Case: Performing Right Society Ltd. &amp; Anr Vs. Commissioner Of Income-Tax &amp; Others

JANAH J. for the (24-9-1973) -The first appellant, the Performing Right Society Ltd., is a company (hereinafter referred to as "the Society") incorporated under the English Companies Act, having its registered of at Copyright House, 33 Margaret Street, Cavendish Square in the county of London, England. The said society is an association of composers, authors and publishers of copyright musical work established to grant permission for the public performance, and in accordance with more recent copyright legislation, broadcast by diffusing by relay service of copyright music. The society collects royalties for issuing licence granting such permission and distributes such royalties to the members of the society, namely, the composers, authors, music publishers and other person having interest in the copyright. The societys constitution is that of company limited by guarantee having no share capital. It makes no profit for itself, pays no dividend and does not charge its members any agency commission or any fees or subscription. All royalties collected and all receipts from other sources are distributed among the composers, authors and published concerned in proportion to the respective extent to which their works are publicly performed and/or broadcast. The society does not deduct from the royalties anything beyond a bare pro rate cost ofsecond appellant, Messrs. Natsin India Private Ltd. (hereinafter referred to as the "India agent"), is a private limited company incorporated under the Indian Companies Act having its office at 26, Chowringhee Road, CalcuttaThe second appellant was appointed by the society to be its lawful attorney in India by virtue of a power- of-attorney granted by the society to the second appellant. The second appellant is the agent in India for the first appellant and it has the power, inter alia, to commence, prosecute, enforce suits, actions and other proceedings and to engage advocates, counsels and to sign, execute plaints, petition, etc., on behalf of the first appellant. On January 19, 1940, the society entered into an agreement with All India Radio which provides that the licensee (i.e., All India Radio) shall sent to the society at its registered officer in England the list of all musical work broadcast in each week during the term of licence from each of the licensees main stations Delhi, Bombay, Calcutta and Madras) and the external service, indicatingThe name and location of the said station.(ii) The name and location of any broadcasting station or other place from which the performance are relayed other than the licensees own studio.(iii) The date and time of the broadcast.(iv) The title of each work.(v) The name of the respective composer author, arranger and publisher and also(vi) (Where gramophone records are used). The name of the manufacturer and identification number of each record; together with such further details as will enable the society to identify the work for the purpose of distribution of fees. Such lists are to be certified by the licensee asagreement further provides that the licensee will pay to the society at the rate of British Pound 2 (two pounds) per hour of broadcast of western music from each of the licensees main and external service station and such annual payment must be made by All India Radio to the society inregard to the royalties realised by the Indian agent on behalf of the society from cinema houses and other sources where music, over which the society has copyright, is played, the society has been paying income-tax to the income-tax authorities in India, and there is not dispute with regard to the receipts of such royalties by the society through its Indian agent. The society filed income-tax returns before the Income-tax Officer Madras. The said officer later on issued a notice under section 34(1) of the Indian Income-tax Act; 1922, on the ground that in the statements filed at the time of original assessment the Indian broadcasting fees had not been including in the income. In the assessment year 1947-48 the Income-tax Officer held that though All India Radio paid fees to the society in England for the transmission of music from India the income accrued or arose or was deemed to accrue or arise to the society in India and as similar facts exist in every year also, he assessed such income to tax after deducting proportionate distribution expenses for all years. The society, thereafter, preferred a revisional application under section 264 of the Income-tax Act before the Commissioner of Income-tax, West Bengal (where the societys Income-tax files had been transferred in the meantime). By an application dated July 4, 1970, in support of its revisional application filed before the Commissioner of Income-tax, West Bengal, the society took a plea that the business in India is carried on by All India Radio and not by the society and that payments were made by All India Radio to the society in England in terms of the agreement and as such the royalties received by the society in England cannot be said to have been received in India, and therefore, this income was not taxable under the Income-tax Act by the income-tax authorities in India. It was further contended by society before the additional Commissioner of Income-tax, West Bengal, who heard the revisional application, that is so far as its transaction with All India Radio was concerned, the India agent of the society had no part in the same. The agreement was made outside India and payments were received outside India and hence the royalties received from All India Radio could not be taxed through the societys agent in India. The Additional the opinion that is was completely a new point and the relevant facts were not on record for the purpose of deciding whether the claim made by the society was correct or not. In that view the revisional application was dismissed by the Additional Commissioner of Income-tax by his order date July 18, 1970.Against the said order the petitioner obtained a rule under article 226 of the Constitution. The rule came up for final hearing before Banerjee J. who discharged the same by his judgment and order dated March 23, 1973, (see [1974] 93 ITR 44 (Cal)) holding that the royalties received by the society in London from All India Radio was liable to tax under Income-tax Act by the income-tax authorities in India. Against the said other appellants have preferred this appeal.

Court's reasoning:
We are unable to accept this argument of counsel for the appellants for the reason that the appellants themselves raised this question before the trial court and naturally therefore the trial court had to give its decision on this question. The appellant cannot now turn round and say that the trial court out not to have recorded its findings on the contention advanced before it. Mr.Dutt submitted further that a decision on this question would be binding upon him for all time to come and his liability for succeeding years would continue because of the decision of the trial court.Pal, learned counsel for the respondent, drew our attention to the decision of the Supreme Court in Commissioner ofv. Brijlal Lohia [1972] 84 ITR 273 (SC) and pointed out that a finding arrived at for the purpose of assessment in one year would not be res judicata for the purpose of assessment for subsequent years and, therefore, there is no substance in the appellants contention in this regard. It is not necessary for us to decide whether, in the facts and circumstances of the present case, the findings of the trial court or of this court would be res judicata for the purpose of assessment in subsequent years.