I.T.A. NO.658/KB OF 1997-98, DECIDED ON 7TH JULY, 1999. VS I.T.A. NO.658/KB OF 1997-98, DECIDED ON 7TH JULY, 1999.
1999 P T D (Trib.) 3516
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Mujibullah Siddiqui, Chairman and Muhammad Mehboob Alam, Accountant Member
I.T.A. No.658/KB of 1997-98, decided on 07/07/1999.
Income Tax Ordinance (XXXI of 1979)---
----Ss.102 & 53---Additional payment for delayed refunds---Advance payment of tax---Advance tax under S.53, Income Tax Ordinance, 1979 was paid by assessee---Assessing Officer, while completing assessment, allowed credit out of total tax paid under S.53 to the extent of liability only and thereby order was made for nil demand---No refund was created ---Assessee claimed interest under S.102, Income Tax Ordinance, 1979 on the amount of refund, if created, after allowing total claim of advance tax paid under S.53 and same was allowed by First Appellate Authority---Validity---Directions by First Appellate Authority for allowing interest under 5.102, Income Tax Ordinance, 1979 on refund after allowing full credit of advance tax paid under S.53, Income Tax Ordinance, 1979 was upheld by Appellate Tribunal with modification to the extent that interest should be calculated not from the date of assessment order but after three months of the date of order.
M. Mehfooz-ur-Rehman Pasha, D.R. for Appellant.
Akbar G. Marchant, F.C.A. and Miss Yasmin Ajani, F.C.A. for Respondent.
Date of hearing: 25th June, 1999.
ORDER
MUHAMMAD MUJIBULLAH SIDDIQUI (CHAIRMAN).-- Heard Mr. Mehfooz-ur-Rehman Pasha, learned representative for the department and M/'s. Akbar G. Merchant and Yasmin Ajani, F.C.As., learned representatives for the assessee.
2. The objection raised on behalf of the department is as follows :-- -
" . . . . . That the learned CIT (A) was not justified in directing to allow interest under section 102 because refund becomes due from the date, it is created and then section 102 would apply. Here admittedly learned CIT (A) has given directions to give credit under section 53 after verification of payment."
A perusal of the impugned order shows that the learned CIT (A) directed to allow statutory interest under section 102 of the Income Tax Ordinance, 1979 from the date of assessment order until refund is suitably adjusted against the valid demand. The learned D. R. has submitted that under section 102 the interest is to be paid on delayed refund if it is not paid within three months of the date on which it becomes due from the expiration of the said three months up-to the date of refund order is made. He has further submitted that in subsection (2)(c) of section 102 a refund shall be deemed to have become due on the date on which the refund order is made. He has contended that as in the present case the refund order was not made at the time bf assessment, therefore; no interest is payable to the assessee. He has submitted that in the present case no credit was allowed for advance payment of tax under section 53 and the learned CIT (A) has directed to give credit for advance tax payment under section 53 after verification, therefore, the interest shall become payable after three months of the refund order. On the other hand Mr. Akbar Merchant has submitted that the department should not be allowed benefit for mala fide action as on one hand the Assessing Officer did not allow credit for advance payment of tax under section 53 in spite of availability of evidence in his possession causing harassment to the assessee and on the other hand the department seeks to reap the benefit of their own highhandedness. Mr. Akbar Merchant has submitted that at the time of making assessment order the Assessing Officer allowed credit for tax paid under section 53 at Rs.73,326 only which did not represent the actual payment. If the Assessing Officer would have allowed credit for full payment of advance tax under section 53 the natural consequence would have been creation of refund in favour of assessee. Mr. Akbar Merchant has submitted that the total tax liability was worked but at R9.9,55,095 and the Assessing Officer with mala fide intention allowed credit for tax paid under sections 50, 53 and 54 to the extent of liability only and thereby an order was made for nil demand. In this manner the Assessing Officer deliberately caused loss and harassment to the assessee lie has contended that the short credit was to the extent of Rs.12,05,411 and if the total claim of advance tax paid under section 53 -would have been allowed, the assessee would have been entitled for interest thereon under section 102 in accordance with the provision contained in said section. We are persuaded to agree with the contentions of Mr. Akbar Merchant. The established principle of law is that the things should be done as they are required to be done in law or not at all. It is specifically provided in subsection(5) of section 53 that the credit for tax paid under section 53 shall be allowed to the assessee in computing the tax payable by him for the said assessment year. If in spite of this specific direction the Assessing Officer has not given full credit of the tax paid, the assessee cannot be deprived of his right, which is created by force of law itself and is not dependent to the discretionary exercise of Assessing Officer. A state functionary cannot be allowed to circumvent and defy a mandatory provision of law to the detriment of a subject/taxpayer. A relief granted by legislature cannot be allowed to be taken away by a state functionary who is required to execute the law as enacted and not distort the law at his discretion fraught with mala fide.
4. For the foregoing reasons we hereby hold that the learned CIT (A) was justified in giving direction for allowing interest under section 102 on the refund after allowing full credit of the advance tax paid under section 53. The direction is modified to the extent that the interest shall be calculated not from the date of assessment order but after three months of the date of assessment order because it is specifically provided in section 102 that a further sum by way of compensation 15 % per annum shall be paid of the amount of refund from the expiration of said three months up to the date on which the refund order is made. With the above modification in the impugned direction of learned CIT (A) the direction for allowing interest under section 102 is hereby upheld. The appeal stands disposed of as above.
C.M.A./M.A.K./74/Tax(Trib)Order accordingly