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New Delhi Television Ltd. Versus ACIT, Delhi, Commissioner of Income-Tax-V

2015 (10) TMI 599 - ITAT DELHI

Reopening of assessment - failure on the part of the assessee to disclose all material facts fully and truly for claiming deduction u/s 80HHF of the I.T. Act, on the export claimed to have been made to Star T.V. Hong Kong and other exports made apart from other issues recorded in the preceding paragraphs - assessee is aggrieved by the action of Ld. CIT in holding that reassessment order dated 24th December, 2010 passed by the AO u/s 147 / 143(3) of the Act is erroneous and prejudicial to the int .....

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ly appreciate the law that income from foreign exchange fluctuation is not derived from the activities of export then assumption of jurisdiction u/s 147 is unsustainable in the instant case in view of the decision of Hon'ble Delhi High Court in the case of Purolator India Ltd. reported in [2011 (11) TMI 365 - DELHI HIGH COURT ].

Since the order of ITAT was passed on 31stMarch, 2008, the AO while recording of reasons on 31st March, 2010 could not have reasons to believe doubting factum .....

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g factum of export the AO thereafter in the reassessment order has accepted the submission of assessee on this issue in para 3.4 and restricted his findings only on the issue of foreign exchange fluctuation gain.

As far as the objection as to the factum of export and issue relating to copyright being not disclosed by the assessee fully and truly, again we find no merit in the case of AO. During the course of proceedings u/s 143(3) of the Act, the assessee had clearly declared the natu .....

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RC's to this extend - Held that:- As in years 1997 and 1999 appellant had received advances from Star TV Hong Kong to the tune of USD 85,00,000. During the course of original assessment proceedings u/s 143(3) vide submissions dated 22nd February 2006, assessee had filed details as to how this advance was offered to tax going forward. Relevant details are also filed before us, which are placed at page 78 of the paper book. From a perusal of this it is seen that advance to the extent of USD 30,00, .....

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does not stand on sound footings. Accordingly, this appeal of the assessee also deserves to be allowed - ITA Nos. 1023/Del./2013, ITA Nos. 5126/Del./2011 - Dated:- 30-9-2015 - I C Sudhir, JM And L P Sahu, AM For the Petitioner : Shri Tarandeep Singh, CA For the Respondent : Shri R L Meena, CIT-DR ORDER Per L P Sahu, Accountant Member Appeal No. 1023/Del/2013 by the assessee is directed against the order dated 10.01.2013 of learned CIT(A)-XVI, Delhi for the assessment year 2003-04 in the matter .....

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rograms for broadcasters like Star TV, BBC, Vijay Television etc. The assessee filed its return of income on 02.12.2003, declaring total income at ₹ 14,41,49,689/-. In this return deduction under section 80HHF of ₹ 12,01,29,653/- was claimed by the assessee. The case was selected for scrutiny and the assessment order u/s. 143(3) was completed on 28.02.2006, assessing the total income at ₹ 26,55,52,542/-. In his order of assessment deduction under section 80HHF of the Act was re .....

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ssment records for the year under consideration, it has been revealed that assessee has claimed to have made export / transfer of software programmes comprising 24 hours news channel to STAR TV, Hong Kong. It also claimed to have exported software programmes for other broadcasters like BBC etc. The assessee-claimed deduction u/s 80HHF to the tune of ₹ 12.01 crores. In the Profit & Loss Account of the assessment year 2003-04, the total incomes (sales have been shown as under : Income : .....

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;Other Income'. The turnovers declared from any gain or loss on account of fluctuation in foreign exchange cannot vary the figure of sales recorded in the Sales Account on the basis of Exchange Rates prevalent on the relevant dates of transactions. This fact of case is totally against the accounting principles and has been actuated by the desire to claim undeserved and illegitimate deduction under section 80HHF on foreign exchange gains which is not eligible for deduction. It is also a matte .....

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be excluded for the purposes of computation of deduction. The assessee has deliberately included this amount in total turnover and export turnover as a result of which the assessee was wrongly allowed excess deduction under section 80HHF.Moreover, in para (6) of Schedule 15 of audited accounts, it has been clearly mentioned that the company is in the business of producing television software. It nowhere states that it is in the business of export of television software. Nowhere in the return of .....

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tuation gains on remittance are included in the export turnover, but has not been mentioned about the amount on which Foreign Exchange Fluctuation has been gained by eligible profit for the purposes of computation of deduction under section 80HHF worked out by the assessee. Thus, it is clear cut cases where inflated deduction has been claimed by suppressing material facts and income escaping assessment is of the order of over ₹ 60 lakhs on this account only. The assessee failed to disclose .....

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o not explained whether the worldwide copy rights of items were to continue with the assessee company after the export or not. All these facts were crucial for determining the eligibility of deduction u/s 80HHF of the Act, which were not examined by the AO while making assessment u/s 143(3) of the Act. The assessee has failed to disclose fully and truly the issue of actual export of eligible item and eligibility of deduction u/s 80HHF in case of export of limited rights. On the basis of examinat .....

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s 147 of the Act vide written objections dated 12th November 2010 which were disposed of by the Ld. AO vide order dated 03.12.2010. Thereafter, vide reassessment order dated 24th December, 2010 the AO reassessed the total income of the assessee at ₹ 14,94,40,960/- after restricting the claim for deduction u/s 80HHF to ₹ 11,48,38,379/- as against claim of ₹ 12,01,29,653/- made by the appellant in its return of income. The AO was of the opinion that the sales are credited to the .....

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mentioned in the section itself. Hence, foreign exchange fluctuation gain will not form part of the export turnover and total turnover. He, thus, found that the assessee had wrongly computed the adjusted profit because the foreign exchange fluctuation gain was not included in other income and also the adjusted profit were wrongly calculated by not excluding 90% of foreign exchange fluctuation gains. The Assessing Officer, therefore, held that the assessee has failed to disclose fully and truly .....

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ion in reassessment order dated 24th December, 2010 the AO, therefore, reduced the figures of Export Turnover and Total Turnover as disclosed by the Appellant in Form No.10CCAI by the amount of foreign exchange fluctuation gain of ₹ 1,19,64,641/-. In addition to this the Ld. AO further reduced 90% of income derived from foreign exchange fluctuation gain from the figure of "profits of business" eligible for claiming benefit of deduction u/s 80HHF. Thus, the AO worked out excess cl .....

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submissions of both the parties and various decisions in the cases of A.G. Holdings (P) Ltd. vs. ITO in W.P.(C)8031/2011, Ess Kay Engineering Co. (P) Ltd. vs. CIT(SC) 247 ITR 818, Revathy C.P. Equipments Ltd. vs. DCIT & Ors. (Mad) 241 ITR 856 and EMA India Ltd. vs. ACIT(All) 30 DTR 82, dismissed the assessee's pleas raised on validity of re-assessment proceedings as per observations made in para 5.2 and 5.3 of the impugned order. The learned CIT(A) further considering the rival submissi .....

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transfer of film software, television software, music software etc. Therefore, profits have to be derived from the eligible business of export of software. 6.3. In view of above provisions due regard must be had to the intendment of Parliament as evidenced by the language used in subsection (1) of section 80HHF. The statute contemplates a deduction where an assessee, being an Indian Company or a person resident in India, is engaged in the business of export out of India of any software to which .....

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stence of a direct and proximate nexus with the export activity. The expression 'derived from' was explained in the judgment of Hon'ble Supreme Court in Pandian Chemicals Ltd. v. CIT [2003] 129 Taxman 539 in the context of the use of that expression in section 80HH. In that case the assessee had placed a deposit with an electricity board for obtaining the supply of electricity and the submission of the assessee was that the undertaking itself could not run in the absence of electrici .....

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usiness" and the derivation of profits on the deposit made "cannot be said to flow directly from the industrial undertaking itself". The same principle has been reiterated by Hon'ble Supreme Court in CIT v. K. Ravindranathan Nair [2007] 295 ITR 228 specifically in the context of the provisions of section 80HHC. 6.4. The transaction of export in the case of the appellant is complete in all respects upon the repatriation of the proceeds. It lies within the discretion of the appe .....

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of his option. The exchange fluctuation arises after the completion of the export activity and does not bear a proximate and direct nexus with the export transaction so as to fail within the expression "derived" by the assessee in sub-section (1) of section 80HHF. The exchange fluctuation arose subsequent to the transaction of export. In other words, the exchange fluctuation was not on account of a delayed realization of export proceeds. The gain in exchange fluctuation which has aris .....

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exchange fluctuation in EEFC account arising after completion of export activity, did not bear a proximate and direct nexus with the export transaction so as to fall within the expression "derived" by the assessee. The above decisions are squarely applicable in the case of the appellant." 2.4 The learned CIT(A) also considered various decisions relied upon by the assessee on the issue and observed that the decisions relied on by the assessee are not applicable in the instant case .....

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O") and the Commissioner of Income Tax (Appeals) {hereinafter referred to as "the CIT(A)} are bad in law and void ab-initio. 2. That on facts and in laws, the CIT(A) erred in upholding the assumption of jurisdiction u/s 147 of the Act by the AO. 2.1. That on facts and in laws, the CIT(A) erred in not appreciating that the prerequisites of assumption of valid jurisdiction in terms of proviso to section 147 are not met rendering the reassessment orders passed thereto as bad in law. 2.2 T .....

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ns are not to be excluded from : (a) "Profits of the Business" as defined in Explanation (f) (b) "Export Turnover" as defined in Explanation (c), and (c) "Total Turnover" as defined in Explanation (j) 4. That on facts and in law the CIT(A) erred in upholding levy of interest u/s 234B, 234D of the Act." 3. The brief facts pertaining to appeal No.5126/Del./2011 are that the learned Commissioner of Income-tax, invoking his revisionary powers under section 263 issu .....

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ly eligible items i.e. film software, television software, music software, television news software including telecast rights were exported by the assessee Co. ii). There was no evidence to show that such eligible items were actually exported outside the country. iii). From the agreement dated 21.02.1997 between the assessee co. and M/s. STAR TV it was seen that there was no mention of the specific items to be exported and further the world wide copy rights of items were to continue with the ass .....

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M/s. NDTV and M/s. NTVI. Subsequent agreements are only internal arrangements between M/s. NTVI and M/s. Star TV. Therefore, sale made in consequence of agreement between M/s. NTVI and M/s. NDTV dt. 21.02.1997 cannot be termed as export turnover. 3.1 The learned Commissioner observed that the Assessing Officer failed to examine these issues which were very crucial for determination of the eligibility of deduction u/s. 80HHF of the Act. The learned Commissioner after going through clause 17 of th .....

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0/- between the declared export receipts from STAR TV and the amount received as per Bank certificates and therefore, if the excess export turnover receipts from STAR are excluded then the deduction u/s. 80HHF would work out to ₹ 10,21,88,579/- instead of ₹ 11,48,38,379/- as assessed by AO u/s. 147 of the Act. He, therefore, observed that excess claim of ₹ 1,26,49,799/- was allowed by the AO in the reassessment order only on this count. The ld. Commissioner after relying on var .....

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facts and in law the Commissioner of Income Tax, New Delhi (hereinafter referred to as the "CIT") erred in holding that the order passed by the Assessing Officer (hereinafter referred to as the "AO") u/s. 147/143(3) of the Act was erroneous and prejudicial to the interest of Revenue. 2. That the CIT erred in observing that: a. The Assessing Officer had failed to examine whether actual export of television software/video eligible for claim of deduction u/s. 80HHF had taken pla .....

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and void ab-initio. 5. That on facts and in law the order u/s. 263 of the Act is bad in law in as much as the order sought to be revised itself is bad in law and sans jurisdiction." 4. From the above narration of facts, we find that since the reassessment order u/s 147/143(3) dated 24.12.2010 has been the subjected matter of revision order u/s 263, we would conveniently like to take up ITA 1023/Del/2013 first. ITA 1023/Del/2013 5. During the course of hearing before us, it was argued by the .....

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,000/- included the gains derived on account of foreign exchange fluctuation (i.e ₹ 97,47,73,359/- plus ₹ 1,19,64,641/-). Reference was also made to the computation of total income, copy of which is placed at pages 4 & 5 of the paper book to point out that there is a specific disclosure for inclusion of foreign exchange fluctuation gain in the figure of export turnover. As to the objection of the AO that the material on record does not evidence factum of export, it was submitted .....

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er section 80HHC of the Income Tax Act. The company had claimed in its assessment that it was eligible for deduction under section 80HHE, since its export fell under the definition of "Computer Software" as defined therein based on the legal opinion / advice of its counsel. The Assessing Officer rejected this contention and disallowed the claim on the primary ground that it was "News Software" and not "computer software" as defined in that section. The CIT(A) in his .....

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7; 51,553,468/- till the date of aforesaid order." 5.1 It was further submitted by the Ld. AR that complete disclosures were made pursuant to specific queries raised by the Ld. AO during the course of original assessment proceedings u/s 143(3) of the Act. In this regard, our attention was invited towards submissions dated 22ndFebruary, 2006 and submissions dated 20th January, 2005 filed before the AO during the course of original assessment proceedings. Objecting to the assumption of jurisd .....

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is regard, Ld. AR relied upon decisions of Delhi High Court in the case of Northern Strips Ltd. reported in 331 ITR 224 (Del) and Satnam Overseas reported in 329 ITR 237 (Del). As regards factum of export being made, the Ld. AR submitted that the notice u/s 148 was issued by the AO on 31stMarch, 2010 and as on that date ITAT in appellant's own case for A.Ys. 1999-2000 and 2002-03 vide orders dated 26th July, 2004 and 31st March, 2008 respectively (copies placed in paper book) had accepted th .....

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ka Gems reported in 367 ITR 575 (Guj) (iii). Alps Chemicals Ltd. reported in 367 ITR 594 (Guj) (iv). Novels Software Development reported in 355 ITR 339 (Kar) (v). Pantasoft Technologies Ltd. reported in 347 ITR 578 (Mad) 6. On the other hand Ld. CIT (DR) vehemently opposed the above submissions advanced by the Ld. AR. It was submitted by him that the Ld. CIT(A) has for just reasons rejected the arguments advanced and the decisions relied upon by the assessee and as such no interference in the i .....

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on 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts .....

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,29,653/- made by the Appellant in his return of income. This increase in deduction was allowed by the then AO owing to certain addition / disallowances made to the business income in his order under section 143(3). It is thus hard to comprehend that the AO framing the original assessment did not apply his mind to the computation of income and Form 10CCAI furnished along with the return of income. It is an established principle of law that if conscious application of mind is made to the relevant .....

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am Overseas (supra) has clearly laid down in this regard as under :- "We feel that the Writ Petitions have to succeed because the contentions as raised on behalf of the counsel for the petitioner are well founded. The only reason which has been given seeking reopening of the assessment for the years 1997-98 and 1998-99 is that suppression of sales have taken place on account of the fact that when average price of the closing stock is multiplied with the quantity of the sales in the year the .....

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he relevant assessment years and also scrutinized by the Assessing Officer before passing the orders under section 143(3) is the basis for seeking reopening of the assessment. Further the new logic, rationale and opinion, which has been formed by the Assessing Officer for seeking reopening of the assessment is nothing but a change of opinion and a new approach to the existing facts and material which the Assessing Officer could well have done during the regular assessment proceedings of the rele .....

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d fixed throughout this period. Even assuming that this logic is correct, it was surely an exercise which the Assessing Officer could have done on the basis of materials which he is now presently seeking to do because the same very materials were available to him in the relevant assessment years and merely because the Assessing Officer feels that he has failed to do what he ought to have done cannot be a valid ground for seeking initiation of reassessment under section 147/148 of the Act." .....

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that income from foreign exchange fluctuation is not derived from the activities of export then assumption of jurisdiction u/s 147 is unsustainable in the instant case in view of the decision of Hon'ble Delhi High Court in the case of Purolator India Ltd. reported in 343 ITR 155 (Del) wherein it has been held as under:- "10. In the present case, there is no indication that the assessee had failed or omitted to disclose the material or primary facts. These were available on record. The .....

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osed incorrect primary facts. …. ….. 11. Recently in Atma Ram Properties (P.) Ltd. v. Dy. CIT [2011] 203 Taxman 408 (Delhi) and it has been observed as under : "15. The reasons recorded above do state that the appellant assessee had failed to fully and truly disclose the facts but do not indicate why and how the assessee had failed to make full and true disclosure of the material facts. Mere repetition or quoting the language of the proviso is not sufficient. The basis of the .....

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w or a section to admitted facts on record is not covered by Explanation (1). Explanation (1) applies when the assessing officer on the basis of account books or other evidence fails to discover or infer material facts which with due diligence could have been discovered. Explanation (1) deals with failure of the assessing officer to discover or infer all material facts on the basis of books of accounts or other evidence produced by the assessee. Difference between facts and law is well recognize .....

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under : "JUSTIFICATION OF CLAIM UNDER SECTION 80HHF OF THE INCOME TAX ACT" 1. As in past, the assessee continues to export / transfer software programmes comprising the 24 hours news channel to STAR TV Hong Kong. It also exports software programmes for other broadcasters like BBC etc. All such programmes are paid for in convertible exchange received in the assessee's bank account through proper banking channels. During the year export income equivalent to INR 974,773,359/- was earn .....

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dia in convertible foreign exchange within a period of 6 months from the end of the previous years. c) It is reiterated that the facts and circumstances for the year relevant to the assessment year 2003-04 are exactly the same as were for the years relevant to assessment years 2000-01, 2001-02 & 2002-03 for which deduction has already been allowed in the assessments under section 143(3). The same may kindly be allowed for this year also. We have been directed vide questionnaire to furnish th .....

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export invoices III. Copy of bank certificate of export and realization (Export to STAR, & sample for BBC - IBR Programme) IV. Foreign inward remittance certificate issue by the bank The assessee fulfils all the conditions, for the claim under section 80HHF which has already been allowed to the assessee company in the assessment for immediately preceding Assessment Years 2000-01, 2001-02 and 2002- 03 on the same facts. (Anenxure-I)." Further, vide submissions dated 20th January, 2005 it .....

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" 8.1 Once these facts were presented and considered by the AO in the proceedings u/s 143(3) of the Act, then the impugned reassessment proceedings u/s. 147 would clearly fit into the class of a change of opinion, which is not permissible under law. Moreover, we find that ITAT in assessee's own case for A.Y. 2002-03 vide order dated 31st March, 2008 in ITA No.2481/Del/2007 held as under : "6. Rival submissions have been considered and, material placed on record has been perused. Th .....

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ated 21st of February 1997 with M/s News Television (India) Pvt. Ltd. (hereinafter referred to as "NTVI"), Indian arm of STAR TV of Hong Kong. According to the agreement, NDTV i.e. the appellant company was responsible for the production of the entire software (Programming for a 24 hrs. Indian News Channel, which will be supplied to NTVI who would broadcast it through STAR TV or any other company. In fact clause (iv) of the aforesaid agreement provides as under: "NDTV shall export .....

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ideration for the five year aggregating to USD 15 Million will be paid..............." 7. Thereafter, another agreement was signed on 21st of March' 1998 between the appellant company, STAR TV of Hong Kong and NTVI in innovation of the earlier agreement. As per the second agreement the rights under the first agreement were assigned by NTVI to STAR TV. Hong Kong and, as such after this agreement, NTVI had no role to play in fulfilling, executing and enforcing terms and conditions of the .....

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ction of News Software for the first time in assessment year 1999-2000. During that year the appellant claimed deduction of ₹ 15,76,17,840/- u/s 80HHE of the Act. However the Assessing Officer denied the aforesaid claim of deduction which was upheld by CIT(A) by holding as under: "In view of the above facts & circumstances and legal position. I hold that though the appellant company is exporting television news software directly to the STAR TV at Hong Kong and getting the amounts .....

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levision news software can be described as computer software within the meaning of explanation (b) to section 80HHE of the Act. Infact in para 2 of the order of the ITAT, it has been observed that Assessing Officer in the order of assessment has held that, television software has been covered u/s 80HHF of the Act with effect from assessment year 2000-01. Thus, it was undisputed in the first year itself that, appellant was engaged in the business of production and, export of television software, .....

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ware. It was held that the assessee was engaged in the production of Television News Software. During the course of assessment proceedings for the assessment year 2000-01 it was submitted that w.e.f. 01.04.2000. Section 80HHE has been brought on the statute which specifically includes 'Television Software' and Television News Software as eligible business activities. It was therefore, pleaded that in case there was any doubt on the eligibility for deduction u/s 80HHE, the deduction could .....

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R TV Hong Kong for successive assessment years namely A.Y. 2000-01 to 2002-03 was under the agreement dated 21st of March' 1998…….. …. ……. We further disagree with the observation of the Commissioner that, Assessing Officer has not examined the issue that, since worldwide copy rights remained with the appellant company under the agreement, therefore appellant was not entitled to claim of deduction u/s 80HHF of the Act, in view of the past history, stated ab .....

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tape to their representative in India, namely, Yash Raj Films Private Limited, and that, subsequently, the tape was couriered by Yash Raj Films Private Limited to Yash Raj Films International Limited UK. The Export or transfer out of India by any means outside India of cassette is anyway not relevant because the claim for deduction under section 80HHf is not in respect of television software per so but is on account of transfer of television software "rights". The agreement in question .....

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. Their Lordships were dealing with deduction under section 80HHC which has materially different requirements. The cassette being sent out of India is, in our humble understanding, is not at all a precondition for grant of deduction under section 80HHF. There is thus no need on the part of the assessee to produce any evidence for the same. It is sufficient for the assessee to demonstrate that the television software "rights" are transferred and that the receipts in convertible foreign .....

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tion between 'transfer of television software rights' and 'transfer of television software'. 13. The Commissioner has thereafter only stated that, the aforesaid decision has not been accepted by Revenue. In our opinion, such an approach is not a valid approach for assumption of jurisdiction u/s 263 of the Act. In any case, the finding does not show that the view adopted by the AO was not a possible view…………." 8.2 Since the above order of ITAT was .....

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rted in 348 ITR 485 (Del)(FB). Moreover after initiating reassessment proceedings doubting factum of export the AO thereafter in the reassessment order has accepted the submission of assessee on this issue in para 3.4 and restricted his findings only on the issue of foreign exchange fluctuation gain. 9. In view of the aforesaid discussion, we are of the considered opinion that the initiation of proceedings u/s 147 is bad in law and deserves to be quashed. The consequential addition made by AO, t .....

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ell settled principle that income derived from foreign exchange fluctuation gain is nothing but an accretion to the turnover of the appellant and, as such, forms part of export turnover and total turnover while computing deduction u/s 80HHF. Moreover, said income cannot be classified as "any other receipts of similar nature" so as to justify exclusion under explanation to the said section as done by the authorities below. In this regard, we may refer to the decision of Gujarat High Cou .....

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te of foreign exchange cannot be divested from the export business of the assessee. As noted, once export is made, due to variety of reasons, the remission of the export sale consideration may not be made immediately. Under the accounting principles, therefore, the assessee, on the basis of accrual, would record sale consideration at the prevailing exchange rate on the quoted price for the exported goods in the foreign currency rates. If during the same year of the export, the remission is also .....

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goods so exported would also be pre-decided in the foreign exchange currency. The exact remittance in Indian rupees would depend on the precise exchange rate at the time when the amount is remitted. This fluctuation and possibility of increase or decrease, in our opinion, can have no bearing on the source of such receipt. Primarily and essentially, the receipt would be on account of the export made. If this is so, any fluctuation thereof also must be said to have arisen out of the export busines .....

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under sub-section (2) of section 80HHC, the remittance is made but in the process accounting year has changed. To our mind mere change in the accounting year can have no real impact on the nature of the receipt. The conclusion of the Assessing Officer that since the year during which such sale proceeds were received by the assessee export was not made, would not in any manner change the situation. The assessee being engaged in the business of export and having made the export, mere fact of the .....

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way of brokerage, commission, interest, rent, charges or any other receipt of similar nature included in such profits. The term "foreign exchange difference" is not specified in any of the categories specifically mentioned in the said clause. The Revenue, however, contended that the same must be included by necessary implication as part of other receipts. Legislature, however, has used the term "any other receipt of similar nature". This expression "similar nature" .....

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tion of value of rupee of any income accruing or arising in case of an assessee and provides that the same shall be telegraphic transfer of buying rate of such currency on the specified date. The term "specified date" has been defined in Explanation-2 to the said sub-rule (1). Rule 115 of the Income-tax Rules, 1962 thus has application for a specific purpose and has no bearing while judging whether foreign exchange rate fluctuation gain can form part of the deduction under section 80HH .....

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kerage, commission, etc. and do not directly add to the export turnover. The foreign exchange fluctuation income, the subject of contention before us is related to the exports effected in earlier years. There is no dispute and naturally cannot be, insofar as the amount representing foreign exchange rate fluctuations income in relation to exports effected during the current year is concerned because that cannot be considered for exclusion to the extent of 90 per cent for computing 'Profits of .....

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at country and at the time of making exports. The exporter converts that currency into Indian rupees at the exchange rate prevalent at that time and accordingly takes cognizance of that amount as its export figure in its books of account. However, when the invoice is actually realised from foreign country and the amount is remitted to India, the exchange rate prevalent on that date may be equal to or more or less than the one recorded in the books of account at the time of making the sales. If t .....

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the income from the foreign currency fluctuation is nothing but part of export turnover and is a sort of additional sales price. Now when we read the Explanation (baa) below section 80HHC(4B) it is noted that 90 per cent of the sums referred to are of the nature of brokerage and commission, etc. In other words, these sums are in no way part of export turnover and hence do not contribute to the making of exports. These items are independent receipts and are in the nature of income and not turnove .....

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n facts, are not found applicable to the case in hand. Accordingly, ground Nos. 3 & 3.1 are decided in favour of the assessee. 12. In Ground No.4, the assessee has challenged the levy of interest u/s 234B & 234D of the Act. To this we direct the AO to allow consequential relief. As a result the appeal of the assessee deserves to be allowed. ITA No. 5126/D/2011 13. In this appeal, the assessee is aggrieved by the action of Ld. CIT in holding that reassessment order dated 24th December, 20 .....

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now).This appeal therefore merits to be disposed of on this aspect itself. However, since elaborate arguments have been advanced before us we are inclined to render our opinion on merits of the appeal as well. 14. Action under 263 of the Act has been initiated by the Ld. CIT in the instant case vide show cause notices dated 21st July, 2011 and 10th August, 2011. Before us written propositions were filed by the Ld AR. Relying upon the same it was pleaded by Ld AR that assumption of jurisdiction u .....

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w subsequently been approved by the Hon'ble Delhi High Court in judgment reported in 360 ITR 44(Del). The factual position as was prevalent in AY 2002-03, stands pari materia in the year under consideration also and an exhaustive enquiry into the claim for deduction u/s 80HHF was made by the AO during the course of original assessment proceedings u/s 143(3) and also during the course of proceedings u/s 143(3)/147 of the Act. This is clearly evident from submissions dated 20th January 2005 an .....

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ing one, are similar to those levied by him in case of appellant for AY 2002-03. In the impugned order in para 9, the Ld. CIT has alleged that assessee has inflated export turnover by ₹ 10.73 crores equivalent to USD 30,00,000. Ld CIT has also held that assessee has not furnished FIRC's to this extend. In our considered opinion assumption of jurisdiction u/s 263 cannot be sustained for the simple reason that no show cause notice was issued by Ld. CIT on this issue. We find that the sho .....

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the Supreme Court noted that the department cannot travel beyond the show-cause notice. The Tribunal was of the view that the ground that the assessee had not fulfilled the conditions laid down under section 80-IA did not form part of the show-cause notice. The Tribunal accepted the argument of the assessee that the Commissioner of Income-tax did not even call for any explanation on this issue and, therefore, the assessee did not have any opportunity to meet this ground. The Tribunal was of the .....

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