- (1.) All the appeals have been filed by the Department under Section 260A of the Income-Tax Act, 1961 against the consolidated judgment and order dated 28.02.2006, passed by the Income Tax Appellate Tribunal, Lucknow in I.T.A. Nos. 1076/A/96; 1760/A/96; and 1764/A/94, for the assessment years 1993-94; 1991-92; and 1992-93 respectively.
(2.) On 07.08.2006, a Coordinate Bench of this Court has admitted the appeals on the following substantial question of law:- "Whether on the facts and in the circumstances of the case, the learned ITAT is, in law, justified in holding that assessee was entitled to deduction U/s 80HH and 80-I of the Income Tax Act, 1961 on consultancy charges even as the consultancy was given by its directors/ employees without involving any usage of the industrial undertaking and the company was eligible for royalty for that as per the agreement entered into by it?"
(3.) The brief facts of the case are that the assessee company is engaged in the manufacturing of wide range of products like industrial perfumes, chewing tobacco, synthetic essential oil etc. The assessee has entered into an agreement with Hindustan Lever Ltd. (for short, 'HLL') whereby assessee as the licensor had licensed the formula developed through its research and gave exclusive right to HLL to use the said formula in their products specially in liril soap. In addition to the consideration, the assessee has also received the royalty/consultancy charges from HLL under the heading for further research work. It is the claim of the assessee that along with its manufacturing activity, the assessee carried out the research and development activity side by side making use of the entire paraphernalia of the industrial undertaking. The assessee has claimed the exemption of the amount received as royalty/consultancy charges under Section 80HH and Section 80-I of the Act.;