I.T.A. No.2081/KB of 2001, decided on 4th May, 2002. VS I.T.A. No.2081/KB of 2001, decided on 4th May, 2002., 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2679 (2002)

(a) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S.12(5), Expln.‑‑‑Fee for technical services‑‑‑One of the arguments adopted on behalf of the assessee was that the Explanation to S.12(5) of the Ordinance envisaged the provisions of technical services by the personnel (requiring the presence of some personnel in Pakistan) and it appeared that such argument was due to influence created by the use of the words `including the provision of the services of technical or other personnel' in the said Explanation‑‑‑Appellate Tribunal found such arguments to be misplaced as the phraseology used was not an exhaustive Explanation but was an inclusive Explanation which meant that not only the provisions of services of technical personnel but other types of technical services could also be treated as fee for technical services where technical personnel were not deputed in Pakistan.

(b) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss.80AA & 12(5), Expln.‑‑‑Treaty for Avoidance of Double Taxation between USA and Pakistan, Art. III‑‑‑Tax on income of non‑resident from fee for technical services‑ ‑‑Assessee had set up the satellite in the space and had allocated certain transponders for use of its customers for transmission and retrieved of signals‑‑‑Fees received from such services was term as `fee for technical services' and charged tax under S.80AA of the Income Tax Ordinance, 1979‑Validity‑‑‑In order to resolve such a question one may look at some parallel or analogous situation‑‑‑One situation, which may not be so highly advance or technical, that came to one's mind was that of set up of the, telephone exchange by the Telecommunication Companies and providing the lines of telephones or to consider a more advance and sophisticated instance, one may consider the facility set up by the mobile phone companies‑‑‑Mobile phone companies on payment of certain consideration, allow the mobile telephone holders the use of such facility to communicate with each other or with the other telephone subscribers‑‑‑All these facilities or services were of technical nature of lesser or more advanced technology‑‑‑Certainly providing of such facility was not earning fee for technical services, as they were not passing on any technical know‑how or knowledge to their customers‑‑‑Mere collection of a fee for use of a standard facility provided to all those willing to pay for it did not amount to the fee having been received for technical services‑‑‑Appellate Tribunal found that the fees for use of transponder did not fall within the meaning of "fee for technical services" ‑‑‑Since the assessee had set up a satellite in the space to earn income, the obvious conclusion, was that the fees received by it could be termed as commercial profit‑‑‑Appeal of the assessee was allowed and orders of the department officials were cancelled by the Tribunal.

(2001) 251 ITR 53 rel.

1992 PTD 636; 1999 PTD (Trib.) 2554; 1998 PTD (Trib.) 291; (1998) 77 Tax 101 (Trib.); Black's Law Dictionary p.1372; New Oxford Dictionary, p.1699, Chamber's Dictionary, p.1774, I.T.A. No. 194/IB of 1997‑98; PLD 1961 SC 215; PLD 1973 Lah. 837; Ballantine's Law Dictionary, p.222; PLD 1958 SC (Ind.)125; AIR 1988 SC 2330; (1953) WLF,728; (1977) 108 ITR 335; 2001 PTD 888; 1998 PTD 291 and Interpretation of Statutes by M. Mahmood ref.

Fateh Ali W. Vellani and Khaliqur Rehman; FCA for Appellant.

Dr. Najeeb Ahmed Memon, ACIT for Respondent.

Date of hearing: 2nd February, 2002.

ORDER

INAM ELLAHI SHEIKH (CHAIRMAN).‑‑‑This is the further appeal of a non‑resident Corporation incorporated in the USA, and is directed against an order dated 24‑9‑2001, recorded by the learned Commissioner of Income‑tax (Appeals), Zone‑I, Karachi, to agitate the levy of tax under section 80AA of the Income Tax Ordinance, 1979 (hereinafter called the `1979 Ordinance') on its receipts from Pakistani Internet Service Providers.

2. The relevant facts in brief are that the assessee has set up a satellite in the space over the Indian Ocean in earth's orbit at 68.6 East longitude. The satellite has various transponders to facilitate the transmission of signals. The assessee‑Corporation has allocated some frequency to its customers in Pakistan, which are used by such customers to transmit and retrieve the signals, which are said to be internet signals. The assessee‑Corporation charges monthly service fee from its customers for the use of such facility. Customers in Pakistan use this facility by beaming the signals to the satellite for transmission to other destination and for retrieving the signals from other destinations meant for their own end users. In order to utilize this facility, customers of the assessee?Corporation in Pakistan have set up their earth‑station and other facilities. The assessee was required to file a return and to pay tax at the rate of 15 % on the receipts under section 80AA of the 1979 Ordinance when the permission was sought to remit such fees to the USA. However, the assessee was issued the necessary certificate for remittance on a provisional payment of tax at 5 % and on the condition that the returns would be filed for proper assessment. On receipts of return, the Assessing Officer proceeded to make the assessment and he confronted the assessee with the proposal to treat such receipts as `fee for technical services' taxable, under section 80AA of the 1979 Ordinance read with Explanation to subsection (5) of section 12 of the 1979 Ordinance. The Assessing Officer referred to the agreement executed by the assessee with the local customers to hold that the receipts of the assessee were in the nature of fees for technical services. As per the Assessing Officer, as recorded in the impugned assessment order, such receipts could be considered as fee for rendering of technical service as these .were received on offering of satellite signals of highly technical value. The Assessing Officer also referred to various decisions of the Appellate Authority such as 1992 PTL 636; 1999 PTD (Trib.) 2554; 1998 PTD (Trib.) 291 and (1998) 77 Tax 101 (Trib.). The assessee strongly disputed such contention of the Assessing Officer. The reply of the assessee was not found to be satisfactory. However, the Assessing Officer has not recorded the contents of such first reply in the assessment order. Another notice was issued to the assessee on 23‑10‑2000 and the assessee's claim of exemption under Article (III) of the Treaty for Avoidance of Double Tax between USA and Pakistan was repelled by, the Assessing Officer. The assessee again explained that this was the business of the assessee as it is the owner of the satellite and that it does not provide any technical services and that the satellite was not situated over Pakistan. It was further elaborated by the assessee to the Assessing Officer that after the launching and installation of the satellite into orbit, the assessee earned revenue for telecommunication signals received by the satellite and that the payment was not received for providing knowledge or experience to the customers. It was also elaborated that there was no fixed place of business or other office of the assessee in Pakistan. It was also explained that the uplink and downlink of earth station and other equipment located in Pakistan were owned by the Pakistani customers and not by the assessee nor were they provided by the assessee. Another plea of the assessee was that the language of, section 80AA of the 1979 Ordinance shows that the law intended only personal service to be taxed under this section, especially in view of the proviso with regard to the intended departure of consultant. The assessee also tried to displace the case‑law relied upon by the Assessing Officer in the following manner:‑‑

"For example, in 1999 PTD (Trib.) 2554, quoted by you the non‑resident company provided expert and professional advice and seismic information in Pakistan; in 1992 PTD 636 a non?resident company provided consultancy and technical advisory services in Pakistan; in 1998 PTD (Trib.) 291, a 'non‑resident company provided sophisticated information and expert advice relating to rock and drilling well requirements in Pakistan; and in (1998) 77 Tax 101 (Trib.), a non‑resident company provided expert and highly specialized advice regarding the repair of damaged well‑heads and well‑bores in Pakistan and actually performed the manual services of repairing the damaged property in Pakistan.

The decisions in these cases are analytically consistent. In each case, the Court or tax tribunal ruled that the non‑resident company was subject to tax in Pakistan under section 80AA because (1) the company's revenues were received for and related to the performance of expert or professional advice and (2) such advisory services were performed in Pakistan. Thus, these cases and tax tribunal decisions squarely support our client's (not your) position that Panamsat is not subject to tax in Pakistan."

3. The assessee also reiterated its claim of exemption from Pakistan tax under double tax treaty between Pakistan and USA by elaborating its claim that the income was to be treated as industrial or commercial profit. The Assessing Officer, however, did not accept such pleas of the assessee and recorded his own reasons in the assessment order for rejecting the same. Hence the receipts of the assessee were subjected to tax at 15 % under section 80AA of the 1979 Ordinance and the First Appellate Authority confirmed such treatment. However, we note that the learned Commissioner of Income‑tax (Appeals), has not really passed a speaking order and he has not recorded any arguments advanced by the assessee.

4. Both the parties have been heard at length and the orders under consideration have been examined. Before proceeding any further we find it useful to reproduce the relevant law under which the income of the assessee has been taxed:‑‑‑

SECTION 80AA

(1) Notwithstanding anything contained in this Ordinance, where any consideration by way of fees for technical services referred to in the Explanation to subsection (5) of section 12 as received or is deemed to be received by, or accrues or arises or is deemed to accrue or arise to, a non‑resident, the whole of such consideration shall be deemed to be income of the non‑resident and tax thereon shall be charged at the rate of (fifteen) per cent. of such income.

(2) A non‑resident referred to in subsection (1), or an agent authorized by him in this behalf, shall prepare and furnish to the [Deputy Commissioner] within thirty days from the last day of each period of six months, in every financial year, that is to say, the thirty‑first day of December and the thirtieth day of June, respectively, a return, in respect of each such period of six months as aforesaid, showing therein full particulars of the income referred to in the said subsection:

Provided that, where such non‑resident is likely to leave Pakistan in any six‑month period as aforesaid or shortly after its expiry and he has no present intention of returning to Pakistan, the provisions of section 81 shall, so far as may be, apply as if references to financial year, the return of total income, the income year, the order of assessment, the assessment year and rate of tax were references to the corresponding provisions of this section.

(3) On receipt of such return, the [Deputy Commissioner] may, after calling for such particulars, accounts or documents as he may require, determine the income referred to in subsection (2) and charge tax thereon in accordance with the provisions of this section.

(4) Nothing contained in this Ordinance shall be so construed as to allow any expense against the income determined under subsection (3).

(5) The tax paid under this section shall, to the extent that the income of the non‑resident is chargeable under this section, be deemed to be the final discharge of his tax liability under this Ordinance, and he shall not be required to file the return of total income under section 55 or be entitled to claim any refund or adjustment on the basis of such return.

(6) ...........

EXPLANATION TO SECTION 12(5)

Explanation.‑‑‑For the purposes of this subsection [clause (b) of section 24, subsection (2) of section 30, subsection (3A) of section 50 and section 80AA], "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial; technical or consultancy services (including the provisions of the services of technical or other personnel) but does not include consideration for any construction, assembly or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salary".

5. The main dispute in this case is whether the receipts of the assessee are in the nature of industrial or commercial profit which could attract the exemption under the Double Tax treaty or whether these are `fee for technical services' taxable under section 80AA, of the 1979 Ordinance read with the Explanation of section 12(5) of the 1979 Ordinance thereof. The Assessing Officer has treated such receipts to be fee for technical services relying on' the use of term technical in the Explanation of section 12(5) in the meaning assigned to fee for technical services. One of the arguments adopted on behalf of the assessee is that the Explanation envisages the provisions of technical services by the personnel (requiring the presence of some personnel in Pakistan) and it appears that such argument is influence by the use of the words `including the provision of the services of technical or other personnel' in the same explanation. We find such arguments to be misplaced as this phraseology is not an exhaustive Explanation but is an inclusive Explanation which means that not only the provisions of services of technical personnel but other types of technical services could also be treated as fee for technical services where technical personnel are not deputed in Pakistan. Nevertheless, we are not also convinced by the reasoning of the Assessing Officer, as recorded in the assessment order, to treat the receipts of the assessee as fee for technical services merely because of the existence of the word `technical' in the meaning of fee for technical services in the Explanation to section 12(5) of the 1979 Ordinance. A close examination of the nature of transaction and of the business of the assessee shows that the assessee has established a facility in the space by way, of the satellite through which signals can be transmitted and retrieved. No doubt setting up of the satellite in the space is a highly technical job. Yet this does not automatically mean that the assessee is providing technical services in the present case falling within the definition of technical services as mentioned in the Explanation to section 12(5) of the 1979 Ordinance. This is the age of highly advanced technology and various such facilities are being set up to facilitate the communication. The assessee has set up a satellite in the space, which is used by its customers to transmit and retrieve the signals. The question arises if the assessee is rendering any technical services.

6. The contention of the learned A.R. of the assessee is that the assessee in fact is providing no services to its customers and that it has merely established facility which is used by its customers. The learned counsel has drawn our attention to the definition of term `service' given in Black's Law Dictionary and in New Oxford Dictionary in the following terms:‑‑‑

"Black Law Dictionary ‑ page 1372"

5. An intangible commodity in the form of human effort, such‑as labour, skill, or advice.

"New Oxford Dictionary ‑ page 1699"

Service: 1. the action of helping or doing work for someone.

7. The learned D.R. at this juncture referred to another definition of service given at No.3 of Black's Law Dictionary, page 1372, read a; follows:‑‑‑

"The act of doing something useful for a person or company for a fee."

The learned DR also pointed out that the agreement between the two parties also refers to the provisions of services by the assessee to its customers. The learned A.R. of the assessee, however, submitted that this was only a label to describe the facility and in fact no services were being provided. The term `technical' carries‑no further meaning in the Income‑tax Law. In the Chamber's Dictionary at page 1774 it has beer defined in the following manner:‑‑

"technical relating to a practical or mechanical art or applies science; industrial; belonging to, or in the language of, a particular art, department of knowledge or skill, or profession."

It is, however; emphasized by the learned A.R. of the assessee that this definition is dependent on the treatment of the facility provided by the assessee as a service or otherwise.

8. The learned D.R. also pointed out that a similar issue has already been decided by a Division Bench of this Tribunal in Islamabad in I.T.A. No.194/IB of 1997‑98 etc. and that it has already been held that the facility involved fell within the purview of section 80AA read with section 50 (3A) of the 1979 Ordinance and that the tax should have been deducted on such payment. The learned D.R. further argued that the adjective `mechanical, technical and consultancy' services should be read together to see which class of services is being considered. The learned D.R. referred to the following two cases at this juncture:‑‑

PLD 1961 SC 215 and PLD 1973 Lah. 837.

The learned D.R. further elaborated the managerial services required the presence of somebody with the person to whom services are being provided whereas in consultancy services, the consultant advises somebody and shows how to do something. Thus according to the learned D.R. the remaining services, including the services provided by the assessee‑appellant, fall within the technical services. According to the learned D.R. such services could .not fall within the ambit of industrial or commercial or business profit. The learned DR has filed a copy of extract from Ballantine's Law Dictionary and on page 222 of the same the term `commercial' has been defined in the following manner:‑‑

"Commercial Pertaining to the purchase and sale or exchange of goods and commodities and connoting as well, forms of, and occupation in, business enterprises not involved in trading in merchandise; in a broad sense, embracing every phase of commercial and business activity and intercourse."

It appears that the learned D.R. has filed this definition to .support the contention that the assessee's income did not fall within the term industrial and commercial profit. However, this definition advanced by the learned D.R. read as a whole, defeats such arguments itself. The learned D.R. has also filed an extract from Black's Law Dictionary and at page 263 thereof the term `commerce' has been defined as follows:‑‑

"Commerce. The exchange of goods and services, esp. on a large scale involving transportation between cities, States and nations. "

Obviously this term also includes the exchange of services and admittedly technical services are also services. Hence this definition also does not help the Department.

9. The learned A.R. of the assessee again emphasized that the income of the assessee falls within the ambit of industrial or commercial profit and exempted by Double Tax treaty as the assessee has no permanent establishment in Pakistan. According to the learned A.R. of the assessee, even if the income of the assessee was to be treated as fee for technical services it would be exempt as it would fall within the meaning of industrial and commercial profit as the definition of commerce in Black's Law Dictionary indicates. The learned A.R. of the assessee also distinguishes the cases relied upon by the Assessing Officer. The learned A.R. of the assessee also dilated upon certain other aspects of the law. It was submitted that the provisions of section 80AA of the 1979 Ordinance had a very limited application and it had been so designed that the business expenses cannot be inflated and that the tax rate of 15 % was the remnant of an individual tax rate. Some references were also made to some foreign ruling, which could not impress us to be relevance to the facts of the present case. Another stand taken by the learned A.R. is that the provisions of the Income‑tax Ordinance did no extend beyond the territory of Pakistan and that the Assessing Office could not tax an American Corporation. It is also submitted that the satellite is situated outside Pakistan and thus the income could not be taxed. The learned A.R, of the assessee also cited the following case‑lave at this juncture:‑‑‑

PLD 1958 (SC Ind.) 125, AIR 1998 (SC Ind.) 2330, (1953; WLR 728 and (1977) 108 ITR 335.

The learned D.R. at this juncture objected that the assessee has not produced all the case‑laws at the assessment stage or before the learned Commissioner of Income‑tax (Appeals) for due consideration.

10. The Assessing Officer who appeared to assist this Bench submitted that the Tribunal needed to consider the following three questions:‑‑

(1) Does income arise in Pakistan?

(2) Nature of receipts ‑ is it fee for technical services?

(3) If yes, is it covered by Double Tax treaty as industrial and commercial profit?

According to the Assessing Officer the income does arise in Pakistan as Cyber space of Pakistan is being used. Also it was submitted that the income was being remitted from Pakistan and thus the source of income is in Pakistan. Another argument of the Assessing Officer is that such income can be taxed under the International tax laws and Double Tax treaty.

11. The Assessing Officer emphasized that the income of the assessee falls within the ambit of fee for. technical services, as the services, as defined in the agreement are of highly technical and sophisticated nature: Reference has been made by the Assessing Officer to an order of this Tribunal dated 16‑4‑1999 recorded in I.T.A. No. 155/HQ of 1988‑89. It was also submitted that the assessee was bound to repair or put right any disturbance in the transmission of signals. Reference was again made to the definition of service and technical as already mentioned above. Reference was also made to the decision of the Islamabad Bench already referred to above. The Assessing Officer also referred to certain extracts 'from encyclopedia Britannica on, the subject of technology with reference to time and development stragedy. However, we failed to appreciate the relevance of such extract from encyclopaedia to the facts of the case. The Assessing Officer also pointed out that the Double Tax treaty itself has given a definition of industrial or commercial, profit in para. l(1) of Article II. The Assessing Officer also referred to the following decisions:‑‑

(2001) 251 ITR 53, 2001 PTD (Trib.) 888 and 1998 PTD 291.

12. The learned A.R. of the assessee while concluding his arguments submitted that the case of PTV is not only distinguishable but also he emphasized that proper assistance had not been provided to the Bench at that time. It was pointed out by the learned A.R. of the assessee that the customers of Panam have their own earth station, which are operated to use the facility of the satellite set up by the assessee whereas no earth stations were available in the case of PTV. It was submitted that in the case of PTV, there was only one‑way communication, i.e. PTV was telecasting the programmes received from the satellite and there was no communication back through transponder. Another distinction pointed out by the learned A.R, of the assessee is that there is no Double Tax treaty with the Hong Kong.

13. The learned counsel of the assessee further argued that this Bench of the Tribunal was not bound to follow the earlier decision of the Islamabad Bench and it may come to its own conclusion. The learned counsel has referred to an extract on the topic of `stare decisis' in the Interpretation of Statutes by M. Mahmood, which is reproduced below:‑‑

"Stare decisis"

Interpretation, which has been consistently given by judicial authorities interpretation if not opposed to general principle of law, should not be departed from in absence, of any compelling reason to contrary.

However, the mere fact that some Courts of the country have for few years, adopted a particular interpretation of a legal provision, is, by no mean, a sufficient reason ,for maintaining that interpretation, it is clearly opposed to some general principles. The principle of stare decisis is not applicable to a case where only some of the Courts in a country have taken a particular view and that too for a comparatively short period. The rule of stare decisis is not limited strictly to matters where concrete and tangible rights in immovable property have come into existence or contracts have been entered into; but it also extends to other matters where Courts have taken a particular view in a long line of decisions extending over a long period.

In spite of a Judge's fondness for the written word and his normal inclination to adhere to prior precedents, it is equally important to remember that there is need for flexibility in the application of this rule for law cannot stand still nor can we become mere slaves of precedents. It will thus be seen that the rule of stare decisis does not apply with the same strictness in criminal, fiscal and Constitutional matters where the liberty of the subject is involved or some other grave injustice is likely to occur by strict adherence to the rule.

Principle of stare decisis is not applicable where it is desirable to set it rest conflict of judicial opinion. The rule of stare decisis is the rule of expediency and public policy and is inflexible and will not be applied where injustice is done or injury caused. This rule will also not apply if the language is not ambiguous. It will apply where two interpretations are open and Court having adopted one interpretation it may not depart from it, if it upsets contracts, titles and marriages, etc. " (Emphasis added by appellant).

14. Before considering the other details and the arguments of both the parties, we would like to consider the facts and the decision in the case of I.T:A. No. 194 1999/IB of 1997‑98, decided on 18‑7‑2000 in the case of PTV (supra). In that case the assessee was using a satellite set up by Asia Satellite Telecommunication, Hong Kong and action was taken against the assessee‑appellant (PTV) in that case for failure to deduct tax which attracted the provisions for disallowance of expense. In that case, the PTV was receiving the signals through such satellite transponder for telecast in Pakistan and thus there was only one way facility whereas in the present case it is two ways of receiving as well as remitting the signals. However, in our view this distinction is not significant because the use of transponder is the main facility in both the cases. The learned counsel of the assessee has also tried to distinguish the case with the submission that PTV had no earth station. However, we find that PTV was required to set up and maintain ground station as per Article VI (2) of the agreement between those two parties. Another distinction the learned counsel has tried to make is that Hong Kong has no Double Tax treaty with Pakistan. Again this distinction is not significant to the facts of the case as presently we are primarily concerned with the nature of receipts and the question of exemption under Double Tax Treaty is of consequential effect. In the case of PTV the A.R. of the assessee had emphasized that the receipts of the assessee did not fall within the ambit of fee for technical services. The detailed arguments have been recorded in para. 8 of the order of the Tribunal in the case of PTV. After considering these arguments and the relevant provisions of the law, including the provisions of section 30 of the 1979 Ordinance, the learned Bench of the Tribunal sitting at Islamabad held that the receipts of the assessee fell within the definition of `fee for technical services in the following manner:‑‑‑

"8. In the light of the provisions of the Lease Agreement, reproduced above, it is further argued by Mr. Iqbal Naeem Pasha, Advocate, that AST has not rendered technical services but only received lease rentals from PTV for utilization of its, Transponder the only object of which is the uplifting and down loading through PTV's earth station which targets the signals to the Transponder from where the so‑called 'services' are provided. According to him, this activity does not fall within the definition of the expression 'fee for technical services' which has been explained in section 12(5) of the 1979 Ordinance to mean any consideration (including any lump‑sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of the services of technical or other personal) but does not include consideration for any construction, assembly or like project undertaken by the recipient or consideration which could be income of the recipient chargeable under the head `Salary'. The learned counsel has also referred to the word `technical' defined in the Black's Law Dictionary, Sixth Edition, 1990 at page 1463 to mean `Belonging or peculiar to an art or profession, technical term is frequently called in the books `word of art'. Immaterial, not affection substantial rights, without substance."

" 10. A careful reading of the provisions of section 12(5) of the 1979 Ordinance shows that the fees paid to a non‑resident are deemed to accrue or arise in Pakistan if technical services are utilized in a business or profession carried on in Pakistan or for the purpose of earning any income from any source in Pakistan. The effect of the deeming provisions is to create the fiction of place i.e. declaring an income of a non‑resident from a source in Pakistan as income arising in Pakistan. These provisions cannot be lined with the general provisions of section 11 (1) (b) or section 12 (2) (a) of the Ordinance. Besides, section 30 (2) (b) of the Ordinance treats the fees for technical services as income chargeable under the head 'income from other sources'. In view of these specific provisions of the Ordinance, reference to any business connection etc. for the purpose of classification of income under any other head of income specified in section 15(1) to (e) becomes irrelevant. Besides, tax on income of a non‑resident from fees for technical services is chargeable at the flat rate under section 80AA where any consideration by way of fees for technical services to in the Explanation to subsection (5) of section 12 is received or is deemed to be received or accrues or arise or is deemed to accrue or arise to a non‑resident. This section also overrides other general provisions of the Ordinance because of its non‑obstante clause.

11. The various clauses and provisions of the Transponder Lease Agreement (reproduced in para. 7 of this Order) and the relevant provisions of the Ordinance discussed above show that the income of the non‑resident (AST) received from PTV was by way of fees for technical services rendered by AST. The services so rendered to PTV were technical in nature even by the definition of the word `technical' explained in P. Ramanatha Aiyer's Law Lexicon, 1997 Edition to mean `peculiar to a particular art, science or craft (as) technical skills, technical school or education appropriate or peculiar to or characteristics of a particular art, science, profession or occupation'. We have, therefore, no hesitation in holding that for the purposes of section 12 (5), section 24 (b), section 30 (2), section 50 (3A) and section 80AA of the Ordinance, the payment made to AST was its income by way of fees for technical services which was taxable in Pakistan. The learned CIT (A) was, therefore, justified in maintaining the order of the IAC, Companies Range‑III, Islamabad, who treated. PTV as assessee in default under section 52 for non‑deduction of tax at the time of payment to AST as required under subsection (3A) of section 50 of the Ordinance."

15. In that case the agreement was for the transponder lease whereas in the present case the agreement uses the term `services': Still the learned Bench of the Tribunal in that case considered the payments received by Asia Sat to be in the nature of fee for technical services. In the opening part of para. 11 of the same order, the learned Bench has referred to the various provisions of the transponder lease agreement to arrive at the conclusion that the income received by the assessee was by way of fee for technical services. A perusal of such extract of the agreement do not clearly show as to how such income can be treated as fee for technical services. All along, the agreement has used the terms `lease' and `rental'. Asia Sat has been described by the term `lessor' and PTV has described by the term 'customer'... In these circumstances we find force in the arguments of the learned counsel of the assessee before us that the Bench was not provided proper assistance. Nevertheless, we feel that the facts and circumstances of these two cases are not substantially distinguishable to enable us to distinguish the finding. Hence, we are inclined to consider the proposal of the learned counsel of the assessee with regard to the principle of stare decisis as already reproduced above in para. 13 of this order. This principle is applicable where an interpretation has been consistently given by judicial authority if the same is not opposed to general principle of law. In the present case it is a question of consideration of the nature of receipts in consideration for use of satellite/transponder set up by a foreign company, receipts being from Pakistani customers. The contention of the department is that such payments are in the nature of fee for technical services and such contention has been accepted by the Division Bench of the Tribunal in the case of PTV. No other decision of any appellate jurisdiction. in Pakistan has been brought to our attention on this issue. We also feel that the decision in the case of PTV does not elaborate as to how the‑rental receipts for the use of transponder could be treated as fee for technical services. Hence, we feel that this Bench is entitled to form its own opinion on this issue irrespective of the decision given by the Islamabad Bench in the case of PTV. Hence with all the due respect to the Islamabad Bench of the Tribunal, instead of following the ratio settled in the case of PTV, we proceed to examine the facts and arguments of this case independently to come to our own conclusion, which may or may not be in agreement with the decision of the Islamabad Bench. It may also be mentioned that a reference has already been made to the Hon'ble Lahore High Court, Rawalpindi Bench in that case.

16. Next we would like to deal with certain objections and arguments of the parties, which are not found to be significant or relevant to the present appeal. The learned counsel of the assessee. has raised a preliminary objection that the assessee could not be taxed in Pakistan since the assessee is a US Corporation and the application of Income‑tax Ordinance could not be extended beyond the territory of Pakistan. We find such objection of the learned counsel of the assessee to be naive and frivolous. Certainly there are provisions in the 1979 Ordinance enabling an Assessing Officer, sitting in Pakistan, to tax a non-resident and we need not to dilate any further of this objection. Another objection of the learned counsel of the assessee is that even if the income of the assessee is held to be in the nature of fee for technical services, the same would fall within the ambit of industrial and commercial profits. Again we are not inclined to agree with the such proposal as section 30 of the 1979 Ordinance specifically lays down that the fee for technical services shall be taxed as income from other sources. Even otherwise the provisions of section 80AA and section 12(5) of the 1979 Ordinance do prevail in any such cases. This will also answer the third question proposed by the Assessing Officer as noted in para. 10 above. Next we propose to deal with the other two questions of the Assessing Officer as noted in para. 10 above. First question is not properly supported by the Assessing Officer. The terms "cyber space" is really not defined or mentioned in the 1979 Ordinance. In any case there may be various signals passing through Pakistan space which are not destined in Pakistan and used by the parties in two different countries not related to Pakistan. Thus the main question before this Bench is whether the receipts of this assessee‑Corporation are in the nature of fee for technical services.

17. One of the main contentions of the Revenue for treating such income as fee for technical services is that the agreement between Panamsat and its customers in Pakistan itself describes the agreement to be digital service agreement and it uses the term "services" again and again. In para. 3. of the agreement the quantum of service fee has been given. As already discussed above, in the case of PTV the agreement was for the lease of transponder whereas in the present case it is described as agreement for service. We feel that we need to closely exa?mine the true nature of the consideration for the payments received by the assessee‑appellant in the present case. The definition of `services' as given in Black's Law Dictionary as has already been given in para. 7 of this order above, simply says that it is the act of doing something useful for a person or company for a fee. As already said above the assessee-?appellant has set up the satellite in the space and has allocated certain transponders for use of its customers for transmission and retrieved of signals. The assessee is receiving certain fees from its customers. The question arises: is the assessee providing any service to its customer?

18. In order to resolve this question one may look at some parallel or analogous situation. One situation, which may not be so highly advance or technical, that comes to one's mind is that of set up of the telephone exchange by the Telecommunication Companies and providing the lines of telephones. Or to consider a more advance and sophisticated instance, one may consider the facility set up by the Mobile phone companies. The Mobile phone companies allow the mobile telephone holders, on payment of certain consideration, the use of such facility to communicate with each other or with the other telephone subscribers. All these facilities or services are of technical nature of lesser or more advanced technology. Certainly providing of such facility is not earning fee for technical services, as they are not passing on any technical know?-how or knowledge to their customers. In fact, the case of a mobile telephone company recently came up before Madras High Court of India. In this case, reported as (2001) 251 ITR 53, the Hon'ble Judges of High Court have held that mere collection of a fee for use of a standard facility provided to all those willing to pay for it does not amount to the fee having been received for technical services. We are inclined to agree with the finding of the Madras High Court on this issue. Hence, we hold that the fees for use of transponder do not fall within the meaning of "fee for technical services".

19. Since the assessee has set up a satellite in the space to earn income, the obvious conclusion is that the fees‑received by it can be termed as commercial profit:

20. In view of the above discussions, the appeal of the assessee is allowed and orders of the department officials are cancelled.

C.M.A./M.A.K./400/Tax(Trib.)??????????

Appeal allowed.