LexPERFORMING RIGHT SOCIETY LTD. & ANR. versus COMMISSIONER OF INCOME-TAX & OTHERS
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PERFORMING RIGHT SOCIETY LTD. & ANR. v. COMMISSIONER OF INCOME-TAX & OTHERS August IO,. 1976 [A. C. GUPTA AND JASWANT SINGH, JJ.] 171 Income Tax Act, 1961~. 5(2)-Non-reSipent · cdmpany receb1ing income outside Jndia-I.ncon1e if accrued in India. A, B, The appeliant Society which is an associationJ>f composers, authors and publishers of copyright musical works was incorporated under the English Cempanies Act, 1903 and 1913 with its registered office ih London.· It collects royalties for the is'sue of licences, granting permission for performing right in the works of its memberg and distributes the :royalties to its members. The C Society entered into an agreement in England .with the President of India by v,1hich it granted to the All India Ra.did (the licensee) authority to broadcast from its sound broadcasti.pg stations in ]ndia the musical works of the Society. Under· the agreement the licensee had to. pay in England anhual licence fee payable to the Society. . The appellant eontended (i) that the agreement between the appellant and the licensee having been executed in England ahd the royalties being also payable in England, the income out of thig agreement was not liable to be taxed in Il India and (ii) the Society being under an obligation to distribute the income ta its members, royalties realised are hot reaily income of the Society. __ Rejecting the contentions, HELD: (l)(a) Whether a certain income accrued or arose in India within the meaning of s. 5(2)" isl a question of fact "'which should be looked at and decided in the light or commonsense and plain thinking. ty The Society is a non-re~ident company and though it received the income 9Ut Of the agreement executed, not in India but England, the income undoubtedly accrued or arO<Jei E in India. [175H and Fl (b) The quCstion whether the agreemeht is the source of the income is not relevant because s. 5(2) provides that all income "from whatever source deriv- ed"' is to be included in the total inoome of the non-resident assessee if the income accrues or arises in India during the relevant year. The income in this case had ·infact accrued in India and by virtue of s. 9 no question arises whether it should be udeemed• to accrue or arise in India. [175 G] In the matter of V.G. Every: (1937) 5 I.T.R 216 approved. (2) Article 48 of the Society's ·Articles of Association shows that the royal- ties payable by the licensee under the agreement are realised by the SOciety as its income. Out of the receipts are deducted 1he expenses and al50- such other sums as in the discretion of the General Council should be set aside for the purposes mentioned .ih that article. This is a case where the assessee, having received the income, applies it in a particular Way; it is not a case ,of diversion of income by an overriding charge. [177 C] Raia Beioy Siizgh Dudhuria v. Commissioner of Income-tax, Bengal (1933) 1 I.T.R., 135. P. C. Mullick and another (Executors) v. Commissioner of Inceme-tax, Bengal (1938) 6 l.T.R. 206 and Com1nissioner of Income-tax, Bombay City v. Sitaldas Tirathdas [1961] 41 I.T.R 367 (pp. 374-375) disting- uished. F G Civ!L APPELLATE JURISDICTION: Civil Appeal No. 488 of 1975. (Appeal by Special Leave from the Judgment and --Order dated H 24-9-1973 of the Calcutta High Court in Appeal from Original Order & No. 335/73). A B c D E F G H 172 SUPREME COURT REPORTS [1977] 1 S.C.R. Hard(}yal Hardy, for appellant No. 1. A. K. Sen, S. K. Mehta, M. Qamaruddin and P. N. Puri, for respon- dent No. 2 .. S. C. Manchanda, P. L. Juneja and S. P. Nayar, for respondents. The Judgment of the Court was delivered by G.UPTA, J. The first appellant, Performing Right Society Limited, (heremafter called the Society) is a company incorporated under the (English) Companies Acts, 1908 and 1913, having its registered office at Copyright House, 33 Margaret Street, Cavendish Square, London- a company limited by guarantee and having no share capital. The Society is an association of composers, authors and . publishers of copyright musical works established to grant permission for the per- forming right in such works. 'Performing right' means the right of performing in public, broadcasting and causing to, be transmitted to subscribers to a diffusion service, in all parts of the world. The mem- bers of the Society are required to assign to the Society the performing right in their works, and the Society exe
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