MUHAMMAD YOUSUFF VS COMMISSIONER OF INCOME-TAX, EAST PAKISTAN, DACCA
1995 P T D 360
[High Court Bangladesh]
Before Md. Abdul Jalil and Muhammad Fazlul Karim, JJ
CHAND TEXTILE (SPINNING) MILLS LTD.
Versus
DEPUTY COMMISSIONER OF TAXES
Writ Petition No.844 of 1991, decided on 29/03/1993.
Income-tax---
----Juristic person---Taxation---Change in management of juristic person Effect ---Business of the mill was nationalized which was denationalized later and possession of the mill was handed over to the original shareholders---Mill having a separate and independent legal existence, and being a juristic person remained and continued as it was and it was thus liable for dues against it whoever was in the management.
Asrarul Hossain, Abdul Alim and Iftikhar Ahmed for Petitioner.
Moksedur Rehman for Respondent.
JUDGMENT
MD. ABDUL JALIL, J.---This rule was issued at the instance of the petitioner Chand Textile (Spinning) Mills Ltd., calling upon the respondent, namely, Deputy Commissioner of Taxes, Companies Circle-I, Dhaka (West Zone), Dhaka to show cause why the impugned notices as evidenced by Annexures `A'; `B' and `C' to the petition should not be declared to have been made without any lawful authority and to be of no legal effect.
2. The case of the petitioner is that it is a manufacturing company carrying on business of spinning textile thread. The business of the company was nationalized under the President's Order No.27 of 1972. Later on after legal proceeding the company was denationalized and the possession of the same was handed over to the original shareholders and promoters of the company on 8-12-1982. The present management received possession of the mill after retransfer in a ramshackle state and before they could fully gear up with confidence to resume the business. The Bankers of the petitioner mill were served with the impugned Notices No. 717/Coy-I(W)/90-91, dated 2-5-1991. 717/Coy-I(W)/90-91, dated 10-11-1990 and 717/Coy-I(W)/90 91/500 dated 10-11-1990 (Annexures 'A', `B' and `C' by the respondent under section 143(2)(a) of the Income Tax Ordinance, 1984, demanding a sum of Taka 2,43,69,560. Previously the amount demanded was Taka 4,62,88,998 as claimed by Demand Notice No.717/Coy-I(W), dated 10-.11-1990 served on Agrani Bank, Nawabpur Road, Dhaka who sent a copy of the said demand notice to the petitioner by Letter No.Agrani/L/1482/90, dated 18-11-1990 (Annexures D and D(I) respectively to the petition). On 12-9-1990 the respondent served a demand notice being No. GIR 390/Com-I(CA) for a sum of Taka 1,02,27,381 (Annexure `E' to the petition). Furthermore, nine notices, dated 24-1-1991 with assessment order were served on the petitioner claiming a sum of Taka 1,52,67,584 as interest due Annexure F-E(8) to the petition. In fact, no sum was due to the respondent. The interest charged for the assessment years 1973-74 to 1979-80 cannot be charged under section 45A of the Income Tax Act, 1922 which was deleted and so the amount under that head amounting to Taka 1,03,80,067 has no basis. The interest is not chargeable on the present management as per section 88(1) of the Income Tax Ordinance 1984 for the assessment year 1981-82 amounting to Taka 21,86,679 as the management at that time was with Bangladesh Textile Mills Corporation. The amount claimed for the assessment years 1983-84 and 1984-85 was Taka 45,79,079. The petitioner already paid Taka 47,76,618 and there is excess payment. The receipts of such payment have been filed as Annexures `G' and `G(1) to the petition for the claim in respect of the assessment year 1985-86 to 1988-89 the appeals are pending and the appeals were filed after making payment of Taka 83,79,114 and the balance disputed tax amounting to Taka 53,33,03 shall not carry any interest and this will be abided by the result of the appeals as per section 35(3) and section 35(4)(c) of the Income Tax Ordinance, 1984. Hence, no amount is due and payable by the petitioner to the respondent, rather, an amount of Taka 19,42,894 is refundable to the petitioner by the respondent. The petitioner approached the respondent to withdraw the attachment and the notices demanding taxes but to no effect. Even its letters were not replied to. The bankers of the petitioner Agrani Bank, Nawabpur, Dhaka City Bank. Tanbazar, Narayangonj and Rupali Bank, Rathkhola Branch, Dhaka were again served with notices on 2-5-1991 and 10 11-1990 which were received by the petitioner on 15-5-1991. The petitioner being aggrieved served notice demanding justice and then filed the present writ petition.
3. It is the further case of the petitioner that all the impugned notices were issued without any lawful authority. The petitioner filed a supplementary affidavit on 30-6-1992 stating that for the four assessment years 1985-86, 1986-87, 1987-88 and 1988-89 the appeals were pending which has since been disposed of in favour of the petitioner and for the years 1985-86 and 1988-89 the tax was reduced to the extent of Taka 55,71,262 in addition to Taka 7,22,607 for the year 1985-86 and the assessment of Taka 11,18,042 for the year 1988-89 had been reduced by Taka 23,62,401 resulting a loss of Taka 12,44,459. The petitioner has filed the copies of the decisions of the appellate authority as Annexures `S', `T', U' and `V' to the said supplementary affidavit. It has also been stated that there was an excess payment of Taka 54,503 which is refundable to the petitioner and, as such, the question of payment of interest for the years in question does not arise and that the appeals for the assessment years 1986-87 and 1987-88 are pending in the appellate tribunal and if the appeals are allowed there i.e. expectation of further refund of Taka 18,09,744. The claim of interest for the assessment years 1973-74 to 1979-80 is unlawful as there was no law for charging interest for those years and the demand made on that head is wrong and unlawful. The interest demanded for the assessment year 1981-82 amounting to Taka 21,86,679 Annexure `F(4)' is barred by limitation. Moreover, in that year the company was nationalized and as per section 88(1)(a) and (b) of the Income Tax Ordinance, 1984 it was payable by the Bangladesh Textile Mills Corporation if at all but not by the petitioner and the said demand is also barred.
4. The respondent filed an affidavit-in-opposition denying the material allegations stating that the petitioner earned profit both before and after re transfer of the Mills to the present management and after re-transfer it earned regular profit and it was quite able to pay the income-tax and that the demand of Taka 4,62,88,998 (Annexure `D') was subsequently reduced in consultation with the assessee in view of the payment already made by the petitioner. For different assessment years the arrear tax is Taka 91,01,976 and the interest charged thereon is Taka 1,52,67,584 and in total Taka, 2,43,69,56(). By Letter No.390 Coy-I (W), dated 22-9-1990 the petitioner was directed to pay Taka, 1,02.27,381 on account of arrear income-tax for the assessment years 1983-84 to 1988-89 alongwith penalty. It was further stated that section 45-A of the Income-tax Act, 1922 was omitted by Act II of 1973 with effect from 1-7-1973 but it was re-enacted from 1-7-1980. The interest was charged on the arrear of tax for the years 1973-74 to 1980-81 correctly and that section 88(1) of the Income Tax Ordinance, 1984 has no manner of application to the facts of the present case. The assessment for the year 1985-86 has been modified and the modified amount of tax came to Taka 66,24,125 against which an amount of Taka 53,78,124 has been paid and as such Taka 12,46,011 together with interest stands at Taka 35,59,796 and that no amount is refundable. The bank account of the petitioner was attached under section 143(2)(a) of the Income Tax Ordinance, 1984 for recovery of Taka 2,43,96,560 which is payable by the petitioner after adjustment of the payment made against different demands.
5. The respondents also filed an affidavit filed by the petitioner denying the allegation that any amount is refundable.
6. The petitioner filed affidavit-in-reply to the affidavits-in-opposition reiterating its stand taken in the writ petition and the supplementary affidavit.
7. Mr. Asrarul Hossain, the learned Advocate appearing for the petitioner, had taken us through the petition and the supplementary affidavit and relevant Annexures and submitted that the demands made by the respondents were all baseless on the ground as stated in the petition, rather, the petitioner was entitled to refund of some amount. He had drawn our attention to the fact that the amount claimed for the years 1973-74 to 1979-80 as interest is not recoverable as the law itself was repealed in 1973 which was re-enacted in 1980 and this demand is also barred by limitation. He also submitted that the amount claimed as interest for-the ear 1981-82 is not also recoverable as there was excess payment in the previous year 1980-81 to the extent of Taka 18,51,278 and as such there cannot be any interest under section 18-A of the Income-tax Act, 1922 and that said demand is also barred by limitation. Moreover, this amount was not payable by the petitioner as it was not in the management during that period. With regard to the demand for the years 1983-84 to 1988-89. Mr. Hossain submitted that the income-tax had already been paid and Taka 54,503 was paid in excess and there is likelihood of further refund of money after the appeals are disposed of.
8. Mr. Moksudur Rahman, learned Advocate appearing for the respondent, submitted that the petitioner should have filed appeal against impugned notices before the appellate authority and it has no right to file the writ petition. He also submitted that, in fact, no amount was refundable to the petitioner. He further submitted that the petitioner is liable to pay the tax and all dues when the management of the Mill was with the Bangladesh Textile Mills Corporation, as the petitioner earned regular profit after it was retransferred to it. He, however, did not dispute the calculation given by Mr. Asrarul Hossain about payment made and claiming exemption.
9. The subject-matter of this Rule in the claim made by the respondent by Annexures `A', `B', and `C'. Annexure`A', the demand notice, dated 2-5-1991 was issued on the banker of the petitioner, namely Manager, Agrani Bank, Nawabpur Road, Dhaka claiming Taka 2,43,69,560. A similar demand, dated 10-11-1990 was also made to the banker of the petitioner, namely, Manager, City Bank Ltd., Tanbazar Branch, Narayangonj claiming the same amount and also to the Manager, Rupali Bank, Ratkhola Branch, Dhaka claiming the same (Annexures B and C respectively to the petition) no description or details of the amount claimed was given in the impugned notices. The petitioner however has given the details, of the claim in respect of the said amount which has not been denied by the respondent. The claims are, interest for the years 1973-74 to 1979-80 amounting to Taka 1,03,80,069, interest for the year 1981-82 amounting to Taka 21,86,679, unpaid tax of some years namely tax for the years 1983-84 to 1988-89 a portion of which is the subject-matter of appeal i.e. for the assessment years 1986-87 and 1987-88. The present Rule is not against any assessment but against demand or arrear of tax assessed earlier and interest against which no appeal is provided for. So, this application is quite maintainable.
10. The petitioner-Mill was nationalized under Bangladesh Industrial Enterprise (Nationalisation) Order, 1972 (President's Order No. 27 of 1972) and it was denationalized and handed over to the original shareholders and promoters of the company on 8-12-1982 and when the Mill was under nationalisation the management was with the Bangladesh Textile Mills Corporation. The petitioner's case is that during that period the Mill being under the management of the Bangladesh Textile Mills Corporation under section 88 of the Income Tax Ordinance the said Corporation is liable to pay tax and other charges and not by the petitioner. Section 88 of the Income Tax Ordinance 1984 runs as follows:
"88.Assessment in the case of succession to business otherwise than on death.---(1) Where a person carrying on any business or profession (in this section referred to as predecessor) has been succeeded therein otherwise than on death by another person (in this section referred to as the successor) in any income year and the successor continues to carry on that business or profession,-
(a) the predecessor shall be assessed, in respect of the income of the income year in which the succession took place, for period up to the date of the succession, and
(b) the successor shall be assessed, in respect of the income of the income year, for the period after the date of succession:"
11. The present case is not a case of succession. The mill remains as it was before and after nationalisation and denationalization. Only the management has been changed and the present management was delivered possession of the mill after re-transfer with all assets and liabilities. It is the Mill which has separate and independent legal existence and is a juristic person which is liable for any dues against it whoever is in the management. The provision of section 88 therefore has no application to the present case.
12. According to the petitioner, the amount clamed by Annexures `A', `B' and `C' and tax and interest for the years 1973-74 to 1979-80, 1981-82 to 1988-89 which are not disputed by the respondent. The interest for year 1973-74 to 1979-80 was charged under section 45-A of the Income-tax Act, 1922. Section 45-A of the said Act was omitted in 1973 and it was re-inserted in 1980 by Finance Act, 1980 and as such no interest can be claimed for those years.
13. The interest charged for the year 1981-82 is Taka 21,86,679. It is stated in the petition that in the previous year i.e. for the year 1980-81, there was some excess payment refundable to the petitioner. So, there is no scope for claiming interest in 1981-82 for non-payment of tax for the year 1980-81 under section 18-A of the Act. This position has not been disputed. However, the said amount is time-barred. There was no demand for 1982-83.
14. For the period from 1984-85 to 1987-88 the appeals were filed and the amount of income-tax reduced for some years and two appeals for the years 1986-87 are pending before the appellate tribunal.
15. It is stated in paragraph 2 of the supplementary affidavit that for the assesment years 1983-84 to 1988-89 total assessment was Taka 2,62,00,457 and tax payable was 50% of the same which came to Taka 1,31,00,229 and the petitioner paid on different dates Taka 1,31,732 and thus there was excess payment to Taka 54,503 the relevant papers have also been filed. The respondent in his affidavit-in-opposition made a general denial of the same stating that it is not correct. He did not question the genuineness of the papers filed by the petitioner. So, the calculations given are not disputed question of facts.
16. From the above facts and circumstances it appears that no amount is due and payable by the petitioner in respect of the claim made by Annexures `A', `B' and `C' to the petition.
In the result, the Rule is made absolute, without any order as to costs. The impugned demand made on three bankers of the petitioner by Annexures `A', `B' and `C' to the petition are declared to have been made without lawful authority..
M.BA./565/T.FRule made absolute.