2015 (10) TMI 1496 - AT - Income Tax

Entitlement to deduction u/s 80QQB - whether the royalty income is not derived by the appellant in the exercise of profession and is therefore not entitled to deduction u/s 80QQB? - Held that - No particulars have been placed on record to show that the assessee is specially qualified apart from the skill and ability to write the book. There is also no material on record to say that whether the assessee is having education in the field of cookery either in the college or university or even by experience. There is no such material on record to suggest that the assessee is qualifying for the parameters laid down for considering a particular activity as a professional activity. In any case, the income earned by the assessee as royalty cannot be said to be earned by the assessee in the exercise of her profession which is the main requirement of the section according to which deduction can be allowed under section 80QQB. The non-fulfillment of such condition would disentitled the assessee to claim deduction under section 80QQB. Therefore, we do not find any infirmity in the order passed by the learned Commissioner (Appeals) vide which it has been held that the assessee is not entitled for deduction under section 80QQB, we decline to interfere - Decided against assessee.

Summary

Issues:
1. Eligibility for deduction under section 80QQB for royalty income derived from a book.
2. Interpretation of the term "profession" in relation to claiming deductions under section 80QQB.

Issue 1:
The appeal was filed by the assessee against the order denying a deduction of Rs. 2,70,000 under section 80QQB for royalty income received from a book authored by the assessee. The Assessing Officer and the CIT(A) held that cooking does not qualify as an "art" under the section, thus disallowing the deduction. The assessee argued that the definition of "art" includes culinary art, i.e., cooking, and provided evidence to support this claim. However, the Departmental Representative contended that the assessee had no professional income from cookery and, therefore, should not be eligible for the deduction. The Tribunal considered the definitions of "profession" and "business" and concluded that the assessee did not meet the criteria of being specially qualified apart from skill and ability to be considered engaged in a professional activity. As the income from royalty did not meet the requirement of being earned in the exercise of a profession, the Tribunal upheld the decision to disallow the deduction under section 80QQB.

Issue 2:
The Tribunal examined the definition of "profession" as including vocation and referred to a previous case where it was determined that a special qualification beyond skill and ability is necessary for an activity to be considered a profession. In this case, the Tribunal found that there was no evidence to show that the assessee had any special qualifications or education in cookery to be considered engaged in a professional activity. The absence of such qualifications, along with the lack of income earned in the exercise of a profession, led the Tribunal to uphold the decision that the assessee was not entitled to the deduction under section 80QQB. The Tribunal dismissed the appeal, affirming the denial of the deduction for the royalty income received from the book.

This judgment clarifies the requirements for claiming deductions under section 80QQB for royalty income derived from a book, emphasizing the need for the income to be earned in the exercise of a profession. It highlights the importance of demonstrating special qualifications or education beyond skill and ability to be considered engaged in a professional activity, ultimately influencing the eligibility for such deductions.