QURESHI INDUSTRIES VS CENTRAL BOARD OF REVENUE, 1998 PTD-LAHORE-HIGH-COURT-LAHORE 2776 (1998)

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

----Preamble---Any clarification by the C.B.R. or by the Justice and Law Division would not curtail the powers vesting in the adjudicating Authorities under the Income Tax Ordinance, 1979 for decision of issue.

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

----S.8---Circular No.2(98)IT-Jud/94, dated 11-12-1997---Circular by C.B.R. being of no, legal effect could not affect the jurisdiction of the adjudicating officer in taking an independent decision.

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

----S.80-D & Second Sched., Cls. 118-C, 112-D & 118-E---C.B.R. Circular No.C.2(98)IT-Jud/94, dated 11-12-1997---Protection of Economic Reforms Act (XII of 1992), Preamble---Deduction of tax---Application for refund---Department would consider the application for the refund of amount of tax deducted under S. 80-D of the Ordinance in the light of judgment of the Supreme Court on the subject and the Authorities are legally bound to decide the application without being influenced by the C.B.R. Circular-- Protection of Economic Reforms Act (XII of 1992), being a special statute and subsequent in time would prevail over S.80-D of the Ordinance.

(d) Income-tax---

----Question of fact- --Questions as to whether a particular assessee fulfils the conditions of the notification being a question of fact would be determined by the hierarchy of forums provided under the Ordinance.

Dr. Ilyas Zafar for Petitioner.

Muhammad Ilyas Khan, Legal Advisor for Respondents.

Date of hearing: 8th May, 1998.

JUDGMENT

This order will dispose of Writ Petitions Nos.6673 of 1998 and 6667 of 1998, as the same arise in the similar situation and raise common questions of law.

2. The petitioners, in these Constitutional petitions, are aggrieved by refusal of the respondents to consider their request for waiver of charge of minimum tax under section 80-D of the Income Tax Ordinance, 1979 and for refund of payment made in lieu thereof. The case of the petitioner, is that the incentive was given for rapid industrialisation and to provide equitable economic opportunities. The petitioner, in view of the incentive given and protection provided by the Economic Reforms Act, 1992 was exempt from tax under Clause (118-A) of Part I of Second Schedule of the Income Tax Ordinance, 1979. The issue relating to the application of section 80-D in the exempted units under Clauses (118-C), (118-D) and (118-E) of the 2nd Schedule was decided by the Honourable Supreme Court on 4-6-1997 in the case of Illahi Cotton Mills Limited v. The Federation of Pakistan (PLD 1997 SC 582).

3. In terms of the judgment of the of the Honourable Supreme Court, the petitioner applied for refund of tax paid under section 80-D during the exemption period, but the respondents did not take any action. The grievance of the petitioner is that respondent No. l has issued Circular No.C.2(98) IT-Jud/94, dated 11-12-1997, whereby it was claimed that the exemption from minimum tax under section 80-D would be allowed in the cases who have contested these provision- and filed appeals before the Honourable Supreme Court and that die judgment will not be given retrospective effect.

4. Learned counsel for the petitioner submitted that the Circular/Letter issued by the Central Board of Revenue could not either curtail powers vesting in the adjudicating authorities under the Income Tax Ordinance nor it could be treated as a pronouncement of forum component to adjudicate upon a question judicially or quasi judicially. It was submitted with vehemence that interpretation of law could be rendered judicially by the hierarchy of the forum provided in law and not by the Central Board of Revenue or by Ministry of Law and Justice and that the petitioners were entitled to the refund in the light of the judgment of the Honourable Supreme Court.

5. Similar question was raised in Writ Petition No.2985 of 1998, which. was decided by me, when I relying on the rule laid in the case of Messrs Central Insurance Company v. Central Board of Revenue (1993 SCMR 1232), clarified that interpretation of any provision of the Ordinance can be rendered judicially by the hierarchy of the forums provided for under the provisions of the Ordinance, namely. Income Tax Officer, Appellate Assistant Commissioner, Appellate Tribunal, High Court and Supreme Court and not by the Central Board of Revenue and the interpretation placed by the Central Board of Revenue can best be treated as administrative interpretation and not judicial interpretation. It was also observed that any clarification bythe C.B.R. or by the Justice and Law Division, would not curtail the powers vesting in the adjudicating authorities under the Income Tax Ordinance, 1979 for decision of issue, in accordance with law and in the light of the observations made by the Honourable Supreme Court. In this case too, similar position has arisen as the respondents have refused to entertain the application for refund filed by the petitioner, on the alleged ground of a Circular /Letter issued by the C.B.R., whereby the interpretation of judgment of the Honourable Supreme Court was attempted to be made. Since the circular is of no legal effect and cannot affect the jurisdiction of the adjudicating officer in taking an independent decision, therefore, the respondent No.3, shall consider the application of the petitioner for the refund of amount of tax, deducted under section 80-D in the light of judgment of the Honourable Supreme Court. The directions contained in paragraphs Nos.54 and 57 of the Judgment are clear, whereby it was observed that provisions of Act XII of 1992 were subsequent in time and they were contained in a special statute and should prevail over section 80-D of the Ordinance and that the asses see who were covered by the notification mentioned in the schedule of section 6 of the Protection of Economic Reforms Act, 1992 would be entitled to the protections in terms of paras. Nos.52 and 54 of the judgment and they could approach the Income Tax Department. It was also observed, that the questions as to whether a particular assessee fulfill the conditions of the above notification being a question of fact would be determined by the hierarchy provided under the Ordinance. In the light of the observations, the petitioner could approach the concerned authorities which is legally bound to decide the application, in the light of observations recorded in the judgment of the Honourable Supreme Court and being uninfluenced by the circular issued by the C.B.R.

6. These petitions are, therefore, disposed of with the observations that the adjudicating authority shall proceed to decide immediately the question pertaining to waiver of tax and for refund of the amount already deposited by the petitioner without being influenced by the circular and the matter will be decided strictly in the light of the observations made by the Honourable Supreme Court in the case noted supra. .

M. B. A./Q-12/L Order accordingly.