Income Tax Appellate Tribunal - Madras
Inspecting Assistant Commissioner vs Ramanathapuram Dist. Co-Op. Printing ... on 15 June, 1992
Equivalent citations: [1992]42ITD415(MAD)
ORDER
S. Kannan, Accountant Member
1. These three departmental appeals and the cross-objection by the assessee were heard together and are disposed of by a common order.
2. The assessee is a co-operative society. It is engaged in the business of printingbooks, registers and forms, which are used by Municipalities and Town Panchayats. At the time of the hearing the assessee had produced before us a compilation containing the price lists (as on 1-6-1991) of the books, registers and forms printed by it as well as model printed forms. From the above compilation it is clear that the assessee was printing-
- books, such as service books, bill books, measurement books, order books, cash books and the like;
- registers, such as revision petition registers, registers of appeals, professional tax demand registers, water meter reading registers, mutation registers and the like;
- licence books, such as vehicle licence books licence for elephants, camel, asses, dogs and the like; and
- forms, such as property tax assessment list, establishment bills, forms for TA bills, bills for contingent charges, DCB statement, annual account, budget estimate etc. Obviously the policy of the State Government in this regard was that municipalities, town panchayats and such like establishments must place their indents for books, registers and forms on the assessee-society. The price lists referred to above, besides indicating the rates at which the various items could be obtained, indicate the packing and forwarding charges, sales-tax and surcharge on sales-tax payable on the purchase.
3. The assessments for the assessment years 1983-84, 1984-85 and 1986-87 were completed, determining the taxable income of the assessee society as indicated below:
Assessment year 1983-84 1984-85 1986-87 ---------- ---------- ------------ Gross total income Rs. 6,32,417 Rs. 5,36,280 Rs. 8,75,543 Deduction under Section 80P Rs. 20,000 Rs. 20,000 Rs. 20,000 ---------- ---------- ----------- (Rs. 6.12,417) (Rs. 8,55,543) Taxable income Rs. 6,12,420 Rs. 5,16,280 Rs. 8,55,540 ------------ ------------ ------------
It may here be stated that deduction under Sections 80P was allowed because the assessee is a co-operative society, which is eligible for such deduction. There is no dispute on this point.
4. Dispute however arose on the question whether the assessee was entitled to deduction under Sections 80QQ or not. The assessee's case before the Assessing Officer was that it was entitled to deduction under the said section for all the three assessment years now before us, because it was earning profits and gains from" the business of publication of books". The Assessing Officer negatived the assessee's claim observing:
I fail to agree with the assessee's contention, if he conditions laid down in Sections 80QQ apply to the concerns engaged in 'printing and publication of books' or 'publication books'. Prima facie, the assessee is not engaged in the publication of any book as understood by a common man. Job printing for outsiders cannot be regarded as publication of books. Mere printing alone cannot qualify an assessee to the above deduction. The section is very clear about the printing and publication of books. Publication of books is quite different from mere delivery of printed materials to the customers as per order. Therefore, the assessee's claim for deduction under Sections 80QQ cannot be entertained.
5. The above issue was one of the subject matters of appeal filed by the assessee before the CIT (A). The assessee's case was, to quote from the grounds of appeal filed by it before the CIT (A) :
The expression "book' is not defined in the Act. Hence the expression must be understood with reference to the connotation of the said word in common parlance. In common parlance, the wordbook' is comprehensive enough to include all kinds of books. According to the Webster's Third New International Dictionary (Unabridged) 1966, the expression book means 'a collection of written, printed or blank sheets fastened together along one edge and usually trimmed at the other edges to form a single series of uniform leaves; specifically a collection of folded sheets bearing printing or writing that have been cut and sewn and usually bound between covers into a volume; a stack of sheets of paper interleaved alternatively with the material whose finish the paper acquires after it passes through the plater; the printed but unfolded and uncutsheets for a book; a long systematic literary composition; a major division of a treatise or literary work; any of the records (as the daybook, cash book, sales book, journal, ledger) in which a systematic record of business transactions may be kept'. Hence, books of all varieties except those which are specifically excluded from its purview under Sections 80QQ (such as newspapers, journals, magazines, diaries, brochures, tracts, pamphlets and other publications of a similar nature) answer the description of 'books' in Sections 80QQ. 'Guides' which contain questions and answers and which are published for the benefit of students in schools and colleges are 'books' within the meaning of Sections 80QQ Satyanarayana Publishing House v. CIT[ 1979] 118ITR519 (AP); CIT v. Dinesh Prakasan Mandir [1979] 120 rTR376 (Ml.). Also see Gouindaswamy Binding Works v. State of Andhra Pradesh[1972] 29 STC 219 (AP); CIT v. Elecon Engineering Co. Ltd. [1974] 96 ITR672, 681 (Guj.); Tomline's Will Trusts, In re : Pretyman v. Pretyman [1931] 1 Ch. 521.
6. The CIT (Appeals) allowed the assessee's claim in part. The reasons which weighed with him in this regard have been given in detail in his order dated 24-3-1987 relating to the assessment year 1984-85 and these are extracted below:
4.1 have duly considered the contentions made on behalf of the assessee. The fact remains that the books produced before me which are extracted above are bundle of certain notices or challans which are to be torn off and given to parties concerned. In fact one of the books produced before me is stated as diary. I have gone through the list of so called books printed by the assessee, they number about 204. Many of the books are only such of those types whose leaves are to be distributed to the parties concerned when actually put to use, for instance, books of cash memos issued for sale of articles by viz. Amudham Mini Super Bazaar. Since books can connote only sheets of papers which remain in tact even in user the alleged books produced before me do not fall under the expression 'Books' is comprehensive to include bill books and other perforated sheets held together until distribution the words 'of similar nature' used in Clause 3 of Sections 80QQ would be far wider to canvass items published by assessee undertaking then to fit in the exclusion clauses.
5. In my view 'Book' no doubt has to be given a wide meaning, but that meaning should be confined to the dictionary meaning or the meaning given by judicial pronouncements. In 118 ITR 519 it was held that the expression 'Book' is comprehensive enough to take any kinds of books. In that case whether guides were books was the question before the Court. In that case the the Lordships of Andhra Pradesh High Court went by definition of 'Book' in Webster's Third New International Dictionary. Taking the view expressed by judicial pronouncements I hold that registers, ledgers and other account books printed and published by the assessee would come under 'Books' whereas licence, receipt books and other books which are mere forms of few pages (50 pages or 100 pages) whose leaves are torn off and given to the concerned persons will not come under expression 'Book'; but would fall under the expression 'Other publications of similar nature by whatever name called'. Since the number of books and the nature of books published by the assessee had not been adverted to by the Assessing Officer I consider that allowance of deduction have to be given to some extent under Sections 80QQ. In this connection I have also taken note of the fact that the assessee is paying multiple point tax on all the items without claiming any exemption for publication of books allowed under notification under Section 47 of the Tamilnadu General Salestax Act. The profits attributable to bill books etc. will not be entitled for any deduction whereas the other profits from printing 'books' of nature of account books etc. will be entitled for deduction. All facts duly considered I allow a deduction of 10 per cent on the income from publication of books. In other words half of the income claimed to be from books shall be considered as from publication of forms.
The CIT (Appeals) took the same line on this issue in the appeals relating to the assessment years 1983-84 and 1986-87.
7. The Department is now before us objecting to the aforesaid decision of the CIT (Appeals).
8. Shri K.L. Tilakchand, the learned Departmental Representative, vehemently contended that the books, registers and forms printed and sold by the assessee to various municipalities/townpanehayats cannot be labelled "printing and publication of books" within the true meaning of Sections 80QQ. Strongly supporting the assessment orders in question, Shri Tilakchand contended that the wide dictionary meaning of the term 'book' notwithstanding, registers, service books and the like printed and sold by the assessee cannot be regarded as "printing and publication of books". In this regard he drew our attention to the fact that in the Andhra Pradesh case of Satyanarayana Publishing House v. CIT [1979] 118 ITR 519 and Govindaswamy Binding Works v. State of Andhra Pradesh [ 1972] 29 STC 219, the question that arose for consideration was whether publication of 'guides' containing questions and answers on various subjects and which were published for the benefit of students amounted to printing and publication of books. The ratio of the said cases cannot be applied to the case before us. Similarly in the case of CIT v. Elecon Engg. Co. Ltd. [1974] 96 ITR 672 the Gujarat High Court was examining the meaning of the words 'books' in the context of the definition of plant. Hence that case cannot avail the assessee.
Shri Tilakchand then drew our attention to the fact that, in any event, the provisions of Sections 8009 are not applicable to assessment for the assessment year 1986-87, because by virtue of the 1981 amendment the section ceased to operate after assessment year 1985-86. He, therefore, urged that the Department is entitled to succeed on this issue.
9. On his part. Shri Quadir Hoseyn, the learned counsel for the assessee, strongly supported the impugned orders of the CIT (Appeals). He first contended that many of the items printed by the assessee-society could rightly be regarded as books within the dictionary meaning of the term.
Secondly, to "publish" means nothing more than supplying sufficient quantities of the items to the public at large. In this regard he referred to and relied upon :
(i) Iyengar's commentary on the Copyright Act and Rules, and particularly to the definition of the term 'publication' contained in Sections 3 and 14 of the Act; and
(ii) the decision of the jurisdictional High Court in the case of Alavandar, In re 57 MLJ 136 in support of the proposition that a man who causes a book to be printed and offers it to the public for sale is a publisher. In view of the foregoing, therefore, contended Shri Hoseyn, the impugned orders of the CIT (Appeals) does not invite any interference.
10. We have looked into the facts of the case. We have considered the rival submissior.
11. We maj clear the decks as it were by considering the issue in relation to the assessment year 1986-87. As rightly pointed out by the learned Departmental Representative, the provisions of Sections 80QQ are not applicable to the assessment year 1986-87. Section 80QQ was introduced by the Taxation Laws (Amendment) Act, 1970 with effect from April 1, 1971. The section, as it stood at the time of its introduction, stipulated that the deduction contemplated by that section would be available to the assessment year 1971-72 and/or to any one of the four immediately succeeding assessment years. The word "nine" was substituted for the word "four" by the Finance Act, 1975 with effect from 1 4-1975. The Finance Act, 1981 substituted the word "fourteen" for the word "nine". Thereafter, there was no extension of the period of availability of the deduction under that section. Thus, the deduction under Sections 80QQ is available only for the assessment years 1971-72 to 1985-86 (both inclusive). Since the section had outlived its life span, the Direct Tax Laws (Amendment) Act, 1987 omitted the section from the Income-tax Act.
12. In view of the foregoing, therefore, the assessee is not entitled to the benefit of deduction under the said section, for the assessment year 1986-87. Accordingly, we set aside the impugned order of the CIT (Appeals) on this issue. We further hold that the Assessing Officer was justified in negativing the assessee's claim, though not for the reasons mentioned by him.
13. We may now deal with the merits of the assessee's claim in relation to the assessment years 1983-84 and 1984-85.
14. At the outset we may notice the warning sounded by the courts in matters relating to interpretation of statutes. The first warning sounded by the courts of law is that "in construing a word in an Act, extreme caution is necessary in adopting the meaning ascribed to the word in other Act". In Macbeth v. Chislett [1910] AC 220 (HL), it was observed by the House of Lords as follows:
It would be adding a new terror in the construction of Acts of Parliament if we were required to limit a word to an unnatural sense because in some Act. which is not incorporated or referred to, such an interpretation is given to it for the purpose of that Act alone.
In Laurence Arthur Adamson v. Melbourne and Metropolitan Board of Works AIR 1929 PC 181, 183 the Privy Council said :
. . .it is always unsatisfactory and generally unsafe to seek the meaning of words used in an Act of Parliament in the definition clauses of other statutes dealing with matters more or less cognate...
In DM Banerji v. P.R. Mukharjee AIR 1953 SC 58, 60 the Supreme Court said :
Though the definition may be more or less the same in two different statutes, still the objects to be achieved not only as set out in the preamble but also as gatherable from the antecedent history of the legislation may be widely different. The same words may mean one thing in one context and another in a different context. This is the reason why decisions on the meaning of particular words or collection of words found in other statutes are scarcely of much value when we have to deal with a specific statute of our own; they may be helpful but they cannot be taken as guides or precedents.
In the case of Nandlal Sohanlal v. CIT [1977] 110 ITR 170 (Punj. & Har.) (FB), Justice Chinnappa Reddy, who subscribed to the majority opinion, observed:
... if a word has a certain meaning in one statute or if a situation is followed by certain consequences under one statute, it does not follow that the word will have the same meaning in another statute or that the situation will be followed by the same consequences under the other statute. Regard must be had to the context, the intention of the Legislature and the object sought to be achieved by the two statutes.
Another warning was sounded by the court of law and that was in the context of the discovery of the intention of the Legislature from the language used. In the case of CIT v. J.H. Gotla [1985] 156 ITR323 (SC), recalling to memory the warning administered by Judge Learned Hand, Sabyasachi Mukharji J. observed:
Where the plain literal interpretation of a statutory provision produces a manifestly unjust result which could never have been intended by the Legislature, the Court might modify the language used by the Legislature so as to achieve the intention of the Legislature and produce a rational construction. The task of interpretation of a statutory provision is an attempt to discover the intention of the Legislature from the language used. It is necessary to remember that language is at best an imperfect instrument for the expression of human intention. It is well to remember the warning administered by Judge Learned Hand that one should not make a fortress out of the dictionary but remember that statutes always have some purpose or object to accomplish and sympathetic and imaginative discovery is the surest guide to their meaning.
For a fact, certain observations of the Supreme Court in the case of CGT v. N.S. Gettt Chettiar [1971] 82 1TR 599 elucidate what is exactly meant by "making a fortress out of the dictionary". At page 605 of the Report the Court observed:
The dictionary gives various meanings for those words but those meanings do not help us. We have to understand the meaning of those words in the context in which they are used. Words in the section of a statute are not to be interpreted by having those words in one hand and the dictionary in the other. In spelling out the meaning of the words in a section, one must take into consideration the setting in which those terms are used and the purpose that they are intended to serve.
The purposive approach to statutory interpretation which was adopted and advocated by Lord Diplock in preference to the purely literal interpretation of the statutory provisions seeks "to promote general legislative purpose" by breaking the stranglehold of the dictionary. Re-emphasising the importance of purposive approach, Lord Diplock in Reg. v. Nat. Ins. Commr. [1972] AC 944 observed:
Meticulous linguistic analysis of words and phrases used indifferent contexts in particular sections' of the Act should be subordinate to this purposive approach. It should not distract your Lordships from it.
15. Now what are the facts before us? The assessee before us is a cooperative society which prints various "books", registers and forms which are used by municipalities, town panchayats and other such institutions. The assessee's case is that the dictionary meaning of the word "book" is wide enough to bring it under the protective umbrella of Sections 80QQ of the Act. The Assessing Officer negatived the assessee's claim observing: "prima facie the assessee is not engaged in the publication of any book as understood by common man. Job printing for outsiders cannot be regarded as publication of books. (Emphasis supplied).
16. On his part, the CIT (Appeals), purporting to follow the decision in the Andhra Pradesh case of Satyanarayana Publishing House [supra), held that "registers, ledgers and other account books printed and published by the assessee would come under 'Books'; whereas licence, receipt books and other books which are mere forms of few pages (50 pages or 100 pages) whose leaves are torn off and given to the concerned persons will not come under expression 'Book'; but would fall under the expression 'Other publications of similar nature by whatever name called'." It was on this basis that the CIT (Appeals) concluded"... I allow a deduction of 10 per cent on the income from publication of books. In other words, half of the income claimed to be from books shall be considered as from publication of forms".
17. The validity of the aforesaid conclusion of the CIT (Appeals), who partly allowed the assessee's claim on this issue, will have to be examined in the context of the provisions of Sections 80QQ of the Act. As already pointed out, Sections 80QQ was introduced in the Act by the Taxation Laws (Amendment) Act, 1970. The heading of the section is "Deduction in respect of profits and gains from the business of publication of books". The Notes on Clauses appended to the Taxation Laws (Amendment) Bill, 1969 explained the scope and effect of Sections 80QQ in the following words:
Clause 24 seeks to insert a new Sections 80QQ in Chapter VTA of the Income-tax Act with effect from 1-4-1970.Under the proposed new Sections 80QQ any person carrying on a business, in India, of the printing and publication of books or publication of books without the activity of printing, will be entitled to a deduction, in the computation of his total income, of an amount equal to 20 per cent of the profits from such business included in his gross total income. The deduction will be admissible for the assessment years 1970-71, 1971-72, 1972-73, 1973-74 and 1974-75. For the purposes of the new Sections 80QQ, 'books' will not include newspapers, journals, magazines, diaries, brochures, tracts, pamphlets and other publications of a similar nature by whatever name called.
18. At the outset we would like to make it clear that we refuse to submit to the dictatorship of the dictionary. We refuse to accept the proposition that the collection between two covers of blank papers or even of ruled papers (with or without words and figures) would come within the pale of Section 80QQ, merely because the dictionary says that such a collection is a book. Similarly, we refuse to accept the proposition that a person who manufactures and markets in large quantities note books, copy books, short-hand note books etc. should be called a publisher of books, merely because Section 3 of the Copyright Act, 1957 defines the term "publication" to mean issuing of the copies of the works/record to the public in sufficient quantities. Similarly, the sense in which the said term has been understood for the purpose of the Press and Regulation of Books Act, 1867 cannot also be called to aid.
19. When a man of ordinary commonsense thinks of a book, he thinks of printed word: not any printed word, but the printed word referring to which Warner Mark in his Publisher's Foreward to John P. Dessauer's 'Book Publishing - A Basic Introduction' (Continuum, N.Y.) observed: "... there is something about the printed word with its anchorage in the heritage of the past and its demand for conceptual thinking, and about the printed page as catalyst of the creative imagination, which is keeping book publishing true to its better self. Again, when a man of ordinary commonsense thinks of a book, he thinks of the author, the publisher, the subject-matter of the book, its format and so on. He certainly does not think of bus tickets, cinema tickets and their printers, even though the tickets might be issued in book form.
20. There is a philosophical dimension too to "books" and "book publishing". As for books, Bacon said: "Some books are to be tasted, others to be swallowed, and some few to be chewed and digested". To our knowledge no one has as yet prescribed cash book, ledgers and bill books for human consumption.
21. As for Book Publishing, John Morley in his "Recollections" wrote: "Aptly it has been said by one of the most brilliant writers of our day, that the great publisher is a sort of Minister of Letters, and is not to be without the qualities of a statesman." (Quoted in "The Truth About Publishing" by Sir Stanley Un win).The archetypal book publisher, and the high priest of book publication. Sir Stanley Unwin himself had in the said book observed: "publishing has rewards greater than money." This accent on the high values of book publishing continues even today. Werner Mark talks of publishing "as a medium of literature, scholarship, education or entertainment." (ibid). John. P. Dessauer regards book publishing as a cultural activity and as a business. Another distinguished American publisher observed "if at base publishing is a business, at its best it becomes a vocation."
In his perceptive article "The Business of Publishing" ('Book Talk': The Hindu dated February 2, 1992) David Davidar has this to say about book publishing:
Publishing is rich in paradox. On the one hand it is a business like most others in that the whole idea is to turn a profit, on the other it is probably the most un business like business you can think of, where success or failure, after the trumpets and shouting have died down, depend on the fancy of the reader and in all this we must realise that books are not a staple of everyday life, like, say, food...;
What trade or general publishers usually do is produce a list of books every year - the list, in publishing jargon - that they then go out and try and sell to the best of their ability plus of course a large dose of luck for, all things being equal, one excellent book may sell while another, equally good, may just roll over and die for no fault of the author and the publisher. If publishers knew exactly what made a book sell, every time they 'bought a book" (i.e., contracted to publish a book) then of course it would be an ideal world where happy contended authors and publishers waltzed off into the technicolor sunset, happy as sand boys or whatever. In the real word, of course, things don't happen that way with surefire best sellers failing and unexpected winners turning up in the slush pile (i.e., the book of unsolicited manuscripts most publishers have to contend with).
While the uncertainty can be maddening this is also the reason publishing is such an exciting business sometimes, quite deliberately, the publisher will publish a book that doesn't stand a chance of making any money, simply in order to see a great book see the light of day or in order to underline the intrinsic quality of the books on this list, but in order to do this he must ensure that he publishes enough books that sell or continue to sell for no amount of goodwill (from critics or otherwise) can help a publisher of uniformly unproductive books to survive.
Desipite the many shapes, sizes and orientations of publishing houses all of them share two basic characteristics: the author and the reader. Let us turn to Vaughan for his well put perceptions of the twin girders on which all good publishing is built: The single most important difference between publishing and other businesses is the unique importance and presence, visible or not, of the author. Many authors feel neglected or misunderstood by their publishers but compared with what can happen to the creative output of automobile designers, and screenwriters, architects and commercial artists - the author is God. There is no doubt who created the work - and alone. The publisher does not simply manufacture an object of industrial design, assembled by employees; the publisher brings forth a 'product' that, in the end as in the beginning, belongs in the deepest sense to its author.
The fact that each book produced is unique to its author/s immediately sets up the interesting supposition that each book, however, humble, is monopoly unto itself. The most basic educational reader and the newest Vikram Seth, are both unique unto themselves and strictly speaking have no competition, by and large (I am not talking here of competition from other books/authors vying for the customers rupee, merely underlining the fact that each books is unique) and this brings us to the other basic foundation on which publishing is built: the reader...
22. As we see it the term "publication of books" used in Sections 80QQ will have to be understood in the light of the foregoing analysis.
23. For a fact, there is internal evidence in the section itself to suggest that the legislative intent was not to equate the mere printing and selling of cash books, registers and forms with publication of books. The section, in terms, excludes from its pale and purview "newspapers, journals, magazines, diaries, brochures, tracts, pamphlets and other publications of a similar nature, by whatever name called." The significant point to be noted here is not the number of the excluded items, but the nature of such items. All of them contain printed words. All of them fit into the dictionary meaning of the term book. All of them except perhaps diaries contain reading material. Even so, such items together with diaries have been excluded from the beneficial umbrella of Sections 80QQ. The significance of the excluded items, and more particularly there nature lies in that the legislative intent was to extend the benefit of deduction under Sections 80QQ only to the profits and gains from the business of "publication of books", the term "publication of books" being understood in its ordinary signification. Indeed, both in the Allahabad case of CIT v. Dtnesh Prakashan Mandir [1979] 120 rTR376 and in the Andhra Pradesh case of Satyanarayana Publishing House (supra) it was with reference to the nature of the excluded items that it was held that "guides" published by the assessee therein must be regarded as books. It may here be highlighted that in the Andhra Pradesh case, after noticing the dictionary definition of the term "book", the Court went on to observe that Sections 80QQ restricted the rather wide dictionary meaning of the word "book". In that regard, the Court observed that the question was not whether the books printed are of enduring value but whether they answer the description of 'books'. It was also not necessary that to answer the description of 'book', a book should have wide sales, or should be in circulation all over the country. Thus, the true ratio of the Andhra Pradesh case cuts at the very root of the assessee's claim.
24. In view of the foregoing, therefore, we hold that CIT (A) was not justified in allowing assessee's claim for deduction under Sections 80QQ even to a limited extent. On a proper construction of the section, the assessee Is not entitled to have benefit at all under the said section. We, therefore, set aside the impugned orders of the CIT (A) on this issue, and restore those of the Assessing Officer.
25. to 39. [These paras are not reproduced here as they involve minor issues.]