Circular No. 347

727. Book publishing company - Whether qualifies to be treated as company engaged in manufacture or processing of goods within the meaning of section 104(4)(a)

What this is

Circular No. 347 was issued by the Central Board of Direct Taxes on 7 July 1982. Its subject is 727. Book publishing company - Whether qualifies to be treated as company engaged in manufacture or processing of goods within the meaning of section 104(4)(a).

What it does

Accepts that a book publishing company is an industrial company for the purpose of section 104 and for the concessional tax treatment given to industrial companies, even where it neither prints nor binds the books itself. The Board records that it has been advised to accept the decisions of the Madras High Court in CIT v. Commercial Laws of India (P.) Ltd. and the Calcutta High Court in Addl. CIT v. A. Mukherjee & Co. (P.) Ltd., which it names - the first holding that folding and stitching printed sheets into books is processing of goods, the second that a publisher need own no press and be no binder, the printer being a mere contractor while the publisher carries on the business of manufacturing and processing goods.

Why it was issued

Representations were received that companies engaged in publishing books should be treated as industrial companies for section 104, relying on those two High Court decisions.

Who it reaches

Book publishing companies
Publishers who outsource printing and binding to contractors
Assessing Officers applying section 104 to publishing companies

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.104	no counterpart recorded

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

727. Book publishing company - Whether qualifies to be treated as company engaged in manufacture or processing of goods within the meaning of section 104(4)(a)
1. The Board has received representations that companies engaged in publishing of books should be treated as industrial companies for the purpose of section 104. Reference has been made in this connection to the decisions of the Madras and Calcutta High Courts in the cases of CIT v. Commercial Laws of India (P.) Ltd. [1977] 107 ITR 822 and Addl. CIT v. A. Mukherjee & Co. (P.) Ltd. [1978] 113 ITR 718, respectively. In the Madras High Court decision it has been held that folding and stitching the printed sheets and converting them into parts or books, as the case may be, constituted processing of goods. In the Calcutta High Court decision it was held that it is wholly unnecessary for a publisher of books to be an owner of a printing press or to be himself a book-binder to be a manufacturer of books. A publisher may get the books printed from any printer, but the printer is a mere contractor and the publisher carries on the business of manufacturing and processing of goods.
2. The Board has been advised to accept these decisions. In view thereof, book publishing companies even though they may themselves not be engaged in the printing or binding of books qualify to be treated as industrial companies for the purpose of section 104 as well as for the concessional tax treatment given to industrial companies.
Circular: No. 347 [F. No. 166/4/81-IT(A-I)], dated 7-7-1982.

What to watch

The concession is for book publishing; the circular does not extend beyond that trade.
It reaches both section 104 and the concessional rate given to industrial companies, so it is worth more than the section it is headed under.
Section 104 and the industrial company concession it turns on are not part of the current rate structure; this construes the law as it then stood.

Where you meet it

In old assessments where a publisher was denied industrial company status or charged additional tax under section 104.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 3210 — An exemption granted under section 104 of the Income-tax Act, 1961 8 August 1969
Circular No. 24 — 728. Whether production of motion pictures amounts to manufacture or processing of goods within the meaning of section 1 23 July 1969
Notification No. 2007 — An exemption granted under section 104 of the Income-tax Act, 1961 6 June 1967
Notification No. 2817 — An exemption granted under section 104 of the Income-tax Act, 1961 14 August 1964

← Circular No. 348 · Circular No. 346 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.