Copyright assignment requires transfer of publishing rights; mere printing and supply arrangement was treated as business income.

An agreement with the Government of Kerala for printing and supplying copies of a book did not transfer any interest in the copyright, because the assessee remained printer and publisher and the Government received only a right to obtain copies at a stipulated price with commission. On that construction, section 12AA of the Income-tax Act, 1922 was not attracted. The related receipt was treated as arising from a commercial arrangement for printing and supply, so it had the character of business income rather than a casual or non-recurring receipt exempt from assessment.

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Issues: (i) Whether the agreement with the Government of Kerala amounted to an assignment of any interest in the copyright of the book so as to attract section 12AA of the Income-tax Act, 1922; (ii) Whether the amount received was income from business and not a casual or non-recurring receipt exempt from assessment.

Issue (i): Whether the agreement with the Government of Kerala amounted to an assignment of any interest in the copyright of the book so as to attract section 12AA of the Income-tax Act, 1922.

Analysis: Copyright in a literary work includes the right to publish, but the agreement had to be read to ascertain whether any such right was transferred. On its terms, the assessee remained both printer and publisher of the Kerala edition. The Government acquired only the right to obtain copies at the stipulated price with an overriding commission, and no independent publishing right was conferred on it. The statutory scheme relating to copyright and publication did not support the claim that the agreement effected an assignment of copyright interest.

Conclusion: The agreement did not amount to an assignment or grant of any interest in the copyright, and section 12AA of the Income-tax Act, 1922 was not attracted.

Issue (ii): Whether the amount received was income from business and not a casual or non-recurring receipt exempt from assessment.

Analysis: Once the agreement was not treated as an assignment of copyright, the receipt arose from the assessee's commercial arrangement for printing and supplying the Kerala edition. The transaction bore the character of business activity rather than a casual or isolated windfall. The receipt therefore could not be treated as a casual or non-recurring income outside assessment.

Conclusion: The amount was income from business and not a casual or non-recurring receipt.

Final Conclusion: The reference was answered against the assessee on all the questions and the income was held assessable as business income.

Ratio Decidendi: A contract will attract copyright-based income-tax relief only where it transfers an interest in the copyright itself; a mere arrangement for printing and supplying copies, without transfer of publishing rights, does not constitute such an assignment.

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