COMMISSIONER OF INCOME-TAX, CENTRAL ZONE A, KARACHI VS MESSRS ROSHAN TOBACCO COMPANY LTD., KARACHI
1991 P T D 867
[Karachi High Court]
Before Mamoon Kazi and Salahuddin Mirza, JJ
COMMISSIONER OF INCOME-TAX, CENTRAL ZONE A, KARACHI
Versus
Messrs ROSHAN TOBACCO COMPANY LTD., KARACHI
I.T.R. No. 41 of 1984, decided on 11/04/1991.
Finance Act (XXX of 1977)---
----Sched. I, Part III, para. 1 [as amended by Finance (Amendment) Ordinance of 1978, S.2]---Tax payable is a part of working capital and while levying surcharge the same should be excluded.
1988 PTD (Trib.) 155 and Commissioner of Income-tax v. Messrs Pakistan Tobacco Co. Ltd. 1988 PTD 66 ref.
Shaikh Haider for Applicant.
Nemo for Respondent.
Date of hearing: 11th April, 1991.
JUDGMENT
MAMOON KAZI, J.---The assessee, which is a private limited Company, derived its income from manufacture and sale of cigarettes. The total income in the assessment years 1977-78 and 1978-79 was determined at Rs.11,89,259 and Rs.9,36,020 respectively. The Income-tax Officer levied surcharge at the rate of 10% on the amount of tax determined for the said two years amounting to Rs.59,463 and Rs.48,400 respectively. This was in accordance with the Finance (Amendment) Ordinance, 1978, Part I.
2. In calculating the amount of surcharge, the Income-tax Officer did not treat any part of the total income as retained income on which surcharge cannot be levied and instead he treated the entire total income as liable to surcharge. The matter went in appeal before the learned First Appellate Authority and it was held that tax payable should be treated as retained income.
3. The department was, however, aggrieved by the said decision and it, therefore, filed an appeal before the learned Appellate Tribunal but the order of the learned Appellate Assistant Commissioner was confirmed as the Tribunal followed its earlier decision reported as 1988 P T D (Trib.) 155. The department still being aggrieved requested the Tribunal to refer the following question for the opinion of this Court:
"Whether on the facts and in the circumstances of the case, the Income-tax Tribunal is justified in holding that the tax payable is a part of working capital and while levying the surcharge the same should be excluded?"
We have had the advantage of hearing only Mr. Shaikh Haider, learned counsel for the applicant, as none is present on behalf of the respondent. Although we would have been too reluctant to proceed in the matter in absence of the learned counsel for the respondent but Mr. Shaikh Haider has invited our attention to an earlier judgment of this Court in the case of Commissioner of Income-tax v. Messrs Pakistan Tobacco Co. Ltd. 1988 P T D 66, wherein a similar question referred to this Court for its opinion was decided in favour of the assessee. The relevant observations which appear at page 83 of the report are as follows:--
"(17) For the aforesaid reasons, our answer to the question referred to hereinabove in para. 1 is that the Tribunal was justified in holding that income-tax liability payable for relevant assessment year could be included for purposes of working out `retained income' for levy of surcharge."
4. Since the question has already been decided by a Division Bench of this Court and the facts and circumstances of the present case are fully covered by the said judgment we also answer the question accordingly and in the affirmative and for the same reasons as stated in the judgment of the learned Division Bench. The parties are left to bear their own costs.
M.BA./C-215/K Reference answered..