Sharda University not required to deduct TDS on consideration paid to evaluator for evaluating PhD thesis
The issue with Income Tax Appellate Tribunal (ITAT) was whether the consideration paid by the assessee (M/s. Sharda Educational Trust or Sharda University) for evaluating Ph.d thesis by remitting the same outside India can be regarded to be the income of non-resident deemed to accrue or arise to him in India so that it may be chargeable to tax in India.
As per the provisions of Section 195 of the I.T. Act, 1961, payment made to a non-resident, if chargeable to tax, the assessee is liable to deduct tax at source. In case he fails to deduct tax at source, he will be deemed to be an assessee in default as per provisions of Section 201 of the I.T. Act, 1961 and is also liable for interest under section 201(1A) of the I.T. Act, 1961.
As per Explanation-2 to Section 9(1)(vii) defines fee for technical services which is for rendering of any managerial, technical or consultancy services. It is not the case of the Revenue that the Ph.d thesis evaluators have rendered managerial or consultancy services to the assessee. It is their contention that they have rendered technical services to the assessee by evaluating the Ph.d thesis papers.
In our opinion, the Ph.d evaluator must have been technically qualified and having technically skilled. However, the question that arises is as to whether these persons by evaluating these papers have rendered the technical services to the assessee? In our opinion, such evaluation of the Ph.d Thesis for which they have received the commission cannot be treated as fees for technical services.
By evaluating Ph.d thesis paper, they have not provided to the assessee any technical services but merely applied their skill for evaluating Ph.d Thesis.
Therefore, we are of the considered opinion that no technical services were rendered to the assessee by the Ph.d thesis evaluators and the assessee has also not asked for any technical services. We, therefore, are of the considered opinion that the Ld. CIT(A) was not justified in holding the assessee to be an assessee in default for not deducting the TDS from the remittance made to the Ph.d Thesis evaluators under section 201 of the I.T. Act, 1961 and consequently interest charged under section 201(1A) of the I.T. Act, 1961.
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