THE. COMMISSIONER OF INCOME-TAX CENTRAL `B', KARACHI VS MESSRS EVENS MEDICAL LTD., KARACHI
1991 P T D 680
[Karachi High Court]
Before Saleem Akhtar and Muhammad Hussain Adil Khatri, JJ
THE. COMMISSIONER OF INCOME-TAX CENTRAL `B', KARACHI
versus
Messrs EVENS MEDICAL LTD., KARACHI
Income Tax Reference No. 67 of 1983, decided on 19/02/1991.
Income Tax Act (XI of 1922)--
----First schedule, Part II---Finance Ordinance (XXX of 1977), S.4---Levy of surcharge---Income Tax Officer while assessing the total income of assessee did not consider any part of income having been retained and while calculating tax on entire total income also levied surcharge---Assessment order having no specific mention of retained income but Income-tax Form XXX, which was a part of assessment order showed the levy of surcharge---Appellate Assistant Commissioner deleted the surcharge which was confirmed by Income-tax Appellate Tribunal---Income-tax Appellate Tribunal found that entire income was retained and thus deleted the surcharge so levied ---Sua-charge, held, was to be levied on income-tax and super-tax payable on total income after exclusion of income remained for capitalisation or meeting working capital requirement and where total income had been retained no question of levy of surcharge would arise.
Q.I.T. v. Pakistan Tobacco Co. Ltd. 1988 P T D 66 ref.
Shaikh Haider for Appellant.
Nemo for Respondent (called absent).
Date of hearing: 19th February, 1991.
JUDGMENT
SALEEM AKHTAR, J.---For the assessment year 1978-79 the Income Tax Officer determined the respondent's total income at Rs.21,122. He did not consider 4ny part of income having been retained and thus calculated tax on the entire to the income which worked out at Rs.10,560. He further imposed surcharge payable 10% on the tax payable, which came to Rs.1,056. This surcharge was imposed in view of section 4 of the Finance Ordinance 1977. In the assessment order no specific mention of retained income was mentioned but in the Income Tax Form XXX which is a part of assessment order the surcharge was worked out and had been imposed. The respondent filed appeal against this order and the Appellate Assistant Commissioner accepted it following the decision of the Income Tax Appellate Tribunal. The Appellate Assistant Commissioner thus ,deleted the surcharge against which the Department filed appeal. While upholding the order of the Appellate Assistant Commissioner the Tribunal observed as follow,
The order of the assessing officer regarding the levy of surcharge is also silent inasmuch as no reasons have been given as to why surcharge .was imposed when the entire income was retained in both the years. In view Of these facts, the learned Appellate Assistant Commissioner was justified in deleting the surcharge in both the years and his orders on this issue are accordingly upheld."
The Department filed an application under section 66(1) and tine following question has been referred:--
"Whether on the facts and circumstances of the case, the Appellate Tribunal was justified in holding that the entire income could be considered as retained income for purposes of levy of surcharge?"
From the question as framed the finding of facts have not been challenged. We have, therefore, to proceed on the premises that the facts as found by the Tribunal are correct.
Mr. Shaikh Haider the learned counsel for the Department has contended that in fact no finding on issue whether the income was retained or not has been given by the Income Tax Officer nor any other authority. We do not agree with this contention because although the ITO had not given any reason or specific finding for imposing surcharge he had imposed it which was set aside in appeal and the Appellate Assistant Commissioner found that no part of the income was retained. This finding has been confirmed by the Appellate Tribunal which has not been challanged. The surcharge was imposed by section 4 of the Finance Ordinance 1977 which reads:--
"Surcharge under Act XI of 1922.---Surcharge under the Income-tax Act, 1922 (XI of 1922), shall be charged in respect of any assessment for the year beginning on the first day of July 1977 at the rate specified in Part III, of the First Schedule:"
The rates were specified in the First Schedule Part III, but by section 4 of Finance (Amendment) Ordinance, 1978 Part III, was substituted as follows:--
"PART III,
RATES OF SURCHARGE,
(a) In the case of every company ......
10 per cent of the income-tax and super-tax payable on total income as reduced by so much of the income as has been retained for the purpose of capitalisation or for meeting working capital requirement:
Provided that if the income so retained is distributed in any subsequent years, the surcharge shall be payable on the income so distributed at the same rates in that year.
(b) In the case of every other person.
10 percent. of the income-tax and super-tax
(c)In the case of every person deriving income from the business of manufacture, purchase or sale of jewellery, including gold, silver, precious metals, stones and ornaments or other articles made thereof:
Provided that the surcharge shall not be payable by any person (not being a company) whose total income does not exceed Rs.12,000.
In addition to any sum payable under clause (a) or (b), a further sum equal to 6 percent. of such income."
A perusal of these provisions will show that the surcharge is to be levied on the income-tax and super-tax payable on the total income after excluding the income retained for capitalisation or meeting working capital requirement. In the present case the finding of the learned Tribunal is that the entire income has been retained. Therefore, the question of imposing any surcharge does not arise. In this regard reference can be made to CIT v. Pakistan Tobacco Co. Ltd. 1988 P T D 66. We, therefore, answer the question in the affirmative.
Z.S./C-202/K Question answered in the affirmative.