R. JAYASIMHA BABU, J.

The petitioners are engaged in the business of providing cellular mobile telephone facility to subscribers, having been authorised to do so under the licences granted by the Department of Telecommunications, Government of India. They are aggrieved by the direction given by the Chief Commissioner of Income-tax to his subordinates to treat the payments made to them by their subscribers as coming within the 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 facility for all the subscriber related data; short message service centre which enables sending short messages between the control room to mobile and from one mobile to another mobile, voice mail service centre which stores incoming voice messages which can be retrieved by accessing the subscribers' mail box; authentication centre which maintains subscriber identity related security information; equipment identity register which maintains the mobile equipment identity related security information; base station controller which controls and monitors all the base stations in the network, interfaces with the mobile switching centre and also performs handover functions whenever mobile subscriber crosses from one base station to another; transcorder which changes the data rate from 64 kbps to 16 kbps in the down link direction and from 16 to 64 kbps in the up link direction; base transreceiver station which is a transmitter-cum-receiver and performs air interface function and talks to mobile stations; mobile station which is a subscriber terminal through which the subscribers access the network; operation and maintenance centre which performs supervision and control functions of all the sub-systems in the network; microwave back-bone network which is used to link cell sites with the base station controller and public switched telephone network through which local/STD/ISD calls are routedThe manner in which outgoing and incoming calls from or to the network subscriber's mobile 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 location register. Whenever the mobile switching centre receives an incoming call either from public switching telephone network or another mobile station, the call is routed through the nearest base transreceiver station. The subscriber is given an audio signal to indicate that there is an incoming call. The subscriber then goes off-hook to communicate with the caller.

Cellular phone facility is thus based on dividing the network area into smaller divisions known as cells, and erecting base stations in those cells to manage transmission and reception within each cell. The base stat