I. T. A. NO. 2781/L.B OF 1998; DECIDED ON 8TH JUNE, 1999 VS I. T. A. NO. 2781/L.B OF 1998; DECIDED ON 8TH JUNE, 1999
1999 P T D (Trib.) 3226
[Income-tax Appellate Tribunal Pakistan]
Before Mohmood Ahmad Malik, Accountant Member and Muhammad Tauqir Afzal Malik, Judicial Member
I. T. A. No. 2781/L.B of 1998; decided on 08/06/1999.
Income Tax Ordinance (XXXI of 1979)----
----S.80-D---Minimum tax on income of certain companies end registered firms for the assessment- year 1.992-93---Registered firm---Levy of minimum tax by the Assessing Officer---Validity---Amendment in S.80--D of the Income Tax Ordinance, 1979 by Finance Act, 1992 was a substantive amendment and in the absence of specific approval of retrospective applicability by the Legislature, the charge of tax under S.80-D on the declared turnover .of the registered firm would be effectively :applicable from the assessment year 1993-94 and was not applicable to the assessment year 1992-93--Demand created under S.80-D of "the Income Tax Ordinance,, 1979, for the assessment year 1992-93 was deleted by Tribunal.
(1998) SC 183; 1989 ,PTD 221; 1995 PTD (Trib.)1113 and 1998 PTD 2769 ref.
Imran Afzal, F.C.A. for Appellant.
Mrs. Riffat Shaheen Qazi, D.R. for Respondent
Date of hearing: 2nd May, 1999.
ORDER
This appeal has been filed by the assessee for the assessment year 1992-93 on the ground that the Assessing Officer was not justified to levy tax under section 80-D as the amendment extending the scope of section 80-D to the registered firms made in section 80-D by virtue of Finance Act, 1992 was effective from the Finance year commencing 1st day of July, 1992.
2. The brief facts of the case are that the assessee, a registered firm, derives income from export of carpets and local sales thereof. Return was filed to declare net loss of Rs.1,243,773 for the assessment year 1992-93, Export sales were accepted as declared. However, the local sales were estimated at Rs.15,000,000 to which G.P. rate at 12.5% was applied as against the local sales declared by the assessee at Rs.8,934,572 yielding G.P. rate of 9.90%. At one place in the impugned assessment order the Assessing Officer has shown his intention to estimate local sales at Rs.l l million but while working out income, the sales has been adopted as Rs.15 million. After making some additions in the P&L Account net loss for the year was determined at Rs.167,995. The Assessing Officer also held that the case of the assessee also attracts the provisions of section 80-D and, therefore, the demand was created under section 80-D @ 0.5 %.
3. Parties have been heard. Learned A.R. for the assessee has submitted that the authorities below failed to appreciate that the amendment made in section 80-D by virtue of Finance Act; 1992 was effective from the financial year commencing 1st day of July, 1992 even after mentioning it in the body of the order. That the trite law is that the substantive amendment in the fiscal statutes shall have prospective effect. No intendment or redundancy can be attached to, the legislature. In this regard the learned A.R. has also relied on the, cases -reported as (1998) SC, 183, 1989 PTD 221, 1995 PTD (Trib.) 1113 and 1998 PTD 2769. In addition the learned A.R- submitted that the authorities below erred in estimating the local sales at Rs.11,000,000 against the declared, sales at Rs.8,934,572 when the assessee had already declared sales 62.81 % higher as compared to the local sales declared in the preceding year, and also there was no justification to levy tax under section 80-D on assessed sales instead of declared sales. G.P. rate applied to local sales at 12.5 % and various add backs made in the profit and loss account have also been agitated. On the other hand, the learned D.R: has supported the orders of the authorities below for the reasons stated therein.
4. We have considered the arguments put forth and the case laws cited at the Bar. In the first case cited as (1998) SC 183 while interpreting the statute it was held;
"A new or an amending statute touching the vested rights of the parties operates prospectively unless the language of the legislation expressly provides for its retrospective operation. However, the, presumption against the retrospective operation of the statute is not applicable to statutes dealing with the procedure as no vested right can be claimed by any party in respect of a procedure. The only exception to the retrospective operation of a procedure law is that if by giving it a retrospective operation, the vested right of a party is impaired then to that extent it operates prospectively."
In the second case reported as 1989 PTD 221 it was-held that statute creating new obligations or affecting existing rights and liabilities of subjects 'are presumed to be prospective in their operation unless they are specifically stated to be operative from a date prior to their enforcement. "In the reported decision of 1998 PTD 2769 their Lordships have held; "If some rights have accrued to a party under a law which is subsequently amended or if substantive rights of parties are concerned, the amendment made it; the existing law or the enforcement of a new law will not affect such rights and the effect of such an amendment would be generally prospective."
5. We have noticed that words were inserted at as many as five places in section 80-D vide Finance Act, 1992. The Explanation to subsection (1) was also inserted vide Finance Act, 1992. At two of the places where new: words were inserted it is specifically provided that the words will be deemed always to have been so inserted. Similarly, it has been provided that the Explanation to subsection (1) would also deemed always to have been so inserted. No such provision has been made with regard to the insertion of the words "or a registered -firm" made by Finance Act, 1992 which is the subject-matter of present discussion. This indicates that the legislature had no intention to give retrospective application to the provisions of section 80-D to the registered firms.
6. After considering the above discussion and case law we have no hesitation in holding that the amendment in section 80-D by way of Finance Act, 1992 is a substantive amendment and in the absence of specific approval of retrospective applicability by the legislature, the charge of tax under p section 80-D on the declared turnover of the registered firm would be effectively applicable from the assessment year 1993-94 and is not applicable to the assessment year 1992-93. Accordingly the Assessing Officer was not justified to apply the provisions of section 80-D. Therefore, the tax demand created under section 80-D stands deleted.
7. The appellant declared local sales amounting to Rs.8,934,572 with a G.P. rate of 9.90%. The Assessing Officer has mentioned in the body of the, assessment order that "in the assessment year 1991-92 the assessee declared local sales at Rs.5,487,679 which were assessed at Rs.9,000,000. The CIT(A) found the assessed sales to be excessive and reduced them to Rs.6,500,000. Keeping in view the above facts the local sales are estimated at Rs.11,000,000. "However, while computing the income the assessing officer worked out the trading addition by estimating the sales at Rs.15,000,000. We have gone through the order of the Assessing Officer who had estimated the local sales at two different figures without assigning, any specific/reason. In the immediately preceding year i.e., 1991-92 the declared local sales of Rs.5,487,679 were assessed at Rs.9,000,000 and were reduced to 6,500,000 by the CIT(A). Keeping in view the increase in turnover which is at 62;81 % and the treatment given to the assessee in the preceding year of 1991-92 the sales in the year under appeal are: reduced to Rs.10,000,000. The G.P. rate applied at 12.5% and the add backs made in the profit and loss account are in order and do not call, for any interference on our behalf.
7. The appeal is decided in the above stated manner
C. M. A./71/Tax ( Trib)Appeal disposed of.