TaxTMI 
TaxTMI 
2010 (4) TMI 42
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....ground that it was engaged in the business of transfer, by any means, out of India, of film software, television software, music software, television news software, including telecast rights. The appellant did not produce its agreement with the foreign party, for production of film, before the Assessing Officer. For the A.Y.2002-2003, the Assessing Officer, after considering the reply submitted by the appellant to the show-cause notice, found that the assessee was providing services such as arrangement of raw material, engaging technicians, hiring equipments, etc., the film was shot by foreigners who brought their own equipments such as camera, motion picture stock and took the same back while leaving India and, therefore, deduction under Section 80 HHF was not available to it. The Assessing Officer for the A.Y.2003-2004 also disallowed the benefit of Section 80 HHF to the appellant on the ground that the assessee was only a service provider and was not involved in the export of film software, nothing had been exported out of India by the assessee and it was not the producer of software, since shooting of the film was done entirely by the foreign parties who produced the film with ....
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....lready been mentioned that the film had to be handed over to the agent of Italgist in India, who would carry it to a place outside India and exhibit after receiving approval from the Indian Embassy. The agreement, to our mind is one of providing assistance in shooting the films and ultimately does not lead to transfer of any film or software from the assessee to the Italgist Video. There was no provision that the assessee will be responsible for losses in case the negative was not found satisfactory by Italgist Video. Thus, the agreement cannot be said to be one for transfer of film software by any means outside India by the assessee to Italgist Video. 8.3. Coming to the agreement with Sign + Media Service Gm BH and Company, the obligations of the assessee are contained in paragraph 3, which reads as under: "Article 3: Obligations of Kas KAS as a party hereto commissions hereto CP as the other party hereto with the complete organization for this film production to theextent to such activities are carried out of India. Resposible Executive - Producer of these three documentaries in India is Ms. Aruna Har Prasad & Kalyan Mukherjee from KAS. Ms. Aruna Har Prasad & Kalyan Mukh....
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....assessee and it was the case of sending or transmitting of the film software by the client from India to a place outside India with no transactional value. Further, mere allotment of IEC does not ipso-facto leads to the conclusion that the assessee transferred software outside India. This issue has to be decided on the basis of agreement between the assessee and the client.............................................................................. 8.6. In a nut-shell, it is held that the instance case is one of rendering multi-farious services for production of films by foreign companies in India and handing over the negatives to them in India. This does not involve export or transfer outside India by any means of any film software by the assessee..............." 8. We have examined the matter with reference to two agreements filed by the appellant and entered into between the appellant and the foreign clients. 9. The following facts emerge from a perusal of the agreement entered into between the appellant and Italgest Video SRL: (i) It is Italgest Video SRL and not the appellant Kas Movie Makers which is the producer of the film. (ii) The appellant was required to....
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....no right, title or authority to transfer it to any person. Thus, though the film was shot with the help of the assessee, it was not owned by it and, therefore, there could be no export or transfer of the film by the appellant outside India, the ownership of the film being the sine qua non for its export or transfer by the appellant. 12. The terms and conditions of the agreement show that no sale price for the film in question was fixed. The insurance policies under clause 9 of the agreement were owned by Italgest Video SRL and in the event of any claim being made with the insurance company, it is that company and not the appellant which would have been entitled to the payment made by the insurance company. Yet another important term which shows that the ownership in the film vested in the foreign client and not in the appellant company is that the expenses to be incurred outside India were to be borne by the foreign client and not by the appellant company. As noted earlier, the entire expenses for the production of the film were to be borne by the foreign client and not by the appellant. A fixed fee in terms of clause 6 of the agreement was to be paid to the appellant. In fact, ....