2008 (9) TMI 489 - HC - Income Tax

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 80HHC? - in respect of other assessee on the very issue in the case of CIT v. A. V. M. Production a Division Bench of this court has held in favour of the assessee to the effect that the assessee is entitled to deduction under section 80HHC in regard to export of one print of a film for exhibition outside India. So it is held that assessee is entitled to special deduction

Summary

Issues:
1. Interpretation of the term "sale of goods or merchandise" under section 80HHC of the Income-tax Act, 1961.
2. Eligibility for the benefit of section 80HHC based on the receipt of consideration in foreign exchange for the transfer of exploitation rights.

Analysis:
1. The Revenue filed appeals challenging the orders of the Income-tax Appellate Tribunal regarding the treatment of the transfer of film exhibition rights as a sale of goods for deduction under section 80HHC. The assessee assigned overseas film rights and claimed benefits under section 80HHC. The Assessing Officer disallowed the claim, stating that no sale of goods occurred as only rights to exhibit films were assigned for a limited period. The Commissioner of Income-tax (Appeals) dismissed the appeals for certain years but remanded the case for verification of foreign exchange receipt timing for another year. The Tribunal, relying on previous decisions, allowed the appeals filed by the assessee and dismissed the Revenue's appeal.

2. The court considered previous judgments related to similar issues, including the assessee's case and other related cases. The court noted that the Tribunal's decision in the assessee's previous case had been upheld by the court, and another Division Bench had ruled in favor of the assessee regarding deductions under section 80HHC for film exports. Following these precedents, the court dismissed the appeals in question.

This judgment clarifies the interpretation of the term "sale of goods or merchandise" under section 80HHC and establishes that the transfer of exploitation rights, when considered in light of foreign exchange receipts, can be eligible for the benefit of section 80HHC. The court's decision was based on consistent application of legal principles and precedents, ensuring uniformity in tax law interpretation.