COMMISSIONER OF INCOME TAX, SOUTH ZONE, KARACHI VS NOOR JEHAN S. ALI BHAI, 1992 PTD-KARACHI-HIGH-COURT-SINDH 1172 (1991)

(a) Income Tax Ordinance (XXXI of 1979)---

----S.136---Scope and application of S.136. A bare reading of section 136 of the Ordinance makes it clear that it covers alt- situations and contingencies which may arise due to repeal of the Income Tax Act, but these provisions are without prejudice to sections 6 and 24 of General Clauses Act, which also deal with the consequences that flow from repeal. Under subsection (2)(a) of section 136 if an assessee has filed the return before the commencement of the Ordinance for any assessment year, the proceedings for assessment shall be taken and continued under the repealed Act. Subsection (2)(i) of section 136 makes provision for pending proceedings before the Income Tax Authority and Tribunal or Court. It provides that where any appeal, reference, revision or prosecution was pending on 1-7-1979, it shall be continued and disposed of as provided by the said Act. Subsection (2)(j) of section 136 deals with the cases where period of limitation for any action or proceedings had expired before commencement of Ordinance. In such cases the provisions of Ordinance providing for longer period of limitation will not apply.

(b) Income Tax Ordinance (XXXI of 1979)---

----S.136---Reference application filed on or after 1-7-1979 was to be governed by S.136 of the Ordinance, which provides a period of limitation of 90 days from the date of service of order of the Tribunal.

Commissioner of Income-tax v. Muhammad Saeed Khan I.T.C.

No-113 of 1984 and Commissioner of Income-tax v. B.D. Avari I.T.R. No.8 of 1984 fol.

(c) Income-tax Act (XI of 1922)---

----Ss.15-C, 15-D & 15-H---Non-resident assessee was entitled to rebate in respect of investment allowance under Ss.15-D, 15-C and 15-H of the Act.

Commissioner of Income-tax v. R.C. Chaman 1979 PTD 484 fol.

Iqbal Ahmad and WakeelFarooqui for Petitioner.

Respondent called absent.

Date of hearing: 13th August, 1991

JUDGMENT

SYED ABDUR REHMAN, J.---This is a reference under section 136(2) of the Income-tax Ordinance, 1979. Respondent in this case is a non-resident. In the return filed by her, she claimed investment allowance under sections 15-D, 15-C and 15-H of the repealed Income-tax Act. The Income-tax Officer, while passing the assessment order under consideration disallowed such claims on the ground that there is no difference between taxable income and the total income returned for the year under consideration in the case of a non-resident assessee. Aggrieved by the Income-tax Officer's order the respondent preferred appeal before the Appellate Assistant Commissioner, who accepted the same and allowed relief / rebate. Departmental appeals were filed against the decision of Appellate Assistant Commissioner before the Income-tax Appellate Tribunal. The learned Tribunal, relying upon its own earlier decision on the same question, directed the Income-tax Officer to allow the claims under considerations. An application under section 136(1) of the Income-tax Ordinance was filed before the Income-tax Appellate Tribunal for making reference to this Court which was rejected and it was held that it was barred by time. Hence this application under, subsection (2) of section 136 of the Income-tax Ordinance has been filed in this Court, praying that the following questions of law arise out of the order of the Income-tax Appellate Tribunal which may be considered and answered:--

(a) Whether on the facts and in the circumstances of the case the Tribunal was justified in holding the application as time-barred? and

(b) Whether on the facts and in the circumstances of the case the Income tax Appellate Tribunal was justified in holding that the respondent, who is a non-resident, was entitled to rebate in respect of investment allowance under sections 15-D, 15-C and 15-H of the repealed Act?

2. So far as the first question is concerned, it is to considered as to whether the application for reference to this Court should be governed by section 66 of the repealed Act, or section 136 of the Ordinance. Income Tax Act, 1922 was repealed by Income-tax Ordinance, 1979, which came into force with effect from 1-7-1979. Section 136 of the Ordinance deals with the issues which may arise due to repeal of the Act. It reads as under:--

"S.136. Repeal and Saying.---

(1) The Income-tax Act, 1922 (XI of 1922) is hereby repealed.

(2) Notwithstanding the repeal of the Income-tax Act, 1922 (XI of 1922) and without prejudice to the provisions of section 6 and section 24 of the General Clauses Act, 1897 (X of 1897):--

(a) Where a return of income has been filed before the commencement of this Ordinance by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Ordinance had not come into force;

(i) Any proceeding pending on the commencement of this Ordinance before any Income-tax Authority, the Appellate Tribunal or any Court or Tribunal by way of appeal, reference, revision or prosecution, shall be continued and disposed of as if this Ordinance had not come into force;

(j) Where the period prescribed for any application, appeal, reference or revision under the repealed Act had expired on or before the commencement of this Ordinance, nothing contained in this Ordinance shall be construed as enabling any such application, appeal, reference or revision to be made under this Ordinance by reason only of the fact that a longer period therefore is prescribed or provision is made for extension of time in suitable cases by the appropriate authority."

A bare reading of section 136 of the Ordinance makes it clear that it covers all situations and contingencies which may arise due to repeal of the Act, but these provisions are without prejudice to sections 6 and 24 of General Clauses, Act, which also deal with the consequences that flow from repeal. Under subsection (2)(a) of section 136 supra if an assessee has filed the return before the commencement of the Ordinance for any assessment year, the proceedings for assessment shall be taken and continued under the repealed Act. Subsection (2)(i) of section 136 supra makes provision for pending proceedings before the Income Tax authority and Tribunal or Court. It provides that where any appeal, reference, revision or prosecution was pending on 1-7-1979, it shall be continued and disposed of as provided by the said Act. Subsection (2)(j) of section 136 deals with the cases where period of limitation for any action or proceedings had expired before commencement of Ordinance. In such cases the provisions of Ordinance providing for longer period of limitation will not apply.

3. Same question had arisen in I.T.C. No.113/1984 (Commissioner of Income-tax v. Muhammad Saeed Khan) where a Division Bench of this Court held that a reference application filed on or after 1-7-1979, shall be governed by section 136 of the Ordinance which provides a period of limitation of 90 days from the date of service of order of the Tribunal. We are in respectful agreement with the view taken in this decision. Similar view was also taken in a recent decision of this Court in the case of Commissioner of Income-tax v. B.D. Avari I.T.R. No.8 of 1984 by a Division Bench of which one of us Syed Abdur Rahman, J. was a member, where it was held that a reference application filed on or after 1-7-1979 shall be governed by section 136 of the New Ordinance, which provides a period of limitation of 90 days from the date of the service of the order of the Tribunal.

Since in this case the application under section 136(1) of the Ordinance was filed on 25-9-1982 and the combined order of the Tribunal was served on the applicant on 4-7-1982, hence the application was filed within 90 days and therefore, is within time. We, therefore, answer this question in the negative and find that the Tribunal was not justified in holding the application as time barred.

Now we come to the next question. The assessee in the relevant years had claimed personal allowance under section 15-H, investment allowance under section 15-C and relief on account of donation under section 15-D of the repealed Income-tax Act, 1922 as non-resident, which has been challenged by the Department. The Appellate Assistant Commissioner, as well as the Income-tax Appellate Tribunal did not agree with the Department and placed reliance in the decision of this Court in Commissioner of Income-tax v. R.C. Chaman 1979 PTD 484 where it was held that a non-resident assessee is entitled to unearned relief under section 15-A of the Income-tax Act in spite of the provisions of section 16(1) thereof. We are also in respectful agreement with the above decision of the Division Bench of this. Court and would, therefore, answer question (b) in the affirmative and find that the Income-tax Appellate Tribunal was justified in holding that the respondent, who is non resident, was entitled to rebate in respect of investment allowance under sections 15-D, 15-C and 15-H of the repealed Act. Reference No.88 of 1984 is disposed of accordingly.

M.BA./C-274/KReference answered.