DILIP LOYALKA,KOLKATA vs. A.C.I.T CIR - 1ASANSOL, ASANSOL

The first issue in this appeal of assessee is against the order of CIT(Appeals) confirming the disallowance of deduction claimed by assessee under section 80QQB amounting to Rs.99,000/-.

Briefly stated the facts are that during the previous year 2004-05 relevant to the assessment year 2005-06, the assessee received royalty to the tune of Rs.99,000/- for his book on income tax and claimed deduction under section 80QQB of the Act. The Assessing Officer disallowed deduction on the ground that the book on income-tax is not a literary work. The Assessing Officer quoted Explanation to section 80QQB, clause (b) and held that in view of the above exclusion of printed material the assessee’s claim of the book that is in ‘’question and answer’’ format cannot be taken as literary works. Accordingly, he disallowed the deduction.

Aggrieved, the assessee preferred appeal before the ld. CIT(Appeals), who also confirmed the order of the Assessing Officer by observing in paras 18 to 28 as under:- “18. I had examined the work. The book consolidates provisions of Income Tax Act 1961, Income Tax Rules, Circulars, Instructions, case decisions etc. topic wise in question answer format. The book is therefore a rearrangement of existing material. In this case, there is no imaginative, creative or a different point of view in the publication. Before I draw my conclusion, I analyse the case decisions submitted by the assessee in the context of the case below:

We have heard rival submissions and gone through facts of this case and also provisions of the Act as well the propositions of law and precedents cited before us by both sides. The facts of the case are that the assessee is an individual, by profession a Chartered Accountant. He has authored books on Income-tax and received royalty on its book “How to Handle Income Tax Problems”. As per the provisions of section 80QQB of the Act claimed deduction for the royalty received on account of his book. The requisite certificate in form No. 10CCD was filed along with the return of income. The assessee claimed before the AO as well as before the CIT(A) that he has received an award from CBDT (Pratyaksh Kar Sahitya Puruskar) on his Hindi Edition of this book “Kaise Suljhaye Aayekar Samasyein” and considered the same as second best literary work on income tax on Hindi. Copy of the same was filed before lower authorities and even now before us. In term of the above facts of the case, whether the assessee is eligible for claim of deduction u/s. 80QQB of the Act on receipt of royalty for literary work?

From the above facts now we have to see whether the assessee’s work i.e. authoring of book in Hindi is a literary work or not. We find that the lower authorities have relied on the relevant definition of

The word literary work has not defined under the Act but has been defined by section 2(o) of the Copyright Act, 1957. The expression literary work covers which are expressed in printing or writing irrespective of the question whether the quality or style is high or whether there is any literary merit or not. The expression literary work means not only such work which deals with any particular aspect of literature in poetry but also indicates a work which is literature i.e. anything in writing which could be said to come within the ambit of literary work. Hon’ble Kerala High Court has dealt on this issue in the case of Infoseek Solutions & Anr. Vs. Kerala Law times (2007) 34 PTC 231 (Ker) and observed that a law report is a composite document and its head notes, editorial comments, footnotes, setting, layout, presentation etc. And even the skill and labour involved in choosing as to whether a

Similarly, Hon’ble Supreme Court in the case of Eastern Book Company & Ors. Vs. D. B. Modak & Anr. (2008) 95 AIR 809 (SC) has also adjudicated identical issue and held that Affirming the above view the Apex court held that not only the head notes and short notes are literary works but even the judgments cited by the law reporters by (i) segregating the existing paragraphs in the original text by breaking them into separate paragraphs; (ii) adding internal paragraph numbering within a judgment after providing uniform paragraph numbering to the multiple judgments; and (iii) indicating in the judgment the Judges who have dissented or concurred by introducing the phrases like ‘concurring’, ‘partly concurring’, ‘dissenting’, ‘supplementing’, ‘majority expressing no opinion’ etc. have to be viewed in a different light. Hon’ble Supreme Court further explained the literary work in term of legal discourse that the task of paragraph numbering and internal referencing requires skill and judgment in great measure. The editor who inserts para numbering must know how legal argumentation and legal discourse is conducted and how a judgment of a court of law must read. Often legal arguments or conclusions are either clubbed into one paragraph in the original judgment or parts of the same argument are given in separate paragraphs. It requires judgment and the capacity for discernment for determining whether to carve out a separate paragraph from an existing paragraph in the original judgment or to club together separate paragraphs in the original judgment of the court. Setting of paragraphs by the appellants of their own in the judgment entailed the exercise of the brain work, reading and understanding of subject of disputes, different issues involved, statutory provisions applicable and interpretation of the same and then dividing them in different paragraphs so that chain of thoughts and process of statement of facts and the application of law relevant to the topic discussed is not disturbed, would require full understanding of the entire subject of the judgment. Making paragraphs in a judgment could not be called a mechanical process. It requires careful consideration, discernment and choice and thus it can be called as a literary work of an author. Creation of paragraphs would obviously require extensive reading,

It is clear that even the government i.e. CBDT has recognised assessee’s work by awarding him Pratyaksh Kar Sahitya Puruskar on his Hindi Edition of the same book as second best literary work on Income Tax in Hindi. It is a fact that the assessee has authored this book on income tax problems in question answer form. His book is on a complex issue which really needs intellect and knowledge. He has received royalty on the same. The word literary work has been defined by the Law Dictionary “Advance Law Lexicon, edited by Justice Y. V. Chandrachur, former CJI in 3rd Edition of Volume 3” as under: “Literary and artistic work in the International Copyrights Act, 1886, ‘unless the context otherwise requires, means every book, print, lithograph, article of sculpture, dramatic piece, musIndian Copyright Act composition, painting, drawing, photograph and other work of literature and art to which the Copyrights Acts or the International Copyrights Acts, as the case requires extends.” “Copyright protection extends to literary works which are defined as works, other than audiovisual work, expressed in words, numbers, or other verbal or numeric symbols or indicia, regardless of the nature of the material objects, such as books periodicals, manuscripts, phone records, films, tapes, disks or cards in which they are embodied. The term ‘literary work’ does not connote any criterion of literary merit or qualitative value and includes catalogues and dictionaries, similar factual, reference or instructional works, compilations of data, computer data bases, and computer programs.”

From the above facts and circumstances of the case, the definitions and the precedents of Hon’ble Supreme Court and Kerala High Court, cited supra, we are of the view that the assessee’s authored book is a literary work in term of section 80QQB of the Act and accordingly, assessee is entitled to deduction u/s. 80QQB of the Act. This issue of assessee’s appeal is allowed.

The next issue in this appeal of assessee is, whether the assessee can be treated as owner of the property in the absence of probate of the will and consequently, notional rental income can be assessed in the hands of the assessee? For this assessee has raised the following ground No. 4:- “4. For that upon facts and circumstances of the case, the Ld. CIT(A) was not justified in treating the assessee as the owner of the house property despite the fact that the ‘will’ from which the house was to be inherited was not probated and thereby disallowing deduction u/s. 54F amounting to Rs.29,425/- and assessing a notional income of Rs.48,000/- under the head house property. ” 12. We have heard rival contention of the assessee and gone through facts and circumstances of the case. We find from the case records that the AO noted from the Balance Sheet of the assessee that it has included one house property in the Balance Sheet, which was inherited from his late mother Sita Devi Loyalka, who expired on 08.07.1998. According to AO, the annual value of the house property @ Rs.4000/- per month is to be computed for the purpose of charging of tax and accordingly, he assessed Rs.48,000/- as income from house property. The assessee claimed before the AO that he has got this property as per the will of his late mother but the will has not yet been probated and accordingly, no notional income can be added to the income of the assessee. Aggrieved, against the action of AO, assessee preferred appeal before CIT(A). The CIT(A) also confirmed the action of AO. Aggrieved, assessee preferred second appeal before Tribunal.

We find from the facts of the case that though the assessee has disclosed the property received from mother through will in his Balance Sheet but claimed that he is not owner as the will is not probated. There

The next issue in this appeal of assessee is as regard to adoption of municipal value of the house property received by assessee through will. For this, assessee has raised following ground no.5: