Buxton School $6,586.34 RISD CE $6,449.42 Lewis-Clark State College $6,449.00 Endicott College $6,403.07 South Kent School $6,396.59 Eastern Christian School $6,374.99 Rollins College $6,345.00 Mercyhurst University $6,273.53 University of Louisiana at Lafayette $6,225.56 Grand Rapids Christian School $6,178.60 SUNY Fredonia $6,166.60 Simon Fraser University $6,148.12 University of Wisconsin-Whitewater $6,136.08 Bay State College $5,933.25 Loma Linda University $5,864.88 West Chester University of PA $5,703.28 University of Wisconsin - Stout $5,681.86 Salem State University $5,576.50 City College of San Francisco $5,574.71 Wheeling University $5,564.90 Temple University - Intensive English Language $5,521.31 Culver Educational Foundation Summer $5,509.25 Amherst College $5,505.57 Bowling Green State University $5,494.17 University of North Carolina School of the Arts $5,440.78 California University of Pennsylvania $5....
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.....02 University of Mobile $4,120.11 Texas Intensive English Program (TIEP) $4,108.44 Wartburg College $4,101.05 University of Wisconsin-La Crosse $4,099.32 East Stroudsburg University $4,059.84 Timothy Christian School $4,042.20 Saint Hubert Catholic High School For Girls $4,010.95 Mercer University $3,986.81 Millersville University $3,974.26 Central Michigan University $3,952.11 University of Minnesota - Duluth $3,947.84 Valdosta State University $3,946.02 SUNY Oneonta $3,930.63 Eastern Mennonite University $3,902.46 Willamette University $3,899.10 Commonwealth University of PA (Lock Haven University) $3,789.64 University of Alabama in Huntsville $3,786.41 Messiah University $3,777.95 Centenary University $3,752.82 California State University - San Bernardino $3,692.10 The Harker School $3,567.25 Roberts Wesleyan College $3,547.02 Word of Life Bible Institute $3,514.72 Christian School of York $3,511.33 Landmark College $3,460.44 Curry College $3,423.81 St. Norbert College $3,423.72 Montreat College $3,403.78 The ....
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....CNY $2,214.25 Proctor Academy $2,213.91 Auburn University $2,181.55 New Mexico State University $2,142.63 University of Minnesota- Morris $2,114.51 Faulkner University $2,101.95 Quest Exchange $2,093.30 Oklahoma Christian University $2,059.16 Eastern Kentucky University $2,025.36 University of Arkansas - Fort Smith $2,017.45 Olivet Nazarene University $2,016.02 Anderson University $2,011.65 The University of Tennessee Chattanooga $1,987.97 University of North Dakota - Vendor Payments $1,954.10 ScholarChip - Payment Gateway $1,945.65 Marquette University Graduate School $1,935.97 American Family Homestays (AFH) $1,930.71 Shippensburg University $1,905.07 Cayuga Community College $1,903.17 Unassigned $153,566.00 Total $16,168,093.42 Annexure C Client Name Muthoot Revenue FY 2015 North Carolina State University $179,330.58 Carnegie Mellon University $170,273.33 University of Texas at Dallas $151,676.89 Arizona State University $133,999.04 San Jose State University $132,818.29 Rochester Institute of Technology $104,498.7....
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.... Boulder $7,341.65 Clark University $7,310.29 Northwest Missouri State University $7,249.13 Temple University - Philadelphia $7,166.70 University of Washington $7,020.42 Massachusetts Institute of Technology (MIT) $6,725.19 Emerson College $6,618.09 University of Central Florida $6,460.06 Grinnell College $6,266.15 Barnard College $6,036.42 Hult International Business School $5,772.12 Georgia Institute of Technology $5,637.82 University of the Sunshine Coast $5,396.83 Georgia State University $5,289.46 Columbia College - Vancouver, CA $5,287.76 California State University Chico $5,188.85 Worcester Polytechnic Institute $5,099.91 Stevens Institute of Technology $4,905.80 University of San Francisco $4,780.45 Saskatchewan Polytechnic $4,717.19 Bryant University $4,617.10 Centennial College $4,464.24 University of Central Florida - Global UCF $4,442.94 DePaul University $4,232.11 Mount Holyoke College $4,197.00 Miami University - Ohio $4,190.64 University of Utah $4,188.94 William & Mary $4,185.17 Ferris State Universit....
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.... University of lowa $1,503.15 University of San Diego $1,446.80 West Chester University of PA $1,445.73 Fairleigh Dickinson University - New Jersey $1,424.96 Troy University $1,422.75 Academy of Art University $1,355.85 Boston College $1,353.60 South Dakota Board of Regents University System $1,334.77 Georgetown University $1,304.96 Wichita State University $1,259.39 Bowling Green State University $1,253.82 Roosevelt University $1,253.21 Kendall College $1,226.01 Oberlin College $1,189.23 OnCampus Boston $1,168.02 Arkansas State University-Jonesboro $1,144.55 Keller Graduate School of Management of DeVry University $1,092.62 SUNY College at Plattsburgh $1,078.03 State University of New York at Oswego $1,072.24 Golden Gate University $1,047.25 Colgate University $1,001.63 University of Richmond $995.33 Southern Illinois University Edwardsville $966.88 Marist College $951.58 Saint Louis University $903.59 UOW College $898.78 University of Missouri - St. Louis $832.09 Rollins College $826.93 Oklahoma City University ....
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....48 SUNY New Paltz $364.19 John Carroll University $363.45 University of New Mexico $362.08 California University of Pennsylvania $352.97 The Boston Conservatory at Berklee $351.20 SUNY Geneseo $350.58 Youngstown State University $349.20 Lewis & Clark $345.03 Walden - USD - APM $335.85 Western Michigan University $333.58 Pacific Lutheran University $332.71 Southwest Minnesota State University $327.57 College for Creative Studies $295.01 Andrews University $292.62 Simon Fraser University $292.25 NYU Polytechnic School of Engineering $291.59 Hult - Confirmation Deposit USD $285.26 St. Edward's University $280.25 Willamette University $272.57 RISD CE $252.76 Shippensburg University $251.75 Mississippi College $241.67 Central Michigan University $238.94 Cal State L.A. College of Professional and Global Education $233.14 OnCampus - UK $222.23 Oral Roberts University $220.85 Arkansas Tech University $217.28 Plymouth State University (US) $209.15 Texas Woman's University $201.61 Emporia State University $....
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....iff University $12.68 Bay State College $9.80 Penn Admissions Undergraduate Enrollment Deposit $6.34 Troy University Shipping Fee $6.32 Clark Labs $6.26 California Lutheran University $3.96 Claremont Mckenna College - Housing $3.17 Saginaw Valley State University $3.17 Wheeling University $3.17 Husson University $2.38 University of North Carolina School of the Arts $2.06 The University of Winnipeg - Application Fees $0.97 Columbus State University $0.79 Alfred State $0.79 8. As it is noticed that in the return filed by the assessee in India, the assessee itself has shown the receipts as Royalty and the TDS has also been deducted by Muthoot under the head "Royalty", the return in respect of the assessee filed with US Authorities was called for as there was a doubt that the assessee may have claimed the revenue from Muthoot as an expenditure or as not taxable in the USA return. The Assessing Officer is to examine whether the amount shown by the assessee in Annexure-C to the US return representing the revenue from Muthoot has been included in the gross receipts of 16.168 million. If the assessee has in....
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....ide for a receipt/intimation note to the Remitter with instructions to present such receipt at the COMPANY's branch office, the Remitter has opted for completing the transaction. 12. The receipt/intimation note shall contain the contact details of the COMPANY's contact centre, the Foreign Currency amount to be transferred, the exchange rate applied and the Indian Rupee Equivalent that need to be remitted. 13. The COMPANY shall arrange to collect the Indian Rupee Equivalent for the transfers as follows a. By way of cash if the Amount is Less than Rs.50000 !- b. By way of Demand Draft/Crossed Cheques/National Electronic Fund Transfer (NEFT) /Real Time Gross Settlement (RTGS) RBLLIC M. 14. 35. In cases where the Indian Rupee funds are collected by way of Demand Draft/Crossed Cheques/NEFT/RTGS, the COMPANY shall affect the transfers only after sighting clear balances in their account. COMPANY will comply with, and will ensure that the KYC, AML and FEMA guidelines are complied with by, the Remitter For MUTHOOT EXCHANGE CO. PVT. LTD. PUIEE EXECUTIVE OFFICER 1 RBLLIC M. 14. 35. Certified Tr Document 2 16. The Remitter will submit the prescribed KYC/A....
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....is less than the FIXED Rate provided by the CLIENT to the Remitter, then the COMPANY shall credit back the differential amount (Exchange Gain) into the Advance placed by the CLIENT, subject to the refund of the Advance by COMPANY to CLIENT as set forth above. 27. COMPANY will provide a monthly report by the 100 of a given month on all transactions remitted for the previous month to the CLIENT's designated Email account. 28. The COMPANY will share the copy of the SWIFT messages to the CLIENT a day after the Transaction Date For MUTHOOT EXCHANGE CO. PVT. LTD. CHIEF EXECUTIVE OFFICER Document 3 RECONCILIATION: > COMPANY will send daily-consolidated report of number of TT'S sent, followed by detailed report giving the names of persons to whom TT request was actually received. PRICING: It is hereby agreed that the CLIENT shall pay to the COMPANY as under. Foreign Exchange Margin: 1% of INR value using Reuters INR - as source rate, which includes any and all Taxes, service tax, correspondent bank charges, foreign currency charges levied by the Government of India on wire amount, bank conversion charges on the foreign currency, internal overheads administrative co....