Section 194J did not apply to electricity transmission and SLDC charges where no technical services were involved.

Transmission charges and SLDC charges paid to a State transmission utility were not fees for technical services under Section 194J because the arrangement covered only transmission of electricity through the utility's network, with charges fixed by the regulator and no contract for technical service, transfer of technology, or offer and acceptance of such service. On that basis, tax deduction at source was not required on these payments. The Court also noted that the recipient had already offered the income to tax and paid tax, which made the demand academic on the facts.

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Issues: Whether Section 194J of the Income-tax Act, 1961 applied to transmission charges and SLDC charges paid to the State transmission utility, so as to require deduction of tax at source.

Analysis: The only service taken by the assessee was transmission of electricity through the transmission network of the State utility under a power transmission agreement. The agreement required payment of charges fixed by the regulator and did not show any contract for the rendering of technical services. There was no transfer of technology, no offer or acceptance of technical service, and no material to show that the payments were fees for technical services within the meaning of Section 194J. The Court also noted that the payee had offered the income to tax and paid tax thereon, making the demand academic in the facts of the case.

Conclusion: Section 194J was not applicable to the payments in question, and the assessee was not liable to deduct tax at source on the transmission charges and SLDC charges.

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