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2007 Supreme(Mad) 24
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE P.D. DINAKARAN & THE HONOURABLE MRS. JUSTICE CHITRA VENKATARAMAN
Commissioner of Income Tax, Chennai
Versus
R. Rajinikanth & Another
Tax Case (Appeal) Nos.2691 of 2006 and 2692 of 2006
Decided On : 02-01-2007
For the Appellant:J. Narayanaswamy, Advocate. For the Respondents: --
Exporting the right for exhibition of positive print constitutes sale of goods or merchandise, satisfying the conditions under Section 80HHC for tax deduction.
Headnote:
Tax Deduction - Export of Film Prints - Interpretation of Section 80HHC
Fact of the Case:
The Revenue appealed against the allowance of deduction under Section 80HHC for export of film prints by the assessees. The assessing officer withdrew the deduction based on the interpretation that the sale of rights does not constitute export of goods.
Finding of the Court:
The Court relied on previous decisions and held that exporting the right for exhibition of positive print constitutes sale of goods or merchandise, satisfying the conditions under Section 80HHC and entitling the assessee for the deduction.
Issues: The substantial questions of law raised were related to the treatment of transfer of rights to exhibit films as a sale of goods for the purpose of deduction under Section 80HHC, and the eligibility of a transaction for transfer of exploitation rights entered into in India for the benefit of sec.80HHC only because the consideration was received in foreign exchange.
Ratio Decidendi: The Court applied the principle laid down by the Apex Court in Tata Consultancy Services Vs. State of Andhra Pradesh and held that exporting the right for exhibition of positive print is nothing but sale of goods or merchandise, satisfying the conditions under Section 80HHC.
Final Decision: The Court dismissed the tax case appeals, citing the settled proposition of law and the previous decisions. No costs were awarded.
P.D. Dinakaran, J.
The above tax case appeals are directed against the common order of the Income-tax Appellate Tribunal in I.T.A. No.1629 and 1628/Mds/2002 dated 15. 2006.
2. The Revenue is the appellant. During the relevant assessment years, viz., 1994-95 and 1998-99, the respective assessees claimed deduction under Section 80 HHC in respect of export of film prints to foreign enterprises. Initially, the claim of the assessees was allowed, but on re-opening the assessment, the assessing officer withdrew the deduction on the basis of the order of the Tribunal that the sale of rights does not mean that goods have been exported out of India. Against the said orders of the assessing officer, the assessees preferred appeals before the Commissioner of Income-tax (Appeals), who allowed the appeals, against which, the Revenue filed appeals before the Income-tax Appellate Tribunal and the Tribunal also held the issue in favour of the assessee. Hence, the present tax case appeals by the Revenue raising the following common substantial questions of law:
"1. Whether in the facts and circumstances of the case, the Tribunal was right in treating the transfer of the right to exhibit the films, as a sale of goods or merchandise for the purpose of deduction under section 80 HHC?
2. Whether in the facts and circumstances of the case, a transaction for transfer of exploitation rights, entered into in India can be eligible for the benefit of sec.80HHC only because the consideration was received in foreign exchange?"
3. Mr.J.Narayanaswamy, learned standing counsel appearing for the Revenue, fairly submits that the issues raised in the above questions of law are squarely covered against the Revenue by the decision of this Court in Commissioner of Income-Tax V.
V.C. Kuganathan dated 310. 2006 (T.C.Nos.224 of 2003, etc. batch).
4. In the said decision, this Court, agreeing with the views taken by the Bombay High Court in Abdulgafar A.Nadiadwala Vs. Dy.CIT [(2004) 267 I.T.R. 488], as well as applying the principle laid down by the Apex Court in Tata Consultancy Services Vs. State of Andhra Pradesh (271 ITR 401), with regard to considering the scope of the word "goods", while observing that exporting the right for exhibition of positive print is nothing but sale of goods or merchandise, held that the assessee therein had satisfied the conditions contemplated under Section 80HHC of the Act and hence, entitled for the deduction under Section 80HHC of the Act.
5. In view of the above settled proposition of law, we do not see any merit in the above tax case appeals and hence, the same are dismissed. No costs. Consequently, M.P.No.1 of 2006 in T.C.(A) No.2691 of 2006 is also dismissed.
