1999 P T D. (Trib.) 3887
[Income-tax Appellate Tribunal Pakistan]
Before Shahid Jamal, Accountant Member and Tahseen Ahmed Bhatti, Judicial Member .T.A. No.683/KB of 1998-99, decided on 25/03/1999.
Income Tax Ordinance (XXXI of 1979)---
----Ss.62, 143B & 50(4)---.,Simplified Self-Assessment Scheme (1997-98)-- C.B.R. Letter C.No.7(71S.ASSTT/97, dated 6-10-1997---Normal income-- Presumptive income--- -Assessee,, to qualify immunity, claimed immunity as total tax deducted under S.50(4) and paid under S.54 of the Income Tax Ordinance, 1979, was higher by 25 % than last year---Assessing Officer excluded the Return from the purview of Self-Assessment and immunity on the basis of Central Board of Revenue clarification issued vide Letter C. No.7(7)S.ASSTT/97, dated 6-10-1997---Assessee contended that clause regarding the comparison was omitted from the Self-Assessment Scheme of 1997-98 and there was no provision in the Self-Assessment Scheme itself to exclude the presumptive income for the purpose of comparison and that subsequent interpretation and clarification by Central Board of Revenue could be an administrative directive and not a law within the meaning of Self-Assessment Scheme---Validity---Clarification or interpretation issued by the Central Board of Revenue was expressly contrary to the Self-Assessment Scheme and had no legal effect---Interpretation of Central Board of Revenue being against the spirit of Scheme which had given a vested right to the taxpayer, Income-tax Appellate Tribunal directed to accept the assessee's case under Self-Assessment Scheme, in circumstances.
1993 PTD (Trib.) 1196 rel.
Zar Khalil, D.R. for Appellant.
Javed Zikarya for Respondent
Date of hearing: 25th March, 1999.
ORDER
SHAHID JAMAL (ACCOUNTANT MEMBER).---The only issue before us iri this appeal is whether the assessee's return for the assessment year 1997-98 qualified under the simplified Self-Assessment Scheme in accordance with Circular No. 5 of 1997. The Department has taken objection against learned CIT (A)'s direction to accept the return under the said Scheme.
2. The facts giving rise to this appeal are briefly' narrated. The respondent, an individual, derives income from supply and local sales of Dyes and Chemicals. He filed his return of income for the assessment year 1997-98 showing normal income at Rs.41,395 and presumptive income under section 143-B at Rs.39,31,686. As far as supplies were concerned tax was deducted at source amounting to Rs.1,37,609 and statement under section 143-B was accordingly filed. The assessee claimed immunity in his statement of normal income on the basis of following tax working.
| Tax computation U . S. A". Assessment Year 1996-97: Tax paid under section 80CRs.22,049 Tax paid under section 54 Rs.1443 Rs.23.542 Tax paid under section 80CRs. 1,37,609 Tax paid under section 54 including surcharge of Rs.300 for Self Assessment SchemeRs. 440 Total tax paid for assessment. year 1997-98 which is much more than immunity target.Rs. 1,38,049 |
3. The assessee was acquired to pay 25 % more than last year to qualify for immunity and in this case the sum required for immunity was Rs.29,427, whereas he had paid Rs.l .38,049 including tax deducted under section 50(4). The Assessing Officer took objection to this as, in his opinion, for purposes of comparison of income-tax, presumptive income arid tax deducted thereon was not to be considered and for this interpretation of the Self-Assessment Scheme he referred to C. B, R's. clarification issued vide Letter C-No.7(7)S.ASSTT/97, dated 6-10-1997. The said clarification was issued in response to a letter from M/s. Gul Ahmad & Co. asking C.B.R. to clarify whether tax paid under section 80-B was to be considered for purposes of availing immunity during the assessment year 1997-98. The C.B.R's Circular is reproduced below for sake of convenience and discussion:--
"I am directed to refer to your Letter No. BAS-CBR-MISC-3950, dated 18-9-1997 on the above subject and so say that tax paid under the presumptive tax, regime should not be considered for the purpose of comparison under the Simplified Self-Assessment Scheme. Furthermore, the persons who availed Broad Based Self-Assessment Scheme will he immune from Special Audit if they pay 25 % more than the last year's tax."
4. Based on above clarification the Assessing Officer excluded the return of the assessee from the purview of the Self-Assessment and immunity and proceeded to make normal assessment, he did so by estimating and computing income at Rs.6,79, 220. The Assessee being aggrieved took his grievance before learned CIT (A), before him the assessee pleaded that there was no provision in the Self-Assessment Scheme itself to execute the presumptive income for purposes of comparison and that subsequent interpretation and clarification by C.B.R. could be an administrative directive but not law within the meaning of the $elf-Assessment Scheme. He placed reliance on the ratio of decision given by the Supreme Court in the case of Central Jnsurance Co. where the apex Court has held that C.H.R. had no authority to interpret the law and such interpretation was not binding on the Courts. The learned CIT(A) being convinced of the arguments allowed the appeal in favour of the assessee and directed that the return be accepted under the Simplified Self-Assessment Scheme. The Department being aggrieved has now filed this appeal.
5. Mr. Zar Khalil, learned D.R. supported the assessment order and repeated the plea as taken therein that as per clarification issued by the C.B.R., assessee's case did not qualify under the Self-Assessment Scheme.
6. Mr. Javed Zakaria, Advocate, appearing for the respondent produced before us the Self-Assessment Scheme for the assessment years 1996-97 and 1997-98. Referring to clause (g) of para. 7 of Circular No. 4 1996, relevant to assessment year 1996-97, he submitted that under the said Scheme it was clearly provided that income under section. 80-B of the Income-tax Ordinance shall not be considered for the purposes of comparison of income, whereas this has been omitted from the Self-Assessment Scheme as issued by Circular No. 5 of 1997. The said clause (G) is reproduced below:
For the purposes of comparison, the income to which section 80-B of the Income Tax Ordinance, 1979 applies, shall not be taken into account."
7. Since the said clause has been omitted from the Self-Assessment Scheme of 1997-98 it is evident that such income was to be considered while making the comparison of income. Extending his arguments, he submitted that on the same analogy, income relating to 80-C was not to be considered during assessment year 1996-97 and is to be considered for assessment year 1997-98. Further, tracing the history of the relevant provision in respect of presumptive x. income for the purposes of Self-Assessment, Mr. Zakaria referred us to the Self-Assessment Scheme of assessment year, 1994-95 issued vide Circular No. 9 of 1994 where E(ii) of Para. 1 of the said Circular provides:--
"Where the total income of a tax payer includes income which is subject to presumptive tax, such income and in case of deemed income under sections 80C and 80CC, imputable income worked out in accordance with the said sections shall be taken into account for all purposes of the Self-Assessment Scheme, including comparison of the income declared or assessed:
Provided that for purposes of sub-paragraph' (b) of this paragraph such income shall not be included:"
8. More or less similar, but less specific provision was contained in clause (C) of para. 10 of Circular No. 5 of 1995 relevant to assessment year 1995=96:--
Clause(g)
For purposes of comparison, the income to which section 80-B of Income Tax Ordinance, 1997, applies, shall not be taken into: account."
9. The above provision is contained in Circular No. 4 of 1996 relevant to assessment year 1996-97 in exactly the same manner, as already discussed supra. It is only for the assessment year 1997-98 that the said provision has been omitted which seems to be a deliberate act and the underlying purpose being to include presumptive income for purposes of comparison of the income. Since the provision was omitted in the original Scheme, any subsequent interpretation by the C.B.R. could not have the same legal effect. Mr. Javed Zakaria referred us .to the decision of this learned Tribunal reported as 1993 PTD (Trib.) 1196. In the reported case, appellant's return filed under the Simplified Assessment Scheme was excluded from the said Scheme on the ground that there was some change in the constitution of the firm and appellant's firm being, a successor did not qualify under the Self Assessment Scheme. Such disqualification was based on C.B.R. Circular No. 10 of 1988. The learned Tribunal held and since no such provision was contained in the original Self-Assessment Scheme any subsequent clarification issued by the, C. B. R.. was extraneous and was incompatible with the said Scheme. Placing reliance on the said judgment; Mr. Javed Zakaria submitted that his case was squarely covered by the ratio of the said decision.
10. We have considered the arguments advanced by Mr. Javed Zakaria and the re-assertion of Mr. Zar Khalil, we find that right form assessment year, 1991-92, the Self-Assessment Schemes promulgated by the C.B.I. have contained provisions relating to presumptive income, to be included for purposes of comparison of income such provision was contained in Circular No. 24 of 1991 vide para. 3 (A) and (B) in para. 4 of the said Circular, during the year 1994-95 it was contained in para. E(ii) of para. 1 of the saidScheme, during the years 1995-96 and 1996-97 it was contained in clause (C), referred to supra. It was only during the year 1997-98 that, relevant Circular No. 5 of 1997 did not contain any provision, regarding exclusion of presumptive income which by implication means, as has been argued by Mr. Javed Zakaria, that such income was to be considered for purposes of comparison. It is, however, worth mentioning that all the circulars contained a provision as to what is to be included in income tax for purposes of comparison. This is contained vide clause (E) under the head Miscellaneous and includes Agricultural income, share of profits from A.O. P., U. R. F., and R. F. and any inadmissible expenditure under the e Income Tax Ordinance, 1979 but this provision, as we understand, comes under the head which can appropriately by called as normal income and not presumptive income. Now any clarification or interpretation issued by the C.B.R., expressly contrary to the Self-Assessment Scheme issued by it, cannot be said to have the same legal effect as that of the Scheme itself. In view of this, we are convinced that such an interpretation was against the spirit of this Scheme which had given a vested right to the taxpayer. We are of course fortified and reinforced in our view by the Tribunal's decision cited supra. Accordingly, therefore, we hold that assessee's case qualified under the Self-Assessment Scheme and confirm the impugned order.
11. The departmental appeal as a result is dismissed
C.M.A./M.A.K./78/Tax(Trib.) Appeal dismissed.