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

----S.16---Income from salary ---Assessee Director of a company---Utilities enjoyed treated as income ---Validity---Assessee returned income---Assessing Officer rejecting same, estimated on higher side and added utilities enjoyed by assessee towards income---Claim regarding capital gain was also disallowed as no details were furnished---Commissioner of Income Tax (A) did not interfere with the utilities added towards income of the assessee but assessment order to the extent of capital gain was set aside for de novo scrutiny by I.T.O.---Assessee came up for further appeal---Held, assessee having supported his claim of perquisites Tribunal allowed in full his claim of house rent and utilities ---Assessee's claim of capital gain was also allowed in full.

(b) Income-tax---

----Remand---Practice and procedure---Natural justice---No remand should normally be ordered when the Appellate Authority can itself dispose of the matter on the basis of material on record.

1994 PTD 858 ref.

Fakhar-ul-Islam, I.T.P. for Appellant.

Mrs. Sameera Yasin, D.R. for Respondent.

Date of hearing: 13th February, 1997.

ORDER

NASIM SIKANDAR (JUDICIAL MEMBER).---The assessee in this further appeal for the assessment year 1993-94 is an individual who returned net income for the year at Rs.1,72,591. Subsequently, the return was revised to declare total income at Rs.1,92,267. The assessing officer rejected the claimed exemption in respect of house rent, utilities and capital gain. After confronting the assessee on various matters which are not of significance for the purpose of issue before us, he proceeded to assess total income Rs.11,12,431. It was observed that since the assessee had been a Director in more than one company during this period the perquisites claimed as exempt were not allowable twice. Therefore, the disclosed amounts of house rent at Rs.84,000 and utilities at Rs.9,333 were added towards income. The claimed capital gain at Rs.3,95,000 was also disallowed with the observation that no details in support of the claim were furnished.

2. Before the first appellate authority CIT(A) Zone-III, Lahore the findings of the assessing officer with regard to simultaneous directorship of two companies were controverted. It was alleged that the assessee was a Director in M/s. Hajveri Modarba Management Company from 1-7-1992 to 30-9-1992. In case of First Hajveri Modarba he claimed to have been Director from 21-4-1993 to 30-6-1993. It was further averred that the remarks of the assessing officer regarding double directorship were factually incorrect. It was also stated that the assessing officer having rejected the claim of the assessee, his remarks that it could not be allowed twice were otherwise inappropriate and incorrect. Learned first appellate authority through its order recorded on 29-12-1996 was however not impressed.

Therefore, the addition towards income of the aforesaid amounts disclosed as house rent and utilities were not interfered with. In case of capital gain on sale of shares of Bank of Punjab it was contended that the claim was duly supported by ownership certificate and then their disposal through the broker. Learned A.R. for the assessee pointed out before the first appellate authority that the assessee submitted all the requisite documents alongwith its reply submitted on April 29, 1995. It was further pointed out that in reply to another notice submitted on June 23, 1996 the assessee pointed out that all the evidence had already been submitted. However, in spite of that it was again enclosed with the reply. All the evidence being already available on record learned first appellate authority was requested to allow the claimed amount as exempt. However, the prayer was not granted.

Instead the assessment order to that extent was set aside for de novo scrutiny by the assessing officer. This has brought the assessee in further appeal before us.

3. Parties have been heard. Learned D.R. for the assessee repeats his submissions as earlier made before the first appellate authority. It .is stated that the assessee duly indicated the factum of his being Chief Executive of the aforesaid Hajveri Modarba Management Company from July 1, 1992 to September 30,1992. Also that in the revised return the fact that the assessee acted as Financial Controller of M/s. First Hajveri Modarba from 21-4-1993 to 30-6-1993 was again duly disclosed. Copies of both the returns have been placed for our perusal and record. Learned A.R. has also pointed out that an acknowledgement dated 25th March, 1991 evidencing receipt of sale price of shares from one Mian Riaz Samin was produced before the assessing officer. The letter of rights No. 1161, dated 8-6-1992 from Bank of Punjab was also placed on record. Another certificate dated 6-10-1992 from M/s. Abdul Sattar Haji Suleman, Member Karachi Stock Exchange evidencing total sale price at Rs.4,95,000 was placed before the assessing officer. However, he opted to consider none of them without any justifiable reason. Assailing the remand order in this regard learned A.R. states that all the evidence being already available on record, the appellate authority acted illegally in setting aside the issue and sending the assessee again to the assessing officer.

4. Learned D.R. opposes the prayer for interference in the remanded issue and also supports the first appellate order whereby part of the relief was refused to the assessee and additions in question were maintained.

5. Having heard the parties we are persuaded to agree with the submissions made at the bar for the assessee, it appears that the assessee successfully demonstrated his claim that he never was a Director at a time in the aforesaid two companies. The break-up of the period stated before the first appellate authority and entailed in the impugned order left no room for any doubt. Learned first appellate authority hardly appears justified in refusing to allow the relief. The claim of the assessee that in one case he acted as Chief Executive of the first-mentioned company M/s. Hajveri Modarba Management Private Limited and Financial Controller in the second-mentioned institution i.e. First Hajveri Modarba Private Limited has not been converted. His claim of being a working Director in both of the above concerns has also not been disputed by the Revenue. We have further noted that in the notice issued to the assessee on 23-6-1996 no intention was expressed by the assessing officer to make any addition in this regard to disallow the claimed house rent and utilities as perquisites. Instead as formal narration was recorded in the assessment order that A.R. was categorically told that the allowances would be added back in the income of the assessee. This can hardly be described as fulfilment of the requirements of natural justice. A further narration that the "A.R. agreed with the contention of this office..." is strongly disputed by the learned A.R. for the assessee. It is averred that the assessee or his AR never expressed any kind of willingness to accept the addition nor forego the claim of exemption in respect of the said perquisites. Learned A.R. contends that the conduct of the assessing officer is evident from another fact that he added towards income an alleged amount of Rs.4,13,499 stated claimed by the assessee as foreign income. According to the learned A.R. no such income was ever declared and the first appellate authority fell no hesitation in knocking off the addition made in this regard.

6. In this view of the matter when the assessee has succeeded in bringing home his claim of being a working Director in only one of the aforesaid concerns at a time the Revenue does not appear justified in disallowing the claimed perquisites as house rent and utilities. Both the amounts shall accordingly be allowed in full.

7. The remand of issue pertaining to capital gain appears totally unjustified and inappropriate in the circumstances of the case. Learned first appellate authority having recorded in detail the letters submitted before the assessing officer and the annexed documents, it was totally out of place to remand the issue. In a number of cases we have disapproved remand of matters in a light vein by the first appellate authorities. In 1994 PTD 858, one of us, the Judicial Member, held that casual remand of order in the long run never benefited either the assessee or the Revenue. Also that law is absolutely clear that no remand should normally be ordered when the 'appellate authority could itself dispose of the matter on the basis of material available before it. The aforesaid details as well as documents being already available on record the first appellate authority erred in law and in fact to remand the issue. Both of these letters as well as annexed documents have been produced for our inspection. The revised return filed in the year under review supports the claim of the assessee of his Directorship of one company at a time. Certificate from the broker, the acknowledgement receipt from the purchaser of shares and aforesaid letter of rights issued by Bank of Punjab supported the claimed capital gain beyond any shadow of doubt. Since we have disapproved the setting aside of the issue of capital gain and since the aforesaid evidence unequivocally supports the claim, we will allow the same and direct that capital gain shown at Rs.3,95,000 shall be allowed in full. We would like to observe here that neither the assessing officer nor before the first appellate authority the admissibility of claim under clause (116) Part I of Second Schedule to the Income Tax Ordinance was challenged by the Revenue.

8. This being so, this further appeal succeeds in toto. The claimed perquisites shall be allowed in full and the capital gain disclosed shall be accepted as exempt income.

C.M.S./418/Trib.Appeal accepted.