M.S. Menon, C.J.
1. This is a reference at the instance of the assessee by the Income-tax Appellate Tribunal, Madras Bench, under Section 256(1) of the Income-tax Act. 1961 The assessment year concerned is 1959-60; and the accounting period, the twelve months ended on the 31st March 1959 The questions referred are:
(1) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the time taken by the assessee to write the book would not be more than twelve months, within the meaning of Section 12-AA of the Income-tax Act. 1922?
(2) Whether on the facts and in the circumstances of the case, the Tribunal was right in permitting the Department to raise the contention that the income of the assessee did not fall under Section 12-AA of the Income-tax Act, 1922?
(3) If the answer to question No. (2) is in the affirmative, whether the Appellate Tribunal was right in holding that the provisions of Section 12-AA of the Act did not apply and that the income of the assessee was Income from business?
(4) Whether the Tribunal was right in holding that the income of the assessee was not a casual or non-recurring income?
2. The assessee is the author of a book entitled 'Oru Kuttiyute Atmakatha'.
The book, we are told, is an adaptation in Malyalam of David Copperfield.
3. The assessee sold the copyright of the book to Messrs. P.K. Brothers in 1956, and the book was published by them in 1956 itself. Subsequently, in 1958, the assessee obtained a reconveyance of the copyright from Messrs. P.K. Brothers. He then entered into an agreement, on the 18th June 1938, with the Government of Kerala, whereby he undertook to print an edition of the book railed the Kerala Edition and supply the copies of that edition to the Government of Kerala. The agreement is reproduced as Appendix A to the Statement of the Case. It reads as follows:
'Articles of agreement made on the 18th day of June 1958 by K. Thayat, P.O. Panoor. Cannanore District (hereinafter called the printer) in favour of the Governor of the State of Kerala hereinafter called the Government.
Whereas the printer has agreed to execute the printing and supplying 1,90,000 (one lakh ninety thousand) copies of the book ORUKUT-TYUDE ATMAKATHA for use in the schools of the Stale.
Now these present witness and it is hereby agreed as follows:
1. The printer hereby undertakes to print a 'Kerala Edition' of the above mentioned book and supply not later than 30th June, 1958 the entire copies of the book ordered by the Director of Text Books and Examinations or such other officer authorised by him who will issue receipt immediately for the same.
2. The book shall bear the superscription of Kerala Edition on the cover page.
3. No sale of the hook shall be made to any outside agency.
4. The cost of the book shall be 12 annas (twelve annas).
5. An overriding commission of 25 per cent on the hooks sold shall be given.
6. In the event of the irregular or late supply of copies, the contract is liable to be cancelled by the Government and the printer shall have to make good to Government any loss, incurred thereby.
7. In the event of any doubt or dispute arising between the printer and the Government in respect of this contract, the decision of the Government shall be final and legally binding on the printer.
8. The printer shall be liable for all loss caused to the Government by his default or delay or breach of all or any of the conditions herein contained.
9. All sums found due to the Government under or by virtue of this agreement will be recovered as if they are arrears of land revenue under the provisions of the Revenue Recovery Act for the time being in force or in such other manner as the Government may deem fit.
In witness where of Shri C.T. Philip. Director of Text Books and Examinations for and on behalf of the Governor of the State of Kerala and Shri K. Thayat the printer have hereunto set their hands at the date and year first above mentioned.'
4. The only contention urged before us is that the agreement spells an assignment of a right in the copyright of the book--the right of publishing the Kerala Edition of the book and that as a resull Section 12-AA of the Indian Income-fax Act. 1922, comes into the picture. that section, omitting the explanation thereto which is not material, reads as follows:
'Where the lime taken by the author of a literary or artistic work in the making thereof is-
(a) more than twelve but less than twenty-four months, or
(b) more than twenty-four months.
The amount received or receivable by him during any previous year on account of any lump sum consideration for the assignment or grant of any of his interests in the copyright of that work or of royalties or copyright fees (whether receivable in lump sum or otherwise), in respect of that work, shall, if he so claims, be allocated for purposes of assessment as hereunder--
(i) In the case referred to in Clause (a), one-half of the amount of such lump sum, royalties or fees as the income of the previous year in which the whole amount is received or receivable, and the other half as the income of the next succeeding previous year and
(ii) In the case referred to in Clause (b), one-third of the amount of such lump sum, royalties or fees as the income of the previous year in which the whole amount is received or receivable, and one-third of the said amount as the income of each of the two next succeeding previous years.'
5. It is common ground that if we conic to the conclusion that the agreement does not spell an assignment of any interest in the copyright of the book, questions (1). (2) and (3) have to be answered against the assessee and in favour of the Department The main point for determination, therefore, is whether the agreement does or does not involve an assignment of any interest in the copyright of the hook as contended by the assessee
6. It is clear from Section 14 of the Copyright Act, 1957, that copyright includes, in the case of a literary work, the right to publish the work. It is also clear from Section 3 of that Act that publication, in the case of a literary work, means 'the issue of copies of the work to the public in sufficient quantities'
7. The submission of counsel for the assessee, as already indicated, is that the agreement transfers to the Government of Kerala the right to publish the Kerala Edition of the book and that as a result the provisions of Section 12-AA of the Indian Income-tax Act. 1922 are attracted to the case We cannot agree
8. Under the agreement, as we read it, both the printer and the publisher of the Kerala Edition will be the assessee himself and not the Government of Kerala. The only right acquired by the Government of Kerala seems to be the right to obtain from the assessee the copies of the Kerala Edition at 12 annas per copy Plus 'an overriding commission of 25 per cent on the books sold'. There is no. indication of any other right being conferred by the agreement on the Government of Kerala.
9. Section 3 of the Press and Registration of Books Act. 1867, provides that every book or paper printed within India shall have printed legibly on it the name of the printer and the place of printing, and (if the book or paper be published) the name of the publisher and the place of publication. If the assessee wanted to substantiate bis contention before the Tribunal, he could have produced a copy of the Kerala Edition of the book. He did not do so, and a ropy is not part of the Statement of the Case. We feel certain that he did not produce a copy of the Kerala Edition for the simple reason that, if produced, it would have shown that he was both the printer and the publisher of the Kerala Edition, and that his submission on the basis of Section 12-AA of the Indian Income-tax Act, 1922, had no factual foundation to support it.
10. In the light of what is staled above we cannot but agree with the Tribunal and answer questions (1), (2) and (3) in the affirmative, that is, against the assessee and in favour of the Department. In the circumstances of the case we cannot but also agree with the Tribunal that the income concerned is an income from business and not a casual receipt exempt from assessment. It follows that question (4) also has to be answered in the affirmative, that is, against the assessee and in favour of the Department.
11. The reference is answered as above. The assessee will pay the costs of the respondent, advocate's fee Rs. 100.
12. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be sent to the Appellate Tribunal as required by Sub-section (1) of Section 200 of the Income-tax Act, 1961.