2009 (3) TMI 4

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....ises for determination in this batch of Civil Appeal(s) is whether the foreign exchange earned by transferring the right of exploitation of the films outside India by way of lease is admissible for deduction under Section 80HHC of the Income Tax Act 1961. According to the Department, movies/films are not goods. They are not merchandise. Hence Section 80HHC is not invokable. Further, according to the Department, there is a difference between "sale" and "lease" hence, the subject transaction will not fall under Section 80HHC. Facts in Civil Appeal No.3300/2007: During the relevant Assessment Year 1993-94, the assessee, B. Suresh, transferred feature film rights for exploitation outside India and earned income in foreign exchange. The as....

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....tapes were given on lease with a right to telecast given to Star TV under the Lease Agreement dated 29^th March, 1995 for a period of five years, there was no element of sale so as to attract Section 80HHC. It was further urged that movies are neither "goods" nor "merchandise". In this connection, learned counsel placed reliance on Dictionaries. Shri Harish N. Salve and Shri S.Ganesh, learned senior counsel appearingon behalf of the assessee, submitted that on a bare reading of Section 80HHC(1), onefinds that the deduction/concession is given in cases where an assessee derives profitsfrom the activity of exports and earns foreign exchange. It is pointed out that thesaid Section is concerned with the Business Profits under the 1961 Act. I....

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....nclude the "lease" of such rights. It is alsosubmitted on behalf of the assessee that Section 80HHF goes far beyond the physicalexports referred to in Section 80HHC(1). Section 80HHF recognises even softwaretransfers "by any means". Further under clause (5) of Section 80HHF, theParliament has clearly indicated that if an assessee has taken the benefit of Section80HHC, he would not be entitled to claim the same benefit under Section 80HHF,which provision, according to the learned counsel, shows that benefit of deductionunder Section 80HHC could be claimed for foreign exchange earned by sale of featurefilms or rights therein. Findings: Two questions arise for determination, namely, whether foreign exchange earned by transfer of feature ....