I.T.AS. NOS.5806/KB, 5807/KB, 6309/KB OF 1991-92 AND 893/KBOF 1996-97 VS I.T.AS. NOS.5806/KB, 5807/KB, 6309/KB OF 1991-92 AND 893/KBOF 1996-97, 1998 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1387 (1997)

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

----S.12(12)---Stock-in-trade---Assessee, a private limited company engaged in business of construction of flats---Plots of land kept for the purpose of construction of flats being stock-in-trade of the assessee, value of such plots could not be enhanced, for, law had specifically prohibited valuation of stock-in-trade.

(b) Income-tax---

----Addition---Commissioner of Income-tax (Appeals) had confirmed the addition by simple observation viz. "rest of the order of the Assessing Officer is not disturbed", though all the details were submitted and issues raised before the Commissioner of Income-tax (Appeals)---Validity---Income Tax Tribunal, in circumstances, cancelled the order of Assessing Officer on the impugned issues and remanded the case back to the C.I.T. (Appeals) for properly discussing the issue after re-hearing the matter in accordance with law.

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

----S.62---Application of G.F. rate---No parallel case was cited by the Assessing Officer despite specific direction from the Appellate Authority while setting aside the original assessment---Appellate Authority reduced the G.P. rate by accepting the plea that no notice of intention of the Assessing Authority to adopt enhanced G.P. rate was issued and served upon the assessee---Assessing Authority in favour of reduction of G.P. rate and Departmental Representative against such reduction did not cite any parallel case in support of their views---Tribunal declined interference in the order of Appellate Authority, in circumstances, and confirmed the same on the point of G.P. rate.

Udharam for Appellant (in I.T.As. Nos.5806/KB and 5807/KB of 1991-92).

Majid Qureshi, D.R. for Respondent (in I.T.As. Nos.5806/KB and 5807/KB of 1991-92).

Majid Qureshi, D.R, for Appellant (in I.T.As. Nos.6309/KB of 1991-92 and 893/KB of 1996-97).

Udharam for Respondent (in I.T.As. Nos.6309/KB of 1991-92 and 893/KB of 1996-97).

Date of hearing: 3rd December, 1997.

ORDER

TAHSEEN AHMED BHATTI (JUDICIAL MEMBER).---For the sake of convenience we propose to dispose of all these four appeals by this single order as they pertain to the same assessee.

2. Heard the learned Advocate for the assessee and the learned representative for the department.

Appeal No 5806/KB of 1991-92 (Assessment Year 1988-89):

3. This appeal by the assessee is directed against the order dated 30-12-1991 in the First Appeal No.61 of 1990 for the assessment year 1988-89 passed by the learned CIT (Appeals), Hyderabad which was pressed only on the ground against enhancement of purchase price of the plot.

4. Briefly the facts giving rise to the present appeal are that the assessee a Private Limited Company, engaged in the business of construction of Flats at Sukkur and Karachi, filed the return declaring loss of Rs.19,12,669. However while processing the return the JAC/Chairman of the Panel in agreement of the learned A.R. of the assessee adopted the value of Plot No.Fl-1 S.Nos.599 and 610, Sector 13-A, K.D.A. Scheme No.33 Gulzar-e-Hijri, Karachi and another plot in the same scheme at Rs.19,00,000 and Rs.22,00,000 against declared value of Rs.15,00,000 and Rs.16,00,000 against which first appeal was filed where the learned CIT(A) confirmed the same on the ground that the addition was made in agreement with the A.R. of the assessee; hence this appeal.

5. Admittedly, the plots in question are stock-in-trade of the assessee because of the nature of their business and, therefore, their value could not be enhanced as is clear from the plain reading of section 12(12) of the Income Tax Ordinance, 1979, despite the fact of so-called agreement of the learned A.R. of the assessee at the stage of assessment because such agreement cannot be recognized in the eyes of law where law itself specifically prohibits valuation of stock-in-trade. This being so we annul the impugned order on this issue. Consequently, we allow the appeal.

Appeal No.5807/KB of 1991-92 (Assessment year 1989-90):

This appeal by the assessee is directed against the order dated 30-12-1991 in the First Appeal No.62 of 1990 passed by the learned CIT (Appeals), Hyderabad which was pressed only against the confirmation of disallowance out of claim towards lift maintenance and interest from P&L Account.

7. Heard the learned Advocate for the appellant and the learned representative for the department.

8. Briefly the facts giving rise to the present appeal are that the assessee a Private Limited Company engaged in the business of construction of Flats at Sukkur and Karachi, filed the return declaring loss of Rs.1,529,360. While processing the return under section 62, the panel disallowed the claim of interest amount to Rs.35,840 and made the add-backs out of claim towards lift service and maintenance amounting to Rs.4,200 as being unverifiable and unvouched. Being aggrieved assessee filed first appeal where the learned CIT(A) confirmed the aforesaid add-back; hence this appeal.

9. The reasons for making the aforesaid addition by the panel are mentioned in the assessment order whereas the perusal of impugned order I' shows that the same have been confirmed by the learned CIT(A) by simple observation viz "rest of die order of the Assessing Officer is not disturbed on the other hand it is contended by the learned Advocate for the appellant that the details in support of aforesaid claim were submitted before panel and also before the learned CIT(A) and he has also submitted the copies of the ground in the first appeals which shows that the ground was taken in the first appeal against the aforesaid add-backs. In view of these circumstances the impugned order is cancelled on those issues and remand back to the learned CIT(A) for properly discussing the issue after re-hearing the matter in accordance with law. Consequently this appeal is hereby disposed of in the manner indicated above.

Appeal .No.630/KB of 1991-92 (Assessment year 1989-90):

10. This appeal by the department is directed against the order dated 30-12-1991 in the First Appeal No.62 of 1990 for the assessment year 1989-90 passed by the learned CIT (Appeals), Hyderabad against the deletion of Rs.11,34,000 from the total receipts.

11. Heard the learned representative for the appellant and the learned Advocate for the respondent.

12. At the very outset it was contended by the learned Advocate for the respondent/assessee that this appeal is time-barred by 14 days because it was received on 23-5-1992 whereas the impugned order was received by the officer of the Commissioner on 10-3-1992 and which is also confirmed from the record of this appeal. This being so this appeal is hereby dismissed as time-barred.

Appeal No.893/KB of 1996-97 (Assessment year 1992-93):

13. This appeal by the department is directed against the order, dated 30-6-1996 in the First Appeal No.259 of 1996 for the assessment year 1992-93, against deduction of G.P. rate.

14. Heard the learned representative for the appellant and the learned Advocate for the assessee.

15. Briefly the facts giving rise to the present appeal are that the assessee a Private Limited Company engaged in the business of construction of Flats and Shops at Sukkur and Karachi filed the return at an income of Rs.8,74,889 with receipts from booking of Shops and Flats at Rs.38,099,713 with G. P. at 17.08 % . The declared receipts were not accepted as the details of direct expenses were not given as such G.P. rate of 20% was applied, as such projects were completed. Being aggrieved assessee filed first appeal where the said assessment was set aside with direction to reconsider application was G.P. by quoting parallel case.

16. At the stage of reassessment nothing further was submitted from the side of the assessee as such reassessment was completed under section 63 of the Income Tax Ordinance, 1979 with the same G.P. rate against which assessee filed the first appeal where through the impugned order; the learned CIT(A) reduced the G. P. rate to 18.5%; hence this departmental appeal.

17. The learned representative for the Department pressed this appeal whereas the learned Advocate for the assessee supported the impugned order.

18. The assessment order shows that the same G.P. rate of 20% has been applied on the ground that the assessee had not furnished details in connection with notice under section 62 issued on 21-4-1996 and without quoting the parallel case despite specific direction from the learned CIT(A) who had set aside original assessment. Then the perusal of the impugned order shows that the G.P. rate has been reduced by accepting the plea that no notice of intention of the Assessing Authority to adopt G.P. rate of 20% was issued and served upon the assessee; in any case, the learned CIT(A) has not cited any parallel case in fixing the G. P. rate at 18.5 % . However, the learned D.R. before has also not shown any parallel case on the basis of which it could be said that the G.P. rate of 18.5% on completed project is not proper.

19. In view of above circumstances we see no reason to interfere with the impugned order and, therefore, confirm the same on the point of G.P. rate. Consequently, this Departmental appeal is hereby dismissed.

M.B.A./511/Trib. ?????????????????????????????????????????????????????????????????????????????? Order accordingly.