TMI Blog2013 (12) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... f deduction of Rs. 38,04,768 made by the assessee under section 80HHC of the Income-tax Act, 1961 (in short "the Act"), for overseas sale of music rights. As per the Revenue, there was only an agreement for exploitation of rights for a fixed period and the Commissioner of Income-tax (Appeals) had wrongly placed reliance on the decision of hon'ble Mumbai High Court in the case of Abdulgafar A Nadiadwala v. Asst. CIT [2004] 267 ITR 488 (Bom) for giving relief to the assessee. 2. Before going into the issue raised by the Revenue, it will be inappropriate, if the chequered history of the case is not recalled. The assessee, a world reputed playback singer had claimed deduction under section 80HHC of the Act for alleged export of certain music rights through one M/s. Galaxy Timber Trading International, his proprietary concern. Such claim for deduction of Rs. 46,78,781 was scaled down to Rs. 38,04,768 in the original assessment completed on March 29, 1996 under section 143(3) of the Act. The assessee filed an appeal before the Commissioner of Income-tax (Appeals), who dismissed such appeal. Meanwhile, the Assessing Officer reopened the assessment by issuing a notice under section 148 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulgafar A. Nadiawala v. Asst. CIT reported in [2004] 267 ITR 488 (Bom). No doubt, the learned counsel for the appellant submitted that the decision of the Bombay High Court is under challenge before the Supreme Court and the special leave petition is pending. 3. It is not in dispute that as on date the decision of the Bombay High Court cited supra holds the field. Even otherwise, in view of the categorical conclusion held by the Appellate Tribunal that, whether the goods or merchandise were crossed the frontiers as to the effect the completion of export out of India is not clear from the records, it is desirable and in the interest of both parties to consider the said aspect afresh by the Assessing Officer, we are in agreement with the said conclusion. Hence, we find no substantial question of law to entertain the above appeal and the same is accordingly dismissed. No costs. Consequ ently, connected miscellaneous petition is also dismissed." 3. The culmination of the events mentioned was that the Assessing Officer took up the issue afresh once again. A notice under section 143(2) was issued to the assessee whereupon his representative appeared and filed a copy of agreement b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of deduction made under section 80HHC of the Act. 6. The assessee once again moved in appeal before the Commissioner of Income-tax (Appeals). Contention before the Commissioner of Income-tax (Appeals) was that spool masters and AD masters totalling in all 51 numbers were exported to Sound Arts, Sharjah, UAE through one Mr. Mahesh and Mr. Mohamed Sheriff and for this, it filed four letters dated December 24, 2002, December 24, 2002, January 27, 1993 and February 9, 1993 before the Commissioner of Income-tax (Appeals). As per the assessee, such letters were also available before the Assessing Officer having been filed during the course of original proceedings itself. According to him, exports always necessarily need not be in physical mode since music rights fundamentally were in nature of intellectual property rights. 7. The learned Commissioner of Income-tax (Appeals) was appreciative of the above contention of the assessee. According to him, the assessee had a right to claim deduction under section 80HHC of the Act. Sale proceeds were collected in foreign exchange and what was exported were goods. The only issue was whether such exports were necessary to be done physically or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned authorised representative strongly supported the order of the Commissioner of Income-tax (Appeals) and submitted that the Commissioner of Income-tax (Appeals) was justified in relying on the decision of the hon'ble Mumbai High Court in the case of Abdulgafar A. Nadiadwala v. Asst. CIT [2004] 267 ITR 488 (Bom). 10. We have heard the rival contentions and also carefully gone through the orders of authorities below. It is required to reproduce the relevant paras of the agreement entered into by the assessee with M/s. Sound of Arts. "This deed of agreement is entered, in duplicate, at Madras this the first day of October 600 108, represented by its managing partner Dr. K. J. Yesudoss, hereinafter referred to as the party of the first part and M/s. Sound of Arts, P. O. Box 2959 Sharjah, U.A.E., represented by its Proprietor, Mr. Mahmoud Sharief Alnahary, hereinafter referred to as the party of the second part. The terms 'party of the first part' and 'party of the second part' wherever the context so permits shall mean and include their respective heirs, executors, legal representatives, administrators and assigns. Whereas the party of the first part is the ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aster tapes to the said party. Delivery was to be done as per the frequency decided by the second party. 13. Payments to the assessee were to be released by way of demand draft or telegraphic transfer. The assessee being a renowned singer, without doubt what were sold was rights to the songs released by M/s. Tharangini Records, M/s. Tharangini Sond Techics and M/s. Tharangini Musik, which were contained in the master tapes. The hon'ble Mumbai High Court in the case of Abdulgafar A Nadiadwala v. Asst. CIT [2004] 267 ITR 488 (Bom) has clearly held that goods or merchandise will include Beta-cam tapes. No doubt, in the said case, the export of Beta-cam tapes was subject to a customs clearance. 13. Reasoning given for denying relief to the assessee under section 80HHC of the Act here is that even if the master tapes were considered "goods", his version that these were sent abroad could not be believed, since there was no customs clearance, for proving movement of such goods showing export beyond the customs frontiers of India. Explanation (aa) given under section 80HHC is relevant in this regard and this is reproduced hereunder : (aa) "export out of India" shall not incl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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