Author: Shubhi Singhal
In the matter of Assistant Commissioner of Income Tax v. M/s Balaji Trust [ITA 5139/MUM/ 2017], Single Member [S. Rifaur Rahman] of the Income Tax Appellate Tribunal, Mumbai, vide order dated November 25, 2021, dismissing an appeal filed by the Assessing Officer, has effectively held that brand logo is an ‘artistic work’ and cannot be subjected to tax as a ‘work of art’.
Section 56(2)(vii) of the Income Tax Act, 1961deals with ‘Income from other sources’ and states that “… the following incomes, shall be chargeable to income-tax under the head Income from other sources, namely:… (c) any property, other than immovable property,[Explanation.—For the purposes of this clause,— …(d) “property” means the following capital asset of the assessee, namely:—…(viii) any work of art; or…”. The question therefore arises whether a brand logo registered as ‘artistic work’ under the Copyright Act can be a ‘property’ and be subjected to income tax as ‘work of art’?
The plaintiff contended that the definition of ‘property’ covering the term ‘work of art’ in the Income Tax Act is pari materia with the definition of ‘artistic work’ provided in the Practice and Procedure Manual [Artistic Work] published by the Copyright Office. Since the brand has been registered as ‘artistic work’ under the Copyright Act, ipso facto, it falls under the category of ‘property’ under Section 56(2)(vii) of the Income Tax Act read with Explanation (d).
The defendant contended that ‘artistic work’ refers to work which is an artistic innovation and is exceptional in its artistic quality. The registration of brand logo under the head ‘artistic work’ does not refer to the characterization of the brand but is simply a reference as to how does the logo looks like.
The tribunal concluded that “…a simplicitor registration of the logo…under the Copyrights Act, 1957 as “an artistic work” would not ipso facto mean that it is in the nature of “a work of art”…is neither an artistic innovation nor possesses any artistic quality for being brought within the meaning of “any work of art” as contemplated in the definition of “property” in Explanation (d) to Section 56(2)(vii) of the Income Tax Act, 1961 the same, merely for the reason that it was registered under the Copyright Act, 1957 as “an artistic work” could not be held to be in the nature of “a work of art”.”
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