COMMISSIONER OF INCOME TAX, LAHORE VS NATIONAL FERTILIZER CORPORATION, LAHORE
1996 P T D 276
[Lahore High Court]
Before Ahmad Saeed Awan and Sharif Hussain Bokhari, JJ
COMMISSIONER OF INCOME TAX, LAHORE
Versus
NATIONAL FERTILIZER CORPORATION, LAHORE
P.T.R. No. 39 of 1990, decided on 09/10/1995.
Income Tax Ordinance (XXXI of 1979)---
----First Sched. Part II, para. A (2)(a)---Assessee, a public limited company declared income under various heads and calculated tax on dividend derived from another Pakistani company at concessional rates---Amount of such dividend being not business income of the assessee-company was chargeable to tax at concessional rate.
Pakistan Textile Mills Owners Association v. Administrator of Karachi PLD 1963 SC 137; Cape Brandy Syndicate v. Inland Revenue Commissioner (1921) IKB 65 and Government of Pakistan and others v. M/s. Hashwani Hotel Ltd. PLD 1990 SC 68 ref.
Muhammad Ilyas Khan for Applicant.
M. Naseem Kashmiri for Respondent.
Date of hearing: 25th September, 1995.
JUDGMENT
AHMAD SAEED AWAN, J.---This is an application under section 136(2) of the Income Tax Ordinance, 1979 under which it is prayed that the Income Tax Appellate Tribunal be ordered to refer the following question to this Court for opinion:---
"Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Rs.20,60,12,700 was not business income of the assessee company but from dividend and chargeable to tax at the concessional rate provided under the First Schedule?"
The question is founded upon 'the following facts:---
The respondent/assessee is a public Limited Company set up for promotion of Fertilizer Industry empowered under its Memorandum and Articles of Association to hold shares or stocks of other companies or undertaking. For the assessment year 1983-84, the assessee declared income under various heads i.e. from Managing Agency, Commission, office allowance; Interest, Commission on guarantees and, dividends. The assessee calculated tax on the dividend income at 5 per cent under para. A (2) of para 2 of the First Schedule to Income Tax Ordinance, 1979.
2: The Income Tax Officer after issuing the notices subjected the total income including the dividends to normal rates of income-tax and super-tax on the ground that earning dividends was business of the company as the assessee itself in earlier years had been claiming adjustment and set off of losses under other heads against income from dividends treating the same as its business income. The assessee/respondent filed an appeal before the C.I.T.(Appeals) who maintained the order passed by the Income Tax Officer. The assessee/respondent being aggrieved filed a further appeal before the Income Tax Appellate Tribunal, Lahore who accepted the assessee's appeal holding that "sections 9 and 10 of the Ordinance, under which a charge has been created, provides that tax has to be charged at the rates given in the schedule on dividends income no tax rate has been given and for super-tax only a concessional rate of tax has been provided----"
3. The department consequently filed an application under section 136(1) of the Income Tax Ordinance, 1979, which was rejected as the Tribunal was of the view that the question sought to be referred did not arise from its order. It is in these circumstances that the present application under section 136(2) of the Income Tax Ordinance has been made.
It is an admitted position that in the Income Tax Return for the year 1983-84 under consideration filed by the assessee, the amount of Rs.20,60,12,700 was shown as dividends in the total income.
4. The learned Tribunal while allowing the appeal of the assessee came to the conclusion that the amount of Rs.20,60,12,700 being dividend income; super-tax was chargeable at the rate of 5 per cent only as prescribed by paragraph A (2)(a) of Part II as it is nowhere prescribed in paragraph C of Part I or paragraph A (1) and A(2)(a) of Part II that the lower rate of super-tax will only be applicable when the income is classified under a particular head and held that the concessional rate of super-tax was available irrespective of the head under which dividend income was classified.
5. The learned counsel for the department vehemently contended that the income from dividends is assessable under the head, "Income from other sources", if it is not included in total income under any other head and the income from dividends is assessable under section 30 and not under section 22 of the Ordinance, while the learned counsel for the assessee contended that the income was assessable under section 22 of the Ordinance; Section 15 of the Income Tax Ordinance which categorize the heads of income, is only for purposes of computation and charge of total income; sections 9 and 10 of the Ordinance under which a charge has been created, provide that tax has to be charged at the rates given in the schedule. .
6. We have heard the arguments advanced by the learned counsel for the parties and have perused the file.
7. At the very outset, we may mention that the arguments of the learned counsel for the department that the assessee/respondent had itself claimed dividend income as business income and the Assessing Officer had accepted it and the assessee had taken benefit out of it by adjusting lessees; has no relevancy whatsoever for applying rates of taxes under the schedule as it had a relevancy only in regard to the computation and charge of total income and not to the application of rates in the schedule. .
8. The dividend income has been specifically excluded from the total income subject to one qualification that if such an income is of kind to which sub-paragraph (2) or (3) (c) of paragraph A of Part II applies. We find after examining sub-paragraph (2) of paragraph A of Part II, that the only condition prescribed therein is that such dividend income must be from a Pakistani Company, for ready reference the aforesaid sub-paragraph (2) is reproduced as under:---
"To which paragraph C of Part I applies, on the amount representing income from dividends from a Pakistani company."
9. Admittedly, the assessee is a Pakistani Company and the dividend income, too, is from a Pakistani Company and there is a dividend income; the required conditions to apply a concessional rate of super-tax under sub para.(2) of paragraph A of Part II of the schedule had been fulfilled.
10. It was observed in case of Pakistan Textile Mills Owners' Association v. Administrator of Karachi PLD 1963 SC 137:---
"In a taxing statute, as in any other statute, there is no reason to depart from the general rule that words used in a statute must first be given their ordinary and natural meaning. It is only when such an ordinary meaning does not make sense that resort can be made to discovery other appropriate meanings".
11. In case of Cape Brandy Syndicate v. Inland Revenue Commissioner (1921) 1 KB 65 at page 71 while dealing the question of interpreting a Taxing Act, the learned fudge observed:---
"It simply means that in Taxing Act one has look merely at what is clearly said. There is no room for any intendment. There is no equity about a lax. There is no presumption as to tax. Nothing is to read in, nothing is to be implied, one can only look fairly at the language used."
12. The dictum laid down in supra case has been followed by their Lordships of Supreme Court in case of Government of Pakistan and others v. M/s. Hashwani Hotel Ltd. PLD 1990 SC 68.
13. As already observed, the only requirement to apply a concessional rate of super-tax under sub paragraph (2) of paragraph A of Part II of the schedule had been fulfilled and by no stretch of imagination can be extended to any other requirement. We are in full agreement with the Tribunal that the above question sought to be referred is not of such type, which could be directed to be referred to this Court for opinion.
14. In this view of the matter, we see no merit in the application filed by the department and hence dismiss it, with no order as to costs.
M.B.A./C-60/L???????????
Application dismissed.