I.T.A. NO.2302/KB OF 1995-96, DECIDED ON 23RD FEBRUARY, 1998. VS I.T.A. NO.2302/KB OF 1995-96, DECIDED ON 23RD FEBRUARY, 1998.
1999 P T D (Trib.) 2168
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Mujibullah Siddiqi, Chairman and Aftab Iqbal Rathore, Accountant Member
I.T.A. No.2302/KB of 1995-96, decided on 23/02/1998.
(a) Income-tax---
----Income covered with the presumptive tax regime---Total income assessed under the general provisions of the Income Tax Ordinance, 1979-- Distinction.
(b) Income Tax Ordinance (XXXI of 1979)---
----Ss.80B, 2(24) & Second Sched., Part III---Income covered under S.80B---Total income---Tax relief/reduction in tax liability---Working out total income for the purpose of working out tax relief under the provision of Part III of Second Schedule to the Income Tax Ordinance, 1979-- Principles---While working out tax relief under the provisions of Part III of Second Schedule to the Income Tax Ordinance, 1979, the total income should be worked out after excluding income covered under S.80B of the Income Tax Ordinance, 1979.
Misri Ladhani, D. R. for Appellant.
Nemo for Respondent.
Date of hearing: 24th October, 1997.
ORDER
MUHAMMAD MUJIBULLAH SIDDIQI (CHAIRMAN). ---This appeal at the instance of Department is directed against the order, dated 25-3-1996 by the learned C.I.T. (A), Sukkur in I.T.A. No. 12 relating to the assessment year 1995-96.
2. None present for the respondent though duly served with the notice of hearing. The service of notice on the respondent is held good and the appeal is heard ex parte with the assistance of learned D.R.
3 The sole objection raised on behalf of the Department is that the learned C.I.T. (A) was not justified to exclude income covered under section 80(B) from the total income as defined under section 2(24) of the Income Tax Ordinance; 1979. A perusal of the assessment order shows that the Assessing Officer confronted assessee on the point, that claim of minimum tax liability as per Part III of Second Schedule to the Income Tax Ordinance was not applicable as the assessee has also income covered under section 80B as well as exempt income and tax liability (wealth tax and income-tax) is not in excess of 75 % of the total income. The claim was ultimately rejected.
4. It was submitted before the learned C.I.T.(A) that according to provision contained in Part III of Second Schedule to the Income Tax Ordinance, 1979, "where any person for any year---
(a) is liable to income-tax and also to wealth tax payable under the Wealth Tax Act, 1963 (XV of 1963); and
(b) his taxable income under this Ordinance exceeds one hundred thousand rupees; and
(c) the aggregate amount of income-tax and wealth tax payable by him exceeds 75 % of his total income, income-tax payable by him shall be reduced by the amount by which the said aggregate amount exceeds 75 % of his total income."
5. It was further submitted that in accordance with the above provision the tax relief works out as under:
| "Share of R.F. | Rs.41,101 |
| Salary | Rs. 309,000 |
| | Rs. 350,101 |
| Less: Zakat | Rs. 58,788 |
| Total Income | Rs. 291, 313 |
| 75 % of total income | Rs 218,485 |
| Less: Wealth tax paid | Rs. 268,145 |
| Tax payable | Nil |
6. It was submitted that since wealth tax paid is higher than 75 % of the total income of assessee he was not liable to pay any income-tax. It was urged that the Assessing Officer has misdirected by including income under section 80B and exempt income for the purpose of working out tax relief under Part III of the Second Schedule. It was submitted that the intention of the Legislature is to give tax relief on income subject to flexible/progressive tax rate slab and the income subject to final discharge of tax liability based on fixed tax rate is not entitled for any relief under any provision of the Income Tax Ordinance, 1979, hence it is not required to be included in total income for tax relief. It was further submitted that in parallel cases Department was excluding dividend income and interest income from total income in order to work out tax relief as per provision of Part III of Second Schedule of Income Tax Ordinance, 1979.
7. The learned C.I.T.(A) agreed with the above contentions and directed the Assessing Officer to compute tax relief as per provision of Part III of Second Schedule to the Income Tax Ordinance, 1979 after excluding income covered under section 80B. The learned D.R. has supported the treatment, given by the Assessing Officer. However, when the learned D.R. was pointed out that the income covered under section 80B falls within the presumptive tax regime, and like all other sections dealing with the presumptive tax regime section 80B also starts with the non obstante clause, to the effect that, "notwithstanding anything contained in this Ordinance or in any other law for the time being in force", meaning thereby that when section 80B is applicable the normal provisions contained in the Ordinance are excluded, he was not able to advance any argument to the contrary. He was further pointed out that the total income is assessed under sections 59, 59A, 59B, 62 and 63 of the Income Tax Ordinance and such total income is subject to the charge of tax under section 9 which is the charging section, while in the case of presumptive tax regime neither any total income is assessed under any provision of the Income Tax Ordinance nor it is subject to the charge of tax under section 9 of the Income Tax Ordinance, 1979. He was further pointed out that there is a basic difference in the income covered with the presumptive tax regime and the total income assessed under the general provisions of the Income Tax Ordinance. The difference is that under the general provisions, total income is assessed meaning thereby that after determining the income as defined in section 2(24) of the Income Tax Ordinance from any source derived under any head' specified in section 15, the expenses admissible are allowed and the resulted income is worked out which is termed as "total income" and it includes any other income which is to be included in the total income of an assessee and thereafter tax is levied on this total income under section 9 of the Income Tax Ordinance while in the case of presumptive tax regime the total income is never worked out and the entire amount which is received, accrues or arises or is deemed to accrue or arise to any person is deemed to be "income" of the said person and the tax thereon is charged at the rate specified in the First Schedule. There is no provision in the Income Tax Ordinance by virtue of which this deemed income under the presumptive tax regime is to be included in the total income and, therefore, in addition to the fact that the presumptive tax regime overrides and excludes general provisions contained in the Ordinance, a marked, distinct and obvious departure has been made by the Legislature whereby tax under the presumptive tax regime is levied on the income and not the total income as envisaged under the general', provisions of the Income Tax Ordinance, 1979. As already observed in several other cases by us, every section in the Income Tax Ordinance, 1979 dealing with the presumptive tax regime is a complete code in itself, as for .the purpose of charging tax under any section of the Income Tax Ordinance covering presumptive tax regime no aid is required from any other provision in the Ordinance except those which are referred to in the particular section itself.
8. The learned D. R. is not able to address any arguments to the contrary.
9. For the foregoing reasons we are of the considered opinion that the learned C.I.T.(A) has rightly directed that for working out tax relief under the provisions of Part III of Second Schedule to the Income Tax Ordinance, 1979 the total income should be worked out after excluding income covered under section 80B.
10. The appeal stands dismissed
C.M.A./25/Trib.Appeal dismissed