TMI Blog2007 (10) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration. This, inter alia, included a sum of Rs. 6,05,23,896 said to have been received in his capacity as a co-author of three foreign books, viz., Men are from Mars, Women are from Venus and Children are from Heaven, Practical Miracles and the Truth of Miracles . The main author in the first two books was Dr. John Gray of USA and in the third it was Kenji Abe of Japan. Further, a sum of Rs. 1,17,24,798 was shown as income from profession received by way of gifts from devotees. The assessee claimed deduction at Rs. 4,53,92,922 from first amount being 75 per cent thereof under section 80RR of the Act. In the original assessment made under section 143(3), the Assessing Officer disallowed 75 per cent of Rs. 30,99,146, i.e. Rs. 23,24,360 as the Foreign Inward Remittance Certificate in respect of this remittance was not attached with the return of income but was furnished only on 20-5-2001. Thus, the assessment was completed at a total income of Rs. 2,84,26,590 on 22-2-2002. As per this assessment order, the assessee is stated to be engaged in the profession of imparting spiritual activities including teaching of meditation. 3. Subsequently, the Assessing Officer came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at income has escaped assessment. It is not material whether it was the assessee who failed to disclose truly, or fully the material for the assessment. Further, with regard to change in opinion, the CIT(A) observed that the show-cause letters issued by the Assessing Officer, in the course of scrutiny assessment and other material on record including the order sheet entries do not in anyway indicate that the Assessing Officer enquired into the fact whether the assessee was a professional author or not. Hence, the question of framing any opinion does not arise and if no opinion was framed, the question of changing it does not arise. Thus, he upheld the reopening of the assessment. On merits, the CIT(A) raised as many as seven issues to come to the final conclusion. In the following paragraphs we briefly discuss these issues as also his reasoning and conclusion on each of those issues. 5. The first issue considered by the CIT(A) is whether a book written by a person on certain concepts, practices and ideas propounded by another person can be said to be a book authored by the second person. This issue was approached by the CIT(A) by discussing the concept of joint authorship which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led a professional artist within the meaning of section 80RR. In this connection, the CIT(A) observed that even presuming that the assessee is a skilled person, the remittances received cannot be said to have been derived from the profession of the assessee as a performing artist. In the last issue, the CIT(A) considered the exact nature of the receipt and held them to be revenue receipts. Finally, referring to the observations of the Supreme Court in the case of Keshavji Ravji Co. v. CIT [1990] 183 ITR 1 on artificial and unduly latitudinarian rules of construction, the CIT(A) held that the assessee was not entitled to deduction under section 80RR of the Act. 6. The learned counsel briefly apprised us of the primary facts. In paragraph 2 of this order, we have mentioned about the disallowance of part-deduction made by the Assessing Officer at the time of original assessment on account of late furnishing of the Foreign Inward Remittance certificate. The assessee had preferred an appeal against this disallowance. The CIT(A) vide his order dated 9-12-2002 allowed the claim of the assessee. The learned counsel drew our specific attention to the following observations made by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly on a change of opinion and reliance was placed on the judgment of the Rajasthan High Court in the case of CIT v. Mahesh Gum Oil Industries [2007] 292 ITR 397. 7. On merits, the main contention of the learned counsel was that both, the Assessing Officer as well as the CIT(A), had taken a very narrow view of the meaning of the word author . To buttress his point that the assessee did contribute positively towards the writing of the book, the learned counsel took us through the certificates of the main author and also through the acknowledgements in the books. Our attention was drawn to the Board s Circular No. 22, dated 17-7-1969 wherein it had been opined that the provisions of section 80RR are designed to encourage successful authors, playwrights etc. in our country to project their activities outside India with a view to contributing to greater understanding of our country and its culture abroad and also augmenting our foreign exchange resources. The contention was that by assisting John Gray and Kenji Abe in writing the books, the assessee had contributed to a greater understanding of our country and had also earned foreign exchange for the country. Finally, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable in which it has been held that so long as ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceedings under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued. Thus, the learned Departmental Representative strongly canvassed that the reopening of the assessment was valid. 9. On merits, the learned Departmental Representative, at the outset, referred to the provisions of sections 80QQA and 80QQB. Our specific attention was drawn to the Explanation given in both the provisions wherein the term author was defined to include joint author unlike section 80RR wherein the assessee was required to be only an author. It was contended that in order to claim deduction under section 80RR the assessee ought to be not only an author but also a professional author. To buttress this point, the learned Departmental Representative also drew support from the Board s Circular No. 22, dated 17-7-1969. He referred to the decision of the Mumbai Bench of the Tribunal in the case of Harsha Bhogle v. Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative also referred to the definitions of the expressions author and work of joint authorship given in sections 9 and 10 of CDPA. The argument was that simply giving ideas did not make one an author. Only a person who could exercise his right under the Copyright Act could be an author. It was also contended that the context of the Copyright Act required one to be not only an author but a professional author. For this contention reliance was placed on the judgment of the Himachal Pradesh High Court in the case of H.P. Tourism Development Corpn. v. Union of India [1999] 238 ITR 38 and of the Supreme Court in the case of CIT v. Venkateswara Hatcheries (P.) Ltd. [1999] 237 ITR 174. The learned Departmental Representative referred to the certificates given by John Gray and Kenji Abe to point out that there were inconsistencies in these certificates insofar as that at some place the assessee was stated to have assisted John Gray and at other place he was referred to as a co-author. Therefore, he questioned the evidentiary value of these certificates and also alleged that the certificates were given only to accommodate the assessee. He also questioned as to why royalty was not share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the validity of the reopening of the assessment. 11. So far as merits of the issues are concerned, the dispute revolves around the provisions of section 80RR under which the assessee has claimed deduction and which is denied by the revenue authorities. Hence, it would be advantageous to reproduce the said section below: 80RR. Deduction in respect of professional income from foreign sources in certain cases. Where the gross total income of an individual resident in India, being an author, playwright, artist, musician, actor or sportsman (including an athlete), includes any income derived by him in the exercise of his profession from the Government of a foreign State or any person not resident in India, there shall be allowed, in computing the total income of the individual, a deduction from such income of an amount equal to (i) sixty per cent of such income for an assessment year beginning on the 1st day of April, 2001; (ii) forty-five per cent of such income for an assessment year beginning on the 1st day of April, 2002; (iii) thirty per cent of such income for an assessment year beginning on the 1st day of April, 2003; (iv) fifteen per cent of such income for an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed. 13. As mentioned in the preceding paragraph, the controversy revolves around conditions (b) and (c). The revenue reads both the conditions together to contend that in order to claim deduction, the assessee should be a professional author. To put it the other way, emphasising on the words in the exercise of his profession and linking them with the various categories of professionals, it is argued that the assessee should have derived the income in his capacity as a professional author. We are afraid, perhaps that is not the intention underlying the deduction under section 80RR. This can be judged by referring to some other provisions belonging to the same genre in Chapter VI-A of the Act. 14. Section 80Q grants deduction in respect of profits and gains from the business of publication of books. Sub-section (3) of section 80Q specifies that books shall not include newspapers, journals, magazines, diaries, brochures, tracts, pamphlets and other publications of a similar nature by whatever name called. Section 80QQA grants deduction in respect of professional income of authors of text books in Indian languages. Clause (a) of sub-section (2) of section 80QQA specifies that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it also means a person who makes some activity not usually followed for gain, such as a sport, the source of his livelihood. Thus, if a person earns some livelihood by authoring something is a professional author. As per the same dictionary, a freelance writer is one who is not under contract for regular work but sells his writings to any buyer. In our opinion, both, the professional author and the freelance writer, can claim deduction under section 80RR. 15. Having said this, let us understand the significance of the words in the exercise of his profession occurring in section 80RR. If a person writes anything connected with the profession he is engaged in and derives income by publishing it abroad, he will be entitled to deduction under section 80RR. Thus, if a chartered accountant writes something on accountancy and derives income by getting it published abroad, he will be entitled to deduction under section 80RR. With this illustration, it would also be pertinent to draw a distinction between the deduction under sections 80QQB and 80RR. Section 80QQB also contains the words in the exercise of his profession. Therefore, if the chartered accountant in the above illustration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book or an article in relation to any profession carried on by him. 16. We now consider whether the word author occurring in section 80RR includes a co-author or a joint author. We will restrict ourselves using only one expression, i.e., co-author as, both the expressions have almost the same meaning, though there may be a very thin line of difference between the two, if there is any. As a matter of fact, Webster s Twentieth Century Dictionary does not contain the expression joint author , but has given the meaning of co-author as a joint author or a collaborator. In paragraph 14, we have seen the distinction between the provisions of sections 80QQB and 80RR. From the tenor of the two provisions, it is quite evident that the conditions in section 80QQB are more stringent than in section 80RR insofar as that because the deduction under the former provision is confined to the writing of a book as defined in the Explanation, the Legislature thought it fit to define the word author . On the other hand, because the deduction under section 80RR is not confined to writing a book, but includes any writing, the Legislature deemed it appropriate to leave the word undefined, thereby pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sional authors, the provision was worded accordingly. On the other hand, in section 80QQA, section 80QQB and section 80RR it is differently worded so as to include non-professional authors as well. Thus, now we end the discussion on the purport of section 80RR to conclude that in order to claim deduction under the said section, a person need not be a professional author, he need not have written only a book but may have contributed to journals, magazines etc. by way of articles. The write-ups should be in the exercise of any profession carried on by him and it would include co-author or a collaborator also as explained above. 17. In the light of the discussion in the preceding paragraphs, let us consider the facts of the case on hand. At the outset, we have already held that in order to claim deduction under section 80RR, a person need not be a professional author. Therefore, we need not go into the facts concerning this aspect of the matter. The next aspect to be considered is whether the assessee can be regarded as a co-author or not and if yes, whether he has co-authored the book in exercise of his profession. Admittedly, and on which the revenue authorities have placed relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stic support for publishing the book. It is a direct contribution to the subject-matter of the book and hence, the case of the assessee gets direct support from the observations of the Delhi High Court in the case of Najma Heptulla reproduced in paragraph 16 above. Besides the above, the certificates also clearly indicate that the assessee was the co-author of the books written by John Gray of USA and Kenji Abe of Japan. It needs to be appreciated that all these books are on spiritual teaching and the art of meditation. It is common knowledge that the art of meditation has originated from India and is almost as old as humanity. India being a country of great sages and rishis, spiritual teachings and activities have transcended down the centuries and we have innumerable spiritual Gurus, the assessee being one of them. Each one may have his own way of doing meditation, teaching meditation and imparting other spiritual training. It is through these teachings John Gray has tried to guide the readers on various aspects of life. In order to do it effectively, he took ideas and concepts from the assessee and made his work possible. Thus, it is difficult to deny the fact that, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int authorship and simply denying the assessee s claim without any discussion does not advance the case of the revenue. The next issue is whether section 80RR envisages co-author within the meaning of the word author . We have dealt with this issue in detail in paragraph 16 above, to hold that section 80RR does envisage the inclusion of co-author within the meaning of the word author . The third issue is whether there is any evidence to hold that the assessee had actually scripted a portion of the book. This issue has been discussed by us in paragraph 17 of our order to hold that there is satisfactory evidence of the assessee actually having written a portion of the book in the form of acknowledgement by Mr. John Gray in the book itself. The next issue is whether an author has to necessarily write the book abroad and publish the same abroad for claiming deduction under section 80RR. This issue has been decided by the CIT(A) in favour of the assessee and hence needs no further discussion. Nonetheless, we have elaborately discussed the issue in paragraphs 14 and 15 of this order. The next issue is whether the assessee can be said to be a professional author and can the receipts sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the practice and process remains an art and in that sense the assessee can be regarded an artist. It should also not be forgotten that these practices project India s culture abroad and, therefore, any income from non-resident for performing this art abroad or writing about it will qualify for deduction under section 80RR. The last issue dealt with by the CIT(A) is whether the receipt is capital in nature or revenue in nature. The assessee has not seriously contested this issue and we also hold it to be a revenue receipt as it is received in the course of the exercising of his profession. Lastly, the CIT(A) cited the decision of the Supreme Court in the case of Keshavji Ravji Co. to contend that undue latitudinarian rules of construction should not be applied to grant relief to the assessee. Well, in our opinion, and as discussed by us in paragraphs 14 to 16, the Legislature itself has provided the necessary latitude to allow deduction in those cases where persons possessing special skills project India s image and culture abroad, participate and compete in international events abroad and earn foreign exchange for the country. Therefore, it is not necessary for us to apply such l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has challenged the validity of the reopening of the assessment. During this year, the return was processed under section 143(1) on 30-11-1999 and notice under section 148 was issued on 1-9-2003, that is, within four years from the end of the assessment year. The circumstances leading to the issuance of the impugned notice were the same as in assessment year 2000-01. Therefore, following our order for assessment year 2000-01, we uphold the validity of the reopening of the assessment. In fact, in this year, the revenue s case is on a stronger footing because the assessment was not under section 143(3) but merely the return, was processed under section 143(1) and hence, there was no question of forming any opinion at all. Thus, the first ground of the assessee is dismissed. 23. The next issue relates to the denial of deduction under section 80RR of the Act. The deduction claimed by the assessee was of Rs. 3,29,79,675. The entire deduction was disallowed, and the reasons for such disallowance were the same as in assessment year 2000-01, viz., that the assessee never co-authored any book and even if he was a co-author, section 80RR did not permit co-authors to claim deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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