TMI Blog2014 (10) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... AO as well as CIT(A) despite insistence by the respective authorities for reasons best known only to the assessee. The copy of complaint which could not be considered at any prior stage of proceedings in the instant case and could only be brought to light from the internet domain before us hence, the same needs to be considered - it would be prudent to state that in absence of any direct evidence to the contrary with respect to case-details/ complaint by the assessee, it is important to point out that, admission of the same shall cause no prejudice to the assessee as the same pertains to assessee’s own case and even none of its contents have been controverted by the assessee – thus, the Application for Additional evidence made by the revenue in terms of Rule 29 of the ITAT Rules, 1963 and admitted – Decided in favour of revenue. Royalty u/s 9(1)(iv) – Article 13 of Indo-French DTAA – Consideration received from distribution agreement - Whether news reports and photographs could be subject matter of copyright in terms of Section 13 of the Copyright Act, 1957 and whether the consideration received by the assessee under the distribution agreements qualify as “royalties’ in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration. The assessee by way of grant of licence to its users obtained a commercial value for distribution of its news which cannot come into the public domain except by virtue of a license agreement - the question of “fair dealing’ by the user of information covering bundle of first, second as well as third category of information does not come into play as it is strictly governed by the terms of the subscription agreement and comes for a commercial value hence, the reference to “fair dealing’ in terms of Section 52(1)(b) is misplaced to this extent – Decided against assessee. Charging of interest u/s 234B – Obligation to deduct TDS u/s 195 – Held that:- Following the decision in DIT-I, International Taxation Versus Alcatel Lucent USA, Inc., Alcatel Lucent World Services Inc. [2013 (11) TMI 734 - DELHI HIGH COURT] - even though there may not be any positive or direct evidence to show that the assessee did make a representation to its Indian telecom dealers not to deduct tax from the remittances, such a representation or informal communication of the request can be reasonably inferred or presumed - The Tribunal ought to have accorded due weightage to the strong possibility or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee within India in terms of relevant provisions of Copyright Act, 1957, and accordingly, such impugned copyright qualify as royalties within meaning ascribed under Paragraph 3 of Article 13 of DTAA between India and France read with Explanation 2(v) to Section 9(1)(vi) of the Income Tax Act during the relevant year. 4. However, prior to adjudicating this matter on the aforesaid issue, we are required to determine whether the application for admission of additional evidence dated 13.06.2014 as filed by the revenue before us in terms of Rule 29 of the ITAT Rules, 1963, should be allowable or not. 5. In this regard, we note that the revenue has along with the relevant Application under Rule 29 in the form of (pages 1 to 22) of Paper Book Volume I has filed A copy of complaint of AFP against Google Inc. filed in the District Court of Columbia, USA in 2005 alleging infringement of copyright by Google Inc. (Pg 1 to 19) and AFP News Agency Sues the Star Newspaper, Nairobi (pg 20 to 22). The Revenue has submitted that both documents are available in the public domain and have been obtained from the internet. 6. It would be relevant to recount the brief background ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that various terms under the agreement entered into between assessee and Indian news agencies inasmuch as IANS PTI and consideration of pleadings and contentions clearly pointed out that copyright subsisted in news-reports as well as photographs distributed/circulated by the assessee in terms of Copyright Act, 1957 and hence, the payments as received by the assessee qualify as royalties in terms of definition contained in Explanation 2 of Section 9 (1) (vi) of the Income Tax Act or Article 13 (3)of the Indo-French Treaty and, accordingly, the consideration of ₹ 65,23,284/- received from Web/ FTP subscribers was held to be taxable @ 15% on gross basis. 10. A brief shorn of contentions put forth by the Ld. DR on the issue regarding admissibility of additional evidence under Rule 29 of ITAT Rules, 1963 could be summarised in the ensuing paragraphs. (ii). The Ld. DR contends that, the revenue department could search some more information in the public domain (internet) on the assessee's complaint against Google Inc. in US Court. This complaint renders details regarding the nature of business carried out by the assessee, information on its products, nature of owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Further, a copy of news item with a credit AFP published by Times of India in its edition dated April 28, 2014 with headlines, N Korea calls South's prez 'prostitute' and Glad Mandela isn't alive today: Tutu were submitted as illustrations of the nature of news items licensed. These news items prove that the headline and storyline are creative literary work and copyright subsists in these news items. The value is not of breaking/current news that is reported by everyone and co-copyright could be claimed for that, but how the same news is presented as a story line or news item by journalists/ news writer that has creative input and are copyrighted. (iv). The ld DR argued that aforesaid documents belonging to the assessee goes to the root of the issue and contradicts the unsubstantiated claims made by the Ld. AR that it is only providing current news, which lacks the basic ingredients of Copyright and is not copyrightable. In this background, the Ld. DR urges this Tribunal to admit these documents as additional evidence and pass an order or any other order for substantial cause to this effect. The Ld. DR also contends that a copy of these documents has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red - Synopsis of arguments filed before us at pages 1 to 9 of paper Book 3 whereby the stand of the Appellant on basic issues involved has been clearly indicated which is based on the detailed submissions made earlier before the Assessing Officer, CIT (Appeals) as well as DRP). (iv). Further it was submitted by the ld AR that before the AO, apart from submissions filed from time to time, a detailed opinion note on the issue of nature of payments received by the assessee for provision of information comprising news items and news photographs indicating the factual and legal aspects of the question were filed at the assessment stage. (Refer pages 64 to 90 of PB I). The Appellant had filed information before the Revenue regarding business being carried out by AFP under the heading business mode. In the light of these facts, the Ld. AR asserts that the stand taken by Ld. DR inasmuch as the payments received from news agencies for supply of news and news photographs is made for transfer of intellectual property is incorrect. (v). As regards the nature of Transaction with PTI, IANS and Web Subscribers, the Ld. AR submitted that, the agreements with the parties placed in PB-I, nome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd again solicited from the Assessee/ Appellant at different stages of litigation i.e. both by AO as well as Ld. CIT(A). In this regard, it is imperative for us to note that the assessee was provided with sufficient opportunities to submit relevant details/ documents pertaining to Google Inc. case etc. (which are now being enlisted for consideration as fresh/ additional documents before us) but, such details/ documents were not submitted before AO and Ld. CIT(A) for consideration. We observe that, even till date the relevant case-papers pertaining to Google s case has not been furnished by the Ld. AR and instead, when the Ld. DR has sought to furnish said information and case-papers in the form of additional evidence obtained from the internet, the Ld. AR opposes the same without citing any specific reason except, stating on record that the case with Google Inc. had ended in a confidential settlement. 14. In the instant case, it goes without saying that the case-papers pertaining to assessee s dispute with Google Inc. is of crucial importance in determination of the central issue at hand i.e. whether copyright subsisted in the newspaper reports, photographs distributed/ circulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the next best evidence, which in the instant case happens to be case-details as obtained from the internet. In this regard, it is important to point out that, admission of the same shall cause no prejudice to the assessee as the same pertains to assessee s own case and even none of its contents have been controverted by the assessee. 17. Thus, we find considerable strength in the reasoning attributed by the Revenue regarding admissibility of the complaint document as it is the next best evidence available before this tribunal. Since the adjudication of any dispute involves quest for truth,and as per the Indian Evidence Act, 1872 Secondary evidence could be admitted when primary evidence is not provided by the party concerned in whose possession it is admittedly there; and ITAT being the final fact finding body, it is our bounden duty to take on board complete spectrum of facts for adjudication of a dispute. Thus, we allow the Application for Additional evidence made by the Ld. DR in terms of Rule 29 of the ITAT Rules, 1963 and admit the same accordingly. 18. Coming back to analysing the principal question of law involved in the present case, it is pertinent to briefly go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to attract more more visitors to its website. The more the number of visitors on his website, the more he gets in the advertisement revenues. - The content of various subscribers displayed on there has to mention the source /credit line. Such use of content helps the subscriber to earn more more advertisement revenue. - Such type of use is covered by use of copyright or in case of such use without valid permission it constitutes infringement of copyright. Which is the reason that assessee has filed the present court suit. - The end user when visits the website, the viewed pages get stored in the memory of computer of the end user. In the result, the subscriber is given the right to copy and use the copy on its website but, not commercially exploit the content owned by the assessee. 20. On the strength of facts/ observations as outlined above as well as submissions made by the assessee, AO had observed that, the consideration received by the assessee for use or right to use copyright of a literary, artistic or scientific work would get covered within the definition of royalties as available in paragraph 3 of Article 13 of the tax treaty between India and France a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the HC has reiterated that although there is no copyright in concept but copyright does exists, as a general proposition in a concept note and the same is entitled to be protected under the Copy Right Act. If it contains copyrightable work, the author/owner thereof would be entitled to the protection accorded under CRA, 1957. 25. Having considered the contentions of the assessee, the Ld. CIT(A) observed that, the appellant received news items from abroad and is allowed to distribute the news only through Indian News Agencies. In India, it is distributed through PTI, UNI and IANS and the Appellant has actually received money in Indian currency from the three Indian entities. The Copy right is a bundle of rights, as has been held under leading judgments of various Indian courts relating to CRA, 1957. Further, once distribution right has been conferred upon the appellant, it is entitled for the abridgement within the meaning of Sec. 2(a) of CRA and abridgement right is within the purview of CRA as decided in Macmillan v K. J. Cooper AIR 1924 PC 75. It has already been stated that there is no bar for joint holding of copyright University of London Press Ltd (Supra). 26. In light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;original' has not be prefixed before the word 'literary' either in the Act or in the Treaty . A similar observation has been made vide para 8.1.5.1 at page 19 of its order. Thus, the consistent stand of the AO, the learned CIT (A) and the learned DR has been that originality is not required for qualifying as literary work. It was on this basis that the Revenue has treated news reports containing narration of current events as copyrightable. There is no such finding by the department that news reports contain originality or that any creative input has been made in such news reports by the assessee. Headlines given by AFP are often changed by newspapers as per their choice. The Ld. DR at this belated stage before the hon'ble Tribunal spun out an entirely new story claiming that AFP provides the news items and photographs and not the current news as is claimed [para 4 at page 2 of learned DR's submission). In para 28, the Ld. DR claimed on the basis of Suits filed against Google and Star and also the contents of news item in the Times of India that the assessee's information consist of news articles/news story which possessed literary quality . Again in pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le regarding infringing the heart of AFP's stories what qualitatively the most important elements of the individual news stories (i.e. the photograph, headlines and story leads). This statement has been relied upon by the Revenue in support of its stand that news items of AFP are copyrightable. This is clearly at variance with the stand of the DRP that there is no copyright in news but only in literary form in which it is expressed. (E) It needs to be pointed out here that in the agreement with the PTI, there is no mention regarding Copyright owned by the AFP for the news reports transmitted as information . Whereas in the agreement with IANS, pages 39 to 44 are the general agreement and page 45 to 47 of PB 1 is the Addendum containing the specific of the redistribution arrangement of the news photographs. Addendum is mentioned vide clause 1 (a) at page 39 of PB 1. It is only in Addendum that clause relating to Copyright has been included. Clause 17 refers to Copyright and clause 18 (b) provides that AFP information is used in a News context and in accordance with this agreement. Thus, photographs are being provided for the purpose of reporting current events and not for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aesthetic merit eloquently depicting human suffering, such a photograph has intrinsic value in a non-news context. If it is used for non-news context and not for reporting contemporaneous news and further acknowledgement of the source is deliberately removed such a case would obviously be outside the purview of Section 52. (vii) An array of judicial authorities have been cited in support of Appellant's case that news being reports of current events does not have the trappings of property and courts are unanimous that news being narration of current events is not copyrightable. INS Vs. Associated Press (page 107 to 122 of PB 2) is a land mark judgment which treated news report as quasi property. However, the INS doctrine has now been undermined with the courts veering round the view that creating property or quasi-property rights in information stands to upset the statutory balance carefully created through the copyright Act. The latest decision is Idea Cellular (174 to 248 of PB 3). (viii) Para 30 of Ld. DR's submissions runs contrary to the interpretation placed on the expression in the OECD commentary, it alludes to the concept of knowhow being undivulged informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to receive AFP's information as clearly defined in the agreement. Schedule A of agreement with PTI defines the information as material derived from the AFP services (page 33, PB-1). In the IANS agreement the definition of information is available on page 44 of the PB-1 and read as: AFP International news Picture Service covering political, economic, business, corporate, orts and other areas. In respect of HT Media Services definition of information is available on page 5 of PB-1 and reads as: information shall be defined as material derived from the following AFP service(s); Text- A selection of all news items .Photos . Therefore, the Ld. DR contends that, AFP provides the news items and photographs and not current news as is claimed. It provides material derived from information. News item is a story that is written by the reporter/journalist in regard to particular news and that is not restricted to current news and these products are copyrighted. The subscribers use this information to commercially exploit the same by publishing the same in their newspapers/web products. (ii) Whether copyright subsists in the information provided: Ld. AR has claimed that restriction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt with Google Inc. entered into licensing agreement and consequent withdrawal of complaint by AFP? (D) The Ld. AR has placed reliance upon the Handbook of Copyright Law in India as appearing in pages 52 to 72 of the PB submitted by the Revenue. It is contended by the Ld. DR that this is an important government document on Copyright. At Page 59, in response to a question whether a photograph is an artistic work or not? It is replied that, There is no copyright over news. However, there is copyright over the way in which a news item is reported. Since, it is not necessary to register a work to claim copyright, any acquisition of Copyright is automatic and does not require any formality. In this regard, reliance could be placed upon Page 59 of PB which clearly shows that, copyright comes into existence as soon as a work is created and no formality is required to be completed for acquiring copyright. (E) Further, pages 62 and 63 of Revenue s PB is explanative about copyright of foreign works in India, as if such works are Indian works. As regards, copyright of nationals of countries who are members of Berne Convention for the Protection of literary and Artistic Works, Universa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that the position adopted by the assessee is contrary to the provisions under different agreements and also run contradictory to its assertion in complaint against Google Inc. and Star. (B) Section 52(b) of the Copyright Act, 1957 provides the purposes of fair dealing. These are situations in which the law allows use of a work without permission of the owner of Copyright. (Refer page 26 of the PB-1 of the assessee and page 53 of the Revenue s PB). These exemptions are very specific and do not include the act of using the licensed information of the assessee. The subscribers do not use the information provided by the assessee for the purpose of research, study, criticism, review and news reporting but use the same (text and photos) as such in its publications to commercially exploit the same. The assessee is licensing the information not for the purpose of fair dealing but to enable them to commercially exploit the same. (C) At Page 86 of the Revenue's PB, is a document obtained from the website of the UK Government which deals with the issue of fair dealing under UK Copyright law, which as per claim of the Ld. AR is similar to Indian Copyright Law, and mentions t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Convention in India applies to income tax (Article 2, DTAA). It is apparent that these terms are also not defined in the Income Tax Act. In view of explicit provisions of the DTTA, the meaning of undefined terms cannot be sought from other sources including other laws of India. The Revenue submits that the term copyright has been used in the agreements of assessee with Indian news agencies and these agreements have given meaning to these terms. Considering the extent and restriction of use of information, due to ownership of copyright, as stated in the agreement without doubt refers that copyright in literary and artistic work only that has been licensed. Therefore, as far is characterization of payment for the purpose of taxation is concerned, there is no need to look for meaning of the term copyright. Agreement states that AFP is the copyright owner of the information and the agreement constitutes a license to use the information. The information (news item/photos) is literary and artistic work. (B) The Ld. DR submits that though the meaning of the terms copyright, literary and artistic is not given in the DTAA or Income Tax Act, however, for the purpose of searching for mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk is and also subject to copyright protection. In this regard the Revenue referred to a case wherein AFP was asked to pay USD 1.22 million for infringing the copyright over the photographs of Photojournalist Daniel Morel. Photographs captured the devastation after the 2010 earthquake that struck Haiti. AFP had lifted photographs from the internet and transmitted the images to large network of subscribers, which included news organization around the world. Copy of this news item was filed. (D) Agreements of the assessee mention that it is the copyright owner of all information. If its contentions that the information is not literary work are correct then the burden of proving that whatever is stated in the agreement is false or otherwise prove with documentary evidence that the information is not of the nature of literary, artistic or scientific work. If it is true that its information does not enjoy copyright protection then it would require explaining under what law it registered its copyrights in the USA. Further, if its work is not protected by Copyright Law then it needs to make a statement with documentary evidence in this regard and the Indian subscribers are free to use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the use of equipment 1. Royalties, fees for technical services and payments for the use of equipment arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other contracting state. 2. However, such royalties, fees and payments may also be taxed in the contracting State in which they arise and according to the laws of that Contracting State, in which they arise and according to the laws of that contracting State, but if the recipient is the beneficial owner of these categories of income, the tax so charged shall not exceed 10 per cent of the gross amount of such royalties, fees and payments.] [With effect from 1-4-1997) 3. However, such royalties, fees and payments may also be taxed in the contracting State in which they arise and according to the laws of that Contracting State, the recipient is the beneficial owner of these categories of income, the tax so charged shall not exceed: (a) in the case of royalties and fees 20 per cent of tile gross amount of such royalties or fees: and (b) in the CIl5t of payments referred to in paragraph 5 of this Article, 10 per cent of the gross amount of such payments. (Effective b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its fold payments pertaining to copyright of literary, artistic work etc. and since, the above terms i.e. copyright of literary, artistic work etc. has neither been defined or illustrated under Income-tax Act nor under present Double Taxation Avoidance Agreement between India and France, we need to place reliance from relevant provisions of Indian Copyright Act, 1957 in order to understand the true meaning and context for usage of the expression copyright of literary, artistic work etc. In this regard we seek support from the case of Gracemac Corporation (supra) wherein it has been observed by the ITAT that, in absence of meaning of copyright under Income-tax Act or Double Taxation Avoidance Agreement reliance needs to be placed upon the Indian Copyright Act, 1957 for the limited purpose of finding out the true meaning and context for usage of expression copyright . Moreover, we find that the jurisdictional High Court in the case of Super Cassettes Industries Limited v. Mr. Chintamani Rao and Ors., 2012(49)PTC1(Del) had held that, Copyright is a statutory right, and no person is entitled to claim copyright or any similar right in any work, otherwise than in terms of Section 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether in the instant case the news stories/ current news distributed by the assessee satisfy the de minimis rule. 36. Copy-right is referred to (in Salmond's jurisprudence, 11th edition, p. 462) as an immaterial form of property recognised by law, being the product of human skill and labour or of a man's brains. In all the English text books and which it is unnecessary to refer at length, copyright has been regarded as incorporeal movable property and that view has been adopted in our country as well. The aforesaid position has been explained in the case of Savitri Devi v. Dwaraka Prasad, AIR1939All305 . 37. In the case of R.C. Cooper v. Union of India ,1970 3 SCR 530, an eleven- Judge Bench at page 67 of the judgment it has been observed that: - By Entry 42 in the Concurrent List power was conferred upon the Parliament and the State Legislatures to legislate with respect to 'Principles on which compensation for property acquired or requisitioned for purpose of the Union or for any other public purpose is to be determined and the form in which such compensation is to be given'. Power to legislate for acquisition of property is expendable only under Ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is protected is not the original thought but expression of thought in a concrete form. In this connection, the author makes the following observations based on the case law: What is protected is not original thought or information, but the original expression of thought or information in some concrete form. Consequently, it is only an infringement if the defendant has made an unlawful use of the form in which the thought or information is expressed. The defendant must to be liable, have made a substantial use of this form; he is not liable if he has taken from the work the essential, ideas however original, and expressed the idea in his own form, or used the idea for his own purposes. 41. In Article 418 Copinger states thus:- In many cases the alleged infringement does not consist of an exact, or verbatim copy, of the whole, or any part, of the earlier work, but merely resembles it in a greater or lesser degree. 42. There can be no copyright in an idea, subject matter, themes, plots or historical or legendary facts while, copyright would subsist on the form, manner, arrangement and expression of the idea by the author of a copyright work. 43. The position has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule B Licensed Uses of the information 1. Only the specific uses enumerated in this Schedule are granted. This license shall be strictly construed. It is understood that any use that exceeds the license granted herein shall violate AFP rights. 2. A licence for the purpose specified in Schedule B 3 only allowing PTI to distribute the AFP Information described in Schedule A 1. 3.a. PTI may distribute as part of its services in English and Hindi (Bhasha) for resale within the Republic of India any part of the Information (as defined above) to only the following: PRINT Newspapers and News Magazines; and Radio . TV broadcasters. Such rights of sale-and distribution shall exclude the following: The INTERNET or any Web site. Any storage device including but not limited to CD ROMS, archival systems or databases; Any online publication service. Advertising, promotional or PR companies. Publishers of books and periodicals. Telecommunications company for distribution via messaging services including but not limited to the following formats: text, html, XML, WML in any WAP, MMS, I-MODE or like services. Distributors, aggregators and other professiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead AFP or AFP Photo and the name of the photographer except as otherwise indicated by AFP. AFP shall notify Subscriber which method of credit acknowledgement is to be used. b. In the event of publication AFP material in electronic form, the AFP credit line and copyright notice must appear with each story. The copyright notice shall be hypertext link to the AFP end-user language as set forth in Schedule E. Additionally, where headlines link to AFP stories, an AFP credit line or logo must appear in conjunction with the headline. Schedule E- Clause 3 3. Subscriber will make the following language (or language acceptable to both parties) a part of its Subscriber/ End-User Agreement and will make it available to subscriber s and end-users of its web site by effecting a hypertext link from each web page to a page displaying such language. Copyright AFP or Agence France-Presse,2004/2005) AFP text, photos, graphics and logos shall not be reproduced , published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP shall not be held liable for any delays, inaccuracies, errors or omissions in any AFP content, or for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Information to IANS for publishing. AFP expects that the Information may require editorial intervention by the IANS on a timely basis when notified by AFP, and that IAMS will be solely responsible for the technical implementation and presentation of the Information both on an automated or editorial basis. Clause 9 9. Credit In any display or republication or redistribution of any of the Information received by IANS from AFP, IANS shall ensure that AFP s copyright notice or credit line (AFP) shall appear on AFP s Information. Copyright notice shall read as follows: (C) AFP 2005/6 or in the alternative, Copyright AFP. 2005/6 . The credit line for photos shall read AFP or AFP Photo and the name of the photographer except as otherwise indicated by AFP. AFP shall notify IANS which method of credit acknowledgement is to be used. Clause 17 Copyright IANS acknowledges that AFP is the copyright owner of all Information provided to it and that this Agreement constitutes a license to use the Information only for the term of this Agreement. IANS further acknowledges that noting the agreement shall constitute a sale or other transfer of title or any rights from AF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ews is preferred and is revered to as one of the most reliable news agencies in the world since its year of inception i.e. 1835. 48. On a perusal of clause of the agreement we understand that AFP invests substantial amount of its capital in its personnel s, correspondent, editors etc. and create its own unique quality in news reporting. This understanding could be explicated on the premise of two main points i.e. (a) the news story supplied by it cannot be altered by the Indian news agencies or other distributors and any change in the news reports can only be carried out by AFP itself; (b) the volume of news-stories supplied to each individual user is strictly regulated inasmuch as news-stories above a certain figure per day would cost more and depends upon the package obtained by a user. Also, news-reporting for special events such as Commonwealth Games, Olympics are carried out for special rates instead of ordinary/ regular rates since AFP has to incur costs by way of placing special correspondent i.e. skilled human capital to cover news reporting and mobilization costs for various resources/ creation of necessary infrastructure in order to capture photographs during such meg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s item is reported. In continuation to the example put forth by the ld DR in the first category above, if a news item or a story is published by anyone, indicating the background of ongoing heat wave, records of temperature, and historical records of rain in the first week of June and also respite from power shortage or progress of monsoon, then this news item/ story cannot be reproduced or used by anyone without proper authorization. 52. Further, so as to appreciate the distinction between mere reporting of facts from news stories which constitutes a form of expression, it would be worthwhile to analyse the recent reporting about, Malaysia Airlines Flight 370 flight which was on a scheduled international passenger flight from Kuala Lumpur to Beijing that disappeared on 8 March 2014 after losing contact with air traffic control less than an hour after takeoff. In one of the newspapers i.e. Strait Times being one of the most widely read newspapers in Singapore, the catchline read as Malaysia s MH 370 report shows delayed response, offers no new clues while, another newspaper The New York Times reported this incident with the catchline Questions Over Absence of Cellphon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by a professional photographer of outstanding stature has unique aesthetic merit eloquently depicting human suffering, such a photograph has intrinsic value. Similarly, in the present case the photographs as distributed by the assessee is taken by a professional photographer of high levels of competence thus, on a reading of the subscription agreement, it emerges that the images or photographs as uploaded in the assesse s website cannot be altered with except minor fading effect and resizing. The credit line for assessee s photographs is required to display a specific credit line i.e. AFP. 56. In the light, taking cue from Section 2(c)(i) of the Indian Copyright Act, 1957 categorically includes photographs as artistic work. In view of the totality of facts in the instant case as well as terms of usage of assessee s photos for news items or non-news items, it cannot be denied that it has an intrinsic value of its own and when used for news items it helps assist in conveying the message in the news story. 57. In the result, we observe that on a reading of Section 2(C)(i) of the Indian Copyright Act 1957 which deems photographs as artistic works keeping in view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 61. From a reading of the above outlined clauses, it could be noted that the above clause is being built into the Copyright scheme in order to protects rights of user of copyrigtable work. In other words, fair dealing is the rights of user and not of an author or owner of copyright. The whole premise of the assessee s argument in the present context by drawing the contours of copyrightability over its news-reports or current events in contradistinction to nature of rights possessed by its user s i.e. Indian News Agencies is misplaced. 62. The assessee has in the instant case by way of grant of licence to its users obtained a commercial value for distribution of its news which cannot come into the public domain except by virtue of a license agreement. Therefore, the question of fair dealing by the user of information covering bundle of first, second as well as third category of information does not come into play as it is strictly governed by the terms of the subscription agreement and comes for a commercial value hence, we feel that the reference to fair dealing in terms of Section 52(1)(b) is misplaced to this extent. 63. We also observe that, we are not in the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2012 and others, judgement dated 07.11.2013. 67. After hearing rival contentions we find that the assessee s case is similar to the facts of the case of M/s Alcatel Lucent USA, Inc (supra). In this case also the assessee did not admit to any income in its returns. The contention of the assessee before us is that, no part of its income is taxable in India. 68. When the assessee denies its liability to pay tax on an income in question then the inference would be that the payer did not deduct tax at source because of its request made to the the payer, not to deduct which is consistant with its stand that the income is not liable to tax. 69. The Hon ble Delhi High court in the case of Alcatel Lucent USA, Inc held as follows:- 16. In the light of the judgment of this Court in Jacabs (supra), the interpretation to be placed on Section 209(1)(d) in juxtaposition with Section 195(1) is that which is canvassed before us on behalf of the assessee. However, we find merit in the submission of the learned standing counsel for the income tax department that on the facts of the present case, the aforesaid legal position cannot be applied. As pointed out by him, in the case of Jacabs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the decision of this Court in Jacabs (supra) cannot be extended to the assessee. 21. We are unable to uphold this part of the decision of the Tribunal. It must be remembered that in the note appended to the return the assessee was quite categorical in denying its liability to be assessed in India. It relied on the double taxation avoidance agreement between India and USA and pointed out that there was no permanent establishment in India. It further stated that the telecom equipments were sold outside India and the payments were also received outside India and thus the assessee did not have any taxable presence in India so as to be liable for tax on its Indian income. If this was the stand of the assessee, it is not impermissible or unreasonable to visualise a situation where, the assessee would have represented to its Indian telecom dealers not to deduct tax from the remittances made to it. On the contrary it would be surprising if the assessee did not make any such representation; such a representation would only be consistent with the assessee's stand regarding its tax liability in India. Moreover, no purpose would have been served by the assessee taking such a categoric ..... X X X X Extracts X X X X X X X X Extracts X X X X
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