Fees for technical services can be taxed in India where testing reports are used domestically for product development.

Maintainability under section 248 was accepted where the assessee had deducted tax at source and sought a declaration that no tax was deductible on the remittance, making the appellate remedy competent on that basis. For taxability, payments to a French testing agency for impact testing and test reports were treated as fees for technical services because the work was technical in nature, the reports were used in India for product development and modification, and the services were utilised in India. Applying section 90(2), the Indo-French treaty and Explanation 2 to section 9(1)(vii), the amounts were held chargeable to tax in India, requiring deduction of tax at source.

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Issues: (i) Whether the assessee's appeals against the order under Section 195(2) of the Income-tax Act, 1961 were maintainable under Section 248 of the Income-tax Act, 1961. (ii) Whether payments made to the French testing agency for impact testing and test reports constituted fees for technical services and were taxable in India, requiring deduction of tax at source.

Issue (i): Whether the assessee's appeals against the order under Section 195(2) of the Income-tax Act, 1961 were maintainable under Section 248 of the Income-tax Act, 1961.

Analysis: The appellate remedy under Section 248 was held available where the assessee had deducted tax at source and sought a declaration that no tax was deductible on the remittance. On that footing, the appeals were treated as competent.

Conclusion: The appeals were maintainable.

Issue (ii): Whether payments made to the French testing agency for impact testing and test reports constituted fees for technical services and were taxable in India, requiring deduction of tax at source.

Analysis: The Court applied Section 90(2) of the Income-tax Act, 1961 and the Indo-French treaty, reading Article 13(4) with Explanation 2 to Section 9(1)(vii). It held that the testing work was technical in nature, the reports were used in India for product development and modification, and the services were utilised in India. The services therefore fell within the expression fees for technical services and were chargeable to tax in India.

Conclusion: The payments were taxable in India and the assessee was liable to deduct tax at source under Section 195(2) of the Income-tax Act, 1961.

Final Conclusion: The Tribunal upheld the Revenue's view on taxability and deduction at source, and the assessee's appeals failed.

Ratio Decidendi: Under a treaty and the Act, technical services are taxable where the services are utilised in India and the consideration is for technical or consultancy services within the applicable treaty definition.

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