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TMI Blog2007 (6) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... goods or merchandise for the purpose of deduction under section 8OHHC of the Income-tax Act, 1961 ?" 2. The Revenue is the appellant. The relevant assessment years are 1994-95 to 1997-98. The assessee is a company engaged in the business of export of Digital Audio Tape Master (DAT Master) containing the recorded version film songs from Tamil feature films for exploitation overseas and the assessee claimed deduction under section 8OHHC of the Income-tax Act ' (for brevity, "the Act"). The Assessing Officer disallowed the claim of the deduction under section 80HHC of the Act on the ground that the exploitation rights in the film songs and music in feature films to overseas assignee would not constitute export of goods for the purpose of deduction under section 8OHHC of the Act. 3. On appeals by the assessee, the Commissioner of Income-tax (Appeals) allowed the appeals directing the Assessing Officer to allow deduction under section 8OHHC of the Act. 4. On further appeals by the Revenue, the Tribunal following the decision of the Bombay High Court in Abdulgafar A. Nadiadwala v. Asst. CIT [2004] 267 ITR 488 allowed the appeals in favour of the assessee. Hence the present appeals. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Reserve Bank of India. Explanation 2.-For the removal of doubts, it is hereby declared that where any goods or merchandise are transferred by an assessee to a branch, office, warehouse or any other establishment of the assessee situate outside India and such goods or merchandise are sold from such branch, office, warehouse or establishment, then, such transfer shall be deemed to be export out of India of such goods and merchandise and the value of such goods or merchandise declared in the shipping bill or bill of export as referred to in sub-section (1) of section 50 of the Customs Act, 1962 (52 of 1962), shall, for the purposes of this section, be deemed to be the sale proceeds thereof. (3) For the purposes of sub-section (1),- (a) where the export out of India is of goods or merchandise manufactured or processed by the assessee, the profits derived from such export shall be the amount which bears to the profits of the business, the same proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee; (b) where the export out of India is of trading goods, the profits derived from such export shall be the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove that,- (a) he had an option to choose either the duty drawback or the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme; and (b) the rate of drawback credit attributable to the customs duty was higher than the rate of credit allowable under the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme: Provided also that in the case of an assessee having export turnover exceeding rupees ten crores during the previous year, the profits computed under clause (a) or clause (b) or clause (c) of this sub-section or after giving effect to the first proviso, as the case may be, shall be further increased by the amount which bears to ninety per cent. of any sum referred to in clause (iiie) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee, if the assessee has necessary and sufficient evidence to prove that,- (a) he had an option to choose either the duty drawback or the Duty Free Replenishment Certificate, being the Duty Remission Scheme; and (b) the rate of drawback credit attributable to the customs duty was higher than the rate of credit allowance under the duty Free Repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he deduction under sub-section (1A) shall not be admissible tent unless the supporting manufacturer furnishes in the prescribed form along with his return of income,- (a) the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed on the basis of the profits of the supporting out manufacturer in respect of his sale of goods or merchandise to the Export House or Trading House; and (b) a certificate from the Export House or Trading House containing such particulars as may be prescribed and verified in the manner prescribed that in respect of the export turnover mentioned ling in the certificate, the Export House or Trading House has not claimed the deduction under this section: Provided that the certificate specified in clause (b) shall be duly certified by the auditor auditing the accounts of the Export House or Trading House under the provisions of this Act or under any other law. (4B) For the purposes of computing the total income under sub or section (1) or sub-section (1A), any income not charged to tax under this Act shall be excluded. Explanation.-For the purposes of this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Trading House for the purposes of export." 8. The provisions of the Act do not define the word "goods" or "merchandise". Hence, a reference to the meaning of "goods" and "merchandise" as can be inferred from the law settled so far would be a guiding factor to decide the case on hand. 9. The larger Bench of the apex court in Tata Consultancy Services v. State of Andhra Pradesh [2004] 271 ITR 401; [2005] 1 SCC 308 while testing whether the property involved in a transaction is "goods" for the purposes of sales tax, held as under : "The term 'goods' includes all types of movable properties, whether those properties be tangible or intangible. In India the test to determine whether a property is 'goods' for the purpose of sales tax, is not whether the property is tangible or intangible or incorporeal. The test is whether the item concerned is capable of abstraction, consumption and use and whether it can be transmitted, transferred, delivered, stored, possessed, etc. The intellectual property, once it is put on to a medium, whether it be in the form of books or canvas or computer discs or cassettes, and marked would become 'goods'. A software program may consist of various command ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsmitted, transferred, delivered, stored and possessed. 13 The above finding that the property involved is "goods" is fortified with the decision of this court in CIT v. Superstar Music [2007 291 ITR 8. Accordingly, we have no hesitation to hold that the assessee is entitled to deduction under section 80HHC of the Act. 14 Alternatively, it is contended by Mrs. Pushya Sitaraman, learned senior standing counsel for the Revenue that the deduction could be claimed by the assessee only under section 8OHHF of the Act, but not under section 8OHHC; and that since section 8OHHF of the Act providing deduction in respect of profits and gains from export or transfer of any film software, television software, music software, television news software, including telecast rights was inserted by the Finance Act, 1999, with effect from April 1, 2000, the assessee is not entitled to deduction even under section 8OHHF of the Act for the assessment years 1994-95 to 1997-98. 15 A contention made in the above lines, was carefully considered by the Division Bench of the Bombay High Court in Abdulgafar A. Nadiadwala v. Asst. CIT [2004] 267 ITR 488 and rejected. 16 Moreover, in view of ..... 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