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TMI Blog2006 (1) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... t of foreign exchange earning from Yashraj Films International Limited, UK relating to export of DVD, VCD and VHS rights of film Prem Rog . When the assessee was called upon to furnish the mode of transport and certificate from telecasting authority along with the extract of log book , it was pointed out that the deduction has been claimed in respect of transfer of DVD/VCD rights and as such the information requisitioned is not relevant for the purpose of this claim of deduction. The assessee also filed a confirmation from Yashraj Films International Limited, UK (YFIL) to the effect that VHS cassette in respect of the film Prem Rog was, in terms of agreement dated 19-8-1999, was transferred to us ( i.e., YFIL), under our instructions and on your (the assessee s) behalf by Yashraj Films Private Limited by courier . The Assessing Officer noted that the assessee did not produce any evidence for the actual exports. The Assessing Officer then referred to Hon ble Bombay High Court s judgment in the case of Abdulgafar A. Nadiadwala v. Asstt. CIT [2004] 267 ITR 488 1 in support of his stand that in order to claim a deduction under section 80HHF, the evidence of export or transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to in sub-section (1A),] derived by the assessee from such business. [(1A) For the purposes of sub-section (1), the extent of deduction of profits shall be an amount equal to ( i )eighty per cent of such profits for an assessment year beginning on the 1st day of April, 2001; ( ii )seventy per cent thereof for an assessment year beginning on the 1st day of April, 2002; ( iii )fifty per cent thereof for an assessment year beginning on the 1st day of April, 2003; ( iv )thirty per cent thereof for an assessment year beginning on the 1st day of April, 2004,] and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year. (2) The deduction specified in sub-section (1) shall be allowed only if the consideration in respect of the software or software rights referred to in that sub-section is received in, or brought into, India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous year or within such further period as the competent authority may allow in this behalf. (3) For the purposes of sub-section (1), profits derived from the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es series of sounds or music recorded on magnetic tape, cassette, compact discs and digital media which can be played or reproduced on any appropriate apparatus; ( f )"profits of the business" means the profits of the business as computed under the head "Profits and gains of business or profession" as reduced by (A)ninety per cent of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and (B)the profits of any branch, office, warehouse or any other establishment of the assessee situated outside India; ( g )"telecast rights" means a licence or contract to exhibit motion pictures or television programmes over a television network either through terrestrial transmission or through a satellite broadcast in a specified territory; ( h )"television news software" means a collection of sounds and images, reportage, data and voice of actualities broadcast either through terrestrial transmission, wire or satellite, live or pre-recorded on video cassettes or digital media; ( i )"television software" means any programme or series of sounds and images recorded on film or tape or digital media or br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or software rights referred to in that sub-section is received in, or brought into India, by the assessee in convertible foreign exchange, within a period of six months from the end of the previous year or within such further period as the competent authority may allow in this behalf. It thus follows that when an assessee "exports or transfers", inter alia such television software rights including VCD, DVD and VHS rights, "by any means out of India", and when the consideration in respect of the same is received, within stipulated time, in convertible foreign exchange, the same is eligible for deduction under section 80HHF of the Act. 7. It is important to bear in mind that for eligiblity for deduction under section 80HHF, it is not necessary precondition that television software per se is to be exported or transferred by any means out of India but consideration on transfer of rights in respect of the television software will also qualify, subject to fulfilment of other conditions, for deduction under section 80HHF. This is a significant departure from the scheme of sections 80HHC and 80HHE in which transfer of rights is not specifically included. Section 80HHC require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r ( i.e., the assessee) will get 85 per cent of surplus amount. This agreement also casts a duty on the YRFIL to send a quarterly business statement, and to remit the dues, in convertible foreign exchange, as may become payable to the producer under the said agreement. It is thus not in doubt that there was a transfer of software rights to the Yash Raj Films International Limited, UK, and that the amount in question was received in consideration of transfer of such rights. The question of export of transfer out of India of the television software per se is, therefore, not at all relevant. We have taken note of the fact that, as provided in residual clause 12 of the agreement, "all other terms in trade practice are applicable". We have also taken note of assessee s uncontroverted stand that the normal practice in the export of these rights is that the beta tape is handed over to the representative of the buyer of television software rights, and that, in the present case, Yash Raj Films International Limited of UK has categorically confirmed that the assessee had handed over the said tape to their representative in India, namely, Yash Raj Films Private Limited, and that, subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the Assessing Officer to delete the impugned disallowance of deduction under section 80HHF. The assessee gets relief accordingly. 10. Before parting with the matter, we may also mention that, during the course of hearing, our attention was also invited to certain other orders passed by the same Commissioner (Appeals), on materially identical facts, in which the conclusions arrived at by him were diametrically opposed to the conclusions arrived at in this case. It is also pointed out that these earlier decisions have been ignored by the Commissioner (Appeals). Having decided the issue in appeal on merits and in favour of the assessee, however, we see no need to deal with those orders or to even examine whether material facts were indeed the same as in this case. It is certainly desirable that the appellate authorities maintain consistency in their approach, and that the appellate authorities, without placing on record cogent reasons to do so, do not deviate from the conclusions arrived at in other similar cases at least on purely legal issues. We need not go any further into the matter and beyond making these general observations. 11. The appeal is allowed. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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