TMI Blog2001 (2) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of "fees for technical services" in section 194J read with section 9(1)(vii), Explanation 2 of the Income-tax Act and require the firms and companies subscribing to the petitioners' network, to deduct tax at source on the payments made by them to the petitioners. The petitioners have averred that they have established the necessary infrastructure for the mobile communication network consisting of mobile switching centre which is an electronic exchange where switching function and call routing takes place ; visitor location register which provides total storage for the variables and functions needed to handle calls to and from mobile subscribers in the service area. Home location register which provides permanent storage facilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bile telephone takes place is described by the petitioners thus : Outgoing calls : Whenever a subscriber goes off the hook, R.F. channel from the nearest base station is allotted to the subscriber by base station controller. Depending on the number dialled by the subscriber the mobile switching centre routes the call either to another mobile or to the public switched telephone network. Communication takes place when there is response from the called number. As the subscriber moves from one cell to another, the call is handed over to the other cell without any interruption. Incoming calls : The base transreceiver station periodically sends paging messages to all mobile subscribers and registers the subscriber locations in the visitor l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter the Deputy Commissioner TDS range on March 20, 1998, has instructed the Income-tax Officer TDS to ensure compliance with section 194J by such of the subscribers of the petitioners are firms or companies. "Fees for technical service" is not defined in section 194J. Explanation (b) in that section provides that that expression shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9. That Explanation 2 in section 9(1)(vii) reads thus : "For the purposes of this clause, 'fees for technical service' means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a technical vi6lation of the treaty. Having regard to the fact that the term is required to be understood in the context in which it is used, "fee for technical services" could only be meant to cover such things technical as ar6 capable of being provided by way of service for a fee. The popular meaning associated with "technical" is "involving or concerning applied and industrial science". In the modern day world, almost every facet of one's life is linked to science and technology inasmuch as numerous things used or relied upon in every day life is the result of scientific and technological development. Every instrument or gadget that is used to make life easier is the result of scientific invention or development and involves the us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same to the Revenue. Satellite television has become ubiquitous, and is spreading its area and coverage, and covers millions of homes. When a person receives such transmission of television signals through the cable provided by the cable operator, it cannot be said that the home owner who has such a cable connection is receiving a technical service for which he is required to deduct tax at source on the payments made to the cable operator. Installation and operation of sophisticated equipments with a view to earn income by allowing customers to avail of the benefit of the user of such equipment does not result in the provision of technical service to the customer for a fee. When a person decides to subscribe to a cellular tele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a contract for availing of technical services from the provider of the internet service, and such subscriber regarded as being obliged to deduct tax at source on the payment made to the internet service provider. At the time the Income-tax Act was enacted in the year 1961, as also at the time when Explanation 2 to section 9(1l)(vii) was introduced by the Finance (No. 2) Act, with effect from April 1, 1977, the products of technology had not been in such wide use as they are today. Any construction of the provisions of the Act must be in the background of the realities of day-to-day life in which the products of technology play an important role in making life smoother and more convenient. Section 194J, as also Explanation 2 in section 9( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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