TMI Blog2022 (6) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the facts of the present case, wherein, there is no concrete material produced by the appellant / assessee to prove that the royalty income received from the subsidiary company, are related to export business, this court is of the view that the Tribunal has rightly directed the assessing officer to exclude the royalty income from the business profits for the purpose of calculation of deduction under section 80HHC of the Act, which warrants no interference. - Decided against assessee. - T.C.A.No.184 of 2012 - - - Dated:- 8-6-2022 - Hon'ble Mr. Justice R.Mahadevan And Hon'ble Mr. Justice J.Sathya Narayana Prasad For the Appellant : Mr.Subbaraya Aiyar For the Respondent : Mr.M.Swaminathan, Senior Standing Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the receipt of royalty from business profits for the purpose of deduction under section 80HHC of the Act. Therefore, the appellant is before this court with this tax case appeal. 3.The learned counsel for the appellant contended that the appellant entered into a MOU with its 100% subsidiary company; the subsidiary company manufactures the goods as per the specifications given by the appellant and the appellant has also provided know-how, secret formula manufacturing process and methods to ensure the same quality of manufactured goods; for providing these services, the subsidiary company paid royalty and hence, the royalty receipts are directly related to the goods exported by the appellant and the same cannot be excluded from the prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in holding that the royalty income received for providing know-how, secret formula manufacturing process and methods in respect of goods manufactured by the subsidiary and exported by the assessee is not eligible for deduction under Section 80HHC of the Income Tax Act? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the royalty receipts should be excluded from the profits of the business for the purpose of computation of deduction under Section 80HHC of the Income Tax Act? 7.Before the assessing officer, the appellant claimed that the sale of raw materials, processed waste and scrap, sale of spares, etc. form part of business activities and hence, it should be included in the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision sets could not be included in the total turnover of the assessee for the purpose of the computation of deduction under section 80HHC of the Act as the total turnover in section 80HHC is only the turnover relating to export business of the assessee and not the turnover relating to other business of the assessee . In the light of the said order, this court held that the scrap and waste materials, which would not be relatable to export business of the assessee, have to be excluded from business profit for the purpose of calculation of deduction under section 80HHC of the Act. 10.Further, in the same decision in Shiva Distilleries Ltd case, with regard to includibility of royalty as well as the guarantee commission for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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