Brilliant Study Centre Private Limited Vs ITO (TDS) (ITAT Cochin)
The ITAT Cochin held that payments made by a coaching institute to faculty members engaged for imparting coaching in competitive examinations were liable for tax deduction under Section 194J as professional fees and not under Section 192 as salary. The Tribunal observed that although the institute exercised administrative control over attendance, working hours, leave, and exclusivity, such supervision was necessary for efficient management and did not establish an employer-employee relationship. The faculty members were referred to as consultants, received remuneration comprising fixed and variable components linked to lectures, were not entitled to statutory employee benefits such as provident fund, gratuity, bonus, leave encashment, or medical reimbursement, and independently discharged their professional duties. The Tribunal also noted that the faculty had declared the receipts as professional income under Section 44ADA, which had been accepted by the Revenue. Relying on judicial precedents distinguishing a contract for service from a contract of service, the Tribunal held that TDS under Section 194J was correctly deducted and deleted the demand raised under Sections 201(1) and 201(1A).
The central issue before the Tribunal was whether payments made by a coaching institute to its faculty members were liable for TDS under section 192 as salary or under section 194J as professional fees. The Revenue treated the faculty members as employees and held that the assessee had short-deducted tax by applying section 194J instead of section 192, thereby treating the assessee as an assessee-in-default under sections 201(1) and 201(1A).
