Profits and gains from publication of books

The deduction under section 80Q is available in respect of profits derived from the business of either printing and publishing of books or business of publications of books. The word ‘books’ for the purpose of sub-section (3) of section 80Q would, however, not include newspapers, journals, magazines, diaries, brochers, tracts, pamphlets and other publications of similar nature. It is the activity of publication which is condition precedent for claiming deduction. With this background it was to be seen as to whether the directory printed by the assessee could be said to be ‘book’, and whether distribution of the directory to various sections of public (free of cost) amounted to publication. [Para 6] There is no ambiguity about the words ‘book’ and ‘publication’ and, therefore, the plain and natural meaning of these words has to be seen. In terms of the dictionary meaning of the word ‘book’ and catena of decisions on the issue it is evident that the word ‘book’ is a word of widest amplitude and as per its natural meaning, would include not only literary or scientific book, book of art, law or religion etc., but also include mere collection of sheets. Thus, it would include even the exercise books used by the students for writing, books of account like cash book, ledger, registers, etc. used by the businessmen for writing their accounts of business. Therefore, it would be wrong to contend that ‘book’ would include only literary work or other work authored by some one. [Para 9] In the instant case, yellow pages was in the form of a directory listing various persons under various classifications such as lawyers, doctors, jewellers, timber merchants and various categories of different traders and professionals. Their addresses and telephone numbers had been provided. If the natural meaning of the word ‘book’ as discussed above would be applied then the yellow pages directory must be held as ‘book’. [Para 10] The next aspect of the issued related to the meaning of the word ‘publication’. The dictionary meaning of the word ‘publication’ shows that a book can be said to be published when it is offered to public. Such offer may be made either by selling or distributing to the public. [Para 11] Therefore, the expression, ‘publication of books’ used by the legislature in section 80Q would refer to only those books which are offered to public in the sense that it enables the public to read or know the contents of the book. Thus, the books which don’t contain the reading material would be outside the ambit of the provisions of section 80Q. Thus, the books like exercise books, cash book, ledger, registers, etc. which otherwise falls within the scope of the word ‘book’ would not be considered for the purpose of section 80Q. This restricted meaning is given considering the context in which the language is used. But there is nothing in its natural meaning that book must be one which is authored by somebody. For example, a publishing house may print a book as a guide for tourists. This may consist of various information collected by it which may be useful for the tourists, it may be without any author but that does not mean that the publishing house has not published it. A Telephone directory issued by Mahanagar Telephone Nigam Ltd. (MTNL) to their subscribers would be considered as a book published by MTNL. Merely because it is distributed free, it does not mean that it is not a case of publication of book. Such book is also not available at book stalls but on that account, it would be wrong to say that such book was not published. Charging of price, is not condition precedent for bringing the book within the scope of the word 'publication'. All the factors taken into consideration by the lower authorities in denying the claim of the assessee, were irrelevant. The purpose of publication is to make the contents of the book known to the public either by way of sale or distribution of the same to the public. The yellow pages directory were printed in lakhs and the same was distributed free to the general public, i.e., Corporate houses, Government offices, Businessmen and Professionals as well as to residents of thousands of housing societies in Mumbai. Therefore, such distribution amounted to ‘publication’ as per its natural meaning. Therefore, the yellow pages directory not only were printed but also published by the assessee. [Para 12] The next aspect of the issue was whether the 'Yellow pages' could be said to fall within the excluded category provided in sub-section (3) of section 80-Q i.e. newspapers, journals, magazines, diaries, brochures, tracts, pamphlets and other publications of similar nature. The stand of the Assessing Officer was that the assessee was registered with the registrar of Newspapers which also shows that 'Yellow pages’ should be treated like newspaper. [Para 13] Every printer of a book and a newspaper is governed by the provisions of ‘The Press and Registration of Books Act, 1867’. This Act defines ‘book’ and ‘newspaper’ separately. Newspaper is defined to mean any printed periodical work containing public news or comments on public news. As per section 3 of the said Act every printer of book or newspaper is required to print legible on it, the name of the printer and the place of printing and if the books or paper is published, the name of the publisher and place of publication. As per section 9 of the said Act, the printed copy of the book is to be delivered to the notified officer. The Registrar of newspapers is required to regulate the working of newspaper only and not the printing and publication of books. There is nothing in the said Act that printer or publisher of a book is required to get registered with Registrar of newspapers. Merely because the assessee got itself registered with Registrar of newspapers, no adverse inference could be drawn against it. Even otherwise, the assessee could not be said to be the publisher of newspaper as per the definition of newspaper given in the 1867 Act inasmuch as no news was published in it. Merely because the directory contained certain advertisements, it could not be said to be newspaper or similar to newspaper. The Commissioner (Appeals) had observed that there was a common thread amongst the excluded items, of books specified in section 80Q(3) i.e., there is no author in respect of excluded items. The reasoning of the Commissioner (Appeals) could not be accepted. In all the newspapers, all the news are authored by their correspondents. In all the magazines and journals, the articles published are written by authors. Therefore, it could not be said that there is no author in the excluded items provided in sub-section (3) of section 80Q. Therefore, the directory in question could not be included in the excluded category of books specified in sub-section (3) of section 80Q on ground that it did not have a author. [Para 14] The last aspect of the issue was whether it could be said the profit earned by the assessee was from the business of the publication of books. The stand of the Assessing Officer was that entire income was generated from the advertisements given in the ‘yellow pages’ and there was no income from the sale of yellow pages as the same was distributed free of cost. Therefore, according to the Assessing Officer, the income could not be said to be derived from publication of books. On the other hand, the contention of the assessee was that basic object of the assessee was to carry on the business of publication of books. The manner in which the business is to be carried on has to be left to the discretion of businessmen. [Para 15] The assessee was in the business of publication of books. It was for the assessee to find out the ways as to how the profits could be earned from such publication. The assessee chosed to earn its income through advertisements in the book published by it and such revenue could not be separated from the activity of the publication. It was because of this publication that assessee was able to earn revenue from the advertisements. No businessmen would give advertisements unless a book of public importance is published. Therefore, the income generated from advertisements given in a book cannot be ignored and would have to be taken into consideration while computing the income derived from the business of publication of books. [Para 16] In view of the above discussion, it could be said that the assessee was engaged in the business of publication of books in terms of the provisions of section 80Q and was entitled to deduction under the aforesaid section. [Para 17]