I.T.AS. 4125/LB, 4126/LB, 4191/LB AND 4190/LB OF 1996 VS I.T.AS. 4125/LB, 4126/LB, 4191/LB AND 4190/LB OF 1996
1997 P T D (Trib.) 786
[Income-tax Appellate Tribunal Pakistan]
Before Nasim Sikandar, Judicial Member and Inam Ellahi Sheikh, Accountant Member
I.T.As. Nos. 4125/LB, 4126/LB, 4191/LB and 4190/LB of 1996, decided on 24/12/1996.
(a) Income Tax Ordinance (XXXI of 1979)---
----S.2(10)---Banking Companies Ordinance (LVII of 1962), S.5(b)-- "Banking company"---Definition---Interpretation and scope---Principles.
The definition of the 'banking company' as contained in section 2(10) of the Income Tax Ordinance read with clause (b) of section 5 of the Banking Companies Ordinance, is fairly wide. A company accepting deposits for investment or lending falls within its ambit if other indicators are also present. The second portion of the definition contains the test which in turn refers to the actual practice of a company by prescribing as to how and when these deposits are demanded and paid back. Thus, certain modes of re-payment or withdrawals are considered as relevant for consideration of banking business. Mere fact that a company is not effecting withdrawals by cheques, drafts or orders will not by itself take it outside the mischief of the definition clause. However, whether a company is engaged in banking is predominantly a question of fact to be answered in the light of the parameters given in the definition clause. The burden of such proof will ordinarily rest upon the Revenue. Treatment extended to company by various official agencies including State Bank of Pakistan does not, per se, mean that for income-tax purposes the same treatment must be extended to such a company. If a company is actually conducting the business of banking no legal bar exists to hold it so. However, burden of proof to establish this fact will be even heavier on the Revenue in cases where other official agencies treat the assessee as a non-banking company.
The definition of banking as contained in section 5(b) of the Banking Companies Ordinance, 1962 can be better understood if it is divided in the parts in which it has been framed. The first part of the definition "accepting, for the purpose of lending or investment, of deposits of money" gives the substance and real nature of this business. It is accepting monies from public and then lending it or investing it in the ventures considered suitable. An account-holder or a depositor with a bank is its creditor, which literally means "he trusts". It is the trust of the depositor that he will have his money back as and when needed or in accordance with the terms settled as to period which is the raison d'etre of the whole banking system. The later half of the definition is again divisible in two parts. The first "repayable on demand or otherwise" indicates that the money deposited is repayable as and when asked by the depositor or "otherwise". The use of word "or" between "demand" and "otherwise" points out a different situation if not opposed to it. This different situation is "when it becomes payable". It may also be read to mean "or any other eventuality" besides demand. The repayability can be predetermined by the parties as to the time, mode, notice or by other similar stipulations. The "payability" occasionally may also arise for unseen reasons or those beyond the control of the creditor and the debtor the banker and the customer. In old days when both bankers and customers were individuals, death of any of them made the amount immediately re-payable. This remains true as for natural creditors or depositors are concerned. Nowadays where many a times both the banker and the customer are legal or juridical persons their death can happen by liquidation or by similar other modes of extinction depending upon the nature of their birth, the creation of incorporation. The later part of the definition prescribes how the monies deposited can be withdrawn. Here again the use of word "or" after the three modes cheque, draft, order amply indicates that the Legislature did not intend to restrict the withdrawability to the three alternates. This intention is further evident from the use of word "otherwise" at the end. The word "or" is a disjunctive particle used to express an alternate or to give a choice of one among two or more things. The word "or" is to be used as a function word to indicate an alternative between different or unlike things". Word "otherwise" has been stated to mean "in a different manner; in another way or the other ways". Though the word "or" ordinarily is used in disjunctive sense the intention of the Legislature may be to read "or" and "and" one for the other. In the definition the word "or" both as an alternate or a conjunctive will not support the submission of the assessee on account of the use of word "otherwise" at the end of the clause. In the first part "or" indicates something different from demand, and in the last part a mode besides the three stated. Accepting the interpretation that monies are withdrawable only by cheque draft order would mean to ignore completely the two words "or otherwise" as used in the definition. This is not permitted by any cannon of interpretation of statutes. Redundancy to a letter of law cannot be readily presumed particularly when these do not lead to absurdity or confusion. Slicing away a part of the definition will rather be offensive to the whole clause. Words of fiscal statute should neither be stretched in favour of the State nor to be narrowed in favour of the taxpayer.
The definition of "banking" in the Banking Companies Ordinance, 1962 appears to have been borrowed from the Negotiable Instruments Act, 1881 (XXVI of 1881). Section 3(b) which defines a "banker" in almost similar words.
The scope of banking must remain confined to the words used in the statute. These words can neither be enlarged nor ignored or squeezed to be pushed into the supposed pattern of practice.
The issuance of cheques though is an important aspect of banking their non-issuance will not take any activity outside the definition if other attributes stated therein are fully answered. To hold otherwise, or to say where no cheque draft or order is used for withdrawals a company cannot be said to be engaged in banking will make almost half of the Banking Companies Ordinance, 1962 as ineffective and irrelevant.
Use of a cheque, draft or order is not invariably necessary to hold a company as a banking company.
The words "or otherwise" are not of general nature as opposed to earlier things mentioned, i.e. cheque, draft order. The word "otherwise" cannot be described as belonging to the genus of the earlier three words or modes of payability.
In every case of banking business, it would predominantly be a question of fact to be resolved before reaching a conclusion. Whether an assessee is engaged in banking as defined in the Banking Companies Ordinance read with section 2(10) of the Income Tax Ordinance will depend largely upon the facts in every case. An activity cannot be branded or held to be banking unless so determined as a matter of fact. If the facts of a case clearly point out and answer all the conditions given in the above definition clauses, it will hardly be of any difference if the State Bank or another regulatory body treats it otherwise. The thin lines if there are any, prescribed by the regulatory bodies are not inviolable nor are these permanent boundaries which must be respected by every other agency. The treatment extended to an assessee by one official agency may at best be one of the pleas or defences which may be put up. However, if a provision of law is clearly applicable to a certain situation, a particular treatment or recognition by one official agency cannot be a bar against the application of that provision of law. There is neither an estoppel against law nor the view point of one official agency can be taken as a promissory estoppel against all other organs of the State. The "finance investment" business is a recent development and any distinction made by the State Bank or Finance Division relates more to its fiscal policies rather than a category recognizable at law. The term "investment finance business" has not been defined anywhere, not even in the relevant notification under which the licence is granted to operate. The State Bank can conveniently allow a party to do banking without treating it as a bank. However, as long the above definition clause, as it stands, remains a part of the statute, a changed nomenclature will not alter the intention and desire of the Parliament.
Law sometimes lags behind practice. Yet its certainty, consistency and persistency are vital for any legal system to exit. No fault lies with the words of law used or employed to express a situation which will invariably be the comprehension of drafters and legislators at the particular time in history. The fault, if any, lies with those who, in spite of feeling winds of change are slow in taking alongwith words of law to the changing directions.
Haideri International Finance Limited v. The State Bank 1986 CLC 2197; Farooq Ahmed v. The Federation of Pakistan 1988 CLC 1731; Mahaluxmi Bank Limited v. Registrar of Companies AIR 1961 Cal. 666; Black's Law Dictionary, 5th Edn., p. 987; Salehon and others v. The State PLD 1969 SC 267 and PLD 1989 SC 232 ref.
I.T.A. No. 1828/LB of 1995; State Saving Bank of Victoria v. Permewan Wright Company Ltd. (1915) 19 CLR 457; Woods v. Martins Bank Ltd. (1959) 1 QB 55; Bombay v. Bank of Montreal 1918 AC 626; Paget's Law of Banking, 9th Edn.; Thompson Dictionary of Banking; Halsbury's Laws of England, Vol. 2, Part 1; United Deminions Trust Ltd. v. Korkwood (1966) 2 QB 431 and Bank of Chettinad Limited of Colombo v. CIT, Colombo (1948) AC 378 distinguished.
Per Inam Ellahi, Accounting Member.---
The Assessing Officer should look at the status assigned to similar other companies by the Tax Department. If the Assessing Officer wishes to assign a different status to the assessee as against that assigned to the other assessees who have been recognised to be non-banking institutions although conducting similar business, the Assessing Officer should record his reasons for such discrimination after confronting the assessee.
(b) Interpretation of statutes---
----Redundancy---Permissibility---Redundancy to a letter of law cannot be readily presumed particularly when the words do not lead to an absurdity or confusion.
(c) Interpretation of statutes---
---- Definition clause---Significance---Slicing away a past of the definition will rather be offensive to the whole clause.
(d) Interpretation of statutes---
---- Taxing statute---Words of such statute can neither be stretched in favour of the State nor to be narrowed in favour of the taxpayer.
PLD 1989 SC 232 ref.
(e) Ejusdem generis, rule of---
----Meaning.
Ejusdem generis, literally means, of the same kind, class or nature. The ejusdem generis rules, in construction of laws, wills or other instruments is that where general words follow an enumeration of persons or thing by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but to be held as applying only to persons or things of the same general kind or class as those specifically mentioned. This rule does not necessarily require that general provision be limited in its scope to the identical things mentioned.
Black's Law Dictionary, 5th Edn., p. 464 ref.
(f) Interpretation of statutes---
---- Definition clause---Changed nomenclature will not alter the intention and desire of the Parliament.
(g) Precedent---
---- Order to a Division Bench of Income Tax Appellate Tribunal is though binding upon another Division Bench of the said Tribunal, yet when it is placed with an express ratio of a judgment of High Court the later has a binding force even if it is a Single Bench judgment against a larger Bench order of the Tribunal.
(h) Income Tax Appellate Tribunal Rules, 1981---
----R.24--Second appeal---Fresh plea or fresh evidence cannot be allowed to be raised or produced in second appeal.
(i) Income Tax Ordinance (XXXI of 1979)---
----S. 2(10)---Banking Companies Ordinance (LVII of 1962), S.5(b)-- Banking company---Mere denial of being a banking company by the assessee was enough to put the Revenue on probing tract---Maxim "ei incumbit probatio qui dicit nou qui negat: Burden of proving a fact rests on the party who substantially asserts the affirmative of the issue and not upon the party who denies the same.
Allah Din v. Habib PLD 1982 SC 465 ref.
(j) Income-tar
--Remand---Addition---Where no prejudice was caused to the assessee with the order of remand, Income Tax Tribunal declined interference.
(k) Income Tax Ordinance (XXXI of 1979)---
----S.24(l)---Deduction---Disallowance---Domain of Assessing Officer pointed out.,
Sohail Hussain, F.C.A. for Appellant (in I.T.As..Nos. 4125/LB and 4126/LB of 1996).
Shahbaz Butt, L.A. and Mrs. Sabiha Mujahid, D.R. for Respondent (in I.T.As. Nos. 4125/LB and 4126/LB of 1996).
Shahbaz Butt, L.A. and Mrs. Sabiha Mujahid, D.R. for Appellant (in I.I.As. Nos. 4191/LB and 4190/LB of 1996).
Sohail Hussain, F.C.A. for Respondent (in I.T.As. Nos. 4191/LB and 4190/LB of 1996).
Date of hearing: 4th December, 1996.
ORDER
NASIM SIKANDAR (JUDICIAL MEMBER).---The principal point of controversy between the parties in these cross-appeals for the years 1993 94 and 1994-95 is the status of the assessee which claimed itself to be a finance investment company while the Revenue treated it as a banking company. The difference in the adopted positions is due to the reason that in the year 1993-94 a banking company was liable to be taxed at @ 64% and in the year 1994-95 at a rate of 62 % as against tax rates of 42 % and 39 applied to Public Limited Companies.
2. The assessee is a company limited by shares incorporated at Lahore on 24-5-1990. The object clauses in the memorandum of association includes, (iii) E(i) titled as General Clause 5 as Bank Accounts and clause 6 as Borrowing. These clauses respectively declared that the company will undertake, inter alia, investment finance business as authorised by the Controller of Capital issues except banking business as defined in Banking Companies Ordinance, 1962 (LVII of 1962) and the Insurance Act, 1938 (IV of 1938); it will neither issue cheque book nor will accept deposits and will not act as a banking company in relation to its dealing with other banks or while borrowing monies. Clause 29 of the Memorandum of Association again emphasised that none of the objects stated earlier will empower the 7pa"Y to engage directly or indirectly in banking or insurance business. Later on 26th November, 1991 the assessee was registered and granted licence to operate as an "Investment Finance Company" in terms of S.R.O. No. 585(1)/87, dated 13-6-1987 issued under subsections (4) and (4-A) of section 3 of the Capital Issue (Continuance of Control) Act of 1947) (XXIX of 1947) since repealed by Finance Act, 1995).
3. The assessee-company started its operations on the 1st of July, 1992 and for the assessment year 1993-94 closed its accounts on 31-12-1992. A loss of Rs.2,57,55,766 was returned to the Revenue from the business conducted in the first six months. However, an assessment was framed at taxable income of Rs.1,60,12,072. Next year i.e. 1994-95 as against an income of Rs.1,62,76,835 an assessment was framed at total income of Rs.3,50,89,098. In the process besides making a number of additions towards income the assessing officer assigned the assessee the status of a Banking Company instead of an Investment Finance Company as claimed. Before the assessing officer it was pleaded:
"(1) Government of Pakistan has granted permission to us as an Investment Finance Company and not as a Bank as defined in Banking Companies Ordinance.
(2) We have been granted licence to commence business by the Government of Pakistan, under S.R.O. 585(1)/87 and Companies Ordinance, 1984 and not by the State Bank of Pakistan as required for establishment of a Bank.
(3) The Applicable rules and regulations are embodied in Notification published vide S.R.O. 585(1)/87 and Companies Ordinance, 1984 and Banking Companies Ordinance, 1962 is not applicable to us, save to the extent that the Government of Pakistan is imposing its control through the State Bank of Pakistan.
(4)The company is classified as non-banking financial institution by the State Bank of Pakistan. This category includes Moderabas, Leasing Companies and Investment Finance Companies".
4. However, the above submissions were rejected for the following reasons:---
(1) The definition of Banking as given in section 5(b) of the Banking Companies Ordinance, refers to accepting and lending money, which should be repayable on demand or otherwise and withdrawals by cheques, drafts, orders or otherwise. The assessee is admittedly engaged in lending and borrowing of money for which a definite procedure has been prescribed by the assessee itself i.e. issue of deposit slips, and repayment on demand or on date of maturity as agreed by both the parties. The issuance of cheque and draft is not the only way for dealing in the lending and borrowing of money. Encyclopaedia Britanica, Volume I defines 'Banks as an institution that deals in money and its substitutes and provides other financial services. Banks accept deposits and make loans and derive a profit from the difference in the interest rates paint and charged, respectively.
The perusal of sub-clause (ii) of clause III of the Memorandum of Association of the Companies reveals that it was established to trade in commercial papers issued by its clients, Government's securities, promissory notes, banks acceptance and other money market instruments, acting either as a broker or acting on its own account.
(2) The above facts prove that the assessee is engaged in the business of banking. The assessee is a body corporate thus covered in the definition of banking company vide section 2(10) of the Income Tax Ordinance, 1979 read with section 5(b) of the Banking Companies Ordinance.
In view of the above facts the assessee's claim is rejected and tax rates are applied 1 as prescribed for a Banking company. This treatment has also been given in other parallel cases e.g. case of M/s. Atlas Bot Investment Bank Limited NTN No. 07-11-1729890."
5. The assessee succeeded in first appeal on the basis of a decision recorded by a Division Bench of this Tribunal on 2-5-1996 in I.T.A. No.1828/LB of 1995 re: M/s, Atlas Bot Investment Bank Limited, the parallel case referred to and relied upon by the assessing officer. In that case the assessee also an investment bank was held to be an Investment Finance Company, and therefore, directed to be subjected to the rates applicable to Public Limited Companies. Before the first appellate authority the present assessee also placed reliance on a C.B.R. Notification, dated 9-8-1987 whereby certain financial institutions namely B.E.L., P.I.C.I.C. and N.D.F.C. were described as non-banking institutions for the purpose of tax. Learned first appellate authority, as noted above, allowed the plea against assigning of status but confirmed the profit and loss disallowances in both of the years. The additions under section 24(1) of the Income Tax Ordinance at Rs.5,34,668 and Rs.1,12,10,100 respectively in the two years were remanded for fresh appraisal. Also in the year 1994-95 the issues of adjustment of loss against capital gains and allowance of incidental expenses were set aside for fresh order after examination of genuineness of the claim under these heads.
6. The assessee is aggrieved of the disallowances in profit and loss account in the two years before us and their confirmation by the first appellate authority. The Revenue on the other hand alleges that acceptance of status as a non-banking company by the first appellate authority was totally illegal. Also challenges the setting aside of additions under section 24(1) as well as the issue of adjustment of loss against capital gain and disallowance for incidental expenses.
7. Parties have been heard. Section 2(10) of the income Tax Ordinance states that a "banking company has the same meaning as in the Banking Companies Ordinance, 1962 (LVII of 1962), and includes any body corporate formed by, or under, any law for the time being in force which transacts the business of banking in Pakistan". In turn sections 5(c) of the Banking Companies Ordinance describes a banking company as "any company which transacts the business of banking in Pakistan". An explanation to this sub-clause excludes a company from the definition which is engaged in manufacture of goods or trading and accepts deposits merely to finance its business. The term "banking" is defined in sub-clause (b) of section 5 of that Ordinance. It says "banking" means the accepting, for the purpose of lending or investment, of deposits of money from the public repayable on demand or otherwise, and withdrawable by cheque, draft order or otherwise". The moot point which emerges, therefore, is whether the assessee is engaged in banking business as defined in section 5(b) of the Banking Companies Ordinance, 1962.
8. Learned D.R. submits that the- assessee is admittedly accepting deposits for the purpose of lending them further or making investments. These deposits which in fact are borrowing are returned to investors per terms as to the period or even before expiry of such period. Therefore, the assessee is engaged in banking business as defined by law notwithstanding the fact that it was not being treated so by various official agencies in Pakistan including State Bank. He claims that the definition given in the Income Tax Ordinance as section 2(10) is wider in scope and also includes in its ambit the companies which may otherwise not be treated as banks by the official authorities, the Finance Division or even the State Bank of Pakistan. Also contends that admitted activity of the assessee in accepting deposits for investment or further lending is sufficient to make its business as that of banking and that the word "otherwise" as used twice in the definition clause has the effect of enlarging the scope to the kinds of receipts and discharge slips actually being used by the assessee company. It is further stated that neither the Income Tax Ordinance nor the Banking Companies Ordinance indicate that a company must engage itself in all kinds of other activities commonly known as banking. In this regard he refers to a host of engagements which a banking company may engage in under section 7 of the Banking Companies Ordinance. He challenges the claim of the assessee that banking means the doing of all activities commonly known as banking and not mere acceptance of deposits for further lending. Further, argues that substance of the dealing has to be seen instead of looking at the contents of documents used as discharged slip, deposit form or other documents of similar nature. These documents according to him only relate to procedure and do not derogate from the basic and real function performed by the assessee company. He forcefully claims that by the use of word, "otherwise" at the end of the aforesaid definition contained in the Banking Companies Ordinance the Legislature has widened the scope to withdrawals even on oral requests. It is again emphasised that the Revenue is not concerned with the nature of the legislation regulating functions of a company nor the forms used by it. According to him it is equally indifferent as to which official agency monitors the conduct or activities of a company. Learned Legal Advisor points out that the word "instruction" as used in the deposit form the assessee company fully answers the meaning and connotation of the word "order" as used in sub-clause (b) of section 5 of the Banking Companies Ordinance, 1962. To pay on "order" as stipulated in the definition clause and on "instruction" as contained the deposit slip are described as one and the same thing. Mr. Shehbaz Butt also cites an instance from the record of the assessee where payment was made before the settled maturity period to claim the accounts maintained by the assessee company do not in any way differ from those maintained by an average banker for its customers.
9. Learned Legal Advisor in support of his contentions places reliance on the ratio of three cases one decided by Lahore and two by the Karachi High Court. In 1986 CLC 2197 re: Haideri International Finance Limited v. The State Bank a declaration in terms of section 43-B of the Banking Companies Ordinance was made to the effect that the petitioner company, was transacting business of banking in contravention of section 27(1) of that Ordinance. The Company challenged the validity of the declaration as well as some of the notices issued by the State Bank through a Writ Petition contending that its activities were covered by explanation to sub-clause (b) of section 5 of Banking Companies Ordinance. On facts it was stated that the petitioner did not issue any cheque or similar other document or instrument mentioned in sub-clause (b) of section 5(b). Therefore, no banking business was conducted as alleged in the impugned declaration and notices issued by the State Bank of Pakistan. Learned Judge, Muhammad Afzal Lone rejected the contention. In para. 25 at page 2209 of the report he observed:---
"The definition of the term 'banking' given in section 5(b) (ibid) is fairly wide. The acceptance of deposits for the purposes of investing or lending but repayable on demand or otherwise, falls within the mischief of this definition. The repayment magi be made through any mode and not necessarily by cheque or draft as usually practised in the recognised banks".
10. In the next para. 26 at page 2210 of the report it was observed:---
"It is correct that in our present day system of banking the transactions of payments and withdrawals of money are so largely affected by cheques that unless there is tree handling of cheques, no banking can be said to have been carried on. But according to the criterion laid down in the definition clause, user of the cheques, is not essential to constitute banking".
11. Learned Judge also cited with favour the remarks of Issacs, J. of High Court of Australia in re: Commissioner of the State Saving Bank of Victoria v. Permewan Wright Company Limited (1915) 19 CLR 457:---
"The essential characteristics of the business banking... may be described as the collection of money by receiving deposits on loan, repayable when and as expressly or impliedly agreed upon, and the utilisation of the money so collected by lending it again in such sums as are required. "
12. Lastly in para. 28 at page 221.1 two cases from English jurisdiction were also cited. In the first case (1959) 1 Q.B. 55 re: Woods v. Martins Bank Limited, Solman, J. examining the scope of banking business held:
"The limits of a banker's business cannot be laid down as a matter of law. The nature of such business must in each case be a matter of fact and, accordingly cannot be treated as if it were a matter of pure law.
In the second case Lord Finlay, L.C. was quoted in re: Bombay v. Bank of Montreal 1918 A.C. 626; he spoke, 'The nature of such a business must in each case be a matter of fact and accordingly cannot be treated as if it were a matter of pure law'."
13. In the next case relied upon by the Legal Advisor, 1988 CLC 1438 re: Overseas Pak Credit and Investment Corporation (Pvt.) Limited v. Governor State Bank of Pakistan the word "otherwise" was treated equivalent to "any manner". A Division Bench of the Karachi High Court in that case was called upon to rule the validity of a declaration made by the State Bank under section 43-B of the Banking Companies Ordinance. The reason for declaration being that the company was engaged in illegal banking business in violation of the 'provisions of section 27(1) of the banking companies Ordinance. In the Constitutional petition the company alleged that its activities were covered by explanation to section 5(c) and, therefore, the declaration made by the respondent was illegal. Saleem Akhtar, J. rejected the petition in limine holding that "The manner and the arrangement under which money is collected from public and invested by the petitioner falls within the ambit of "banking" and is hit by section 27 of the Ordinance". At page 1441 of the report the learned Judge remarked:
"The word 'Banking' as defined in section 5(b) contemplates a business where money or deposits are accepted from public for investment or lending them and further that such amount received from public is repayable on demand or by any other mode and can be withdrawn by cheque, draft or in any other manner."
14. The issue in the third case relied upon by the Revenue, re: Farooq Ahmed v. The Federation of Pakistan, 1988 CLC 1731 was slightly different. The petitioner was served with a show-cause notice by the State Bank that it was engaged in banking business in contravention of section 27-A and, therefore, why it should not be prosecuted. Section 27-A of that Ordinance places restrictions on advertising for deposes. In reply the assessee pleaded for an excuse to have invited investment through newspapers. It was also alleged that since no investment was received in response to the advertisements, the penal provisions of the Banking Companies Ordinance were not attracted. The State Bank was not satisfied. On initiation of prosecution against him, the petitioner challenged section 27-A of the said Ordinance on the ground that provisions contained therein were illegal ultra vires and violative of the fundamental rights relating to trade and business as guaranteed by the constitution. Before the Court it was pleaded that no effect to the provisions of section 27-A could be given because these nullified the right of the petitioner to invite capital for the purpose of financing his business in terms of Explanation to section 5(c) and was also derogatory to the fundamental rights conferred by the Constitution. The submission was rejected. The Court while examining the plea also applied the rule of ejusdem generis to the general words used at the end of the provisions of section 27-A. It provided that no company except a banking company, "shall invite deposits of money from the public through advertisement in the public media or by postal circulars, handbills, displays in public places or by any other means". Learned counsel for the petitioner contended that the expression "or by any other means" conveyed a meaning that a person could not invite deposits of money from public in any manner whatsoever. His Lordships disagreed and observed: "It is well-recognised principle of interpretation of statutes that if specific words are followed by general words, then the meaning of the general words will be understood, comprise and include the same kind of meaning which is given to the preceding expression unless a contrary intention is expressed. Therefore, the words "any other means" will be taken to mean only such modes which are in the nature of public advertisement or publicity and will include advertisement through television, radio, cinema slides, neon signboards, boarding at public places, prints and slogans written on buses, vehicles, trains pubic places and public announcement etc".
15. Learned A.R. for the assessee on his turn submits that mere acceptance of deposits does not make a company a banking company and secondly that return of deposits or their withdrawal in case of the assessee company does not happen by one or more of the modes given in the definition clause, i.e. cheque, draft or order. According to the learned A.R. the last word used in the definition clause viz. "otherwise" should be seen in the light of the rule of ejusdem generis. This rule lays down that general words used in a statute or a statutory instruments must take their colour from the preceding specific words. Therefore, according to learned A.R. a person can be said to be engaged in banking only if the amounts accepted as deposits are repayable by cheques, drafts or order. Since none of these qualifications is present in the case of the assessee it cannot be held to be' a banking company. Explaining the practice of the assessee he states that the assessee company issues a deposit slip and at the time of withdrawal the depositor signs the receipt printed on its reverse. No negotiable instrument being involved, contends the learned A.R. no banking was possible. Further, states that "banking" and "investment business" are totally different as these are regulated by different legislations though at times and for specific purposes, the authorised agency to monitor banking activities, the State Bank of Pakistan also oversees the activities of investment companies and other financial institutions. To do banking, learned A.R. continues a company has to obtain a special permission for this purpose which is given subject to a number of conditions as to minimum paid-up capital, reserves, funds, dividends, maintenance of records, appointment of directors, loans and advances etc. The assesee on the other hand is using the word "bank" as part of its name under a specific licence issued under proviso to section 8 of the Banking Companies Ordinance. This permission according to the learned A.R. was again given subject to express condition that no banking business shall be carried out.
16. Reverting to his main defence, learned A.R. says that assessee company does not issue a cheque book nor it collects them from other banks for or on behalf of its customers or depositors as it is not a member of the clearing house. Therefore, for this fact alone the assessee cannot be treated as a banking company. In support of his submission that mere acceptance of deposits for lending or investment does not amount to "banking" learned A.R. has made reference to some eminent writers on the subject. The First Treatise referred is Paget's Law of Banking (9th Edition). At page 5 of this book the learned author after noting that the term banking had not been defined anywhere refers to the judgment of the Court of appeal in the United Dominions Trust case where Lord Denning M.R. approved the three characteristics of Banking as stated in the-6th Edition of Paget, i.e. the conduct of current accounts, the payment of cheques drawn on the bankers, and collection of cheques for the customers. Next is the Thompson Dictionary of Banking which repeats the tests given in Paget's Law of Banking namely, taking of deposits, the taking of current account, the payments of cheques and the collection of cheques. Halsbury's Laws of England, Vol. 2, Part 1 has also been referred wherein a "banker" is defined as, "an individual, partnership or corporation whose sole or predominating business is banking, that is the receipt of money on current and deposit account and the payment of cheques drawn and by the collection of cheques paid in by a customer".
17. Learned A.R. for the assessee places a lot of stress on a reported decision from English jurisdiction re: United Dominions Trust Limited v. Kirkwood (1966) 2 Q.B. 431. In fact this case finds repeated mention in all the aforesaid writings of the distinguished authors on banking. In this case per curium, their Lordships of the Court of appeal in England held that:
"Usual characteristics of banking at the present time are---
(i) the acceptance of money from and collection of cheques for,customers and the placing of them to the customers credit;
(ii) the honouring of cheque on orders drawn on the bank by their customers when presented for payment and the debiting of the customers accordingly;
(iii) the keeping of some form of current or running accounts for the entries of customers credits and debits."
The precise question before their Lordships was whether the appellant was a money lender or a banker. If it was a banker it could succeed in recovering the dishonoured bills of exchange but if it was held to be a money lender it could recover nothing. Learned A.R. has particularly referred to certain parts from the judgment recorded by Lord Denning. At page 446 of the report the learned Judge says:
"The march of time has taken us far beyond those cases of 50 years ago. Money is now paid and received by cheque to such an extent that no person can be considered a banker unless he handles cheques as freely as cash. A customer nowadays who wishes to pay money into his bank takes with him his cash and the cheques, crossed and uncrossed, payable to him. Whereas in the old days it was a characteristic of a banker that he should receive money for deposit, it is nowadays a characteristic that he should receive cheques for collection on behalf of his customer. How otherwise is the customer to pay his money into the bank? It is the only practicable means, particularly in the case of crossed cheques. Next, when a customer wishes to withdraw the money which he has deposited or to pay his creditors with it, he does it in most cases by drawing a cheque or the bank. Occasionally he does it by a draft on the bank or a written order. Whereas in the old days he might withdraw it on production of a passbook and n6 cheque, it is nowadays, a characteristic ofbank that the customer should be able to withdraw it by cheque, draft or order. This view has gradually gained acceptance. "
18, On the next page of the report viz. 447 his Lordship remarks:
"There are, therefore, two characteristics usually found in bankers today: (i) They accept money and collect cheques for their customers and place them to their credit; (ii) They honour cheques or orders drawn on them by their customers when presented for payment and debit their customers accordingly. These two characteristics carry with them also a third, namely: (iii) They keep current accounts, or something of that nature, in their books in which the credits and debits are entered. "
19. In relation to the appellant's practice of accepting short term deposits and payment of interest the celebrated Judge observed that bankers may occasionally accept such kinds of deposits which in fact were short term investments but this fact alone was not sufficient to make them banker. It was further noted that the appellant never collected a cheque forits customers. Harman, L.J. while delivering his judgment referred to another famous case re: Bank of Chettinad Limited of Colombo v. CIT Colombo (1948) A.C. 378 and noted that "banking" was defined in the relevant Legislature considered in that case which was as under:
"A company which carries on as its principal business the accepting of deposits of money on current account or otherwise subject to withdrawal by cheque draft or order. "
20. Diplock, L.J. adding his separate note observed:---
"What makes a person a banker is not what he does with the money of which he obtains the use, for instance, by lending it at interest (as mentioned by Holmes, L.J. and Issacs, J.) by investing it, by discounting bills, etc., but the terms upon which he obtains from other persons, his banking customers, loans of money which h8 can use as he thinks fit. What I think is common to all modern definitions and essential to the carrying on of the business of banking is that the banker should accept from his customers, loans of money on 'deposit' that is to say, loans for an indefinite period upon running account, repayable as to the whole or any part thereof upon demand by the customer either without notice or upon an agreed period of notice. "
The appellant, however, succeeded only on the basis of its "reputation" of being a banking company. Their Lordships, therefore, wared that any other person desirous of being taken as a banker must obtain necessary licence from the prescribed authority.
21. Lastly, learned A.R. points out that the definition of banking given in section 5(1Y(b) of the (Indian) Banking Companies Ordinance, 1949 is framed exactly the same manner in which it occurs in the Banking Companies Ordinance of 1962. It was considered by a Division Bench of the Calcutta-High Court in a case AIR 1961 Cal. 666 re: Mahaluxmi Bank Limited v. Registrar of Companies. H.K. Bose, J. looked at the definition clause and found the word "or otherwise" to carry the meaning "by like' methods". Page 669-of-the report is referred wherein it was remarked:
"Now this definition makes it clear that receiving money on deposit from customers and honouring their cheques is the essential characteristic of banking. The money deposited by the customers can be utilised by the banker for lending it or for investing it but the bank also undertakes the obligation to repay the deposit on demand or otherwise and the mode by which the withdrawal of the deposit can be effected is by the issue of cheques, drafts, orders or otherwise, that is by like methods".
22. The definition of banking as contained in section 5(b) of the Banking Companies Ordinance, 1962 can be better understood if it is divided in the parts in which it has been framed. The first part of the definition "accepting, for the purpose of lending or investment, of deposits of money" gives the substance and real nature of this business. It is accepting monies from public and then lending it or investing it in the ventures considered suitable. An account-holder or a depositor with a bank is its creditor, which literally means "he trusts". It is the trust of the depositor that he will have his money back as and when needed or in accordance with the terms settled as to period which is the raison d'etre of the whole banking system. The later half of the definition is again divisible in two parts. The first "repayable on demand or otherwise" indicates that the money deposited is repayable as and when asked by the depositor or "otherwise". The use of word "or" between "demand" and "otherwise" points out a different situation if not opposed to it. This different situation is "when it becomes payable". It may also be read to mean "or any other eventuality" besides demand. The repayability can be predetermined by the parties as to the time, mode notice or by other similar stipulations. The "payability" occasionally may also arise for unseen reasons or those beyond the control of the creditor and the debtor the banker and the customer. In old days when both bankers and customers were individuals, death of any of them made the amount immediately re-payable. This remains true as for natural creditors or depositors are concerned. Nowadays where many a times both the banker and the customer are legal or juridical persons their death can happen by liquidation or by similar other modes of extinction depending upon the nature of their birth, the creation of incorporation. The later part of the definition prescribes how the monies deposited can be withdrawn. Here again the use of word "or" after the three modes cheque, draft, order amply indicates that the Legislature did not intend to restrict the withdrawability to the three alternates. This intention is further evident from the use of word "otherwise" at the end. According to Black's Law Dictionary, 5th Edition, page 987 "the word "or" is a disjunctive particle used to express an alternate or to give a choice of one among two or more things. The word "or" is to be used as a function word to indicate an alternative between different or unlike things". In the same book at page 992 the word "otherwise" has been stated to mean "in a different manner; in another way or the other ways". The Supreme Court in PLD 1969 SC 267 re: Salehon and others v. The State found that though the word "or" ordinarily is used in disjunctive sense the intention of the Legislature may be to read "or" and "and" one for the other. In the definition before us, however, the word "or" both as an alternate or a conjunctive will not support the submission of tile assessee on account of the use of word "otherwise" at the end of the clause. In the first part "or" indicates something different from demand, and in the last part a mode besides the three stated. Accepting the interpretation of the assessee that monies are withdrawable only by cheque draft order would mean to ignore completely the two words "or otherwise" as used in the definition. This is not permitted by any cannon of interpretation of statutes. Redundancy to a letter of law cannot be readily presumed particularly when these do not lead to absurdity or confusion. Slicing away a part of the definition will rather be offensive to the whole clause. The Supreme Court in PLD 1989 SC 232 has settled the principle as for taxing statutes are concerned. It is that words of a statute should neither be stretched in favour of the State nor to be narrowed in favour of the tax payer.
23. The definition of "banking" in the Banking Companies Ordinance, 1962 appears to have been borrowed from the Negotiable Instruments Act, 1881 (XXVI of 1881), section 3(b) which defines a "banker" in almost similar words. The difficulty in the present case is that the assessee wishes to see the definition interpreted purely in the perspective of the actual practice being followed by such institutions world over. Its reliance on the cases from the above English and Indian jurisdictions amply expresses this desire. However, these cases are clearly distinguishable. In Paget's Law of Banking (supra) it has been observed that "banking" has not been defined anywhere. Therefore, the three supposed ingredients have been picked up to define it. These ingredients in fact are the practices or most prominent ways of doing the business- of banking. These indicators have emanated from the practice of bankers rather than any law or legislative instrument. The situation in re: Dominions Trust Limited (supra) is exactly the same where their Lordships of Court of appeal repeatedly refer to modern day banking practice rather than any letter of law. These practices or characteristics, as their Lordships would prefer to call them, them self speak of the changes went around since the inception of the institution. In the same judgment Harman, L.J. while delivering the order relied upon another case re: Bank of Chettinad Limited of Colombo (supra) which supports the submission of the Revenue before us that the words of statute in that case were different from those in consideration before us. The definition of banking company before their Lordships in that case as reproduced in para.19 (ante) appears somewhat similar to the one before us. However, in that definition the last two words "or otherwise" as used in Banking Companies Ordinance, 1962 are missing this is the difference and as said above, the basis of the contentions of the learned A.R. for the assessee; to look at banking either from pure practical aspect or to accept the definition without the last words used namely, "or otherwise". We will refuse to oblige for the simple reason that here we have a delimitation of a business which needs to be seen through the letters of law the windows opened to look at banking rather than looking at the words of the statute from behind a bank counter. Learned A.R. for the assessee may well be right in explaining the common aspects of modern banking. However, his contentions cannot be granted because our consideration of the scope of banking must remain confined to the words used in the statute. These words can neither be enlarged nor ignored or squeezed to be pushed into the supposed pattern of practice. His Lordship M. Afzal Lone, J. in re: Haideri International Finance Limited (supra) has pointed out the difference as noted above in para. 10 ante. It is that according to the definition clause in consideration before us the issuance of cheque is not essential to constitute banking notwithstanding the practice of modern banking. The issuance of cheques though is an important aspect of banking their non-issuance will not take any activity outside the definition if other attributes stated therein are fully answered: To hold otherwise, or to say where no cheque draft or order is used for withdrawals a company cannot be said to be engaged in banking will make almost half of the Banking Companies Ordinance, 1962 as ineffective and irrelevant. As found by their Lordships of the Karachi and Lahore High Courts in the aforesaid cases while repelling the contentions of companies charged with engagement in banking use of a cheque, draft or order is not invariably necessary to hold a company as a banking company.In fact this was one of the most important submissions for defence in these three cases. The petitioners failed as the learned Judges felt that withdrawal by cheque, draft or' order was not necessary to invoke the above regulatory powers of the State Bank of Pakistan.
24. Learned A.R. for the assessee's an alternate seeks to invoke the rule of ejusdem generis while interpreting the definition clause, particularly, the last two words. Ejusdem generis, according to Black's Law Dictionary, 5th Edition page 464 literally means, of the same kind, class or nature. "The ejusdem generis rules, in construction of laws, wills or other instruments is that where general words follow an enumeration of persons or thing by words of a particular and specific meaning, such general words are not to be construedin their widest extent, but to be held as applying only to persons orthings of the same general kind or class as those specifically mentioned". This rule according to the Dictionary does not necessarily require that general provision be limited in its scope to the identical things mentioned. In the facts before us the rule is not attracted as the words "or otherwise" are not of general nature as opposed to earlier things mentioned, i.e. cheque, draft order. Bearing in mind the earlier stated meaning and explanation in Black's Law Dictionary the word "otherwise" cannot be described as belonging to the genre of the earlier three words or modes of payability. Therefore, we will not allow the argument. All the more so because in at least two cases relied upon by the Revenue namely, re: Farooq Ahmed (supra) and M/s Haideri International Finance Limited (supra) the Karachi and Lahore High Courts have interpreted these two words in different manner. In the first case at page 1735 of the report the last two words of the definition clause have been treated equivalent to "any other manner". The relevant portion reads, "According to section 5(b) acceptance of deposits of money from public for lending or investment purposes which is made repayable to the creditor on demand or any other manner and can be withdrawn by cheque, draft order or in any other manner amounts to transacting banking business". In the second case, re: Haideri International Finance Limited Para. 25 at page 2209 opens with these words. "The definition of the term "Banking" given in section 5(b) (ibid) is fairly wide. The acceptance of deposits for the purposes of investing or lending but repayable on demand or otherwise, falls within the mischief of this definition. The repayment may be made through any mode and not necessarily by cheque or draft as usually practised in the recognized banks".
25. The rule, if applied, will still enlarge the scope of modes of re payability to "like methods" as interpreted by H.K. Bose, J. in re: Mahalukshmy Bank (supra) a case relied upon by the assessee and to other manners as found by the Lahore and Karachi High Courts in the above cases. A like method or other manner in such case keeping in view the first cited three modes would mean any kind of document acceptable to or agreed upon between the parties evidencing deposit and when presented or surrendered will legally discharge the banker of its liability whether or not such discharge is further solemnized by express words or an acknowledgement of the depositors. The result would be that if moneys deposited or entrusted are also withdrawable, besides the three modes, by an' instrument of a kind, which can be treated as an evidence of valid discharge the activity conducted would be banking when co-related with other requirements of the definition. Therefore, in every case of banking business, as pointed out by their Lordships in re: Woods v. Martins Bank (supra) and re: Bombay v. Bank of Montreal (supra) it would predominantly be a question of fact to be resolved before reaching a conclusion. Whether an assessee is engaged in banking as defined in the Banking Companies Ordinance read with section 2(10) of the Income Tax Ordinance will depend largely upon the facts in every case. An activity cannot, be branded or held to be banking unless so determined as a matter of fact. If the facts of a case clearly point out and answer all the conditions given in the above definition clauses, it will hardly be of any difference if the State Bank or another regulatory body treats it otherwise. The thin lines, if there are any, prescribed by the regulatory bodies are not inviolable nor are these permanent boundaries which must be respected by every other agency. The treatment extended to an assessee by one official agency may at best be one of the pleas or defences which may be put up. However, if a provision of law is clearly applicable to a certain situation, a particular treatment or recognition by one official agency cannot be a bar against the application of that provision of law. There is neither an estoppel against law nor the view point of one official agency can be taken as a promissory estoppel against all other organs of the State. It may further be noted that the alleged "finance investment" business is a recent development and any distinction made by the State Bank or Finance Division relates more to its fiscal policies rather than a category recognizable at law. The term "investment finance business" has not been defined anywhere, not even in the said S.R.O. No. 585 of July, 1987 under which the assessee was granted a licence to operate. The State Bank can conveniently allow a party to do banking without treating it as a bank. However, as long the above definition clause, as it stands, remains a part of the statute, a changed nomenclature will not alter the intention and desire of the Parliament Law, it is perhaps rightly said, sometimes lags behind practice. Yet its certainty, consistency and persistency are vital for any legal system to exit. No fault lies with the words of law used or employed to express a situation which will incurably be the comprehension of drafters and legislators at the particular time in history. The fault, if any, lies with those who, in spite of feeling winds of change are slow in taking alongwith words of law to the changing directions.
26. In the above case relied upon by the assessee re: D.C.I.T. v. Atlos Bot Investment Company Limited (supra) a Division Bench of this Tribunal rejected the departmental plea against the first appellate order whereby the assessee was held to be an investment company and not a banking company as treated by the assessing officer. Mr. Iftikhar Ahmad Bajwa, learned Accountant Member while speaking for the Division Bench upheld the first appellate order for two reasons; firstly that though first part of the requirement namely acceptance of money for lending or investment was present in the case of that assessee the second leg, withdrawability by cheque, draft, order was not available. Secondly, that for such reason similar institutions were not being treated as banking companies by various official agencies.
27. As noted earlier these reasons are now being advanced at the bar for the assessee. However, the submission based upon these reasons cannot be granted. It appears .that the attention of the learned Division Bench was not invited to the aforesaid three cases decided by the Lahore and Karachi High Courts. Particularly the one re: Haideri International Finance Limited (supra). At a stage we considered reference of the issue for constitution of a larger Bench but refrained on account of the fact that the judgments of the High Courts are binding upon this Tribunal. Even a larger Bench would not be of any difference as far the ratio settled in the above cases is concerned. We are aware of the general principle that order of a Division Bench is, binding upon another Bench of equal strength yet, when it is placed with an express ratio of a judgment of High Court, the later has a binding force even if it is a Single Bench judgment against a larger Bench order of this Tribunal.
28. The assessing officer, in this case does not appear to have strained much on the mode of withdrawals. Learned Legal Advisor has attempted to fill in lacunae at this stage by producing and explaining the contents of deposits slips being issued by the assessee. He has painted the document as a regular negotiable instrument amounting to an "order" as used in the definition clause. However, we cannot allow the introduction of a fresh plea of fact at this stage of second appeal nor the introduction of fresh evidence in support thereof. This is against rule 24 of the I.T.A.T. Rules 1981. we have also noted that the assessing officer in this refusal to allow the plea for an exemption has not considered this important aspect. The burden of proof right on the day the assessee lodged a claim by returning income in the status of an investment company squarely laid upon the Revenue to establish it as a matter of fact that notwithstanding its declarations in the memorandum the assessee was a banking company. It was also to be brought home that irrespective of the treatment of the assessee as an investment company by various specialized agencies engaged in monitoring similar institutions, particularly the State Bank of Pakistan the assessee was hit by the mischief of the definition clause. For this purpose a detailed factual inquiry was required, which is conspicuously absent in this case. For the assessee mere denial of being a banking company was enough to put the Revenue on probing track. It was not done. Ei incumbit probation qui decit non qui negat---the burden\ of proving a fact rests on the party who substantially asserts the affirmative of the issue and not upon the party who denies it. For, a negative is usually incapable of proof (see PLD 1982 SC 465 re: Allah Din v. Habib).
29. In case of remand of additions under section 24(1) of the Income Tax Ordinance 'as. well the Revenue 'has not been able to bring home a prejudice for interference, in its favour: The .first appellate authority- has desired a ,factual probe in the issue and we find no illegality in the desired inquiry for the purpose of ascertaining the exact nature and extent of the claim. So, is the case with the remand of adjustment of loss and allowance for incidental expenses in the year 1994-95. The assessee appears to have accepted the remand order in both of the years. Therefore, as stated above we find no substance in the grievance expressed by the Revenue against the remand.
30. The assessee has challenged the confirmation of disallowances in profit and loss account under various heads in the two years. In the year 1993-94 those challenged are, telephone, telex and postage at Rs.2,54,398, vehicle running and maintenance at Rs.41,848. Travelling and boarding at Rs.39,077, entertainment at Rs.13,204 and miscellaneous at Rs.1,07,325. In the year 1994-95 the disallowances in profit and loss account include telephone telex and postage at Rs.6,65,632, vehicle running and maintenance at Rs.99,444, travelling and boarding at Rs.3,35,705 entertainment at Rs.57,526, miscellaneous at Rs.4,62,276 and repair and maintenance at Rs.1,66,648. The assessing officer found these expenses either to be on the higher side or, otherwise partly unverifiable. In some cases presence of element of personal use was also noted. Learned A.R. for the assessee contends that he can demonstrate complete verifiability of all the expenses. It is also submitted that neither any notice in this regard was served upon the assessee to express an intention to make the impugned disallowances nor the assessing officer was competent to say that some of the claimed expenses were excessive. Further, submits that the assessing officer in this disguise attempted to tell the assessee as to how it should have conducted its business. This, according to the learned A.R. was not his domain. The contentions bear weight. It is accordingly directed that the assessing officer shall confront the assessee with his objections to various claims and will allow all these expenses which were fully verifiable. The alleged excessiveness of claim should not be a consideration if the expense has been incurred wholly and exclusively for the purpose of the business of the assessee. All the above disallowances are accordingly set aside for reconsideration as directed above.
31. The final analysis being that the definition of the 'banking company' as contained in section 2(10) of the Income Tax Ordinance read with clause (b) of section 5 of the Banking Companies Ordinance, is fairly wide. The fact that a company accepts deposits for investment or lending falls within its ambit if other indicators are also present. The second portion of the definition contains the test which in turn refers to the actual practice of a company by prescribing as to how and when these deposits are demanded and paid back. Thus, certain modes of re-payment or withdrawals are considered as relevant for consideration of banking business. Mere fact that a company is not effecting withdrawals by cheques, drafts or orders will not by itself take it outside the mischief of the definition clause. However, whether a company is engaged in banking is predominantly a question of fact to be answered in the light of the parameters given in the definition clause. The burden of such proof will ordinarily rest upon the Revenue. Treatment extended to company by various official agencies including State Bank of Pakistan does not, per se, mean that for income-tax purposes the same treatment must be extended to such a company. If a company is actually conducting the business of banking no legal bar exists to hold it so.
However, burden of proof to establish this fact will be even heavier on the Revenue in cases where other official agencies treat the assessee as a non banking company. In the case before us the vital aspect of determination of mode and, character of documents used for withdrawals having not been considered we will remand the matter to the assessing officer, He will investigate the exact nature of business of the assessee, the kind and nature of the documents being used while accepting deposits, procedure for demand and repayment or withdrawals made in the light of the observations contained in para. 25 above.
32. These cross-appeals accordingly succeed partly as the above issues are remanded to the assessing officer. The grievance of the Revenue against remand of additions under section 24(1), adjustment of loss against capital gain and allowance for incidental expenses in the year 1994-95 is, however, rejected and the remand order is not interfered.
(Sd. )
Inam Ellahi Sheikh,
Accountant Member.
33. INAM ELLAHI SHEIKH (ACCOUNTANT MEMBER).---I have carefully perused the order proposed by my learned brother, the Judicial Member, in the above four cross-appeals. I have been especially impressed by the well-reasoned and detailed order on the issue of status of the assessee whether this is a banking company or otherwise. My learned brother, the Judicial Member, has set aside the issue with certain directions as given in para.31 of the order. I respectfully agree with the conclusion reached by my learned brother for all the reasons recorded therein. However-while setting aside the assessment on the issue of status, I feel that the Assessing Officer should also look at the status assigned to similar other companies by the tax department. If the Assessing Officer wishes to assign a different status to the present assessee as against that assigned to the other assessees already discussed above who have been recognised to be non-banking institutions although conducting similar business, the Assessing Officer should record his reasons for such discrimination after confronting the assessee. With these brief observations I record my findings that I fully agreed with the order proposed by my learned brother, the Judicial Member and the appeals be decided as proposed by him.
M.B.A./308/Trib.Order accordingly.