2008 (3) TMI 311 - HC - Income Tax

Transfer of rights for manufacture of cassettes outside India as export of goods eligible for deduction under section 80HHC for the assessment years 1996-97, 1997-98, 1998-99, 1999-2000, 2000-01 and 2001-02, when the relief for the same is available under section 80HHF only from the assessment year 2000-01

Summary

Issues:
1. Interpretation of deduction under section 80HHC for the assessment years 1996-97 to 2001-02.
2. Whether the export of cassettes can be equated with export of goods for the purpose of section 80HHC.

Analysis:

Issue 1: Interpretation of deduction under section 80HHC
The case involved the assessee, a limited company engaged in various business activities, including production and exploitation of motion pictures, printing and processing of films, and generation of power through wind mills. The Assessing Officer disallowed the deduction under section 80HHC based on the absence of export sales. The Commissioner of Income-tax (Appeals) upheld this decision. However, the Income-tax Appellate Tribunal ruled in favor of the assessee, citing a judgment of the Bombay High Court. The Revenue challenged this decision, questioning the treatment of the transfer of rights for manufacturing cassettes outside India as export of goods eligible for deduction under section 80HHC. The Tribunal dismissed the appeal, highlighting previous judgments that supported the assessee's position. The court, following precedent, held that there was no substantial question of law in the case and dismissed the appeals along with connected miscellaneous petitions.

Issue 2: Equating export of cassettes with export of goods
The Revenue argued that previous judgments in cases involving the production and export of recorded CDs outside India had allowed the benefit of section 80HHC. Citing specific cases, the Revenue contended that the assessee should also be entitled to the deduction under section 80HHC. The court, in line with its previous decisions, dismissed the appeals, emphasizing that there was no substantial question of law involved. Consequently, the connected miscellaneous petitions were also dismissed.

In conclusion, the High Court of Madras upheld the Tribunal's decision in favor of the assessee regarding the deduction under section 80HHC for the assessment years in question. The court emphasized the consistency of its rulings in similar cases and found no substantial question of law to entertain the appeals.