A. Kalyanasundharam, Accountant Member - (1.) THE assessee, an individual, has filed this appeal and has raised the issue relating to deduction claimed under Section 80RR on the share income derived by him from the firm M/s. Ved & Co., which firm carries on the business of photography and journalism.
(2.) Appearing for the assessee Shri Hari Harlal submitted that the partners of the firm are professional photographers/journalists and in the exercise of their professional expertise certain foreign firms had engaged them in production of films etc. In regard to the professional services so rendered by the partners of the firm the clients paid them in foreign currency. The firm filed its return and the share of the partners have been determined on that basis and accordingly the assessments have been made in the hands of the partners. His submission was that the authorities below have not appreciated the fact that the income derived by the firm, later on distributed to the various partners in accordance with their profit-sharing ratios, retains its original character all through. To emphasize this point he made reference to the provisions of Section 67 of the Income-tax Act which provides the method of computing the partner's share from the firm. He made special reference to Sub-section (2) of Section 67 which provides for the apportionment of the share of a partner in the income or loss of the firm under the various heads of income in the same manner in which the income or the loss of the firm has been determined under each head of income. He accordingly emphasized that in the hands of the firm the income so derived consequent to the exercise of the profession of photography and journalism clearly falls within the classification of 'artist' as defined in Section 80RR. He pleaded that Section 80RR makes reference to the individual and the term 'artist' was clarified by the Board by means of a Circular No. 31 [F. No. 77/69-IT A-I], dated 25-10-1969 according to which artist includes photographers and TV news-film cameramen. It has been decided that photographers and TV cameramen can be regarded as artists for the purposes of Section 80RR. He pleaded that in view of the provisions contained in Sub-section (2) of Section 67 the amount of income earned by the firm from carrying on of profession of photographers and TV news-film cameramen, would retain the character in the hands of the partners also and thereby the partners are entitled to make claim of deduction under Section 80RR. He made reference to the provisions of Section 80A(3) of the Income-tax Act which specifically provides that the deductions which have been allowed in the hands of the firm cannot be allowed in the hands of the partners once again. He submitted that this also makes it amply clear that the legislature realised that a firm being a compendium of persons, would stand in the same footing as an individual would insofar as the income derived by the firm is concerned because the income so derived by the firm is, in fact, the income derived by the partners jointly. He relied on various judicial pronouncements in support of his above claim. He then made reference to the Allahabad High Court decision in CIT v. Brij Raman Das [1979] 118 ITR 397. In this case the question was whether the partners could claim deduction under Section 80L, representing interest/ dividends etc. earned from scheduled banks, companies etc. which interest/dividends were earned by the firm, received or apportioned to him as his share. He submitted that Their Lordships have held that the partner in view of the provisions contained in Section 67(2) of the Act, received the income from the firm retaining its original character and thereby he was entitled to claim deduction in his individual assessment under Section 80L. Shri Hari Harlal finally submitted that the firm also has been assessed in the status of a professional firm as the surcharge has been charged at the rate that is normally charged to a professional firm. Shri Hari Harlal also made reference to the various documents which listed accreditation of the journalist in which the names of the partners of the firm figure. He accordingly pleaded that the individual partner should be allowed deduction under Section 80RR. Shri Girdharilal, the Departmental Representative, placed heavy reliance on paragraph 3 of the order of the CIT (Appeals) and submitted that the term 'derived' means direct income earned by the individual and not sharing of income from a firm.
(3.) WE have given our very careful consideration to the rival submissions. The crux of the matter in the present appeal is whether the assessee who received his share from the firm M/s. Ved & Co., which income included income from carrying on of profession of photography, T.V. news-film cameramen etc., "whether in his hands also it would retain its character so as to be stated as the income of the individual?" "Whether he is an artist and whether if such income is so received as an artist and is brought into India by him in accordance with the provisions of Foreign Exchange Regulation Act, could be allowed deduction under Section 80-RR?" As per the accreditation index published by Press Information Bureau, Government of India, Shri Prem-Prakash and Shri Sanjiv Prakash have been accredited as correspondent-cum-cameramen. The Press Release by the British Television News Film has announced award on the hard news (sound) to Shri Prem Prakash, indicating that his competence has been recognised world over. The partnership deed as filed by the assessee also indicates that the partners of the firm have formed the partnership to carry on the business of dealing in photography as photographers and producers of TV and other films and for any other business or businesses as may be agreed or mutually decided upon by the partners. As per the details of Visnews account the total amount released in foreign currency aggregated to Rs. 18,90,182.60, which according to the banker's certificate of foreign inward remittance is for export of news film, TV film etc. Therefore, the perusal of the above shows that one of the activities of the firm is related to journalism and TV news-film making. As per the term 'artist' which has been clarified by the Board, the particulars of which have been provided above, it includes photographers and TV news-film cameramen. The firm is a compendium of persons, the partners of which are recognised as correspondent-cum-cameramen and are, therefore, artist in their personal capacity. As per the provisions of Section 67(2) of the Income-tax Act the share of the partners from the firm, shall be apportioned under the various heads of income in the same manner in which the income or loss of the firm has been determined under the respective heads of income. Therefore, the income that is derived by the firm from making of TV news-film would be income as artist or income from profession as artists, which profession is carried on jointly and severally by the partners. The first point receipt of acting as the TV news-film makers is that of a professional nature and that it would have to be carried further in the hands of the partners as well so as to comply with the provisions of Section 67(2) of the Income-tax Act.;