2018 (12) TMI 1149 - HC - Income Tax

TDS u/s 194J - amount reimbursed by the Assessee-University to the affiliated colleges for holding examinations - whether the amount is in the nature of services of professional or technical experties - non deduction of tds - Held that - Tribunal in considering the matter held that no doubt the payment of expenditure incurred by the affiliated colleges/centres is reimbursable but there is no involvement of professional or technical experties. The affiliated colleges/centres do not render any technical services in conducting of the examination. The Tribunal further observed that the revenue in the past and in the subsequent years has never raised such an objection. Thus, in the absence of any material to establish that the affiliated colleges/centres were rendering services of professional or technical nature in the matter of conducting the University s examination, we are of the opinion that the Tribunal has not committed any error of law in holding that the tax was not deductable on such reimbursement under Section 194J(b) - No substantial question of law.

Summary

Issues:
1. Interpretation of Section 194J of the Income Tax Act, 1961 regarding reimbursement of expenses by an Assessee-University to affiliated colleges for conducting examinations.

Analysis:
The judgment in question pertains to an appeal against the Income Tax Appellate Tribunal Lucknow Bench's order. The case involved the Assessee-University reimbursing expenses to affiliated colleges for conducting examinations. The Assessing Officer had created a demand on the Assessee-University for non-deduction of tax under Section 194J of the Income Tax Act, 1961. The CIT (Appeal) and the Appellate Authority upheld that the reimbursed amount falls under services of professional or technical expertise covered by Section 194J. However, the Tribunal differed in its interpretation.

The Tribunal's decision was based on the absence of professional or technical services being rendered by the affiliated colleges in conducting examinations. It noted that the reimbursement was for various administrative and procedural expenses, not for technical services. The Tribunal highlighted that the revenue had not objected to this practice in the past or subsequent years. Consequently, the Tribunal concluded that the tax was not deductible on such reimbursements under Section 194J(b) of the Act.

The High Court, in its analysis, concurred with the Tribunal's findings, stating that there was no evidence to prove that the affiliated colleges provided professional or technical services in conducting the examinations. Therefore, it was held that the Tribunal did not err in its decision. The court further emphasized that no substantial question of law meriting consideration had arisen in the appeal. Consequently, the appeal was deemed devoid of merit and dismissed.

In summary, the judgment clarifies the interpretation of Section 194J of the Income Tax Act in the context of reimbursing expenses by an Assessee-University to affiliated colleges for examination purposes. It underscores the distinction between administrative expenses and professional/technical services, ultimately upholding that tax deduction was not applicable in this scenario.