1992 (5) TMI 61 - AT - Income Tax

Deduction granted for share income from photography and journalism firm

The Tribunal allowed the deduction claimed under section 80RR for share income from a firm engaged in photography and journalism business. It held that ... A Firm, Foreign Currency, Foreign Exchange Regulation Act Issues:Deduction claimed under section 80RR on share income from a firm carrying on photography and journalism business.Analysis:The appeal raised the issue of whether the income derived by the assessee from a firm carrying on photography and journalism business retains its character in the hands of the individual partner for the purpose of claiming a deduction under section 80RR. The argument presented emphasized that the income derived by the firm, later distributed to partners, retains its original character as per section 67 of the Income-tax Act. The appellant contended that the income falls under the classification of 'artist' as defined in section 80RR, citing a circular clarifying that photographers and TV news-film cameramen are considered artists. Reference was made to judicial pronouncements supporting the claim that income retains its character in the hands of partners. The Departmental Representative argued that 'derived' income refers to direct income earned by the individual, not income from a firm.The Tribunal considered whether the income received by the individual partner from the firm, which included income from photography and TV news-film making, retained its character as income of the individual. The Tribunal analyzed the activities of the firm, including journalism and TV news-film making, and the accreditation of partners as correspondent-cum-cameramen, qualifying them as artists. Referring to section 67(2) of the Income-tax Act, the Tribunal concluded that income derived by the firm as artists would also be considered income from the profession of artists in the hands of partners. The Tribunal highlighted the requirement under section 80RR that income must be brought into India in compliance with the Foreign Exchange Regulation Act for the deduction to apply.The Tribunal directed the Assessing Officer to verify if the income derived by the partner had been brought into India in accordance with the Foreign Exchange Regulation Act, as required by section 80RR, to determine the eligibility for the claimed deduction. Citing a previous decision of the Allahabad High Court, the Tribunal reiterated that income derived by the firm retains its character in the hands of partners. Ultimately, the Tribunal allowed the claim of the assessee based on the observations made regarding the nature of income derived from the firm and the compliance with section 80RR requirements.