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

----S. 4(3)(vii)---Casual income---Voluntary payment which is made entirely without consideration and is not traceable to any source of assessee's income, but depends entirely on the whim of the donor, cannot fall in the category of income.

1985 P T D 297; CIT v. Messrs Sandoz (Pakistan) Ltd., 1987 P T D 482; CIT (South), Karachi v. French (Pakistan) Ltd. 1985 P T D 297 and Commissioner of Income-tax v. Messrs Smith Klirie and French of Pakistan Ltd. and others 1991 P T D 999 ref.

Shaik Haider for Applicant.

Iqbal Naeem Pasha for Respondent.

Date of hearing: 19th May, 1993.

JUDGMENT

SYED HAIDER ALI PIRZADA, J.--This is an application under section 136(2) of the Income Tax Ordinance, 1979 fled by the Commissioner of Income-tax Companies II, Karachi, referring the following two questions of law said to arise out of the order, dated 1-12-1988, passed by the Income-tax Appellate Tribunal, Karachi Bench, Karachi:--

"(1) Whether on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was justified in treating the subsidy remittance from parent company amounting to Rs.23,50,000 as casual receipts specially when the amounts have been remitted for the assessment years 1978-79 and 1979-80 also?

(2) Whether on the facts and in the circumstances of the case and in the law, the learned Income-tax Appellate Tribunal was justified in relying upon their decision on 1985 P T D 297 which revolved around its own facts and circumstances?"

The facts giving rise to this reference are that the respondent .was assessed under section 23(3) for the assessment years 1977-78 and 1978-79 and under section 62 for the assessment year 1979-80, on 6-4-1980. The Income-tax Officer added to the income of the respondent a sum of Rs.10,24,607 in 1977-78, Rs.23,50,000 in 1978-79 and Rs.1,04,53,345 in 1979-80 being the contribution made by the parent company based in Switzerland. The respondent had filed appeals against the assessments before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) ordered deletion of all the three amounts on the ground that these amounts were receipt of casual nature. The Department had filed appeals before the Income tax Appellate Tribunal. The learned Tribunal dismissed the appeals and affirmed the order of C.I.T. (Appeals).

The Commissioner of Income-tax had filed application under section 136(1) bf the Income-tax Ordinance, 1979 thereby requesting the Tribunal to refer the above questions to this Court. The application was rejected on 24-1-1990. The applicant has, therefore, filed the present reference on the above questions.

We have noticed that the Tribunal has relied upon the cases of CIT v. Messrs Sandoz (Pakistan) Ltd. 1987 PTD 482 and CIT (South), Karachi v. French (Pakistan) Ltd. 1985 PTD 297 in which it was held by a Division Bench of this Court that a voluntary payment which is made entirely without consideration and is not traceable to any source of his income, but depends entirely on the whim of the donor, cannot fall in the category of the income. The Commissioner of Income-tax had preferred appeal before the Honourable Supreme Court which was dismissed. The decision of the Honourable Supreme Court is reported as the Commissioner of Income-tax v. Messrs Smith Kline and French of Pakistan Ltd. and others 1991 PTD 999.

The facts and circumstances of the instant case being on all fours with the above cases cited above, we would like to respectfully follow the decisions and hold that the Tribunal's order seems to be in consonance with law. Our answer to the above questions is, therefore, in- the affirmative. However, there will be no order as to costs.

M.BA./C-302/KOrder accordingly.