Income Tax Act (XI of 1922)---

----Ss. 10 & 12---Wealth tax liability, Held, was an allowable expense under S. 10 or 12 of the Income Tax Act, 1922.

Commissioner of Income-tax v. Zakia Siddiqui 1989 P T D 135 fol.

Waheed Farrooqi for Applicant. Iqbal Naim Pasha for Respondent.

Date of hearing: 2nd May, 1991.

JUDGMENT

NASIR ASLAM ZAHID, J: -- This judgment will dispose of Income Tax References Nos.118, 119 and 120 of 1984 as common questions are involved in these three references. Parties are also same, namely, the applicant is the Commissioner of Income Tax, Central Zone `C', Karachi and the respondent is Messrs M. Hussain Ahmed. The only difference is that I.T.R.118 of 1984 relates to assessment year 1974-75, I.T.R. No.119 of 1984 relates to assessment year 1975-76 and I.T.R. No.120 of 1984 to assessment year 1977-78. In all these three reference applications filed by the Commissioner of Income tax under section 136(2) of the Income Tax Ordinance, 1979, the following two questions have been raised:--

(i) Whether, on the facts and the circumstances of the case, the Tribunal was justified in holding the application (under section 136(1) of the Income Tax Ordinance, 1979) of the applicant as barred by time?

(ii) Whether, on the facts and circumstances of the case, the wealth tax liability is an allowable expense under section 10 or section 12 of the Income Tax Act, 1922?

2. During the relevant years, the respondent had claimed deductions from their income for amounts representing wealth tax liabilities. The Income Tax Officer disallowed the claims of the respondent. Respondent's appeals were allowed by the Appellate Assistant Commissioner. The Department took the matter to the Income Tax Appellate Tribunal who maintained the decision of the Appellate Assistant Commissioner. The Department filed reference applications under section 136(1) of the Income Tax Ordinance but all such applications were dismissed as time-barred. In the circumstances, the Department has filed these applications under section 136 (2) of the Ordinance. We have heard Mr. Waheed Farooqi for the Department and Mr. Iqbal Naim Pasha for the respondent.

3. Learned counsel for the parties submitted that the first question relating to limitation may not be answered as both parties want a decision on the second question which relates to the merits of the case. On the second question, it is informed that there is a decision of a Division Bench of this Court in the case of Commissioner of Income-tax v. Zakia Siddiqui 1989 P T D 135 in which this very question was considered and answered in the affirmative in favour of the assessee and against the Department.

4. As neither party wants the question relating to limitation being answered, we refrain from making any observation in this regard. The other question relating to wealth tax liability being an allowable expense under section 10 or 12 of the Income Tax Act, 1922, has been correctly decided by the Tribunal. The decision of this Court in 1989 P T D 135 with which we agree, supports the view taken by the Tribunal. In the circumstances, these applications under section 136(2) of the Income Tax Ordinance, 1979, are dismissed with no orders as to costs.

M.BA./C-236/KApplications dismissed.