DCIT, CHENNAI V. Shri K.J.Yesudoss, CHENNAI

ITA 2171/CHNY/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64323 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-09-2012
• Assessment Year: 1993-1994
• Appeal Filed On: 27-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: M J NICHANE
• Keywords: Question of law
• Section: 80HHC; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C B ENCH C HENN AI BEFORE SHRI ABARAHAM P.GEORGE ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY , JUDICIAL MEMBER .. ITA NO. 2171 /MDS./ 20 08 ASSESSMENT YEAR: 1993 - 94 DCIT, MEDIA CIRCLE - II, ROOM NO.312,NEW BLOCK, AAYAKAR BHAVAN, CHENNAI VS. SHRI K.J.YESUDOSS, 13, 3 RD STREET, ABHIRAMAPURAM, CHENNAI 600 018. PAN AAOPY 9888 L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.DAS GUPTA, JCIT RE SPONDENT BY : MS.M.J.NICHANE, ADVOCATE DATE OF HEARING : 26 .0 9 .12 DATE OF PRONOUNCEMENT : 26 .0 9 12 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY REVENUE, IT S GRIEVANC E IS THAT THE CIT(A) ALLOWED A CLAIM OF DEDUCTION OF ` 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. A S PER REVENUE, THERE WAS ONLY AN AGREEMENT FOR EX PLOITATION OF RIGHTS ITA . 2171 /MDS/ 08 2 FOR A FIXED PERIOD AND CIT(A) HAD WRONGLY PLACED RELIANCE ON THE DECISION OF HON BLE MUMBAI HIGH COURT IN THE CASE OF ABDULGADAR A NAD IADWALA VS. ACIT IN 267 ITR 488 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. ASSESSEE , A WORLD REPUTED WORLD PLAY - BACK 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 PROPRIET ARY CONCERN . SUCH CLAIM FOR DEDUCTION OF ` 46,78,781/ - WAS SCALED DOWN TO ` 38,04,768/ - IN THE ORIGINAL ASSESSMENT COMPLETED ON 29.03.1996 UNDER SECTION143(3) OF THE ACT. ASSESSEE FILED AN APPEAL BE FORE THE CIT(A), WHO DISMISSED SUCH APPEAL. MEANWHILE, ASSESSING OFFICER RE - OPENED THE ASSESSMENT BY ISSUING A NOTICE UNDER SECTION 148 OF THE ACT FOR A REAS ON THAT DEDUCTION UNDER SECTION 80HHC WAS WRONGLY ALLOWED TO THE ASSESSEE . THE REOPENED ASSESSMENT WAS COMPLETED ON 31.03.2003 WHEREIN THE DEDUCTION OF ` 38,04,768/ - ORIGINALLY ALLOWED UNDER SECTION.80HHC OF THE ACT , WAS WITHDRAWN. FURTHER APPEAL W AS FILED BY THE ASSESSEE ASSAILING THE REOPENING MADE UNDER SECTION. 147 OF THE ACT AS WELL AS AGAINST T HE DENIAL OF ITA . 2171 /MDS/ 08 3 DEDUCTION UNDER SECTION.80HHC OF THE ACT BEFORE THE CIT(A). THIS WAS DISMISSED BY AN ORDER OF CIT(A) ON 05.02.04. ASSESSEE MOVED IN FURTHER APPEAL BEFORE THIS TRIBUNAL AND IN THIS APPEAL ALSO, ASSESSEE ASSAILED BOTH THE REOPENING AND DENI AL OF DEDUCTION UNDER SECTION 80HHC OF THE ACT. THIS TRIBUNAL IN ITS ORDER DATED 30.11.2005 IN ITA NO.971/MDS/2004 HELD THAT REOPENING WAS JUSTIFIED BUT NEVERTHELESS REMITTED THE I SSUE OF DEDUCTION UNDER SECTION 80HHC BACK TO THE FILE OF ASSESSING OFFICE R , FOR VERIFYING WHETHER GOODS OR MERCHANDISE HAD CROSSED THE CUSTOMS FRONTIERS , SO AS TO COMPLETE OF EXPORT OF GOODS OUTSIDE INDIA . AS PER TRIBUNAL, IT WAS NOT CLEAR FROM THE RECORDS WHETHE R THE EXPORTS WERE COMPLETED ASSESSING OFFICER WAS REQUIRED TO REEXAMINE THE ISSUE BASED ON THE DECISION OF HON BLE MUMBAI HIGH COURT IN THE CASE OF ABDULGADAR A NADIADWALA VS. ACIT IN 267 ITR 488. A GAINST SUCH ORDER O F THE TRIBUNAL, ASSESSEE MOVED I N FURTHER APPEAL BEFORE HON BLE JURISDICTIONAL HIGH COURT AND JURI SDICTIONAL HIGH COURT VIDE ITS JUDGEMENT DATED 08.11.06 IN TC(A) NO./2597 OF 2006 AND TNP NO.1 OF 2006 HELD AS UNDER: - THIS TAX CASE APPEAL IS DIRECTED AGAINST THE ORDER OF THE INCOME - TAX APPELLATE TRIBUNAL, BENCH - A, CHENNAI DATED 30.11.2005 MADE IN ITA NO.971/MDS/2004 FOR THE ASSESSMENT YEAR 1993 - 94. 2. AFTER HEARING BOTH SIDES AND ON PERUSING THE RECORDS, THE APPELLATE ITA . 2171 /MDS/ 08 4 TRIBUNAL, AFTER FINDING THAT WHETHER THE GOODS OR MERCHANDISE WERE CROSSED THE FRONTIERS SO AS TO EFFECT THE COMPLETION OF EXPORT OUT OF INDIA IS NOT CLEAR FROM THE RECORDS, IN ORDER TO COME TO A CORRECT CONCLUSION THAT THERE WAS COMPLETION OF EXPORT, ON SATISFYING ITSELF, REMITTED THE MATTER BACK TO THE ASSESSING OFFICER, WHO IN TURN WILL DECIDE THE ISSUE IN ACCORDANCE WITH LAW. IN SUPPOR T OF THE ABOVE CONCLUSION, THE TRIBUNAL RELIED ON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF ABDULGAFAR A. NADIAWALA VS. ACIT & OTHERS REPORTED IN 267 ITR 488. NO DOUBT, THE LEARNED COUNSEL FOR THE APPELLANT SUBMITTED THAT THE DECISION OF THE BOM BAY 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 COURTE CITED SUPRA HOLDS THE FIELD. EVEN OTHERWISE, IN VIEW OF THE CATEGORICAL CON CLUSION 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 T HE 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. CONSEQUENTLY, CONNECTED MISCELLANEOUS PETITION IS ALSO DISMISSED. 3. CULMINATION OF THE EVENTS MENTIONED WAS THAT 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 AGR EEMENT BETWEEN THE ASSESS EE AND ONE M/S.SOUND OF ARTS,SHA RJAH, U.A.E. EVIDENCING THE SALE OF COPY RIGHTS. ASSESSING OFFICER SOUGHT FROM THE ASSESSEE EVIDENCE FOR EXPORT OF MASTER TAPES OUT OF INDIA. ON THIS, ASSESSEE PRODUCED A BANK STATEMENT OF ANZ GRIND LAYS BANK FOR THE PERIOD 31.03.93 TO 31.03.94. CERTIFICATES OF FOREIGN INWARD ITA . 2171 /MDS/ 08 5 REMITTANCE RECEIVED FROM THE SAID BANK AND FAX MESSAGE RECEIVED FROM SOUND OF ARTS, SHARJAH FOR HAVING SE NT A DEMAND DRAFT IN US DOLLARS WERE ALSO FILED. 4. ASSESSING OFFI CER AFTER PERUSING THE AGREEMENT CAME TO A CONCLUSION THAT IT DID NOT SPECIFY THE NATURE OF SPECIFY GOODS OR MERCHANDISE SOLD. A GREEMENT , ACCORDING TO T HE LD. ASSESSING OFFICER ALSO, DID NOT SPECIFY WHEN THE MASTER TAPES HAD TO BE DELIVERED. ASSESSEE H AD NOT PRODUCED ANY EVIDENC E FOR THE CUSTOMS CLEARANCE OF THE GOODS OR MERCHANDISE FOR PROVING THAT IT HAD CRO SSED THE FRONTIERS OF INDIA. AS PER THE ASSESSING OFFICER , WITHOUT ANY BILL/VOUCHERS FOR SALE OF MUSIC TAPES , IT WAS NOT POSSIBLE TO OBTAIN A C USTOMS CLEARANCE. THE BANK STATEMENT PRODUCED ONLY VOUCH ED FOR THE RECEIPT OF US DOLLARS BUT THE PLACE OF REMITTANCE WAS NOT CLEAR. ALSO M/S.GALAXY TIMBE R TRADING INTERNATIONAL WAS HAVING EXPORT SALE OF TIMBER AND THEREFORE, THE REMITTANCE COULD HAVE B EEN FOR SUCH EXPORTS . AS PER THE A.O., EXCEPT FOR THE A FFIDAVIT FILED BY THE ASSESSEE THAT GOODS HAD CROSSED THE FRONTIERS AND SALE PROCEEDS WERE RECEIVED WITHIN THE STIPULATED TIME , NO OTHER EVIDENCE WAS PRODUCED FOR THE ALLEGED EXPORT. ITA . 2171 /MDS/ 08 6 5. AS FOR THE R ELIANCE PLACED ON THE DECISION OF HON BLE MUMBAI HIGH COURT IN THE CASE OF ABDU LGADAR A NADIADWALA VS. ACIT, ASSESSING OFFICER WAS OF THE OPINION THAT IN THE SAID CASE, CONCERNED ASSESSEE COULD PROVE MOVEMENT OF GOODS FROM INDIA TO ANOTHER COUNTRY, WHICH WAS SUBJECTED TO CUSTOMS CLEARANCE AT THE CUSTOMS STATION. ACCORDING TO THE LD.A.O., FOR THE PURPOSE OF INCOME TAX ALSO EXPORT HAD TO BE GIVEN THE SAME ME ANING UNDER SECTION 2(18) OF CUSTOMS ACT, 1962 . ASSESSEE HAD NOT PRODUCED EVIDENCE TO SHOW TH AT THERE WERE ANY CUSTOMS CLEA RANCE OF THE EXPORTE D GOODS. HENCE AS PER THE A.O. HE COULD NOT AVAIL OF RELIEF UNDER SECTION 80HHC OF THE ACT FOR EXPORTS. IN THIS VIEW OF THE MATTER , IN THE FRESH PROCEEDINGS ALSO, ASSESSING OFFICER DENIED THE CLAIM OF DED UCTION MADE UNDER SECTION 80HHC OF THE ACT. 6. ASSESSEE ONCE AGAIN MOVED I N APPEAL BEFORE THE CIT(A). CONTENTION BEFORE THE CIT(A) WAS THAT SPOOL MASTERS AND AD MASTERS TOTALING IN ALL TO 51 NUMBERS WERE EXPORTED TO SOUND ARTS, SHRJAH, UAE THROUGH ONE MR. MAHESH AND MR. MOHAMED SHER IFF AND FOR THIS, IT FILED FOUR LETTERS DATED 24.12.2002, 24.12.2002, 27.01.1993 & 09.02.1993 BEFORE THE CIT(A). AS PER THE ASSESSEE, SUCH LETTERS WERE ALSO AVAILABLE BEFORE ASSESSING ITA . 2171 /MDS/ 08 7 OFFICER HAVING BEEN FILED DURING THE COURSE OF ORIGINAL ASSESSMENT 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. LD. CIT(A) WAS APPRECIATIVE OF THE ABOVE CONTENTION OF THE ASSESSEE . ACCORDING TO HIM, ASSESSEE HAD A RIGHT TO CLAIM DEDUCTION UNDER SECTION 80HHC OF THE ACT. S ALE PROCEEDS WERE COLLEC TED IN FOREIGN EXCHANGE AND WHAT WAS EXPORTED WERE GOODS. THE ONLY ISSUE WAS WHETHER SUCH EXPORTS WERE NECES SARY TO BE DONE PHYSICALLY OR NOT WITH CUSTOMS CLEARANCE . ACCORDING TO HIM , IN HON BLE MUMBAI HIGH COURT IN THE CASE OF ABDULGADAR A NADIADWALA VS. ACIT IN 267 ITR 488 HAD CLEARLY HELD THAT PHYSICAL TRANSMISSION WAS NOT ALWAYS NECESSARY. BETA - CAM TAPE S TRANSMITTED, COULD BE CONSIDERED AS EXPORTS . BETA - CAM TAPES AND MASTER TAPES ARE ONLY ONE AMONG THE MANY MODES OF TRANSPORTATION OF SUCH RIGHTS AND DEDUCTION WILL BE AVAILABLE UNDE R SECTION 80HHC OF THE ACT FOR EXPORTS THROUGH SUCH TAPES AS WELL . IN THIS VIEW OF THE MATTER, HE HELD THAT ASSESSEE WAS ELIGIBLE FOR DEDUCTION OF ` 38,04,768/ - UNDER SECTION 80HHC OF THE ACT. ITA . 2171 /MDS/ 08 8 8 . NOW BEFORE US, LD. D.R. STRONGLY ASSAILING THE ORDER OF CIT(A) SUBMITTED THAT THE ASSESSEE DID NOT PROVE EXPORT OF THE GOODS B EYOND THE FRONTIER S OF INDIA FOR CLAIMING DEDUCTION UNDER SECTION 80HHC OF THE ACT. LD. D.R. W AS OF THE OPINION THAT IT WAS ESSENTIAL FOR THE GOODS TO MOVE OUT OF THE FRONTIER S OF INDIA AND ASSESSEE FAILED TO PRODUCE EVIDENCE IN THIS REGARD . THOUGH ASSE SSEE HAD PRODUCED LETTERS PLACED AT PAPER BOOK (PAGE NOS. 13 TO 15) ADDRESSED TO SOUND OF ARTS, THESE LETTERS BY ITSELF W OULD NOT PROVE THE EXPORT OF GOODS, SINCE SUCH LETTERS WERE WRITTEN BY ASSESSEE HIMSELF AND NOT ACKNOWLEDGED BY THE SAID PARTY. RELYIN G ON EXPLANATION (AA) GIVEN UNDER SECTION 80HHC OF THE ACT , LD. D.R. SUBMITTED THAT FOR AN EXPORT TO BE EXPORT OUT OF INDIA, IT WAS NECESSARY THAT A CLEARANCE WAS OBTAINED FROM THE CUSTOMS STATION AS DEFINED UNDER THE CUSTOMS ACT, 196 2. HERE, THERE IS NO THING ON RECORD TO SHOW THAT ASSESSEE HAD PAID ANY CUSTOMS DUTY ON THE MASTER TAPE , IF ANY , EXPORTED BY IT. L ETTER OF M/S.SOUND OF ARTS PLACED AT PAPER BOOK PAGE NO.16 DID NOT SHOW THAT SUCH PAYMENTS WERE IN RELATION TO SPOOL MASTERS SENT TO THEM. ASSE SSEE COULD NOT BRING ANY CONCLUSIVE EVIDENCE TO PROVE THAT ANY EXPORT OF GOODS WERE THERE. EVEN IF IT WAS PRESUMED THAT WHAT WAS EXPORTED COULD BE CONSIDERED GOODS , STILL ASSESSEE COULD NOT SHOW BY WHAT MODE IT WAS TRANSMITTED ITA . 2171 /MDS/ 08 9 AND HOW IT REACH ED THE P ARTY IN SHARJAH. ACCORDING TO HIM, THE AGREEMENT DATED FIRST OCTOBER, 1992 ENTERED BETWEEN ASSESSEE ANS M/S.SOUND OF A RTS CLEARLY SHOWED THAT IT WAS FOR PURCHASE OF TITLES BY THE LATTER PARTY AND NOT FOR SALE OF ANY GOODS . 9. PER CONTRA LD. A.R. STRO NGL Y SUPPORTED THE ORDER OF CIT(A) AND SUBMITTED THAT CIT(A) WAS JUSTIFIED IN RELYING ON THE DECISION OF THE HON BLE MUMBAI HIGH COURT IN THE CASE OF ABDULGADAR A NADIADWALA VS. ACIT(SUPRA). 10 . WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS REQUIRED TO REPRODUCE THE RELEVANT PARA S OF THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH M/S.SOUND OF ARTS . THIS DEED OF AGREEMENT IS ENTERED, INDUPLICATE, AT MADRAS THIS THE FIRST DAY OF OCTOBER 600 108, REPRESENTED BY ITS MANAGING PARTNER DR. K.J.YESUDAS, HEREINAFTER REFERRED TO AS THE PART 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 A LNAHARY, HEREINAFTER REFERRED TO AS THE PARTY OF THE SECOND PART. ITA . 2171 /MDS/ 08 10 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, ADMINISTRA TORS AND ASSIGNS. WHEREAS THE PARTY OF THE FIRST PART IS THE (WORLD WIDE) COPYRIGHT HOLDER OF ALL TITLES RELEASED OR TO BE RELEASED BY M/S.THARANGINI RECORDS, M/S.THARANGINI SOND TECHICS & M/S.THARANGINI MUSIK, HEREINAFTER REFERRED TO AS TR, TS & TM RESPE CTIVELY. AND WHEREAS THE PARTY OF THE SECOND PART IS DESIROUS OF PURCHASING THE COPY RIGHTS OF ALL THE TITLES RELEASED BY TR, TS & TM FOR COMMERCIAL EXPLOITATION ALL OVER THE WORLD EXCEPT INDIA. AND WHEREAS BOTH THE PARTIES ARE DESIROUS OF REDUCING THE T ERMS OF THIS AGREEMENT IN WRITING. NOW THIS DEED OF AGREEMENT WITNESSETH AS FOLLOWS: 1. THE PARTY OF THE SECOND PART SHALL BUY ALL THE TITLES RELEASED AND TO BE RELEASED TILL 31 ST DECEMBER, 1992 EXCEPT THE FOUR TITLES LISTED IN ANNEXURE A WHICH WERE ALREAD Y SOLD TO ANOTHER PARTY. A) 8316 : MURUGAN SONGS (TR) B) 8314 :CLASSICAL MUSIC LIVE PROGRAMME VOL.I(TR) C) 8460 :CLASSICAL MUSIC LIVE PROGRAMME VOL.4(TR) D) TAM - 104 : MAHIRKA NACCHI PAADANJALI (TM) ITA . 2171 /MDS/ 08 11 6. ALL T HE MASTER - TAPES HAVE TO BE DELIVERED BY THE PARTY OF THE FIRST PART TO THE SECOND PARTY AT RANDOM AND AT THE FREQUENCY AS DESIRED BY THE SECOND PART, THE MAXIMUM TIME OF SCHEDULE BEING SIXTY DAYS FROM THIS DAY. 7. THE PAYMENTS FOR THE TITLES, RELEASED AN D TO BE RELEASED UPTO 31.12.1992 WILL BE MADE BY T.T. OR D.D. 8. THE PARTY OF THE SECOND PART SHALL BE ENTITLED FOR EXCLUSIVE RIGHTS IN PERPETUITY OVER THE ENTIRE WORLD EXCEPT IN INDIA FOR THE REPERTOIRE OF TR,TS & TM PURCHASED FROM THE PARTY OF THE FIRS T PART ON ANY PRODUCT CONFIGURATION, VIZ. PRE - RECORDED. 11. THOUGH T HE ABOVE AGREEMENT MENTIONS THE ASSESSEE TO BE THE MANAGING PARTNER OF M/S.GAL AXY TIMBR TRADING INTERNATIONAL, IT WAS CLARIFIED BY THE LD. D.R. DURING THE COURSE OF PROCEEDINGS BEFORE US THAT I T WAS ONLY A TYPING MISTAKE, AND ASSESSEE WAS IN FACT THE PROPRIETOR OF THE SAID CONCERN. A LETTER RECEIVED FROM THE ASSESSEE CONFIRMING THIS FACT WAS FILED BY THE LD. D.R. 12. IT IS CLEAR FROM THE AGREEMENT , PERTINENT P A R TS OF WHICH HAVE B EEN REPRODUCED BY US AT PARA10 ABOVE, THAT M/S.SOUND OF ARTS WAS TO PURCHASE ALL TITLES RELEASED BY THE ASSESSEE UPTO 31.12.92 EXCEPT FOR FOUR TITLES AND ASSESSEE WAS TO DELIVER SUCH TITLES BY WAY OF MA STER TAPES TO THE SAID PARTY. DELIVERY WAS TO BE D ONE AS PER THE FREQUENCY DECIDED BY THE SECOND PARTY. ITA . 2171 /MDS/ 08 12 P AYMENTS TO ASSESSEE WERE TO BE RELEASED BY WAY OF DD OR TT. ASSESSEE BEING A RENOWNED SINGER, WITHO UT DOUBT WHAT WERE SOLD WAS RIGHTS TO THE SONGS RELEASED BY M/S.THARANGINI RECORDS, M/S.THARANGINI S OND TECHICS & M/S.THARANGINI MUSIK , WHICH WERE CONTAINED IN THE MASTER TAPES . HON BLE MUMBAI HIGH COURT IN THE CASE OF ABDULGADAR A NADIADWALA VS. ACIT (SUPRA) 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 . REASON ING GIVEN FOR DENYING RELIE F TO THE ASSESSEE UNDER SECTION 80HHC OF THE ACT HERE IS THAT EVEN IF THE MASTER TA PES WERE CONSIDERED GOODS , HIS VERSION THAT THESE WER E 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 REPRODU CED HEREUNDER: - (AA) EXPORT OUT OF INDIA SHALL NOT INCLUDE ANY TRANSACTION BY WAY OF SALE OR OTHERWISE, IN A SHOP, EMPORIUM OR ANY OTHER ESTABLISHMENT SITUATED IN INDIA, NOT INVOLVING CLEARANCE AT ANY ITA . 2171 /MDS/ 08 13 CUSTOMS STATION AS DEFINED IN THE CUSTOMS ACT, 1962 (52 OF 1962); BY VIRTUE OF THE ABOVE EXPLANATION, A TRANSACTION BY WAY OF SALE IN A SHO P IN INDIA, IF IT DOES NOT INVOLVE CLEARANCE AT ANY CUSTOMS STATION WILL NOT BE CONSIDERED AS EXPORT OUT OF INDIA. IN OTHER WORDS TO BE CONSTRUED AS EXPORT OUT OF IN DIA , IF A SALE IS EFFECTED IN A SHOP OR EMPORIUM IN INDIA, IT IS NECESS ARY THAT SUCH SALE SHOULD HAVE CLEAR ANCE OF A CUSTOMS STATION. THIS POSITION IS CLEARLY EXPLAINED BY HON BLE APEX COURT IN THE CASE OF CIT VS. SILVER & ARTS PALACE IN 259 ITR 664 . B Y NECESSARY IMPLICATION , IF THE SALE IS NOT TO A SHOP OR AN EMPORIUM IN INDIA, BUT TO SOME PERSONS OUTSIDE INDIA, THEN QUESTION OF INSISTING ON A CLEARANCE FROM CUST OMS STATION MAY NOT BE RELEVANT. E SPECIALLY SO WHERE GOODS EXPORTED ARE OF A NATURE , W HICH DID NOT REQUIRE PHYSICAL TRANSFER AT ALL. 14 . A L OOK AT THE LETTERS ISSUED BY THE ASSESSEE TO M/S.SOUND OF ARTS (PAPER BOOK PAGES - 13 - 15 ) , WHICH ARE CERTIFIED BY LD. SR. COUNSEL OF THE ASSESSEE , TO HAVE BEEN PLACED BEFORE THE ASSESSING OFFICER DUR ING THE COURSE OF ASSESSMENT ORIGINAL PROCEEDINGS , CLEARLY SHOW THAT MASTER TAPES WERE HANDED OVER TO ITA . 2171 /MDS/ 08 14 TWO PERSONS FOR DELIVERING IT TO M/S.SOUND OF ARTS, SHERJAH UAE. LETTER FROM M/S. SOUND OF ARTS PLACED AT PAPER BOOK AT PAGE NO.18 READS AS UNDER: - SHA RJAH 31 ST DECEMBER,1992. GALAXY TIMBER TRADE INTL. 13,3 RD STREET, ABHIRAMPURAM, MADRAS. INDIA ATTN. MR. THOMAS KURIEN. WE ARE SENDING YOU HEREWITH A DD NO.966105 DATED 31.12.1992 FOR THE SUM OF USD.19.298.21 BEING OUR JANUARY 93 PAYMENT. KINDLY ACKNO WLEDGE RECEIPTS. HOPEFULLY I WILL BE COMING TO MADRAS AROUND 15 TH JANUARY 93 AND WILL BRING OUR ORIGINAL AGREEMENT DULY CERTIFIED. IN THE MEANTIME, WE APPRECIATE IF YOU MAY KINDLY ARRANGE CONTINUING OF TRAN SFERRING MASTERS FOR US, SO WE HOPE IT WILL BE COMPLETED WITHIN SHORT FUTURE. THANK YOU AND YOUR COOPERATION WILL BE HIGHLY APPRECIATED. YOURS SINCERELY, M.S.ALNAHARY SD/ - THE ABOVE LETTER CLEARLY IMPLY THAT PAYMENTS WERE EFFECTED BY THEM TO THE ASSESSEE TILL THAT DATE, FOR TRANSFER OF MASTERS TAP E TO THEM . IN THE FACE OF SUCH EVIDENCE PLACED BEFORE LOWER AUTHORITIES TO ASSUM E THAT NO EXPORT OF THE TI T LES WERE DONE BY THE ASSESSEE TO M/S.SOUND OF ARTS, SHARJAH WILL BE INCORRECT. IN O UR OPINION, ASSESSEE HAD ADDUCED REASONABLE EVIDENCE TO SHOW THA T MA S TERS TAPES WERE DELIVERED BY HIM TO TH E PARTY IN SHARJAH. THAT ASSESSEE HAD RECEIVED FOREIGN EXCHANG E WITHIN THE STIPULATED ITA . 2171 /MDS/ 08 15 PERIOD HAS NOT BEEN DENIED BY THE REVENUE AND ASSESSEE HAD ALSO OBTAINED CERTIFICATE OF FOREIGN INWARD REMITTANCE BY ANZ GRIND LAYS BANK, COPIES OF WHICH HAVE BEEN PLACED AT PAPER BOOK (PAGES 22 TO 24). IN THESE CIRCUMSTANCES, WHERE ASSESSEE HAD RECEIVED THE CONSIDERATION FOR EXPORT OF THE MASTERS TAPES WHICH CONTAINED THE TITLE AND RIGHTS OF SONGS , BY VIRTUE OF DECISION OF HON BLE MUMBAI HIGH COURT IN THE CASE OF ABDULGADAR A NADIADWALA VS. ACIT (SUPRA), WE ARE OF THE OPINION ASSESSEE WAS ENTITLED FOR DEDUCTION UND ER SECTION.80HHC OF THE ACT. LD. CIT(A) WAS JUSTIFIED IN GRANTING SUCH RELIEF. WE DO NOT FIND ANY REASON TO INTERF ERE WITH THE ORDER OF THE CIT(A), 15 . IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AF TER CONCLUSION OF HEARING ON 26 TH SEPTEMBER , 2012. SD/ - SD/ - ( VIKAS AWASTHY) ( ABRAHAM P. GEORGE ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED 26 TH SEPTEMBER , 2012 . K S SUNDARAM COPY TO: ASSESSEE / AO / CIT (A) / CIT / D.R. / GUARD FILE ITA . 2171 /MDS/ 08 16