Copyright in news expression and photographs can generate royalty tax where licensed use is contractually restricted.

Additional evidence was admitted under Rule 29 because it was relevant to the central controversy, had earlier been sought from the assessee, and would cause no prejudice. Copyright was held to subsist in the assessee's news stories and photographs because copyright protects original expression, selection, arrangement and presentation, not mere facts or current events; the contractual restrictions, licence terms and copyright credit showed controlled use of proprietary material, so consideration under the distribution agreements was taxable as royalty under section 9(1)(vi) and the applicable DTAA. Interest under section 234B was upheld on the facts applied by the Tribunal.

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Issues: (i) Whether additional evidence filed by the Revenue was admissible under Rule 29 of the Income-tax Appellate Tribunal Rules, 1963; (ii) whether copyright subsisted in the news reports and photographs supplied by the assessee, so that the consideration received under the distribution agreements constituted royalty under section 9(1)(vi) of the Income-tax Act, 1961 and the applicable DTAA; and (iii) whether interest under section 234B of the Income-tax Act, 1961 was leviable.

Issue (i): Whether additional evidence filed by the Revenue was admissible under Rule 29 of the Income-tax Appellate Tribunal Rules, 1963.

Analysis: The material sought to be produced related to the assessee's own litigation and was held to be relevant to the central controversy. The Tribunal found that the assessee had earlier been called upon to furnish the material, that it remained within the assessee's knowledge and possession, and that admitting the material would cause no prejudice. The Tribunal treated it as the best available evidence for adjudicating the dispute.

Conclusion: The additional evidence was admitted.

Issue (ii): Whether copyright subsisted in the news reports and photographs supplied by the assessee, so that the consideration received under the distribution agreements constituted royalty under section 9(1)(vi) of the Income-tax Act, 1961 and the applicable DTAA.

Analysis: The Tribunal held that while news per se, being mere facts or current events, is not copyrightable, copyright can subsist in the manner of reporting, expression, arrangement, and presentation where there is sufficient skill, labour, and a modicum of creativity. It found that the assessee's agreements conferred controlled and licensed use of proprietary information, imposed restrictions on redistribution and alteration, and required copyright credit. The Tribunal further held that the assessee's news stories and photographs were original literary and artistic works in the relevant sense and did not fall within the fair dealing exception for reporting current events, because the users were exploiting licensed material under contractual restrictions rather than relying on a public-domain right.

Conclusion: Copyright was held to subsist in the news stories and photographs, and the consideration received was held taxable as royalty.

Issue (iii): Whether interest under section 234B of the Income-tax Act, 1961 was leviable.

Analysis: The Tribunal applied the jurisdictional High Court's ruling that where the assessee denies taxability in India and the payer's obligation to deduct tax is correspondingly not attracted in the same manner, the assessee cannot avoid interest liability on the facts of the case. The assessee's position was found to be similar to the precedent relied on by the Revenue.

Conclusion: Interest under section 234B was upheld.

Final Conclusion: The Tribunal upheld the taxability of the receipts as royalty, sustained the interest levy, and dismissed the assessee's appeal in full.

Ratio Decidendi: News as mere facts or current events is not copyrightable, but copyright may subsist in the original expression, selection, arrangement, and presentation of news and photographs where the work reflects sufficient skill, labour, and a modicum of creativity; payments for licensed use of such protected material are royalty.

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