K.C. Singhal, Judicial Member -
(1.) ALL these appeals have been heard together and are being disposed of by the common order for the sake of convenience.
(2.) The only issue arising in the appeals of the assessee relates to the eligibility of deduction Under Section 80Q of the I.T. Act, 1961 (the Act). Briefly stated the facts are that 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 claim of the assessee was denied by the AO on various grounds. Firstly, it was held by him that Tata Yellow pages directory cannot be said to be book for the reasons given in para 2.2 of his order which is extracted below:
2.2 The assessee's contention have been carefully considered. No doubt, the definition of 'book' is very wide but the 'Yellow pages' will within the definition of 'other Publication' of a similar nature by whatever name called as provided in Section 80-Q on which deduction is not available. The Yellow pages basically consist of classified advertisements giving nature of product, address and telephone number of the advertiser. The matter to be printed in the Yellow page is at the discretion of the advertiser, that is, whether it is to be printed in box or in large print or it has to be highlighted or it has to be printed with illustrations. In other words, the advertisements given in the Yellow pages are not materially different from newspapers classified advertisements. The only difference is that Yellow pages is in a bound form and is indexed whereas a newspaper is not indexed. In fact, it is seen from the publication itself that Yellow pages is registered with the Registrar of New Papers in India. Moreover, it is distributed free. Therefore, one of the essential characteristics of a book, that is, its cost, is missing in this case.
Secondly, he was of the view that Tata Yellow pages published by the assessee does not fall within the intended objectives underlying the provisions of Section 80-Q. For this purpose, he referred to the speech of Finance Minister as well as Explanatory Memorandum issued by the board. The relevant portion of the order in this regard is reproduced below:
It is relevant to take into account the Speech of the Finance Minister that was made while introducing the Finance Bill 1991, an extract from which bearing on the subject, deserves verbatim reproduction:
As a token of my commitment to education and research and in recognition of the significant role they have to play in our development process, I propose to extent certain tax concessions that will help in funding of social science research and provide some incentive to authors and publishers.
Similarly, it is also noteworthy to take into account the Explanatory Memorandum, a contained in para 14 thereof, which is reproduced below:
Under the provisions of Section 80-QQ of the Income-tax Act prior to its omission by the Direct Tax Laws (Amendment) Act, 1987, any person carrying on a business in India, of printing and publications of books or only of publication of books without the activity of printing, was entitled to a deduction in the computation of his taxable income of an amount equal to 20 percent of the profits from such business.
It has been observed that the publishing industry has stagnated over the last few years and this is a cause for serious concern. Keeping in view the vital role of publishing industry in the development of human resources, it is proposed to insert a new Section 80-Q in the Income-tax Act to revive the aforesaid tax concession for five years commencing with the assessment year 1992-93.
It will be appreciated that at least in the light of the Speech of the Finance Minister and Explanatory Memorandum, the legislative intent has been transparently brought out indicating the underlying objective of the benefit conferred under Section 80-Q. The emphasis is on education and research as a part of the development process and inducement to authors and publishers. What is kept in mind is also the development of human resources, which is the end result of the process of education and research. Applying the aforesaid tests, it clearly appears that the 'book' published by the assessee does not fall within the intended objectives underlying the provisions of Section 80-Q.
Thirdly, he was of the view that Tata Yellow pages falls within the extracted categories of books specified in Section 80-Q(3) by observing as under:
After careful consideration of all the aspects involved, I am of the view that excluded category of books in Section 80-Q(3) is characterised by one common attribute which is that this category enumerates such publications which are not 'authored' as such. The category so excluded indicates the imparting of information either through collection and dissemination of news and events of through advertisements. The sources of such publication are of diverse nature with conspicuous absentee, namely, an author or authors.
Lastly, it was observed as under:
It will also be relevant to take into account the manifest legislative intent as exhibited in the Speech of Finance Minister and Explanatory Memorandum, the simultaneous revival of Section 80-Q on the one hand and Section 80-QQA on the other, the common characteristics running through all the species of the excluded category of 'books' leads me to the conclusion that the 'book' that is published by the assessee is not envisaged to be of such nature which entitles conferment of Section 80-Q.
The 'book' published by the assessee is only of informative nature, subserving the purpose of advertisers of the wares and services of the subscribers to the book and, therefore, even qualitatively the contents of the book are similar to the contents of the excluded categories of books provided under Section 80-Q(3).
In view of the above observations, it was concluded by him that the case of assessee did not fall within the scope of Section 80-Q of the Act. Consequently, the deduction under the aforesaid Section was denied by the AO.
The matter was carried in appeal before the learned CIT(A) who approved the reasonings given by the Assessing Officer. He also strengthened the view of Assessing Officer by observing as under:
a. that Tata 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, brochers, tracts, pamphlets in Sub-section (3) of Section 80-Q. According to him, there is common thread running through the various items mentioned above i.e. such publications do not have a author. Since there is no author, in Tata Yellow pages, the same could not be described as a book.
b. the litigation arose between Mahanagar Telephone Nigam Ltd. (MTNL) and the assessee according to which, MTNL wanted to prevent the assessee from printed the Yellow pages. The contention of the assessee before the Supreme Court was that Yellow pages was a compilation of advertisements given by the businessmen, traders and professionals which amounted to commercial speech and consequently the assessee could not be prevented from publishing such book namely 'Tata Yellow Pages'. The court upheld the contention of the assessee by observing that Yellow pages is a buyer's guide comprising of advertisements given by traders, businessmen and professionals. Thus, the compilation of such commercial speech could not be equated as a book.
c. The order of the Custom Excise and Gold Control Appellate Tribunal in the assessee's case shows that Yellow pages is nothing other than collection of paid advertisements.
d. that activity of the assessee is that of promoting the products of its clients who had paid to the assessee on account of advertisements and therefore, the profit derived by the assessee was not on account of publication of book but it related directly to the advertisements given by their clients in Yellow pages.
e. Yellow pages is not freely available for sale or distribution at any book shop or book stall and therefore neither it can be described as book nor it can be said that the assessee has published a book.
In support of his observations, the learned CIT(A) relied on the following decisions:
1. New India fisheries Ltd. 82 ITD 765 (Bom)
2. Prom Magnet Pvt. Ltd. 219 ITR 138 (AP)
3. Cholaram 217 ITR 609 (Mad)
(3.) LAXMI foods & Exports Ltd. 62 ITD 31 (Mum);