I had prepared this reply for one of the clients: Hope it helps.
Sec 194J says that “technical services” shall have the same meaning as given in Explanation 2 to Sec9 (1)(vii) of the Income Tax Act.
Explanation 2 to Sec 9(1) (vii) says:
“Fees for technical services” means any consideration for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head Salaries.
Under Companies act, Director is treated as a managerial personnel and he is not employee of the company.
As per clause (13) of section 2 of the Companies Act, 1956, "director" includes any person occupying the position of director, by whatever name called. Further, clause (24) to section 2 of the said Act, "manager" means an individual (not being the managing agent) who, subject to the superintendence, control and direction of the Board of directors, has the management of the whole, or substantially the whole, of the affairs of a company, and includes a director or any other person occupying the position of a manager, by whatever name called and whether under a contract of service or not;
Further sitting fees cannot be treated as salary as there is no employer - employee relationship. Hence the sitting fees paid to Directors cannot be subjected to section 192.
From the above facts it can be concluded that, a Director is also a manager under the provisions of Companies Act, 1956. And hence, sitting fees paid to such directors shall be subject to Section 194J.