COMMISSIONER OF INCOME-TAX, ZONE-B, LAHORE VS MUHAMMAD SHAHBAZ KHAN
1996 P T D 1138
[Lahore High Court]
Before Malik Muhammad Qayyum and Ahmad Saeed Awan, JJ
COMMISSIONER OF INCOME-TAX, ZONE-B, LAHORE
Versus
MUHAMMAD SHAHBAZ KHAN
Civil Tax References Nos. 18, 21, 22 and 23 of 1989, decided on 12/03/1996.
(a) Income Tax Rules, 1982---
----R. 39(7)---Exemption---"Free" or "concession-passage" as mentioned in 8.39(7)---Meaning---Employees had fixed leave fare assistance at a uniform rate of basic salary which was paid to the employee in cash irrespective of the fact whether or not the journey was actually performed---Claim of tax exemption on account of such leave fare assistance by employee who had not actually undertaken actual journey---Validity---Held, "free or concessional passage" as mentioned in R.39(7), Income Tax Rules, 1982, meant concessional fare for journey actually performed---Such allowance, therefore, could not be equated to the exemption of passage as provided in R.39(7).
Black's Law Dictionary, Fifth Edn. ref.
(b) Interpretation of statutes---
---- Rule of literal interpretation---Statute has to be read literally by giving the words used ordinary natural and grammatical meaning---If, however, such a reading leads to absurdity and the words are susceptible of another meaning, Court may adopt the same---If no such alternate construction is possible, Court must adopt ordinary rule of literal interpretation.
Black's Law Dictionary Fifth Edition ref.
(c) Words and phrases--
Passage" ---Meaning.
Muhammad llyas Khan for Applicant.
Date of hearing: 12th March 1996.
JUDGMENT
AHMAD SAEED AWAN, J.---In these references No. C.T.R. 18 of 1989, C.T.R. No.21 of 1989, C.T.R. No.22 of 1989 and C.T.R. No.23 of 1989 filed by the applicant Department under section 136 of the Income Tax Ordinance, 1979 and referred to the Court for opinion, wherein common question of law arise, namely:--
"Whether leave fare assistance received a 16% of the basic salary is covered by the exemption as envisaged by Rule 39(7)(b)(i) of the Income Tax Rules?"
2. The case of the Department is that the assessee/respondents employees of Messrs Coca Cola Export Corporation, Lahore, who besides salary were entitled to perquisites; claimed exemption on account of house rent and leave fare assistance; the Income Tax Officer while making assessment under section 59(3) of the Ordinance, 1979 held that the exemption claimed by the respondent/assessee on account of leave fare assistance did not fall within the purview of Clause (b)(i), Rule 39(7) of the Income Tax Rules. The respondents appeals against the Income Tax Officer's orders were allowed by the Appellate Assistant Commissioner; the learned Income Tax Appellate Tribunal also in appeals filed by the Department/applicant maintained relief allowed by the Appellate Assistant Commissioner to the assessees.
3. The Department/applicant being aggrieved with the orders of the learned Tribunal, required the Tribunal to refer the question of law arising out of these order as aforementioned.
4. In order to resolve the above question it would be pertinent to reproduce the relevant Rule 39(7)(3)(1) of the Income tax Rules which reads as under:
"39(7). Rule Free or concessional passage provided by the employer to an employee (including the members of the household and dependents):
(a) Whether the passage is provided for the travel abroad of the employee (including the members of his household and dependent).
(i) Where such passage is in accordance with the employee's terms .of employment and not often than once in two years during the period of. the employees service with the employer. "
5. Admittedly as per service agreement for the year under consideration the employer had fixed leave fare assistance at a uniform rate of 16 % of the basic salary which was paid to the employee in cash irrespective of the fact whether or not the journey was actually performed Undoubtedly the passage in common parlance means fare for journey between two places and the respondents admittedly in fact had not undertaken actual journey but received the cash allowance on basic salary as per agreement; the learned counsel for the respondent is unable to convince us that the allowance is exempted.
6. A cardinal rule of construction of statutes is to read the statute literally; that is, by giving to the words used ordinary, natural and grammatical meaning. If, however, such a reading leads to absurdity and the words are susceptible of another meaning; the Court stay adopt the same. But if no such alternative construction is possible, the Court must adopt the ordinary rule of literal interpretation.
7. In the present case, the literal construction of "passage" leads 'to no apparent absurdity. The dictionary meaning of "passage" according to Black's Law Dictionary Fifth Edition are:--
??????????? "Act of passing, transit, transition and a way over water or land or through the air."
hence free or concessional passage as mentioned in sub-Rule (7) of rule 39 of Income Tax Rules means concessional fare for journey actually performed.
8. We are of the view that by no stretch of imagination such cash allowance can be equated to the exemption of "passage" as provided in the aforementioned rule: The answer to reference is negative against the assessee and in favour of the department. There shall be no order as to costs.
M.B.A./C-4/L ???????????????????????????????????????????????????????????? Question answered in negative.