MISCELLANEOUS APPLICATIONS NOS. 45/LB, TO 47/LB OF 1994, DECIDED ON 19TH FEBRUARY, 1995. VS MISCELLANEOUS APPLICATIONS NOS. 45/LB, TO 47/LB OF 1994, DECIDED ON 19TH FEBRUARY, 1995., 1995 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 770 (1995)

(a) Income-tax---

---Appeal---Order of intermediary appellate authority purported to deal with a matter in appeal as if the authority had jurisdiction to deal with the appeal (though in fact that authority had no jurisdiction to deal with the appeal) would be appealable to a higher appellate authority.

(1964) 10 Tax 12 ref.

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

----S.156---Rectification of mistake---Scope of application of S.156, Income Tax Ordinance, 1979.

Essential condition for exercise of such power is that the mistake should be apparent on the face of record; mistake which may be seen floating on the surface and does not require investigation or further evidence. The mistake should be so obvious that on mere reading the order it may immediately strike on the face of it. Where an officer exercising powers under section 156 enters into controversy, investigates the matter, re-assessees the evidence or takes into consideration additional evidence and on that basis interprets a provision of law and forms an opinion different from the order.

The CIT, Companies-II, Karachi v. National Food Laboratories Supreme Court of Pakistan 1992 SCMR 687 = 1992 PTD 580 quoted.

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

----S. 156---Rectification of mistake---Travelling beyond the order sought to be rectified under S.156, Income Tax Ordinance, 1979 on the basis of contentious pleas is not warranted.

(1964) 10 Tax 12; PLD 1958 SC 104; 129 ITR 351; 1971 PTD 204; 1986 PTD 238; United Commercial Bank Limited v. CIT, West Bengal (1957) 32 ITR 688; 1967 63 ITR 252: CIT v. Khem Chand Ram Dass (1964) 51 ITR 823; (1962) 42 ITR 123; (1944) 12 ITR 59; Commissioner of Income-tax, Madras-I v. Dalmia Maganasite Corporation 117 ITR 930 and CIT, Companies-II, Karachi v. National Food Laboratories 1992 SCMR 687 = 1992 PTD 580 ref.

Qaiser M. Yahya, D.R. and Shahbaz Butt, LA. for Applicant.

M. Nawaz Khan, ITP for Respondent.

Date of hearing: 1st February, 1995.

ORDER

NASIM SIKANDAR (JUDICIAL MEMBER):----Through these Miscellaneous Applications, Commissioner of Income-tax, Zone-I, Lahore, prays for rectification of an order recorded by this Tribunal in I T As. Nos. 1660 to 1663/LB/92-93 (Assessment years 1988-89 to 1991-92) on 21-3-1993 in Re: Holder Management & Consultant v. The ITO, Companies Circle-13, Lahore.

2. The assessee-respondent in this case is a non-resident company engaged in providing professional services in the fields of corporate affairs, financial analysis, engineering, economics and business administration etc. The assessee-company claimed exemption from levy of tax under section 50(3) of the Ordinance on the ground that it did not have a permanent establishment in Pakistan. The contention was refused on the ground that during the period under consideration the assessee did have an establishment in Pakistan and that the major part of the receipts/income resulted to its activities carried on within Pakistan. The first appellate authority confirmed the treatment meted out to the assessee for somewhat similar reasons. -On further appeal this Tribunal by way of the aforesaid order held that receipts of the assessee were covered by the terms of the convention for avoidance of double taxation between the Government of Pakistan and the Swiss Federal Union. It was further found that the- receipts were not fees for technical services but industrial or commercial profits and, therefore, did not fall within the mischief of section 80-AA of the Ordinance. On facts also this Tribunal held that the assessee had no permanent establishment in Pakistan.

3. Mr. Shahbaz Butt, Legal Advisor, speaking for the revenue contends that section 80-AA of the Ordinance does not find mention in section 129 of the Ordinance and, therefore, the appeal filed by the assessee before the first appellate authority was incompetent. It is further submitted that the second appeal before this Tribunal was equally incompetent. The main thrust of his argument is that all superstructure based upon an illegal and void order is equally fallacious and illegal. Reliance in this connection is placed on (1964) 10 Tax 12 at 17 PLD 1958 SC 104 at 107 and 129 ITR 351 at 364. In support of the competency of this application under section 156 of the Ordinance reliance is placed upon a reported decision cited as 1971 PTD 204. It is further submitted that per ratio of the case cited as 1986 PTD 238 over-looking of a mandatory provision of law is an error apparent from the record and, therefore, this application merits acceptance.

4.Learned A.R. for the assessee controverts the submissions made by the revenue both on legal as well as factual plain. On facts it is submitted that the assessments in the years 1988-89 and 1989-90 were framed under section 62 of the Ordinance and, therefore, the revenue is incorrect in saying that the assessments were framed under section 80-AA of the Ordinance against which no appeal was competent before the first appellate authority. On legal plain it is submitted that section 80-AA is not by itself a charging section and all kinds of incomes under whatever head they may fall are taxed on the authority of charging provisions in the statute which in this case is section 9 of the Ordinance. It in also contended that mere mention of section 80-AA in the assessment order will not change the nature of levy and the order shall remain an assessment order framed under section 62 of the Ordinance as happened in the other two years. Reliance in this regard is placed upon a reported decision of Supreme Court of India cited as (1957) 32 ITR 688 Re: United Commercial Bank Limited v. CIT, West Bengal. Another case of Allahabad High Court Re: Ramchand & Sons v. CIT, U.P. reported as (1967) 63 ITR 252 at 260-261 is relied upon to say that wrong or mistaken mention of a particular section or the label or nomenclature used is not determinative of the validity of an assessment. It is also asserted on the authority of (1964) 51 ITR 823 Re: CIT v. Khem Chand Ram Dass that mere fact that an order proposed to have been made under a particular section does not shut out an appeal if the facts go to show that the correct section under which the order ought to have been made was another one. Learned A.R. also seeks support from (1962) 42 ITR 123 and (1944) 12 ITR 59 at 65 to plead that the first appellate authority as a Court of appeal had jurisdiction to determine the soundness of the conclusions of the assessing officer both on question of fact and law as well as the jurisdiction of the assessing officer to pass the order appealed against.

5. After hearing the parties, we have concluded that the revenue has no case as far this application is concerned. For the moment we are not willing to adjudicate whether an order under section 80-AA amounts to an order under section 62 of the Ordinance. The fact remains that in two of the four years under consideration before us section 62 was expressly mentioned in the assessment order as the provision under which the order was being recorded. Also the jurisdiction of this Tribunal to entertain appeal against first appellate order cannot be described to be illegal either. Madras High Court in Additional Commissioner of Income-tax, Madras-I v. Dalmia Maganasite Corporation cited as 117 ITR 930 held that if "intermediary appellate authority purported to deal with a matter in appeal as if that intermediary authority had jurisdiction to deal with that appeal, though, in fact that authority had no jurisdiction to deal with that appeal the order of that appellate authority would become appealable to a higher appellate authority?????.. ".

6. Besides, we have noted that no such contention was ever made by the revenue at the time of hearing of this appeal. Again it was not suggested as a question of law in reference application made qua the aforesaid order of this Tribunal. It may also be mentioned that on the application of the department in RAs. Nos. 312 to 315/LB/1993-94 (assessment years 1988-89 to 1991-92) this Tribunal on 15-12-1993 referred the questions of law said to have arisen out of the aforesaid order of this Tribunal. No mention of this objection was made in the statement of the case or the question framed for a reference to the High Court under section 136(1) of the Ordinance.

7. The scope of application of section 156 of the Ordinance has lately been determined by the Supreme Court of Pakistan in 1992 SCMR 687 = 1992 PTD 580 in Re: The CIT, Companies-II, Karachi v. National Food Laboratories. The relevant portion of this judgment is reproduced to highlight the view of Supreme Court of Pakistan with regard to the powers available to an income-tax authority or this Tribunal for rectification of mistakes under section 35 of the repealed Act, 1922 (which is equivalent to section 156 of the Ordinance, 1979):

"Therefore, essential condition for exercise of such power is that the mistake should be apparent on the face of record; mistake which may be seen floating on the surface and does not require investigation or further evidence. The mistake should be so obvious that on mere reading the order it may immediately strike on the face of it. Where an officer exercising powers under section 35 enters into controversy, investigates the matter, re-assesses the evidence or takes into consideration additional evidence and on that basis interprets a provision of law and forms an opinion different from the order, then it will not amount to rectification of the order:"

8.On a querry from the Bench, learned Legal Advisor for the Revenue states that through this petition the Revenue prays for recalling of the aforesaid order of the Tribunal and also its substitution by another, probably after hearing the parties again, that the first appellate order was incompetent and, therefore, no appeal laid before this Tribunal. We are afraid this prayer can neither be allowed on facts nor it is covered by the provisions of section 156 of the Ordinance. The Revenue has not been able to bring home that the aforesaid order of the Tribunal suffers from a turbidity, which is apparent on its face. The question whether section 80-AA is a charging section and that assessment made with reference to provisions of this section could not be assailed before the first appellate authority, can hardly be considered in these miscellaneous applications. Travelling beyond the order sought to be rectified under section 156 of the Ordinance on the basis of contentious pleas is not warranted.

9.For these reasons, we will refuse to grant the prayer.

10. These applications, therefore, fail.

M.BA./86/T???????????????????????????????????????????????????????????????????????????? Applications dismissed.