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

----S.136(1)---Income-tax Act (XI of 1922), S.66(1)---Constitution of Pakistan (1973), Art.185(3)---Reference--Limitation---Leave to appeal was granted to examine a common question of law requiring authoritative pronouncement i.e. whether in the matter of making a reference the period of limitation of sixty days prescribed in S.66(1) of the Act or the period of limitation of ninety days prescribed in S.136(1) of the Ordinance was available to the aggrieved party, the Commissioner of Income Tax in all these appeals.

(b) Limitation---

---- Law of limitation is by and large and substantially a procedural law.

S.M. Junaid v. President of Pakistan PLD 1981 SC 12 ref.

(c) Interpretation of statutes---

---- Procedural law---Such a law has retrospective application and is attracted forthwith to the pending proceedings.

Yew Bon Tev v. Kenderaan Bas Mara 1983 PSCC 1200 PC ref.

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

----S.136(1)(2)---Income Tax Act (XI of 1922), S.66(1) & (2)---Reference--?Limitation---Provision of S.136(1)(2) of the Ordinance had the effect of enlarging the period of limitation both for applying to the Tribunal for making a reference as well as for making a reference thereafter to the High Court--?Provision being beneficial and relating to procedure should have been given effect to forthwith and in the matters decided after coming into force of the Ordinance---Such an application of S.136(1)(2) of the Ordinance, however, could not revive the period of limitation or extend to where at the time when the Ordinance came into force the period of limitation under the Act had already expired.

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

----S.166(2)---Expressions "proceedings for the assessment of that person for that year may be taken and continued" and "shall be continued and disposed of as if' occurring in S.166 2(a) & (i) are in the nature of saving clauses protecting the vested rights that had already accrued in the context of Income Tax Law--?Vested rights that accrued are those under the charging provisions of the repealed Act---Protection is not to the procedural rights nor from the said expressions it can be said to be so intended---Such general principle will lend a substantive content to these expressions and will be taken to protect only the vested rights that had accrued under the law and not to rights or matters relating to procedure of adjudication.

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

----S.136(1), Explanation [as added by Finance Act (I of 1985]---Explanation is not a substantive enactment but a declaratory one ---Declaratory legislation always has retrospective effect.

Balaji Singh v. Chakka Gangamma and another AIR 1927 Mad. 85 ref.

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

----S.136(1), Explanation [as added by Finance Act (I of 1985)]---Income-tax Act (XI of 1922), S.66(1)---Reference---Appeals related to years prior to enforcement of Income Tax Ordinance, 1979---Assessment orders and the first appellate order were also passed in all the cases prior to enforcement of Ordinance---Rejection of appeals, however, had taken place after the Act had been repealed and the Ordinance had been enforced ---Assessee in applying to the Income Tax Appellate Tribunal for making a reference of law point had himself invoked S.66(1) of the Act in three appeals and invoked S.136(1) of the Ordinance in other appeal---First two appeals were filed on the 80th day of the service of appellate order of the Tribunal and the third was filed on the 83rd day and the fourth on the 62nd day---Held, extended period of limitation provided under the Ordinance was to apply and not the earlier one prescribed under the Act in circumstances.

Shaik Haider, Advocate instructed by S.M. Abbas, Advocate-on-?Record for Appellant (in CA. No. 261-K of 1990).

Shaik Haider, Advocate instructed by Muzaffar Hassan, Advocate-on-?Record for Appellant (in CA. No.262-K of 1990).

S.M. Abbas, Advocate-on-Record for Appellant (in CAs. Nos.231-K and 205-K of 1991).

Sirajul Haq Memon, Advocate for Respondent (in C.As. Nos.261-K and 262-K of 1990).

M.S. Ghaury, Advocate-on-Record for Respondent (in CA. No.231-K of 1991).

A. S. K. Ghaury, Advocate-on-Record . for Respondent (in CA. No.205-K of 1991).

Date of hearing: 21st April, 1992.

JUDGMENT

SHAFIUR RAHMAN, J.---In all these appeals by leave the common question of law requiring authoritative pronouncement is whether in the matter of making a reference the period of limitation of sixty days prescribed in section 66(1) of the Income-tax Act, 1922 (hereinafter referred to as the Act) or the period of limitation of ninety days prescribed in section 136(1) of the Income Tax Ordinance, 1979 (hereinafter referred to as the Ordinance) was available to the aggrieved party the Commissioner of Income Tax in all these appeals.

2. All these appeals relate to years prior to 1979 when the Ordinance was enforced. The assessment orders and the first appellate orders were also passed in all these cases prior to enforcement of the Ordinance. However, the rejection of the appeals by the Income Tax Appellate Tribunal had taken place after the Act had been repealed and the Ordinance had been enforced. The first mistake committed by the appellant was that in applying to the Income Tax Appellate Tribunal for making a reference of a law point the appellant himself invoked section 66(1) of the Act in three appeals and only in one (Civil Appeal No.231-K of 1991) he invoked section 136(1) of the Ordinance. The first two appeals (CA. Nos.261-K and 262-K of 1990) were filed on the 80th day of the service of appellate order of the Tribunal, the third (CA. No.205-K of 1991) was filed on the 83rd day and the fourth (CA. No.231-K of 1991) on the 62nd day.

The Tribunal held that all these appeals were time-barred and incompetent and they should have been filed as required under section 66(1) of the Act within sixty days.

3. The appellant then directly approached the High Court under section 136(2) of the Ordinance. The High Court by examining various provisions of the law came to the conclusion that the proceedings continued to be governed by sections 66(1) and 66(2) of the Act and, therefore, the applications made before the Tribunal for reference to the High Court being beyond sixty days -of the service of notice were barred by time and hence rightly rejected by the Tribunal. It is in this background that this common question about the applicability of the correct law to the cases has come up for consideration. We may point out that in the matter of limitation the Lahore High Court has given a decision in Commissioner of Income-tax v. Sarwat Sultana 1986 PTD 368 which is contrary to the view taken in the impugned judgment now under examination.

4. The first legal proposition not open to question is that the law of limitation is by and large and substantially a procedural law. It was so held in S.M. Junaid v. President of Pakistan PLD 1981 SC 12. The other principle equally well established is that a procedural law has a retrospective application and is attracted forthwith to the pending proceedings. In between these two general principles is to be found a word of caution put in by the Privy Counsel in Yew Bon Tev v. Kenderaan Bas Mara (1983 Pakistan Supreme Court Cases 1200 Privy Council) in the following words:---

"Their Lordships consider that the proper approach to the construction of the 1974 Act is not to decide what label to apply to it, procedural or otherwise, but to see whether the statute is applied retrospectively to a particular type of case would impair existing rights and obligations. The appellants assert that a Limitation Act does not impair existing rights because the cause of action remains, on the basis that all that that is affected is the remedy. There is logic in the distinction on the particular facts of The Ydun because the right to sue remained, for a while totally unimpaired. But in most cases the loss, as distinct from curtailment, of the right to sue is equivalent to the loss of the cause of action."

5. Section 136, clauses (1) and (2) of the Ordinance had the effect of enlarging the period of limitation both for applying to the Tribunal for making a reference as well as for making a reference thereafter to the High Court. The provision being beneficial and relating to procedure should have been given effect to forthwith and in matters decided after coming into force of the Ordinance. Of course such an application could not revive the period of limitation or extend it where at the time when the Ordinance came into force the period of limitation under the Act had already expired.

6. In drawing the conclusion which the High Court has drawn in the impugned judgment it has been guided substantially by the provision made in the Ordinance repealing the Act i.e. section 166(1) and (2). Subsection (1) and clauses (a) and (i) of subsection (2) of section 166 are reproduced hereunder: ---

"166. Repeal and savings.--(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 or 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;

(b)??????? .............................??????

(c)??????? .............................

(d)??????? .............................

(e)??????? .............................

(f)???????? .............................

(g)??????? .............................

(h)??????? .............................

(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)???????? .............................

(k)??????? .............................

(I)??????? .............................

(m)?????? .............................

(n)??????? .............................

(o)??????? .............................

(p)??????? .............................

7. The expressions deserving particular attention are "proceedings for the assessment of that person for that year may be taken and continued" and the other is "shall be continued and disposed of as if'. These provisions are in the nature of saving clauses protecting the vested rights that had already accrued in the context of Income-tax Law. The vested rights that accrued are those under the charging provisions of the repealed Act. The protection is not to the procedural rights nor from these expressions it can be said to be intended so. That general principle will lend a substantive content to these expressions and will be taken to protect only the vested rights that had accrued under the law and not to rights or matters relating to procedure of adjudication.

8. A further aid to interpretation is available in the form of Explanation to section 136(1) of the Ordinance. That was added on 1-7-1985 by Finance Act I of 1985. It (the Explanation) reads as hereunder:----

"The period of ninety days within which an application is to be made shall apply notwithstanding that the application relates to an assessment year prior to the assessment year beginning on the first day of July, 1979, if such application is made on or after the first day of July, 1979."

This Explanation is not a substantive enactment but declaratory. A declaratory legislation has always a retrospective effect. In Balaji Singh v. Chakka Gangamma and another AIR 1927 Mad. 85 the following principle was enunciated on good authority for construing such Acts: ---

"In Attorney-General v. Bugett (2 Price 381 = 146 Eng. Rep. 130), it was held that an Act of Parliament made to correct an error by omission in a former statute of the same session, has relation back to the time when the first Act was passed. Even when mistakes in legislative enactments are corrected by a later amending Act, the amending Act should be read as part of the Act which it was intended to correct. Though the Act is not called a declaratory or explanatory Act, if from the words used in the Act the Court can come to the conclusion that it is a declaratory or an explanatory Act, retrospective effect will be given to such Act.?

9. In the circumstances the appellant committed a mistake in invoking section 66(1) of the Act and the Income Tax Appellate Tribunal and the High Court in applying period of limitation prescribed therein for determining the period of limitation available to the appellant for the purpose.? In fact on the strength of the provisions made in the Ordinance with regard to the limitation and the Explanation added subsequently it was unmistakable made clear that the extended period of limitation provided under the Ordinance was to apply and not the earlier one prescribed under the ?act.? These appeals are allowed and judgments of the High Court on this point are set aside.? No order is made as to costs.

M.B.A./C-123/S????????????????????????????????????????????????????????????????????????????????? Order accordingly.