Commissioner of Income Tax vs R. Rajinikanth and R.K. Exports

P.D. Dinakaran, J.—The above tax case appeals are directed against the common order of the Income Tax Appellate Tribunal in I.T.A. No. 1629 and 1628/Mds/2002 dated 12.5.2006.

The Revenue is the appellant. During the relevant assessment years, viz., 1994-95 and 1998-99, the respective assessees claimed deduction u/s 80HHC in respect of export of film prints to foreign enterprises. Initially, the claim of the assessees was allowed, but on re-opening the assessment, the assessing officer withdrew the deduction on the basis of the order of the Tribunal that the sale of rights does not mean that goods have been exported out of India. Against the said orders of the assessing officer, the assessees preferred appeals before the Commissioner of Income Tax (Appeals), who allowed the appeals, against which, the Revenue filed appeals before the Income Tax Appellate Tribunal and the Tribunal also held the issue in favour of the assessee. Hence, the present tax case appeals by the Revenue raising the following common substantial questions of law:

Whether in the facts and circumstances of the case, the Tribunal was right in treating the transfer of the right to exhibit the films, as a sale of goods or merchandise for the purpose of deduction u/s 80HHC ?

Whether in the facts and circumstances of the case, a transaction for transfer of exploitation rights, entered into in India can be eligible for the benefit of Section 80HHC only because the consideration was received in foreign exchange ?

Mr. J. Narayanaswamy, learned standing counsel appearing for the Revenue, fairly submits that the issues raised in the above questions of law are squarely covered against the Revenue by the decision of this Court in Commissioner of Income Tax v. V.C. Kuganathan dated 31.10.2006 (T.C. Nos. 224 of 2003, etc. batch).

In the said decision, this Court, agreeing with the views taken by the Bombay High Court in Abdulgafar A. Nadiadwala Vs. Assistant Commissioner of Income Tax and Others, , as well as applying the principle laid down by the Apex Court in Tata Consultancy Services Vs. State of Andhra Pradesh, , with regard to considering the scope of the word "goods", while observing that exporting the right for exhibition of positive print is nothing but sale of goods or merchandise, held that the assessee therein had satisfied the conditions contemplated u/s 80HHC of the Act and hence, entitled for the deduction u/s 80HHC of the Act.

In view of the above settled proposition of law, we do not see any merit in the above tax case appeals and hence, the same are dismissed. No costs. Consequently, M.P. No. 1 of 2006 in T.C.(A) No. 2691 of 2006 is also dismissed.