Adhoc percentage in cases of Indian authors/Writers. - Income Tax - 1102/CBDT

INSTRUCTION NO. 1102/CBDT Dated : September 28, 1977 Section(s) Referred: 44AA(1) ,44AA(2) Statute: Income - Tax Act, 1961 It has been represented to the Board that in cases of Indian authors/Writers an adhoc percentage be allowed as expense from receipts arising from royalties/writings, since the expenses incurred by them are so varied and complex that it is not possible to provide documentary evidence for every item of expenditure incurred. 2. After considering the representation in all its aspects it has been decided that in cases where the amount receivable from royalties/writings are less than Rs.25,000/- and where detailed accounts regarding expenses incurred are not maintained, claims of expenses to the extent of 25 percent of such amount or Rs.5,000/- whichever is less, may be allowed in the year of publication of a book or other publication including articles. The deduction will be allowable with reference to the total royalty receivable whether in respect of one edition or more than one editions published in any previous year and not with reference to the actual royalty received in that year. If royalty from a particular edition/editions of a book or publication is received over a number of years and expenses have been allowed in the year of publication in the above manner, no further expenses are allowable in subsequent years in respect of that publication. The expenses to the extent mentioned above will be allowable without calling for any evidence in support of the claim. However, if higher expenses are claimed, production of evidence is to be insisted upon before allowing the same. 3. The instructions contained in earlier para will also apply to a case where the amount receivable is more than Rs.25,000/- but the expenses claimed do not exceed Rs.5000-/ provided the income from this source is not more than Rs.25,000-/. In cases where the income from this source exceeds Rs.25,000/- the provisions of section 44AA(2) will apply and the assessee is expected to keep and maintain such books of account and other documents as would enable the Income-tax Officer to compute his income in accordance with the provisions of the Income-tax Act, 1961. 4. Attention is also drawn to section 44AA (1) whereby it is required that every person following a profession notified by the Board shall keep and maintain such books of accounts as may enable the Income-tax Officer to compute his income in accordance with the provisions of the Income-tax Act even if the income does not exceeds twenty-five thousand rupees or the turnover or the gross receipts do not exceed two hundred and fifty thousand rupees. The Board has so far not notified authors/writers as such under this section. The relaxation provided in para 2 of this Circular will not, however, be available in cases of such authors/writers who are included in the term of film artists being story-writers, screen play writers and dialogue writers if they are engaged in their professional capacity in the production of cinematograph film as they have been notified for the purposes section 44AA(1) vide Notification No.S.O.17(E) dated 12th January , 1977.