Case Law Details
RELEVANT PARAGRAPH
8. We have considered the facts of the case and rival submissions. Section 80HHF regarding deduction in respect of profits and gains from export or transfer of film software etc. This provision grants the deduction in a case, where the assessee is engaged in the business of export or transfer by any means out of India, of any film software, television software etc., including telecast rights. On closer examination, it becomes clear that either the film software should be exported outside India or transferred out of India by any means by the person resident in India. The term “export” involves the crossing of the customs frontier by the goods or the software sought to be exported. However, due to advancement in technology, the software etc. can be transferred, which does not involve the crossing on customs frontier as normally understood in case of export of goods. That is why, the words “transferred by any means” were included in the section to the word “export”. However, both the expressions involve an element of export of film software (in the case of the assessee) from India to a country outside India by the assessee. Further, the word `transfer’ does involves at least a bilateral transaction under which some proprietary rights are transferred from the transferor in India to transferee outside India. Therefore, essentially this provision contains a stipulation about a bilateral agreement with further stipulation that there should be transfer of film software from India to a place outside India. This transfer, in the case of transfer by conventional manner, takes place when the film or software crosses the customs frontier and in electronic transfer software it takes place when by computer command it is transferred outside India. But handing over the software or film to the clients’ representative does not amount to transfer outside India by any means under either of the situations. Lai Gem’s case supports this view. Therefore, we do not agree with the finding of the Id. CIT (A) when he held that transfer of the film software by the agent of the foreign parties, who received it from the assessee in India, amounts transfer to a place outside India by any means. In doing so, he did not take into account the fact that the expressions “export” and “transfer by any means” have been used in conjunction and, therefore, have to be interpreted by applying the principle of ejusdem generis. Further, the order of the Tribunal in the case of Lai’s Gems Export (supra) supports the case of the revenue.
8.1 Coming to the issue whether the case involved a bilateral transaction, which could be called “transfer”, we may have regard to the terms of two agreements filed by the assessee in respect of its duties. In so far as the agreement with Italgist Video SRL is concerned, the production services have been defined as under: –
“Production on 6ei vices means all and usual and necessary production services for the production, provision of general counseling services and advice (subject to Producer’s decision being final) regarding the production of the film in India including, without limitation budgetary matters, aspects of crewing and casting advertisements. Procurement of such production equipment as necessary in connection with the production of the film including, without limitation, camera, grip and fighting equipment, props as required by Producer in conjunction with the Designated Representative of Producer; Negotiation of the agreements on behalf of Producer for all India Personnel and all Indian suppliers of facilities and equipment necessary for the production of the film on the best terms obtainable and as approved, in advance, by Producer in accordance with the Budget-Arrangement, in conjunction with the Designated Representative of Producer of ail office space, hotel and other lodging, transportation and catering service as may be required by Producer in connection with the Film, including supervision of ail cast and crew travel to and from locations in India; Assistance in arrangements of all vehicle rentals, required by Producer for shooting the film; supervision and negotiation of all location agreements on terms and conditions approved in advance by Designated Representative of Producer. Provision of officer and personnel, as required, for production end final wrap up of outstanding issues, accounting, deposit, bonds, etc., as and if required by Producer.”
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