Tata Infomedia
Ltd.
v.
Assistant
Commissioner of Income-tax, Range-7(3)
K.C. SINGHAL,
JUDICIAL MEMBER
AND D.K.
SRIVASTAVA, ACCOUNTANT MEMBER
IT APPEAL NOS.
7323, 7341 (MUM) OF 2002, AND 4898 (MUM) OF 2003
[Assessment
years 1995-96 and 1996-97]
January 3,
2008
Section 80Q of the Income-tax Act, 1961
– Deductions – Profits and gains from publication of books – Assessment years
1995-96 and 1996-97 – Whether expression, ‘publication of books’ used in
section 80Q refer to only those books which are offered to public in sense that
it enables public to read or know contents of book and such offer may be made
either by way of sale or distribution of same to public - Held, yes - Whether
charging of price, is not condition precedent for bringing book within scope of
word ‘publication’ - Held, yes - Whether merely because a printer or publisher
of a book is registered with Registrar of newspaper and book published by him
contain certain advertisement, he cannot be said to be publishers of newspaper
-Held, yes - Whether income generated from advertisement given in a book cannot
be ignored and would have to be taken into consideration while computing income
derived from business of publication of books - Held, yes - Assessee was engaged
in business of printing and publication of yellow pages directory – It claimed
deduction under section 80Q in respect of profits derived from such business –
Department disallowed claim of assessee on ground that yellow pages directory
printed by assessee could not be said to be book and since assessee had
distributed said directory to various section of public (free of cost) it would
not amount publication as per section 80-Q - Whether, word ‘book’ is a word of
widest amplitude which would not only include literary work or other work
authored by some one but may also include mere collection of sheets within its
ambit - Held, yes - Whether in view of above said wide meaning of word ‘book’,
it could be said that yellow pages which was in form of a directory listing
addresses and telephone numbers of various person under various classification
such as lawyers, doctors etc,. could be treated as ‘book’ - Held, yes - Whether
further since ‘yellow pages’ were printed in lakhs and same were distributed
free to general public i.e. Corporate houses, Government offices, Businessmen
and Professionals as well as to residents of thousands of housing societies
such distribution amounted to ‘publication’ - Held, yes - Whether, therefore,
it could be said that assessee was engaged in business of publication of books
in terms of provisions of section 80Q and would be entitled to deduction under
aforesaid section - Held, yes
Section 80Q of the Income-tax Act, 1961
- Deductions - Profits and gains from publication of books - Assessment years
1995-96 and 1996-97 - Whether in newspaper, magazines, journals and other
publication of similar nature articles published are written by authors - Held,
yes - Whether therefore, it could not be said that various items listed in
excluded category of books under section 80Q(3) viz newspapers, journals,
magazines, diaries, brochures, tracts, pamphlets and other publications of a
similar nature do not have a author - Held, yes - Whether yellow pages
directory printed and published by assessee would be included in excluded
category of books specified in sub-section (3) of section 80Q on ground that
such publications did not have a author - Held, no
Words and Phrases
Expression ‘Publication of books’
appearing in section 80Q of the Income-tax Act, 1961.
FACTS
The assessee was engaged in the
business of printing and publication of yellow pages directory. It claimed
deduction under section 80Q in respect of profits derived from such business.
The Assessing Officer as well as the Commissioner (Appeals) denied the
deduction under section 80Q on various grounds viz (i) yellow pages
directory could not be said to be ‘book’, (ii) the assessee had
distributed the yellow pages directory to various section of public (free of
cost) and therefore, same would not amount to publication, (iii) Yellow pages
printed by the assessee fell within the excluded items under sub-section (3) of
section 80-Q on the ground that the same fell within the expression "Other
publications of the similar nature by whatever name called" used by the
legislature after the words newspapers, journals, magazines diaries, brochures,
tracts, pamphlets in sub-section (3) of section 80-Q. There was common thread
running through the various items mentioned in excluded category i.e. such
publication do not have author and since there was no author, in yellow pages,
the same could not be described as book, (iv) the entire income was
generated by the assessee from the advertisements given in the yellow pages and
there was no income from the sale of yellow pages and, therefore, income could
not be said to be derived from publication of books.
On second appeal:
HELD
The deduction under section 80Q is
available in respect of profits derived from the business of either printing
and publishing of books or business of publications of books. The word ‘books’
for the purpose of sub-section (3) of section 80Q would, however, not include
newspapers, journals, magazines, diaries, brochers, tracts, pamphlets and other
publications of similar nature. It is the activity of publication which is
condition precedent for claiming deduction. With this background it was to be
seen as to whether the directory printed by the assessee could be said to be
‘book’, and whether distribution of the directory to various sections of public
(free of cost) amounted to publication. [Para 6]
There is no ambiguity about the words
‘book’ and ‘publication’ and, therefore, the plain and natural meaning of these
words has to be seen. In terms of the dictionary meaning of the word ‘book’ and
catena of decisions on the issue it is
evident that the word ‘book’ is a word of widest amplitude and as per
its natural meaning, would include not only literary or scientific book, book
of art, law or religion etc., but also include mere collection of sheets. Thus,
it would include even the exercise books used by the students for writing,
books of account like cash book, ledger, registers, etc. used by the
businessmen for writing their accounts of business. Therefore, it would be
wrong to contend that ‘book’ would include only literary work or other work
authored by some one. [Para 9]
In the instant case, yellow pages was
in the form of a directory listing various persons under various
classifications such as lawyers, doctors, jewellers, timber merchants and
various categories of different traders and professionals. Their addresses and
telephone numbers had been provided. If the natural meaning of the word ‘book’
as discussed above would be applied then the yellow pages directory must be
held as ‘book’. [Para 10]
The next aspect of the issued related
to the meaning of the word ‘publication’.
The dictionary meaning of the word ‘publication’ shows that a book can
be said to be published when it is offered to public. Such offer may be made
either by selling or distributing to the public. [Para 11]
Therefore, the expression, ‘publication
of books’ used by the legislature in section 80Q would refer to only those
books which are offered to public in the sense that it enables the public to
read or know the contents of the book. Thus, the books which don’t contain the
reading material would be outside the ambit of the provisions of section 80Q.
Thus, the books like exercise books, cash book, ledger, registers, etc. which
otherwise falls within the scope of the word ‘book’ would not be considered for
the purpose of section 80Q. This
restricted meaning is given considering the context in which the language is
used. But there is nothing in its natural meaning that book must be one which
is authored by somebody. For example, a publishing house may print a book as a
guide for tourists. This may consist of various information collected by it
which may be useful for the tourists, it may be without any author but that
does not mean that the publishing house has not published it. A Telephone
directory issued by Mahanagar Telephone Nigam Ltd. (MTNL) to their subscribers
would be considered as a book published by MTNL. Merely because it is
distributed free, it does not mean that it is not a case of publication of
book. Such book is also not available at book stalls but on that account, it
would be wrong to say that such book was not published. Charging of price, is
not condition precedent for bringing the book within the scope of the word
'publication'. All the factors taken into consideration by the lower
authorities in denying the claim of the assessee, were irrelevant. The purpose of publication is to make the
contents of the book known to the public either by way of sale or distribution
of the same to the public. The yellow pages directory were printed in lakhs and
the same was distributed free to the general public, i.e., Corporate houses,
Government offices, Businessmen and Professionals as well as to residents of
thousands of housing societies in Mumbai. Therefore, such distribution amounted
to ‘publication’ as per its natural meaning.
Therefore, the yellow pages directory not only were printed but also
published by the assessee. [Para 12]
The next aspect of the issue was
whether the 'Yellow pages' could be said to fall within the excluded category
provided in sub-section (3) of section 80-Q i.e. newspapers, journals,
magazines, diaries, brochures, tracts, pamphlets and other publications of
similar nature. The stand of the Assessing Officer was that the assessee was
registered with the registrar of Newspapers which also shows that 'Yellow
pages’ should be treated like newspaper.
[Para 13]
Every printer of a book and a newspaper
is governed by the provisions of ‘The Press and Registration of Books Act,
1867’. This Act defines ‘book’ and ‘newspaper’ separately. Newspaper is defined
to mean any printed periodical work containing public news or comments on
public news. As per section 3 of the said Act every printer of book or
newspaper is required to print legible on it, the name of the printer and the
place of printing and if the books or paper is published, the name of the
publisher and place of publication. As per section 9 of the said Act, the
printed copy of the book is to be delivered to the notified officer. The Registrar
of newspapers is required to regulate the working of newspaper only and not the
printing and publication of books. There is nothing in the said Act that
printer or publisher of a book is required to get registered with Registrar of
newspapers. Merely because the assessee got itself registered with Registrar of
newspapers, no adverse inference could be drawn against it. Even otherwise, the
assessee could not be said to be the publisher of newspaper as per the
definition of newspaper given in the 1867 Act inasmuch as no news was published
in it. Merely because the directory contained certain advertisements, it could
not be said to be newspaper or similar to newspaper.
The Commissioner (Appeals) had observed
that there was a common thread amongst the excluded items, of books specified
in section 80Q(3) i.e., there is no author in respect of excluded items. The reasoning of the Commissioner (Appeals)
could not be accepted. In all the newspapers, all the news are authored by
their correspondents. In all the magazines and journals, the articles published
are written by authors. Therefore, it could not be said that there is no author
in the excluded items provided in sub-section (3) of section 80Q. Therefore,
the directory in question could not be included in the excluded category of
books specified in sub-section (3) of section 80Q on ground that it did not
have a author. [Para 14]
The last aspect of the issue was
whether it could be said the profit earned by the assessee was from the
business of the publication of books.
The stand of the Assessing Officer was that entire income was generated
from the advertisements given in the ‘yellow pages’ and there was no income
from the sale of yellow pages as the same was distributed free of cost. Therefore, according to the Assessing
Officer, the income could not be said to be derived from publication of
books. On the other hand, the
contention of the assessee was that basic object of the assessee was to carry
on the business of publication of books.
The manner in which the business is to be carried on has to be left to
the discretion of businessmen. [Para
15]
There was force in the contention of
the assessee. The assessee was in the business of publication of books. It was
for the assessee to find out the ways as to how the profits could be earned
from such publication. The assessee chosed to earn its income through
advertisements in the book published by it and such revenue could not be
separated from the activity of the publication. It was because of this publication
that assessee was able to earn revenue from the advertisements. No businessmen
would give advertisements unless a book of public importance is published.
Therefore, the income generated from advertisements given in a book cannot be
ignored and would have to be taken into consideration while computing the
income derived from the business of publication of books. [Para 16]
In view of the above discussion, it
could be said that the assessee was engaged in the business of publication of
books in terms of the provisions of section 80Q and was entitled to deduction
under the aforesaid section. [Para
17]
Editor’s Note
(1.)
Where the assessee made payments in respect of contribution to Provident
Fund and Family Pension Fund within the grace period, no disallowance
could be made under section 43B.
(2.) The interest income received by
the assessee from its clients was assessable as ‘business income’ and the
Assessing Officer was wrong in assessing the same under the head ‘Income from
other Sources’.
(3.) Under section 220(2) interest can
be levied only where the amount specified in notice of demand under section 156
is not paid within the period specified under sub-section (1), and since in the
instant case no demand was pending against the assessee beyond the specified
date, the interest levied upon the assessee under section 220(2) was rightly
deleted by the Commissioner (Appeals).