I.T.A. NO. 6453/LB OF 1995, DECIDED ON 15TH DECEMBER, 1998. VS I.T.A. NO. 6453/LB OF 1995, DECIDED ON 15TH DECEMBER, 1998.
1999 P T D (Trib.) 1672
[Income-tax Appellate Tribunal Pakistan]
Before Nasim Sikandar, Khawaja Farooq Saeed, Judicial Members and Inam Elahi Sheikh, Accountant Member
I.T.A. No. 6453/LB of 1995, decided on 15/12/1998.
income Tax Ordinance (XXXI of 1979)---
----S.12(18)---C.B.R. Circular No.3 of 1992, dated 27-1-1992---Income deemed to accrue or arise in Pakistan---Transaction of loan was not done through a cross-cheque but through a bearer cheque---Addition of such transaction was made in assessee's income as deemed income by the Assessing Officer---Validity---Held, transaction of loan "otherwise than by a cross-cheque drawn 3n Bank" was hit by mischief of S.12(18) of the Income Tax Ordinance, 1979 [as existed before substitution by Finance Act, 1998]- C.B.R. Circular No.3 of 1992, dated 27-1-1992 being against express provision of the statute, could not be called in for a favourable interpretation.
1997 PTD (Trib.) 2141; 1997 PTD (Trib.) 276; 1993 PTD Note 133 at p.183; Muhammad Shafi v. Deputy Superintendent Police, Narowal PLD 1992 Lah. 178; Papper (Inspector of Taxes) v. Hart 1993 SCMR 1019. Navnit Lal C. Javeri v. K.K. Sen. Assistant Commissioner, Bombay (1965! 56 ITR 198; Eller-Man Liens Ltd. v. Commissioner of Income-tax. West Bengal (1971) 82 ITR 913; Rajan Ram Krishna v. C.W.T., Gujarat (1981) 127 ITR 1; Additional Commissioner of Income Tax, Delhi v Avtar Mohan Singh (1982) 136 ITR 645; 1991 PTD (Trib.) 758; Mst. Zanib v. Kamal Khan PLD 1990 SC 1051; R.K. Garg v. Union of India and others (1982) 133 ITR 239; 1990 PTD (Trib.) 121; 1988 PTD (Trib.) 315; Crescent Pak, Industries (Pvt.) Ltd. v Government of Pakistan 1990 PTD 29; A. Sanyasi Rao and another v. Government of Andhra Pradesh and others (1989) 178 ITR 31; Sri Ven Kateswara Timber Depot v. Union of India and another (1991) 189 ITR 741; Muhammad Ismail and others v. The State PLD 1969 SC 241: Mian Aziz A. Sheikh v. CIT PLD 1989 SC 613; Habib Bank Limited v. Muhammad Hussain PLD 1987 Kar. 612; Mst. Sakina Bibi v Federation of Pakistan PLD 1992 Lah. 99; The State v. Qaim Ali Shah 1992 SCMR 2192; Jagan and another v. The State PLD 1989 Kar. 281; Ajjaz Haroon v. Inam Durrani PLD 1989 Kar. 304; Mirza Qamar Raza v. Tahira Begum PLD 1988 Kar. 169; Millat Bottle Store, Faisalabad v. Assistant Commissioner of Income Tax 1998 PTD 2555; 1995 PTD (Trib.) 797; PLD 1994 Kar, 67; Chairman, Evacuee Property Trust Board, West Pakistan v Muhammad Din and others PLD 1971 Lah. 217; 1993 PTD 766; Central Insurance Company and others v. C.B.R. and others 1993 SCMR 1232; CIT, East Pakistan, Dacca v. Noor Hussain PLD 1964 SC 657; 1970 PTD 75 (Trib.); Fatima Bibi (Tax Reference) PLD 1962 Lah. 809; M/s. Hirgina & CO- (Pak.) Ltd., Karachi v. C.S.T., Central Karachi 1971 SCMR 128; Commissioner of Agriculture Income Tax, East Bengal v. B.W.M. Abdul Rehman 1973 SCMR 445; A & B Food Industries Ltd. v. Commissioner o1 Income Tax/Sales, Tax Karachi 1962 SCMR 663; Textile Manufacturer Association and 2 others v. Administration, Karachi Metropolitan Corporation PLD 1963 SC 137; Abdul Rehman v. Inspector-General of Police, Punjab, Lahore PLD 1995 SC 546; CIT, East Pakistan v. Hussain Qasim Dada PLD 1961 SC 375; PLD 1962 (W.P.) 809; A & B Food Company Limited v. CIT, Karachi 1992 SCMR 663- Dreamland Cinema, Multan ~ . CIT, Lahore PLD 1977 Lah. 292 and Mehran Associates v. CIT, Karachi 1993 SCMR 274 ref. '
1997 PTD (Trib.) 276 rel
Dr. Ilyas Zafar for Appellant.
Sh. S. M. Babar, Standing Counsel for the Revenue and Farooq Tahir, D.R. for Respondent.
Date of hearing: 27th October, 1998.
ORDER
NASIM SIKANDAR (JUDICIAL MEMBER).---The issue before this Full Bench can be sub-divided into two. First if a transaction though not done through a cross cheque but is otherwise through banking channels will still be hit by the mischief of section 12(18) of the Income Tax Ordinance as it existed before substitution by Finance Act, 1998. Second, whether a purposive approach and interpretation of the provision as suggested by the C.B.R. through Circular No.3 of 1992, dated January 27, 1992 is lega115 possible.
2. Section 12 titled "Income deemed to accrue or arise in Pakistan" as an original part of the Income Tax Ordinance had only 12 subsections. Five subsections were added to it by Finance Act, 1980. Then subsection (18) was added by Finance Act, 1987 which provided for deeming any sum or aggregate of sums declared or shown to have been received as loan by an assessee from any person not being a Bank or a notified Financial Institution as income of the assessee if it was received "otherwise than by a cross cheque drawn on a bank". A minimum sum of Rs.50,000 was fixed as a limit which was enhanced to Rs.1,00,000 by Finance Act. 1990. The provision was frozen and made inactive by way of Notification No. SRO 838(1)/ 1987, dated October 26, 1987 issued by Federal Government in exercise of their powers under subsection (2) of section 14 of the Ordinance. Through that notification sub-clause (7) in Part-IV of Second Schedule to the Ordinance was added providing inter alia "the provisions of subsection (18) of section 12shall not apply in respect of any person". The effect of the Notification and insertion of the aforesaid words in Part IV of Second Schedule to the Ordinance being that the operation of the provision viz. section 12(18) was held in abeyance. However, the provision was reactivated by Finance Act, 1990 whereby the words "subsection (18) of section 12" were omitted from the aforesaid clause (7) of Part-IV of the SecondSchedule The spate of amendments however, still continues and in the
Finance Act, 1998 this subsection has again been substituted to soften its rigours. The substituted provision has extended protection to transactions "through banking channel from a person holding a National Tax Number". Since the operation of the amendment subsection has specifically been made to commence from first day of July, 1998 it is clearly prospective and therefore, is not a moot point before us.
3. The provisions of section 12(18) as these stood during the period relevant before us read:---
"12(18). Where any sum, or the aggregate of sums claimed or shown, to have been received as loan by an assessee during any income year commencing on or after the first day of July, 1987, from any person, not being a banking company, or a financial institution notified by the Central Board of Revenue for this purpose, otherwise than by a crossed cheque drawn on a bank, exceeds one hundred thousand rupees, the said sum or the aggregate of sums shall be deemed to be the income of the assessee for the said income year chargeable to tax under the Ordinance.
Provided that, where the said loan is claimed, or shown, by way of the explanation, referred to in subsection (1) of section 13, in a case to which the first proviso to the said subsection applies, the, income under this subsection shall relate to the assessment year referred to in the said proviso."
4. These were first explained by the Central Board of Revenue through Circular No.6 of 1987, dated July 5, 1987. After restoration of the provision by the Finance Act, 1990 the C.B:R. issued Circular No.3 of 1992, dated January 27, 1992 to provide relief to "genuine loans shown to have been received from identifiable persons through banking channel". In the Circular the alleged purpose of the provision was stated to be "to check fictitious loans and to preclude back, dated introduction of creditors in the books of accounts". Therefore, the assessing officers were directed that they "should not invoke the provisions of section 12(18) in respect of genuine loans received by way of cross cheques, pay order, demand draft or telegraphic transfer etc. through the banking channel". This Circular was further explained and the rigours of the provisions were Further softened through Circular No. 11 of 1992, dated May 4, 1992. It conveyed decision of the Board that even in cases of transactions through bearer cheques these provisions should not be invoked where genuine loans were received from identifiable persons and were encashed by the borrowers from the banks on which these were drawn. Another Circular No.12 was issued on May 19, 1992 in respect of cash deposits in accounts books maintained in the names of the Directors of the Company or partners of the firm According to the Circular "although suchamounts attracted provision 2(18) yet in view of lack of general awareness on the part of the tax payers the provisions of section 12(18) shall not be invoked for the assessment year 1991-92 in respect, of cash deposits and transactions referred to in paragraph 1".
5. A Division Bench of this Tribunal while hearing the appeal of the present assessee noted divergence of views of the Tribunal on the subject as expressed in two reported judgments cited as 1997 PTD (Trib.) 2141 and 1997 PTD (Trib.) 276. In the first reported judgment a Division Bench at Lahore found for the assessee holding that "keeping in view the spirit of legislation there was no doubt that the additions made by the Revenue were illegal". The assessee in that case being a Director of the company took loan through a bearer cheque which was encashed by himself and that fact was duly certified by the Banker. In the second reported judgment a Division Bench of the Tribunal at Peshawar reversed the order of the first appellate authority whereby relief was allowed to the assessee, a private limited company which received loan through a bearer cheque. The assessing officer considered the amount of loan as deemed income by resort to the provisions in question while the first appellate authority relying upon Circular Nos.3, 11 and 12 of 1992 and Circular No. l of 1993 directed deletion of the addition. so made. In the course of the judgment the' learned Division Bench at Peshawar found that the aforesaid Circulars being ultra vires of the said provision of the Ordinance could not have been invoked to delete the addition made in this regard.
6. Before proceedings further and referring to the rival contentions of the parties it appears necessary to have a glance at the facts in appeal before the learned Division Bench recommending a Larger Bench and now before us. The assessee is an individual and derives income from salary from two private limited companies namely M/s. Surgeon Surgical (Pvt.) Limited Sialkot and M/s. North West O.R. Instruments Limited Sialkot. The disclosed version being certified by salary certificate was accepted. During the course of assessment proceedings it was observed that the assessee took a loan of Rs.480,000 from one of the two companies namely M/s. Surgeon Surgical Limited Sialkot of which he was also a Director. This loan was admittedly taken through a bearer cheque. The assessing officer finding that the transaction was hit by the aforesaid provision served upon the assessee a notice asking for his explanation. In reply the assessee drew the attention of the assessing officer to C.B.R. Circular No.3 of 1992 alleging that the bearer cheque having been issued to the assessee as payee and the payment having been received from the bank as a drawee the transaction could be taken as one through normal banking channel. According to the assessee the object of checking .fictitious loan having properly been served no addition of the kind could be made. The assessing officer, however, was not satisfied. Therefore, he proceeded to treat the amount of the alleged loan at Rs.480,000 as income of the assessee by resort to the said provision. Some other additions were also made to compute total income for the year at Rs.5,76,753.
7. Learned first appellate authority C.I.T.(A) Sialkot by way of its order, dated 21-9-1995 maintained the addition by observing that through the certificate issued by the Banker suggested that bearer cheques issued by the company were encashed by the appellant, the basic purpose of section 12(18) had been defeated. Therefore, the impugned addition was maintained.
8. Parties have been heard. Dr. Ilyas Zafar, learned Advocate for the assessee repeats stance of the assessee that in the facts of the case the transaction being through banking channel needed to be accepted as having fulfilled the requirement of law. Particularly when seen in the perspective of the C.B.R. Circulars including No.3 of January, 1992. The use of the words ,,etc." at the end of the circular is claimed to include similar other modes of transactions including bearer cheques. It is stated that while applying the provision the objects and reasons for enacting the same should have been kept in sight. The contention is supported by the ratio settled in reported judgments cited as (1992) 198 ITR 110 = 1993 PTD Note 133 at p.183 re: The CommisVoner of Income Tax v. Pyari Lal Kasim Manji &. Company. The view adopted by the Division Bench at Lahore expressed in 1997 PTD 2141 is also supported for the reasons stated therein. It is further contended that the present assessee is not only the real brother of the assessee in the said reported case but also a Director in the same company. The adoption of a consistent approach viz-a-viz both assessee brothers is prayed for. Learned counsel also states that the trend of modern jurists and Courts leans towards a purposive approach as against' literal interpretation of statutes. Reliance in this regard is placed upon PLD 1992 Lah. 178 re: Muhammad Shaft v. Deputy Superintendent Police Narowal and 1993 SCMR 1019 re: Paper (Inspector of Taxes) v. Hart. It is claimed that the House of Lords in the last cited judgment even allowed consideration of extraneous material to reach the intention of legislature. To support his contention that the Circulars Z:'R issued by the C.B.R. have binding force, reliance is placed upon (1965) 56 ITR 198 re. Navnit Lal C. Javeri v. K.K. Sen. Assistant Commissioner Bombay, (1971) 82 ITR 913 re: Eller-Man Liens Ltd. v Commissioner of Income Tax West Bengal (1981) 127 ITR 1 re: Rajan Ram Krishna v. C.W.T. Gujarat, (1982) 136 ITR 643 re: Additional Commissioner of Income Tax Delhi v. Avtar Mohan Singh, Also relies upon 1991 PTD (Trib.) 758 and PLD 1990 SC 1051 re: Mst. Zanib v. Kamal Khan. In the first cited case a Full Bench of this Tribunal, on the authority of the principle settled in a number of reported judgments of the superior Courts held that while interpreting a statute it was the duty of the Courts to suppress mischief and to advance remedy. The second reported judgment from the Supreme Court of Pakistan is referred for adoption of a beneficial interpretation. The Apex Court in that case inter alia laid down the principle that construction of a state had to be made in a manner which would be beneficial to the widest maximum extent as the law pre-supposes that legislature presumes that the enactment will operate fairly, justly and equitably. A case from Supreme Court of India re: R.K. Garg v. Union of India and others reported as (1982) 133 ITR 239 is relied upon to contend that laws relating to economic activities should be viewed with greater latitude than other laws touching civil rights such as freedom of speech, religion etc. Also states that even if two interpretations of the provision are possible a more favourable to the assessee should be adopted as done in two cases reported as 1990 PTD (Trib.) 121 and 1988 PTD (Trib.) 315. The provision in question is otherwise described as inconsistent with fundamental rights conferred under Article 18 of the Constitution relating to freedom of Trade, Business or Profession. The provisions are thus, described bad on the basis of the principle settled by a Division Bench of the Karachi High Court in a case reported as 1990 PTD 29 re: Crescent Pak. Industries (Pvt.) Ltd. v Government of Pakistan. To do justice, learned counsel continues, the provisions should be "read down" as explained in (1989) 178 ITR 31 re: A. Sanyasi Rao and another v. Government of Andhra Pradesh and others. Another judgment cited on the subject was delivered by their lordships of the Orissa High Court as (1991) 189 ITR 741 in re: Sri Ven Kateswara Timber Depot v. Union of India and another. Reference is also made to PLD 1969 SC 241 re: Muhammad Ismail and others v. The State, in which their lordships stated the conditions which must pre-exist before the principle of cassus omissus was held invokable. Also refers to a passage from Maxwell on Interpretation of Statutes favouring construction which is agreeable to justice. Lastly it is claimed that after insertion of Article 2A in the Constitution, the provisions need to be seen and interpreted in the light of Islamic Jurisprudence. In the view of the learned counsel the provision is per se offensive to Muslim way of life as all Banks and banking transactions are interest based.
9. On our invitation Mr. Siraj Khalid, Advocate has also addressed us. His arguments, however, revolve around the assumption that provisions of section 12 (18) of the Ordinance are ultra vires of Article 2A read with Article 227 of the Constitution. First he has explained the meaning of the word "loan" in the light of Chambers 21st Century Dictionary at page 533, Webster Dictionary page 746, Blacks Law Dictionary page 936, B. No. Ahuja' s Dictionary page 168 and Feroze Sons Urdu and English Dictionary. In his view since all the aforesaid books explain loan as taking of money returnable alongwith interest and since giving or taking of interest in any form was prohibited in Islamic Law, the provision must be struck down. He supports his arguments by the principle settled in re: Mian Aziz A. Sheikh v. CIT PLD 1989 SC 613, Habib Bank Limited v. Muhammad Hussain, PLD 1987 Kar. 612, Mst. Sakina Bibi v. Federation of Pakistan, PLD 1992 Lah. 99, the State v. Qaim Ali Shah 1992 SCMR 2192, Jagan andanother v. the State PLD 1989 Kar. 281, Ajjaz Haroon v. Inam Durrani PLD 1989 Kar. 304, Mirza Qamar Raza v. Tahira Begum PLD 1988 Kar. 169 and Millat Bottle Store, Faisalabad v. Assistant Commissioner of Income Tax cited as 1998 PTD 2555. In most of these judgments it was held that while interpreting statutes Islamic principles of interpretation were to be kept in view by the Courts.
10. Mr. S.M. Babar, learned legal advisor appearing for the Revenue has not opposed the purposive interpretation of the provision in question. However, submits that on facts the assessee failed to demonstrate that it was -he who had encashed the bearer cheques. Therefore, in the view of the learned legal advisor the assessee must fail as he could not establish the source of the alleged loan.
11. Having considered the submissions made for the parties we are of the view that the proposition as detailed in the opening part of this order almost stands conceded by the Revenue. The approach of the learned Legal Adviser to the proposition in hand appears identical to the one adopted by the C.B.R. is Circular No. 12 of 1992 that "although such amounts attracted the provisions 12(18) yet in view of lack of general awareness on the part of the tax payers" these should not be invoked. This is a strange position to be taken up and still a stranger assigning of meanings to the clear words of the statute. The concession made by the learned Legal Adviser, however, cannot restrain us from resolving the issue in the light of the provisions of law and the established cannons of interpretation of statute. In the first place the Revenue being part of the Executive cannot be allowed to say that although law was otherwise yet they would be benevolent to the people and will relax the prescribed condition to allow relief to the tax payers. No one can be allowed to be wiser than law and such an attempt on the part of the Revenue being a limb of the executive is all the more detestable. On an earlier occasion we had to frustrate a similar attempt by the Revenue through an order now reported as (1995) 71 Tax 255 (Trib) = 1995 PTD (Trib.) 797. The assessee in that case was an individual and derived income from salary. During the relevant period he was employed in an Executive position with a company limited by shares and engaged in running an industrial concern. From the wealth statement accompanying the return the assessing officer noted a loan liability towards his employer. On a reference the employer company affirmed that a sum was advanced to the assessee for the purchase of land without charging of any interest. On this the assessing officer opined that if the same amount had been taken from a bank the assessee would have paid interest at a minimum rate of 14 % per annum. Therefore, the amount advanced was taken as a perquisite as defined in section 16(2)(b)(iv) of the Income Tax Ordinance and the deemed interest at a rate of 14 % was added towards already declared income from salary and brought to tax. Learned first appellate authority maintained the addition of deemed interest. Before us the assessee placed reliance upon C.B.R. Letter No4 (C) ITJ of 1991, dated 30th June, 1991 addressed by a Second Secretary C.B.R. to the Regional Commissioner. Subject of the letter read "Notional Interest in respect of the interest free loans to employees". In the body of the letter it was stated that in view of a number of representations the matter had been examined in the Board and it was decided that" although such benefit does constitute a perquisite in the hands of the employee yet it is not desirable to impute notional income in such cases". The assessing officers were, therefore, directed not to tax such notional income under Rule 18 of the Income Tax Rules, 1982 While repelling reliance of the assessee on the said Circular we found that it was clearly ultra vires of the powers of the Board. It was noted that doing away with the legal presumption of accrual of value to the assessee after conceding that' it did arise was clearly beyond the scope, powers and functions of the C.B.R. The suggestion that when prime tax collecting agency decides not to make or enforce a levy against a particular assessee or class of assessee, the Tribunal need not strain on the concession was also repelled. The idea was found to be fallacious in view of the fact that the C.B.R. being a creation of the Statute (Act IV of 1924) could not create an exemption in the way it did by way of the aforesaid letter. Reference was made to a reported judgment of the Karachi High Court in re: Syed Ali Athar Naqvi v. Government of Pakistan cited as PLD 1994 Kar. 67 wherein it was found "where a statute provides a procedure for doing a thing in a particular manner then that thing should be done in that manner and in ho other way or should not be done at all". The view of their Lordships of the Lahore High Court expressed in PLD 1971 Lah. 217 re: Chairman Evacuee Property Trust Board West Pakistan v. Muhammad Din and others was also referred which said, "wherever a statute limits a thing to be done in a particular form, it necessarily includes in itself a negative, viz. that a thing shall not be done otherwise". Lastly it was noted that the competency of the C.B.R. to issue Circulars, notifications or letters to interpret various provisions of the law was finally settled by the .Supreme Court of Pakistan in Re:. Central Insurance Company and others v. C.B.R. and others cited as (193) 68 Tax 86 = 1993 PTD 766 = 1993 SCMR 1232. In that case the Court inter alia re-affirmed its view cited in PLD 1964 SC 657 = 1964 10 Tax 206 re: CIT East Pakistan Dacca v. Noor Hussain. In that case Cornelius C.J. remarked "In my view if there is a departure from the law involved in the provision for relaxation contained in the Circular then that Circular is to the extent of the deviation, invalid and in-effective and power thereunder is illegally exercised".
12. The view of the C.B.R. as contained in the aforesaid Circulars that although the transaction in question was covered by the mischief of the provision yet it was found convenient not to enforce the same sounds Greek to a legal mind. Such kind of despotic benevolence is neither conducive to an established judicial system nor it is practicable to be sustained. An encroachment on the authority of the Parliament must be seen and checked with a vigilant eye. A smallest and most insignificant lapse may have disastrous results in times to come. Therefore, I will repeat the view *as expressed in said reported judgment of the Tribunal that the contents of the aforesaid Circular are neither an interpretation of a statute nor a construction of a legal principle. It was a denial of the presumption created by law. Since the decision of the learned Division Bench at Peshawar reported as 199? PTD (Trib.) 276 moves on similar lines qua the authority of the C.B.R. to issue Circulars, Notifications and their legal implications I will respectfully follow the same.
13. As far the plea for purposive approach is concerned again we will not readily agree with the submissions which are necessarily misconceived. First of all no-one can speak for the legislature except the legislature itself which speaks only through letters of law. The "purpose" of the provision as explained by C.B.R. in the aforesaid Circulars including Circular No.3 of 1992 is merely an opinion held by a branch of the executive. It does not represent the view of the legislature nor it binds any Income Tax Authority entrusted with a function to interpret the legal provisions as laid down by their lordships of the Supreme Court in re: Central Insurance Company and others v. C.B.R. and others (supra). Secondly the question of interpretation or even beneficial interpretation arises only when letters of law are either ambiguous or admit of more than one meaning or if adoption of natural or popular meaning would lead to a naifest absurdity. The golden rule of interpretation being that words of law should first be given their natural and ordinary meaning. The question or stage of interpretation will arise only' if assigning of such meaning will either result in an impossible situation or would defeat the express intention of law gathered from the language in the statute. In a reported judgment cited as 1970 PTD 75 we explained the view, that no interpretation should be made where it was not needed. In PLD 1961 SC 375 re: M/s. Hossain Kasam Dada, Karachi and PLD 1962 Lah. 809 re; Fatima Bibi (tax reference) it was authoritatively laid down that in fiscal statutes only an ambiguity could be interpreted in favour of the assessee. In interpreting fiscal statute in the view of their lordships of the Supreme Court of Pakistan expressed in 1971 SCMR 128 re M/s. Hirgina & Co. (Pak.) Ltd Karachi v. C.S.T. Central Karachi and 1973 SCMR 445 re: Commissioner of Agriculture Income Tax East Bengal v. B.W.M. Abdul Rehman it is only the letters of law which must be looked into. It is also the view of the Supreme Court as stated in 1962 SCMR 663 re: A & B Food Industries Ltd v. Commissioner of Income Tax/Sales Tax Karachi that where language of law is clear effect must be given to it. In PLD 1963 SC 137 re: Textile Manufacturers Association and two others v. Administration Karachi Metropolitan Corporation the apex Court reiterated its view that words of statute should be given ordinary and natural meaning and other meaning to them could be given only where ordinary meaning did not make any sense. In PLD 1995 SC 546 re: Abdul Rehman v. Inspector-General of Police Punjab, Lahore it was made absolutely clear that beneficial interpretation was possible only without doing violence to the language of the statute.
14. It is equally established that one cannot be permitted to first create an ambiguity in the provision and then to proceed to employ niceties of the interpretation to resolve it. However, where the provision is apparently uncertain or ambiguous and admits of more than one equally possible interpretations it is only there that in fiscal statutes an interpretation favourable to an assessee can be made. This principle was explained in PLD 1961 SC 375 re: CIT East Pakistan v. Hussain Qasim Dada and followed in PLD 1962 (W.P.) 809 re: Income Tax Assessment of Mst. Fatima Bibi. The rule of beneficial interpretation of a provision is always subject to the condition that two equally reasonable meaning of the provision are possible. However, as mentioned earlier where language of statutory provision is clear effect must be given to it as found by the Supreme Court in 1992 SCMR 663 re: A & B Food Company Limited v. CIT Karachi. In fiscal laws an equitable interpretation is not possible as found in PLD 1977 Lah. 292 re: Direamland Cinema Multan v. CIT, Lahore and approved in 1993 SCMR 274 re: Mehran Associates v. CIT Karachi. Yet another rule of construction of statute says that violation of literal construction is permissible only where obvious intention of law is defeated.
The letters of law as used in section 12(18) of the Ordinance namely" otherwise than by a crossed-cheque drawn on a bank" are so bold and clear that these do not admit of either an ambiguity or uncertainty. To implement them also hardly involves any impossibility or even a difficulty. The words crossed cheque in their peculiar meaning or 'as mentioned in the relevant law viz the Negotiable Instrument Act indicate a separate and distinct document from that of a bearer cheque. The words used 'in the provision could not be simpler to give both the desire as well as the intention of the legislature. These say that a transaction or claim of loan by an assessee "otherwise than by a cross cheque drawn on a bank" shall not be accepted and that the shown amount shall be deemed income of the assessee. The purpose of the provision may very well be the same as explained in C.B.R. Circular No.3 of 1992 yet to read in words in the statute or to ignore the used words will not be legal. The reason that the provision was somewhat harsh or that the assessees could not tune them self to the law or that the purpose wanted to be achieved was achievable by other means are not relevant. Adding anything to the simple and clear words of the statute made to suit a person's peculiar needs is neither interpretation nor construction. It is an attempt to look at them through tained glasses. Attributing different meaning to letters of law than which are popular or natural can result, into chaos.
16. As noted above except for the judgment recorded by a Division Bench at Lahore no other case relied upon by the learned counsel for the assessee is directly relevant to the issue before us. Most of the judgments cited at the bar state general principle's of interpretation of statutes. However, in none of them we can find an authority to support the view adopted by the learned counsel that clear and 'expressive letters of law could be assigned different meanings in the perspective of either the purpose of the legislation or the consequences which could flow there from. It needs to be repeated that a question of interpretation arises only where the words of the statute are not expressive or admit of a doubt or uncertainty. Also that a beneficial interpretation can be adopted only where two equally reasonable interpretations are possible. In the case before us however, no such situation has at all arisen. The words of the statute being clear no occasion has arisen to entertain material extraneous to the provision in hands. Nor there exists a justification to "read down" or "read in" anything that changes or alters the ordinary meanings of the words used in the provision.
17. A number of cases have also been cited at the bar to support the view that circulars issued by the C.B.R. are binding on the sub-ordinate authorities. This issue has also been dealt with above and in the light of the ratio settled by their Lordships of the Supreme Court of Pakistan in re: Central Insurance Co. (supra) we need not add anything except to re-mention the earlier view adopted by the same Court in re: CIT East Pakistan Dacca v. Noor Hussain (supra). The view of their Lordships of the Gujarat High Court in re: Rajan Ram Krishna v. CIT Gujarat (supra) that benevolent circulars issued by the C.B.R. were binding even if they deviated from the legal provision being directly opposed to the one held by the Supreme Court both in re: Central Insurance Co. (supra) and re: CIT East Pakistan Dacca v. Noor Hussain (supra) we are unable to give any serious thought to it. We will readily agree that a Court while interpreting statutes should try to suppress the mischief and advance the remedy. However, in the provision before us we are unable to find any mischief, which needs to be suppressed. The idea of advancement of a supposed remedy also appears irrelevant in the facts before us. The settled principle being that in taxing statutes due regard must be given to the letters of law used in a provision without stretching it either in favour of the assessee or against the revenue. Also we are not in agreement with the learned counsel for the assessee that the provision in question has in any way hindered free exercise of right of trade, business or profession as conferred under Article 18 of the Constitution. The provision in question in no manner derogates from any other fundamental rights either. It is a more regulation of conduct of a transaction for the ultimate public good of documentation of economy. Therefore, since no injustice has apparently flown from the provision the invocation of doctrine of "reading in" or "reading down" is legally not permissible.
18. The arguments put-forth at the bar by Mr. Siraj Khalid are completely out of context. From the dictionary meanings of the word "loan" he wants us to believe that the term is intrinsically un-Islamic as in modern use it contains an inseparable concept of payment of interest. For this reason he wants us to strike it down. In the first instance this Tribunal as a forum of limited jurisdiction cannot declare any provision of law to be ultra Ores of the Constitution or Islam. For this purpose Federal Shariat Court is the right forum to be approached. Other superior Courts in Pakistan are also empowered to make a declaration as pressed by the learned counsel for the assessee. However, as observed earlier neither we are competent to do so nor in the facts or circumstances we find even the slightest justification to do so. The regulation of a transaction for its conduct in a particular mode hardly contains any element which could be described as offensive to the injunctions of Islam. The submissions made in this regard and the case-law relied upon in this connection being totally out of context we will not take long to ignore it.
19. For these and other reasons as detailed in the order of the Division Bench at Peshawar cited as (1997) 75 Tax 22 (Trib) we will hold that every transaction of claimed loan "otherwise than by a cross cheque drawn on a bank" is hit by the mischief of section 12(18) of the Income Tax Ordinance as it existed before substitution by Finance Act, 1998. Also that in the facts the C.B.R. Circular No.3 of 1992, dated January 27, 1992 and the rest of them on the issue as stated earlier being against express provision of the statute could not be called in for a favourable interpretation.
20. The appeal shall accordingly be referred back to the Division Bench for consideration and decision on other issues involved in this appeal.
C.M.A./21/Tax(Trib.)Case remanded