Transmission charges are not fees for technical services; no TDS under Section 194J applies where only network use is involved.

Payment for mere use of a statutory electricity transmission network, without any technical service, consultancy or transfer of technical expertise, does not constitute fees for technical services and therefore does not attract tax deduction at source under Section 194J; the Revenue's demand failed on that basis. Where the payee had already offered the income to tax, no surviving revenue loss remained and the Section 201 demand could not be pressed as a live controversy, reinforcing the result against the Revenue.

---

---

Issues: (i) Whether deduction of tax at source under Section 194J of the Income-tax Act, 1961 was attracted on payment of transmission charges to the State transmission utility and allied charges; (ii) whether the fact that the payee had already offered the income to tax affected the Revenue's demand under Section 201 of the Income-tax Act, 1961.

Issue (i): Whether deduction of tax at source under Section 194J of the Income-tax Act, 1961 was attracted on payment of transmission charges to the State transmission utility and allied charges?

Analysis: Section 194J applies only where the payment is by way of fees for professional or technical services. The agreement between the parties showed that the assessee only used the transmission network of the utility for carrying electricity, on charges fixed by the regulator. There was no material to show any offer or acceptance of technical services, no transfer of technology, and no service attributable to technical consultancy or similar technical assistance. Mere use of a statutory transmission facility did not convert the payment into consideration for technical services.

Conclusion: Section 194J was not applicable to the transmission charges on the facts of the case, and the finding was against the Revenue.

Issue (ii): Whether the fact that the payee had already offered the income to tax affected the Revenue's demand under Section 201 of the Income-tax Act, 1961?

Analysis: The payee had already paid tax on the income received. In that situation, no real revenue loss survived, and the demand could not be pressed as a live controversy. The Court treated this aspect as rendering the dispute academic, while noting that the principal basis for decision remained the inapplicability of Section 194J.

Conclusion: The payee's tax payment negated any surviving demand under Section 201, and this aspect was also against the Revenue.

Final Conclusion: The Revenue's appeals failed because the payments were not fees for technical services and no effective demand survived once the payee had paid tax.

Ratio Decidendi: Payment for mere use of a statutory electricity transmission network, without any technical service being rendered or any transfer of technical expertise, does not fall within fees for technical services under Section 194J of the Income-tax Act, 1961.

---