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TMI Blog2010 (4) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee company unless the ownership rights in the software in question vested in it - A perusal of the agreement between the appellant and Cine + Media Services would show that the equipment for shooting the film was brought from Germany and the appellant company was made responsible for customs clearance for bringing the equipment in and taking it out. Under this agreement also, a fixed sum stated in terms of article 4 of the agreement was to be paid to the appellant and it was foreign client which was to bring the equipment to India for the purpose of shooting. – deduction is not allowable – decided in favor of revenue against the assessee - 484/2010 - - - Dated:- 19-4-2010 - Mr. Badar Durrez Ahmed and Mr. V.K. Jain, JJ. For the Appellant: Mr M.S.Syali, Sr.Advocate with Mr.M.P.Rastogi Mr K.N.Ahuja For the Respondent: Mr Sanjeev Sabharwal JUDGEMENT V.K. JAIN, J. This appeal was filed against the order of the Income Tax Appellate Tribunal dated 23.3.2009 in ITA No. 159/Del/07 for the A.Y. 2003-2004 and ITA No.555/Del/06 for the A.Y.2002-2003, whereby the appeals filed by the Revenue were allowed and the orders passed by CIT(A) were set aside. We ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anded over to them in India, which did not involve any export or transfer of film software. 5. Section 80 HHF of the Act, to the extent it is relevant, provides that where an assessee is engaged in the business of export or transfer, by any means, out of India, of any film software, television software, music software, television news software, including telecast rights, the deductions specified in the Section will be allowed, while computing the total income of the assessee. Therefore, the only question relevant to these appeals is as to whether the appellant company was engaged in the business of export or transfer, out of India, of any film software, television software, etc. during the assessment years in question. The export or transfer of prescribed software can, however, be by any means, so long as it constitutes export or transfer out of India. 6. A copy of the agreement of the assessee with Italgest Video SRL was filed before the Tribunal and it was stated that the agreements entered into by the assessee with the foreign clients are similar. 7. While returning a finding of fact in favour of the Revenue, the Tribunal, inter alia, noted as under: "8.2. The resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch were handed over to the agents of the customers in India. The expenses were incurred on behalf of the clients and no proprietary right got vested in the assessee. Although the assessee was required to render satisfactory services, the risk and reward remained with the clients. The handing over negatives in India neither involved export nor transfer by any means, outside India .. ... ............ In the instant case there has been no sale of the film software off the shelf. That is also not the case of the assessee. It is a case where certain services were rendered to foreign clients for shooting films in India, and the negatives were handed over to them in India. The services may involve the use of assessee's expertise in the process of production. We have already seen that this activity neither involves export nor transfer of film software by any means outside India by the assessee and everything was handed to the clients in India 8.5. The invoices produced by the assessee show nil value. We are of the view that this fact goes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeds derived from the production services, including the results and proceeds of the services rendered by the appellant. (viii) It was the producer Italgest Video SRL who owned all rights, including proceeds, all insurance policies in respect of the film and the insurance policies were subject to approval by it. 10. We also note that, as pointed out to the Tribunal, the Profit and Loss Account of the assessee company did not show any purchase or sale and Schedule of its Assets did not contain any equipment for manufacture of a software. 11. The first pre-requisite condition, for export or transfer out of India, of the prescribed software by an assessee is that the ownership or title in the software claimed to have been exported or transferred out of India must necessarily have vested in him. There could not have been any export or transfer, by the assessee company unless the ownership rights in the software in question vested in it. In the present case, the film was produced by Italgest Video SRL and not by the appellant. In terms of clause 7 of the agreement, it was the foreign client and not the appellant which owned the software that came to be developed as a result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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