2007 (10) TMI 331 - AT - Income Tax

Summary

Issues Involved:
1. Validity of reopening the assessment under section 147 of the Income-tax Act, 1961.
2. Eligibility for deduction under section 80RR of the Income-tax Act, 1961.
3. Definition and scope of the term "author" under section 80RR.
4. Nature of the receipts and whether they qualify for deduction under section 80RR.

Detailed Analysis:

I. Validity of Reopening the Assessment:
The assessee challenged the reopening of the assessment under section 147 for the assessment years 1999-2000, 2000-01, and 2001-02. The Assessing Officer (AO) reopened the assessments after discovering that the main author of the books in question was John Gray, and the assessee was not listed as an author or co-author. The AO issued notices under section 148 within four years from the end of the relevant assessment years, stating that there was reason to believe that income had escaped assessment. The CIT(A) upheld the reopening, stating that the AO did not form an opinion on whether the assessee was a professional author during the original assessment. The Tribunal agreed with the CIT(A), noting that the AO's actions were based on new information and not a change of opinion, thus validating the reopening of the assessments.

II. Eligibility for Deduction under Section 80RR:
The assessee claimed deductions under section 80RR for income received as a co-author of certain books. The AO denied the deductions, arguing that section 80RR applies only to authors, not co-authors, and that the assessee was not a professional author. The CIT(A) upheld the AO's decision, stating that there was no evidence the assessee scripted any portion of the books and that section 80RR does not include co-authors. However, the Tribunal disagreed, stating that section 80RR does not require one to be a professional author and that co-authors are included within the meaning of "author" for the purposes of section 80RR. The Tribunal noted that the assessee had contributed intellectually to the books, fulfilling the conditions for joint authorship.

III. Definition and Scope of the Term "Author" under Section 80RR:
The Tribunal analyzed the term "author" under section 80RR, comparing it with sections 80QQA and 80QQB, which explicitly include joint authors. The Tribunal concluded that the term "author" in section 80RR includes co-authors, as the provision aims to encourage intellectual contributions that project India's culture abroad. The Tribunal cited acknowledgments in the books and certificates from the main authors, which confirmed the assessee's contributions. The Tribunal emphasized that section 80RR is designed to promote activities that enhance the understanding of Indian culture and augment foreign exchange resources.

IV. Nature of the Receipts:
The AO classified the receipts as revenue in nature, which the assessee did not contest. The Tribunal agreed, stating that the receipts were earned in the course of exercising the assessee's profession. The Tribunal also addressed the argument that the assessee was an artist, concluding that the assessee's activities in imparting spiritual training and teaching meditation qualify as artistic endeavors under section 80RR. The Tribunal noted that the assessee's contributions to the books were in the exercise of his profession, thereby fulfilling the conditions for deduction under section 80RR.

Conclusion:
The Tribunal upheld the validity of the reopening of the assessments under section 147 but allowed the assessee's claims for deductions under section 80RR. The Tribunal concluded that the term "author" in section 80RR includes co-authors and that the assessee's contributions to the books were in the exercise of his profession, qualifying him for the deductions claimed. The appeals were partly allowed, granting the assessee the deductions under section 80RR for the relevant assessment years.