COMMISSIONER OF INCOME-TAX, CENTRAL ZONE `A', KARACHI VS MESSRS SHAHSONS FISHERIES LTD.-
1991 P T D 905
[Karachi High Court]
Before Mamoon Kazi and Salahuddin Mirza, JJ
COMMISSIONER OF INCOME-TAX, CENTRAL ZONE `A', KARACHI
Versus
Messrs SHAHSONS FISHERIES LTD.-
I.T.Cs. Nos.13 and 14 of 1978, decided on 11/03/1991.
Income-tax Act (XI of 1922)--
----S. 18-A(6) [(as amended by Finance Act (L of 1973)]---Object and effect of amendment---Amendment remedial and curative in nature---Amending provision has to be given retrospective operation for extending benefit to the affected parties in pending cases, to give effect to the intent of the legislature.
The effect of the amendment in section 18-A(6) of Income-tax Act, 1922 was that additional amount at the rate of 2 per cent per mensem upon the shortfall was payable for the period from 1st day of April in year in which the tax was paid upto the date of the regular assessment by an assessee whose case came within the mischief of section 18-A of the Income Tax Act, 1922. However, the said amendment introduced through the Finance Act, 1973 restricted the period to a maximum of 15 months for which the aforesaid additional amount at 2 per cent per mensem was payable.
The amending provision had been inserted in subsection (6) of section 18-A to remedy a wrong that was being done to the assessees, and the amending provision does not affect any vested right or create any new obligations, the amending provision is to be given restrospective operation for extending benefit to the affected parties in pending cases to give effect to the intent of the Legislature. A wrong was being done to assessees by providing for an indefinite period during which they were trade liable for payment of additional tax at the rate of 2 per cent per mensem and this wrong was sought to be remedied by the remedial and curative amendment brought about by the Finance Act, 1973. If the intention of the Legislature had been that this remedy should be available only in respect of assessments for the year 1973-74 and subsequent years, the Legislature would have used appropriate words to express such intention. No such appropriate words are mentioned in the amending provision. There is no reason why the remedial provision of the amending law should not be applied to pending proceedings. In fact, this appears to be the intent of Legislature.
Commissioner of Income Tax v. Olympia 1987 PTD 739 fol.
Sheikh Haider for Applicant.
Athar and Wadood for Respondent.
Date of hearing: 11th March, 1991.
JUDGMENT
MAMOON KAZI, J.---By this common judgment we propose to dispose of I.T.C. No.13/78 and I.T.C. No.14/78 as common question of law is involved therein.
2. The following question has been referred by the Commissioner Income Tax, Central Zone `A', Karachi for determination:--
"Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was justified in directing the Income Tax Officer to charge additional tax under section 18-A (6) only for 15 months holding that the amendment made by the Finance Act, 1973 in Section 18-A(6) has retrospective effect?"
3. Briefly stated the facts of I.T.C. No.13/78 are that the Income Taxi JV Officer, Companies Circle A-9 Karachi, assessed the respondent under section 23(3) of the Income Tax Act, 1922 vide assessment order dated 29-6-1974. The respondent/assessee appealed against the said order to the Appellate Assistant Commissioner, Range, Karachi which appeal was allowed vide his order dated 7-4-1975. However, from the order of the Appellate Assistant commissioner dated 7-4-1975 the Income Tax Officer C.C.X. filed an appeal before the Income Tax Appellate Tribunal, Karachi Bench, Karachi which was allowed vide the Tribunal's order dated 7-10-1976. Being aggrieved by the said order the Commissioner Income Tax filed a reference before the learned Tribunal under section 66(1) of the Income Tax Act, 1922. However, vide order dated 15-3-1978 the learned Tribunal rejected the reference application and declined to state the case on the ground that no question of law had arisen therefrom. Being aggrieved by the said order the Commissioner of Income Tax has now made the aforesaid reference. The facts of I.T.C. No.14/78, with exception of minor details, are also more or less the same.
4. It may be pointed out that section 18-A, subsection (6) of the repealed Income Tax Act,1922 originally read as follows:--
"(6) Where in any year an assessee has paid tax under subsection (2) or subsection (3) on the basis of his own estimate and the tax so paid is less than eighty per cent of the tax determined on the basis of the assessment under section 23, hereinafter called regular assessment, and calculated in the manner laid down in subsection (1) so far as such tax relates to income to which the provisions of subsections (2), (2-A) and (2-B) of section 18 do not apply an additional amount of tax at the rate of two per cent per mensem from the first day of April in the year in which the tax was paid upto the date of the said regular assessment shall be payable by the assessee upon the amount by which the tax so paid falls short of the said eighty percent.
(a) Where tax is paid under section 22-A, or
(b) Where a provisional assessment under section 23-B has been made but regular assessment has not been made, the additional amount of tax shall be calculated in accordance with the foregoing provision:
(i) up to the date on which tax under section 22-A or as provisionally assessed was paid; and
(ii) thereafter such additional amount shall be calculated at the rate aforesaid on the amount by which the tax as so paid, in so far as it relates to income to which the provisions of subsections (2), (2-A) and (2-B) of section 18 do not apply, falls short of the said eighty per cent;
Provided further that, where as a result of an appeal under section 30 or of a revision under section 66, the amount on which additional tax was payable under this subsection has been reduced the additional tax shall be reduced accordingly and the excess additional tax paid, if any, shall be refunded together with the amount. of income-tax that is refundable:
Provided further that, where a business, profession or vocation is newly set up and is assessable on the income, profits and gains of its first previous year in the year following that in which it is set up, the additional tax payable shall be computed from the first day of July of the said year."
The words "the date of the said regular assessment" appearing in subsection (6) of section 18-A of the Income Tax Act, 1922 were substituted by section 2(7)(a) of the Finance Act, 1973 by the following words:--
"Thirtieth day of June of the year next following or upto the date of the said regular assessment, whichever is the earlier."
The aforesaid amendment of subsection (6) of section 18-A consequently changed the crucial provision to read as follows:--
" ..an additional amount of tax at the rate of two per cent per mensem from the first day of April in the year in which the tax was paid upto thirtieth day of June of the year next following or upto the date of the said regular assessment, whichever is the earlier, shall be payable by the assessee upon the amount by which the tax so paid falls short of the said eighty per cent:'
5. The effect of the amendment was that additional amount at the rate of 2 per cent per mensem upon the shortfall was payable for the period from 1st day of April in year in which the tax was paid upto the date of the regular assessment by an assessee whose case came within the mischief of section 18-A of the Income Tax Act, 1922. However, the said amendment introduced through the Finance Act,' 1973 restricted the period to a maximum of 15 months for which the aforesaid additional amount at 2 per cent per mensem was payable.
6. We have heard Mr. Sheikh Haider, learned counsel for the applicant but none has appeared on behalf of the respondents.
7. Learned counsel has pointed out that the question referred to by the Commissioner Income Tax is completely covered by an earlier judgment of this Court in the case of Commissioner of Income Tax v. Olympia (1987 PTD 739). In this case a similar question had arisen before a Division Bench of this Court and it was held as follows:--
"The general rule of construction of statutes is that the enactments are not to be given retrospective operation unless the statute expressly provides so or from the language employed it appears to be the necessary intendment of the Legislature. As, however, remedial statutes are designed to redress an existing grievance and do public good, and such statutes normally do not diminish, destroy or affect any vested right, these are liberally construed. Lahore High Court had also taken the view in Rippon's ease P L D 1973 Lah. 849 that an amending law which is purely remedial and curative, must be liberally construed in favour of the subject. We also subscribe to the same view. Then as stated in Crawford, if the rule of liberal construction is to be applied as it obviously should then any doubt should be resolved in favour of retrospective operation, if such operation does not destroy or disturb vested rights, impair the obligations of contracts, create new liabilities, violate due process of law or contravene some other provision of law and if such operation will carry out the intent of the Legislature as ascertained through the. application of the principles of liberal construction.
18. In our view, as the amending provision under consideration had been inserted in subsection (6) of section 18-A to remedy a wrong that was being done to the assessees, and the amending provision does not affect any vested right or create any new obligations, the amending provision is to be given retrospective operation for extending benefit to the affected parties in pending cases to give effect to the intent of the Legislature. As observed earlier, a wrong was being done to the assessees by providing for an indefinite period during which they were made liable for payment of additional tax at the rate of 2 per cent per mensem and this wrong was sought to be remedied by the remedial and curative amendment brought about by the Finance Act, 1973. If the intention of the Legislature had been that this remedy should be available only in respect of assessments for the year 1973-74 and subsequent years, the Legislature would have used appropriate words to express such intention. No such appropriate words are mentioned in the amending provision. There is no reason why' the remedial provision of the amending law should not be applied to pending proceedings. In fact, this appears to be the intent of Legislature.
8. We find ourselves in respectful agreement with the view expressed by the learned Division Bench and for the same reasons as stated in the said judgment, we answer the question accordingly.
M.BA./C-224/K Order accordingly.