I.T.A. NO.832/LB/D13 OF 1992-93, DECIDED ON 21ST APRIL, 1998. VS I.T.A. NO.832/LB/D13 OF 1992-93, DECIDED ON 21ST APRIL, 1998., 1998 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 3699 (1998)

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

----S.80-C, Second Sched., Part IV, cl. (9) & Ss. 55 & 143-B-- Presumptive tax regime ---Assessee filed income-tax return under S.55 of the Income Tax Ordinance, 1979 without declaration of option to be out of presumptive tax regime---Assessing Officer assessed the income of the assessee under presumptive tax regime and the same was confirmed by the first Appellate Authority---Contention was that assessee had opted to be taxed under a normal regime by filing a return on Form IT-11 instead of filing a statement under S. 143-B of the Income Tax Ordinance, 1979---Held, mere filing of a regular return form, and not the statement under S.143-B, Income Tax Ordinance, 1979 would not mean that assessee had opted out of the presumptive tax regime ---Assessee had to file an "irrevocable" option to opt out of the presumptive tax regime.

(b) Interpretation of statutes---

---Provision of law has to be interpreted and applied in substance and not in form.

Ahmad Nauman Sheikh, I.T.P for Appellant.

Abdul Rauf, D. R. and Rana Munir Hussain, L.A. for Respondent.

Date of hearing: 1st November, 1997.

ORDER

INAM ELLAHI SHEIKH (ACCOUNTANT MEMBER).---A private limited company, deriving income from supply of electric meters manufactured by it has filed this further appeal against am order, dated 23-7-1992 recorded by the learned C.I.T. (Appeals), Zone-II, Lahore mainly to agitate the application of provision of section 80-C of the Income Tax Ordinance (hereinafter called the Ordinance) are not applicable in this case.

2. The relevant facts in brief are that the assessee filed a return to declare income at Rs.7,260,399 in addition to an exempted income at Rs.3,810,000. The assessing officer found that the assessee had only engaged in the supply of electric meters and that only other sales effected amounted to Rs.91,280. He, therefore, proposed to determine the tax tinder section 80-C of the Ordinance and confronted the assessee with such proposal. The assessee took the plea that it could not be taxed under section 80-C of the Ordinance as it had filed a return on IT- 11 Form and not a statement under section 143-B of the Ordinance. Hence it was contended that the provision of 80-C was not applicable. This contention of the assessee was rejected by the assessing officer. The assessing officer, thereafter, determined the tax payable under section 80-C of the Ordinance in the following manner:---

Tax payable under section 80-C is computed as under:---

The assessing officer also determined the income from other sales at Rs.2,000 and the tax at Rs. 1,100 which was added to the tax determined under section 80-C of the Ordinance. The [earned C.I.T.(Appeals) confirmed this treatment against which the assessee has filed his further appeal.

3. The learned counsel of the assessee has strongly objected to the treatment given by the department. It was argued that the assessee had opted to be taxed under a normal regime by filing a return on form IT-11 instead of filing a statement under section 143-B of the Ordinance. la was also argued by the learned counsel that the assessing officer himself had passed an order under section 62 of the Ordinance which is against the treatment given in the body of the assessment order itself. It was conceded by the learned counsel that the assessee had not filed a separate option to opt out of the presumptive regime as required by Clause 9 of Part-IV of the Second Schedule to the Ordinance. The learned Legal Adviser on the other hand strongly supported the orders of the departmental officials with the contention that the assessee was obliged to file an option alongwith the return as required by the provision of Clause 9 of Part-IV of the Second Schedule to the Ordinance if it wanted to opt out of the presumptive regime.

4. The parties have been heard and relevant orders perused. The provision of section 80-C were inserted by Finance Act, 1991 but effective for the assessment year 1991-92 which is under appeal before us. According to this section 80-C, the amount representing payments on which tax is deductible under subsection (4) of section 50 of the Ordinance was to be deemed to be income of' the assessee unless it represented the payments on account of services rendered. Under the provision of subsection (4) of section 50 advance tax at specified rates is deductible by a person responsible for making payments on account of supply of goods etc. to the Government or a local authority, or a company etc. The provision of section 80-C were introduced to make such advance tax, actually deducted or liable to be deducted, as final tax liability to the extent of income from such supplies. This was done by making other provisions of the Ordinance applicable in respect of assessment proceedings. It was also provided in subsection (4) of section 80-C that such an assessee was not required to file return of total income under section 55 of the Ordinance. However, another provision was also inserted in the law in the shape of "Clause 9 of Part-IV of Second Schedule to the Ordinance which allowed the assessee to opt out of such presumptive tax regime if he was also the manufacturer of goods which were being supplied provided that a declaration of option, final and irrevocable, was furnished in writing alongwith the return of total income under section 55 of the Ordinance. It may be noted that there was no provision for opting out of the presumptive tax regime built in to section 80-C of the Ordinance itself and such option was only allowed by Clause 9 of Part-IV of the 2nd Schedule to the Ordinance. However, such option was allowed subject to the proviso that the assessee filed a final and irrevocable option in writing alongwith the return of the total income. Admittedly no such option was filed by the assessee alongwith the return of total income. The assessee has taken a technical objection that since it has filed a regular return under section 55 of the Ordinance and the assessment order has been passed under section 62 of the Ordinance, the provision of section 80-C of the Ordinance can not be applied in this case. We are afraid that we are not convinced by this technical objection. The provision of the law has to be interpreted and applied in substance and not in form. Merely because the assessee filed a regular return form, and not the statement under section 143-B of the Ordinance, would not mean that it had opted out of the presumptive tax regime. It must be kept in mind that the assessee had to file an "irrevocable" option to opt out of the presumptive tax regime. Since this option was not exercised by the assessee, he has to be taxed under section 80-C of the Ordinance. No other ground was pressed. The appeal is dismissed being devoid of any force.

C.M.A./567/Trib. Appeal dismissed.