Income Tax Ordinance (XXXI of 1979)---

----First Sched., Part III---Income-tax liability payable for relevant assessment year could be included for purposes of working out "retained income" for levy of surcharge.

Sheikh Haider for Applicant. Ali Athar for Respondent.

Date of hearing: 4th November, 1991.

JUDGMENT

MAMOON KAZI, J.---The respondent-company declared an income of Rs.2,26,25,942 which was assessed to tax at Rs.2,34,81,824 on which the tax payable was determined as Rs.1,38,50,587. The surcharge payable on the amount of tax was calculated as Rs.6,92,529. The respondent appealed before the Commissioner of Income-tax (Appeals) against levy of surcharge and while disposing of the appeal, it was held by the learned Commissioner that the tax payable out of the total income of the relevant year is to be treated as income retained for working capital requirements and hence it was further held that surcharge was not to be levied on the said amount. The Department was,, however, not satisfied with the said order and, therefore, it filed appeal before the learned Appellate Tribunal which upheld the decision of the learned Commissioner. Thereafter the Department moved the learned Income Tax Appellate Tribunal for reference of the following question to this Court for its opinion:--

"Whether on the facts and in the circumstances of the case Appellate Tribunal was justified in holding that the tax payable out of the total income should be treated as income retained for working capital requirements?"

Both the learned counsel point out that similar question has already been answered by a Division Bench of this Court in the case of Commissioner of Income Tax v. Pakistan Tobacco Company Limited 1988 PTD 66. It was held in that case as follows:---

"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."

As we find ourselves in respectful agreement with the conclusions arrived at by the learned Division Bench, we for the same reason answer the question accordingly and in the affirmative.

M.B.A./C-259/K Reference answered.