JUDGMENT K.L. Manjunath, J.— This appeal is by the Revenue challenging the order passed by the Income Tax Appellate Tribunal, Bangalore Bench, in I.T.A. No. 816/Bang/2002 dated August 26, 2003, for the assessment year 2000-01. 2. The facts of this case are as hereunder: 3. 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 IITC, and in turn pass on the same to the students admitted by IITC in Bangalore. In other words, it has to act as a liaison office between the students who have been admitted by IITC and the IITC. The Assessing Officer considering the provisions of Section 195 of the Income Tax Act treated the assessee as an assessee in default for having, not deducted tax at source while remitting the fees collected by it on behalf of IITC. Accordingly an order under Section 201(1) and 201(1A) of the Income Tax Act, was passed. This order was challenged by the assessee by filing an appeal before the Commissioner of Income Tax (Appeals) on the ground that the IITC has no permanent establishment in India and it is not carrying on any business or trade in India, therefore, there was no necessity for the assessee to deduct tax at source as required under Section 195 of the Income Tax Act and requested the Commissioner of Income Tax (Appeals), to allow the appeal and set aside the order passed by the Assessing Officer. The contentions urged by the assessee were turned down and the appeal ultimately came to be dismissed. Against which, a second appeal before the Income Tax Appellate Tribunal, Bangalore, was filed. The contentions urged by the assessee were turned down and the appeal ultimately came to be dismissed. Against which, a second appeal before the Income Tax Appellate Tribunal, Bangalore, was filed. The Income Tax Appellate Tribunal, Bangalore having heard the counsel for the parties held that in view of the agreement entered into between IITC and the assessee and in view of the Double Taxation Avoidance agreement for United States of America pursuant to the notification dated December 20, 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 the IIT, Chicago through the assessee amounts to business or trade and liable for tax? (3) Whether the Tribunal was justified in holding that the income received by IIT, Chicago would not fall under Article 7 or Article 12 of the Double Taxation Avoidance Agreement? 4. We have heard the learned Counsel appearing for the parties. 5. Sri Sheshachala, who is appearing for the Revenue, taking us through the agreement entered into between IIT, Chicago and the assessee contends that IIT, Chicago has a permanent establishment in Bangalore and that any fee collected by the assessee on behalf of the IIT. Chicago has to be considered as an income earned out of the business. The Tribunal without considering the pith and substance of the agreement entered into between the assessee and IIT, Chicago has passed an order in favour of the assessee. Therefore, he requests the court to set aside the order passed by the Tribunal. 6. Chicago has to be considered as an income earned out of the business. The Tribunal without considering the pith and substance of the agreement entered into between the assessee and IIT, Chicago has passed an order in favour of the assessee. Therefore, he requests the court to set aside the order passed by the Tribunal. 6. Per contra, the learned senior Counsel appearing for the assessee submits that IIT, Chicago is having a permanent establishment in USA and it is not conducting any business and it is imparting education through internet and any fees collected by the IIT, Chicago for rendering services to the students of India through internet with the assistance of the assessee, cannot be treated as an income from the business. To support his argument he has relied upon the judgment of the Supreme Court in Unnikrishnan P.J. and Others Vs. State of A.P. and Others, 1993 (3) SCALE 248 and also the judgment of the Supreme Court in T.M.A. Pai Foundation and Others Vs. State of Karnataka and Others, AIR 2003 SC 355 . 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 IIT, the appeal has become infructuous and he further submits that in the subsequent assessment of the IIT, Chicago had filed its return and refund is also ordered in assessment proceedings. Therefore, he requests the court to dismiss the appeal considering the subsequent developments. 8. Therefore, he requests the court to dismiss the appeal considering the subsequent developments. 8. Having heard the counsel for the parties, we have to consider whether IIT, Chicago has any permanent establishment in India and whether the fees collected to impart distance education in India by IIT, Chicago have to be treated as an income from business or commerce and we are also required to consider the effect of not obtaining any interim order by the Revenue and ordering refund for the subsequent assessment year, in the case of the assessee and IIT, Chicago. 9. From the judgment of T.M.A. Pai Foundation and Others Vs. State of Karnataka and Others, AIR 2003 SC 355 , it is no longer in dispute that imparting education cannot be treated as a business or commerce. It is also not in dispute in the present case what is imparted is an education and IIT, Chicago has not conducted any business in India. If IIT, Chicago has not conducted any business in India, if the assessee has collected fees and transferred it to IIT, Chicago without deducting the tax at source as contemplated under Section 195 of the Income Tax Act, we are of the opinion that there is no necessity for the assessee to deduct the tax at source when a foreign company has not earned any profit or income in India by conducting a trade or business in India. 10. Therefore, we have to answer the question of law framed against the Revenue and in favour of the assessee. 11. It is no doubt true that the learned senior Counsel appearing for the respondent has relied upon the judgment of the Bombay High Court in CIT v. Mahindra and Mahindra Ltd. reported in [2003] 263 ITR 481 wherein their Lordships have dismissed the appeal as having become infructuous on account of the Department not having obtained an interim order and due to which the assessee had remitted the amount deducted under Section 195 of the Income Tax Act to company. 12. In the instant case, for the relevant assessment year, the assessee has not deducted tax at source. But without deducting the tax at source it had remitted the entire fees collected by it on behalf of the IIT, Chicago to the foreign company. Therefore, on the facts of this case, the judgment relied upon by the learned senior Counsel has no application. But without deducting the tax at source it had remitted the entire fees collected by it on behalf of the IIT, Chicago to the foreign company. Therefore, on the facts of this case, the judgment relied upon by the learned senior Counsel has no application. However, in view of our finding on the substantial question of laws framed in this appeal, we have to dismiss the appeal. 13. Accordingly, this appeal is dismissed.