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TMI Blog2012 (8) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in beta-cam tapes are 'goods' or 'merchandise' and, hence, entitled to deduction under section 10B - IT APPEAL NOS. 5867 & 6187 (MUM.) OF 2004 - - - Dated:- 16-5-2012 - D.K. AGARWAL, RAJENDRA, JJ. Madhur Agarwal for the Appellant. Ms. Rupinder Brar for the Respondent. ORDER Rajendra, Accountant Member Cross Appeals have been filed by the Assessee and the Revenue for the Assessment Year 2001-02 challenging the order dt. 18-06-2004 of CIT(A)-XI, Mumbai. Grounds of appeal filed by the Revenue read as under: "On the facts and in the circumstances of the case and in law, the learned that CIT(A)-XI, Mumbai has erred in directing the Assessing Officer to allow the assessee's claim for exemption of income of Rs. 4,54,57,270/- u/s. 10B(4) of the I.T. Act, 1961." "On the facts and in the circumstances of the case and in law, the learned that CIT(A)-XI, Mumbai has erred in allowing the assessee's claim for deduction u/s. 80HHF of Rs. 3,06,754/- in addition to treating the sum of Rs. 4,54,57,270/- as exemption u/s. 10B of the I.T. Act by applying the provisions of Section 80HHC to the export turnover of Rs. 21,18,63,506/-." 2. Claim for deduction u/s. 10B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4,54,57,270/- as worked out by the appellant deserves to be allowed. The appellant gets relief of Rs. 4,54,57,270/-." 4. Before us, DR submitted that contents of exported beta-cam tape could not be termed manufacturing, that no new thing was produced or exported by the assessee that the assessee was not entitled for deduction u/s.10B of the Act. Authorised Representative (AR) of the assessee submitted the Hon'ble High Court of Bombay in the case of Abdulgafar A. Nadiadwala v. Asstt. CIT [2004] 267 ITR 488/137 Taxman 112 has held that the assessee was entitled to deduction u/s. 80HHC in respect of export of beta-cam tapes of films to a satellite television channel under an agreement for transfer of telecasting rights, that the beta-cam tape, which had incorporeal rights is goods or merchandise, that the transaction in question involved export of goods out of India, that there was sale involving clearing at the custom station. 5. After hearing both the parties we are of the opinion that decision of the CIT(A) should be upheld. Besides the decision of Hon'ble jurisdictional High Court, same issue was also considered by the Hon'ble High Court of Madras in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue. Ground No. 3 is decided against the Revenue. Appeal filed by the Revenue is partly allowed. ITA No. 5867Mum/2004 9. In the appeal filed by the assessee, following are the Grounds of Appeal: "The learned Commissioner of Income Tax (Appeals) ["CIT(A)"] has erred in reducing profit of Rs. 4,54,57,270/- derived by Export Oriented Unit ('EOU") of the appellant while computing profit eligible for deduction u/s. 80HHF of the Act on the ground that the profit derived by EOU is exempt from tax u/s. 10B". "The learned CIT (A has erred in confirming the action of assessing officer of computing the deduction u/s. 80HHF of the Act by treating, Media content software business i.e., sale of telecasting rights sponsored telecast business i.e., sale of time slot on Doordarshan as composite business activities thereby including the turnover of sponsored telecast business in total turnover while computing the deduction u/s. 80HHF of the Act". 10. Grounds No. 1 is the result of the observations made by the CIT(A) in his Order at pg.7, that reads as under: " . Deduction u/s. 80HHF of I.T. Act must be allowed in accordance with Sec. 80HHF(3) on the entire profits of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith allowable deduction and extent of deduction. Sub-Sec. (2) is about period and receipt of consideration in convertible foreign exchange. Sub-Sec. (3) defines profits derived from the business. Sub-Sec. (4) stipulates condition of furnishing of a report for claiming the deduction. Sub-Sec. (5) and 6 are about certain restrictions in allowing the deductions. Sub-Section (5) reads as under: Where a deduction under this section is claimed and allowed in respect of profits of the business referred to in sub-section (1) for any assessment year, no deduction shall be allowed in relation to such profits under any other provision of this Act for the same or any other assessment year. 12.1 Similar kind of prohibition we find in sub-section 6(iii) of Section 10B of the Act also. Said section reads as under: "Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of the relevant assessment years ending before the 1st day of April 2001, or of any previous year, relevant to any subsequent assessment year,- ( iii ) no deduction s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the assessment has sought to be reopened is belied by a plain reading of the provision. The Assessing Officer was plainly in error in proceeding on the basis that because the income is exempted, the loss was not allowable. All the four units of the assessee were eligible under section 10B. Three units had returned a profit during the course of the assessment year, while the Crab Stick unit had returned a loss. The assessee was entitled to a deduction in respect of the profits of the three eligible units while the loss sustained by the fourth unit could be set off against the normal business income. In these circumstances, the basis on which the assessment is sought to be reopened is contrary to the plain language of section 10B." Clearly, facts and issue dealt by the Hon'ble High Court were totally different from the facts and issues of the case under consideration. We have clarified that though the Sec. 10B is part of Chapter III, yet it is about deductions and not about exemptions. After perusing the provisions of Sections 10B and 80HHF, we have arrived at a conscious decision that decision of the CIT(A) was as per law. Secondly, before us issue was not setting off of loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r provisions of Chapter VI-A under the heading C, whereas, section 80-IA(9A) provides that the deduction allowed under section 80-IA(1) shall not be allowed under any other provisions of Chapter VI-A under heading C. Similarly, in section 80-IC(5), the words used are that notwithstanding anything contained in any other provision of the Act, in computing the total income of the assessee, no deduction shall be allowed under any other section contained in Chapter VI-A or section 10A or section 10B in relation to the profits and gains of the undertaking. Thus, the Legislature has used specific words whenever it intended to affect the computation of deduction." We are of the opinion that the express intention of the legislature with regard to sections 10B6(iii) and 80HHF was not to allow deduction under both the sections. In short, cases relied upon by the AR are of no help to resolve the issue under consideration. Ground No. 1 is decided against the assessee. 13. Next Ground is about treating media content software business and sale of time slot as composite business. AR fairly admitted that the issue was decided against him vide ITAT Order dt. 22-09-2010, in case of Sri Adhik ..... X X X X Extracts X X X X X X X X Extracts X X X X
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