Finance Act (XXX of 1977)---

----Sched. 1, Part III [as amended by Finance (Amendment) Ordinance (II of 1978)]---Surcharge---Tax liability or tax payable is requirement of working capital and therefore has to be excluded from the total income for levy of surcharge 1988 PTD (Trib.) 155 and I.T. v. Asbestos Cement Industries Ltd. and others 1993 PTD 459 ref.

Shaik Haider for Applicant.

Makhdoom Ali Khan for Respondent.

Date of hearing: 21st April, 1993.

JUDGMENT

SYED HAIDER ALI PIRZADA, J.---By this common judgment, we intend to dispose of the above two Income Tax cases which raise common question of law. It may be observed that I.T.C. No.124 of 1990 is treated as the leading case by the learned counsel for the parties and, therefore, it may be advantageous to reproduce here in below the question referred to in the above I.T.C.'

"Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was justified in holding that the tax liability or tax payable is requirement of working capital and, therefore, to be excluded from the total income for levy of Surcharge."

2.The statement of the case relates to the Assessment Year 1979-80. The assessee is a private limited company the assessee filed a return showing a loss of Rs.35,39,740. Assessment for the year 1979-80 was finalized under section 62 of the Income Tax Ordinance and surcharge amounting to Rs.82,448 was levied. The respondent felt aggrieved and went up in appeal before the Commissioner of Income Tax (Appeals). Learned Commissioner of Income Tax (Appeals) directed the Income Tax Officer to decide this issue in the light of Tribunal's decision reported as 1988 PTD (Trib.) 155. The Income Tax Officer being aggrieved went in appeal before the Income Tax Appellate Tribunal. The learned Tribunal confirmed the direction of the Commissioner by Income Tax (Appeal). The Commissioner of Income Tax filed reference application before the Appellate Tribunal which was rejected. The Commissioner of Income Tax filed the present application under section 136(2) of the Income Tax Ordinance, 1979.

3. Mr. Shaik Hyder, learned counsel, appearing for the applicant has contended that the point involved in these references is covered by a decision in the case of Commissioner of Income Tax v. Messrs Pakistan Tobacco Co. Ltd. This decision was approved by the Hon'ble Supreme Court in Civil Appeal No.261-K of 1990 (I.T. v. Asbestos Cement Industries Ltd. and others connected appeals' 1993 PTD 459, decided on 27-6-1992. The above decision was subsequently followed in a number of references.

4. Messrs Makhdoom Ali Khan and Muhammad Ali Seena, Advocates have candidly conceded the above legal position and have submitted that the point involved in these references is covered by the above decisions.

5. We have considered the submissions of the learned counsel carefully. We have also gone through the decisions cited above. The above case is on all fours with the present cases.

6. In view of the above legal position no exception can be taken to the decisions of the learned Appellate Tribunal.

7. In the result. we answer the question of law in the affirmative, that is, in favour of the assessee and against the Revenue. There will be no order as to costs.

M.BA./C-304/K Order accordingly.