2000 P T D (Trib.) 2853

[Income-tax Appellate Tribunal Pakistan]

Before Muhammad Mujibullah Siddiqui, Chairman, Muhammad Daud Khan and Shahid Jamal, Accountant Members

I.T.A. No.26/KB of 1999-2000, decided on 27/09/1999.

Per Muhammad Mujibullah Siddiqui, Chairman and Shahid Jamal, Accountant Members---[Majority view]---

(a) Interpretation of statutes---

---- Fiscal statute---Scope---Any tax burden can be imposed by the Legislatures by a clear and explicit provision of law, though the same may not always be based on good logic or reason, and to which no exception could be taken.

(b) Interpretation of statutes---

---- Statute should be construed, rather than interpreted with due regard to its avowed object and to its character.

(c) Income Tax Ordinance (XXXI of 1979)---

----Second Sched.---Interpretation---Provisions contained in Second Sched to the Income Tax Ordinance, 1979 were for the benefit of assessee and could never be strained to the determent or disadvantage of assessee.

(d) Income Tax Ordinance (XXXI of 1979)---

----Second Sched., Part IV, Cl.(9B)---Clause (9B) of Part IV of the Second Sched. was in the nature of concession rather that of imposition, charge or additional burden on the taxpayer---Second Sched. was an exemption from total income and all the four Parts of the Second Sched. were intended to give relief to the taxpayer, in various forms, from the normal taxing provisions; classified as exemption from total income; reduction in tax rate reduction in tax liability; and exemption from specific provisions-- Clause (9B), Part IV of the Second Sched. of the Income Tax Ordinance, 1979 should be interpreted as concessionary and not charging or over bearing---Purpose of enactment was to provide relief to importer-cum -supplier from the operation of S.50(4) of the Income Tax Ordinance, 1979, against double and enhanced deduction and bring same to a level more or less close to the tax paid at import stage.

(e) Income Tax Ordinance (XXXI of 1979)---

----Ss. 80C(2)(i)&(ii), 50(4)&(5) & Second Sched., Part IV, cl. (9B)-- C.B.R. Circular No.10 of 1996, dated 16-7-1996- -Tax on income of contractors and importers----Imports and supplies ----Deductions---Assessee was- a public limited company and engaged in manufacturing and sale of Man-made Fibre Yam ---Assessee imported raw material for manmade fibre for trading purpose also ---Assessee filed normal tax return under S.55 of the Income Tax Ordinance, 1979---Assessing Officer charged tax on such import, being an import in the nature of commercial item to the extent of trading, under S.50(5) and also on supply of such goods under S.50(4) read with S.80C of the Income Tax Ordinance, 1979 on the ground that assessee did not file any option under cl. (9B) of Part IV of the Second Sched. of the Income Tax Ordinance, 1979 to opt out of presumptive tax regime---First Appellate Authority deleted the charge of tax on supplies on the plea that once tax on import stage was paid, the tax liability stood finally discharged---Department contended that as the assessee had not filed irrevocable option for normal law assessment with the return of total income, the was liable to pay both the taxes under S.50(4)&(5) of the Income Tax Ordinance, 1979---Validity---Clause (9B) of Part IV of the Second Sched. to the Income Tax Ordinance, 1979 was tot operative with the result 'that the assessee was entitled to be governed according to law contained in S.80-C of the Income Tax Ordinance, 1979---Once an assessee had paid tax at import stage, he acquired a right, as per scheme of presumptive taxation, and not to be bothered with any other charge under the Income Tax Ordinance-- Assessee had chosen to remain within the presumptive fold and protection, by not opting, out, the. right could not be taken away or violated---Once the assessee was finally discharged of his tax liability under S.50(5) read with S.80-C of the Income Tax Ordinance, 1979, he could not be charged again on supply of same goods second time under S.50(4) read with S.80-C of the Income Tax Ordinance, 1979---Relief allowed by the First Appellate Authority was upheld by the Appellate Tribunal and appeal of the department was dismissed.

1997 PTD (Trib.) 1143 rel.

1999 PTD (Trib.) 2949; CIT, East Pakistan v. Hussain Qasim Dada PLD 1961 SC 375; Messrs Friend Sons v. Deputy Collector, Central Excise and Sales Tax PLD 1989 Lah. 337; (1961) 4 Tax 96; Dreamland Cinema v. CIT PLD 1977 Lah. 292; CIT v. Muhammad Kassim 2000 PTD 280; I.T.A. No.282/KB of 1999-2000; I.T.A. No.1917/KB of 1988-89; 1997 PTD (Trib.) 879 and I.T.As. Nos.42 and 43/KB of 1999-2000 ref.

Zaki Ahmed, D.R. for Appellant.

Tayyab G. Adeeb, F.C.A. and Javed Zakaria for Respondent.

Date of hearing: 23rd September, 1999.

ORDER

MUHAMMAD DAUD KHAN (ACCOUNTANT MEMBER).---As per this appeal department agitates directions of CIT (A) as per his appellate order, dated -10-10-1998 not to subject the supplies to any tax rate under the presumptive tax regime as the same had already suffered deduction at imports stage which should be taken full and final discharge of assessee's liability under section 80-C. Mr. Zaki Ahmed, D. R. appeared. for the department while Mr. Tayyab G. Adeeb, FCA represented the respondent-assessee. D.R. arguing the department's case assailed the order of CIT(A) and for his reliance on this Tribunals decision reported as 1997 PTD (Trib.) 1143. According to him the position of law has since changed due to insertion of clause (9B), Part IV of Second Schedule whereby such facility as granted by the CIT(A) to the assessee is available only to those assessee who opt out of the presumptive tax regime and as per proviso to this clause furnish a final and irrevocable written option alongwith the return of total income under section 55. This is not the case here. CIT (A) relied on decision which pertains to prior period i.e. (1994-95). He, therefore, forcefully argued that the relief granted by the CIT (A) should he revoked and the sax calculation by the Assessing Officer be restored. Mr. Tayyab G. Adeeb on the other hand defended the order of CIT (A) and claimed that there could not be a duplicate taxation of same item as consistently and persistently held by this Tribunal.

2. We have heard both the parties to appeal and perused the assessment and appellate orders. It is a fact that position of law has changed due to insertion of clause (9B) of Part IV of Second Schedule with effect from 1st July, 1996. Now supplies of imported items will not suffer tax once again under the presumptive tax regime only upon furnishing of an option to opt out of the presumptive tax regime as per proviso to this clause. We, therefore, hold that CIT (A) was not justified to grant the relief in the light of this Tribunal's order reported as 1997 PTD (Trib.) 1143 which pertains to earlier period i.e. assessment year 1994-95. Any tax burden can be imposed by the Legislature by a clear and explicit provision of law; though the same may not always be based on good logic or reason, or to which no exception could be taken The purpose of insertion of clause (9B) of Part IV of Second Schedule appears to be to tax the imported goods which suffered tax 50(5) read with 80C once again on supply thereof either under 80C or under section 22/23. As per ground No.3 it is categorically stated by DCIT that no such option was filed. Mr. Tayyab G. Adeeb did not make any claim regarding filing the option before us. However, in the assessment order there is no discussion to this effect and whole liability is stated as covered under section 80-D. We, therefore, set aside the order on this issue with directions to Assessing Officer to pass speaking order on this issue in the light of the amended position of law on this behalf as per clause (9B) of Part IV of Second Schedule and facts on record and correctly quantity assessee's liability to the light of different provisions of law i.e. 80-C, 80-CC and 80-D or 62 etc.

Regarding department's grievance about CIT (A) setting aside the additions made out of P&L Account, we see no reason to interfere as the additions have only been set aside and the department cart after finding deficiencies and defects if any and after properly confronting the assessee with the same make the addition according to law. Department's appeal on this behalf is dismissed.

4. Department's appeal succeeds to the extent indicated above on issue of charge of tax under section 50(4)/80-C or 62 which has been set aside.

(Sd.)

(MUHAMMAD DAUD KHAN),

ACCOUNTANT MEMBER)

5. MUHAMMAD MUJIBULLAH SIDDIQUI (CHAIRMAN).---I have had the benefit of going through the opinion of my learned brother the Accountant Member. I am not persuaded to agree with the views of my learned brother contained in para. 2 of the order.

6. Before I proceed further, it would be appropriate to narrate the relevant facts briefly. The asses see/respondent is a public limited company enjoying income from manufacture and sale of manmade fibre yarn. The respondent imported raw material for manmade fibre for trading purpose also. The Assessing Officer held that the import and sale of raw material was commercial import which attracted. section 80-C. The Assessing Officer further held that the imports (purchases) were liable to tax under sub section (5) of section 50 of the Income Tax Ordinance, 1979 read with section 80-C and the supply of said imported goods were also chargeable to tax under section 50(4) read with section 80-C of the Income Tax Ordinance, 1979. The tax liability on import was worked out at Rs.14,81,532 and on supplies at Rs.14,41,105. Thus, total tax liability under section 80-C was worked out at Rs.29,22,637. The respondent assailed the above findings of Assessing Officer contending that once tax under section 50(5) read with section 80-C was levied, the tax liability under section 80-C stood finally discharged, and therefore, the supply of same goods could not be subjected to the levy of tax for second time under section 50(4) read with section 80C g Reliance in this behalf was placed on the judgment of this Tribunal reported as 1997 PTD (Trib.) 1143. The learned CIT (A) accepted the contention and by placing reliance on the following decision of the Tribunal deleted the charge of tax under section 50(4) read with section 80-C:--

"30. For the reasons stated above we are of the considered opinion that as soon as a person has suffered the incidence of tax by way of collection under section 50(5) of the income Tax Ordinance an assessment would be deemed to have been made in respect of income pertaining to the imported goods and by virtue of such collection the assessee shall be deemed to have discharged his final tax liability under the Income-tax Ordinance and no further deduction is to be made in respect of the same goods under subsection (4) of section 50 for the simple reason that no tax liability remains against such assessee and thus, no tax is deduct-able under subsection (4) of section 50 with the result that section 80C(2)(a)(i) is not applicable on such supplies."

7. The department feeling aggrieved preferred this second appeal raising the following plea:---

"Clause (9B) of Part IV of Second Schedule to the Income Tax Ordinance, 1979 was inserted by Finance Act, 1996 and since then both taxes deducted at source under section 50(4) and under section 50(5) are to be treated as final discharge of liability and in case the assessee does not want to pay both the taxes, return of total income alongwith irrevocable option has to be filed for normal law assessment. The assessee never opted for normal law assessment and hence both taxes deducted under section 50(4)&(5) were rightly treated as final discharge of tax liability by the Assessing Officer under section 80-C of the Income Tax Ordinance, 1979 read with clause (9B) of Part 1V of the Second Schedule to the Income Tax Ordinance, 1979. "

8. The learned D.R. has reiterated the contention contained in the above averment on the ground of appeal. On the other hand the learned counsel for the respondent has submitted that the issue already stands decided by the Tribunal in favour of assessee vide judgment reported as 1997 PTD (Trib.) 1143 and, therefore, until and unless that law is amended by the Legislature by inserting a new of charging provision or the judgment of Tribunal is reversed by the Hon'ble High Court, the judgment shall hold the field. He has submitted that insertion of clause (9B) in Part IV of the Second Schedule to the Income Tax Ordinance, 1979 shall not have the effect of enhancing any tax liability- or enlarging the scope or charging provision contained in section 80-C of the Income Tai Ordinance.

9. My learned brother the Accountant Member has accepted the departmental view holding that the position of law has changed due to insertion of clause (9B) of Part IV of Second Schedule to the Income Tax Ordinance, 1979 with effect from 1-7-1996. I agree with him that a new clause has been inserted in Part- IV of the Second Schedule with effect from 1-7-1996 but I am not persuaded to agree with his views that the insertion of clause (9B) in Part IV of the Second Schedule can be interpreted are applied in a way which is adverse or detrimental to the interest of assessee. Clause (9B), Part IV of the Second Schedule has been inserted in pursuance of section 14 of the Income Tax Ordinance, 1979, which deals with the exemption and not the charging of tax. Moreover, a bare perusal of clause (9B) of Part IV of the Second Schedule shows that the option of . availing clause (9B) rest with the assessee and it cannot be imposed upon an unwilling assessee to his disadvantage and to his detriment. Section 14 of the Income Tax Ordinance, 1979 is not a charging provision, although it is contained in Chapter III of the Income Tax Ordinance which deals with the charge of tax. There are six sections in Chapter III, sections 9 and 10 are the charging sections, section 11 deals with the scope of total income on which the income-tax is charged. Section 12 deals with the income deemed to accrue or arise in Pakistan. It also contains various other deeming provisions pertaining to income. Section 13 also deals with the deemed income. Section 14 is neither a charging section nor deals with the scope of total income or deemed income but it deals with the exemption in respect of income or classes of income or person or classes of persons specified in Second Schedule. Various exemptions froth charge of tax, confessional rate of tax which are less than specified in First Schedule, reduction in tax liability and exemption front operation of any provision of the Income Tax Ordinance are specified in the Second Schedule. Thus, in the words of Hon'ble Supreme Court of Pakistan the exemptions allowed under section 14 permit an income to escape taxation which is otherwise liable to charge of tax. Thus, while examining the scope and consequences of any insertion in .any part of Second Schedule in pursuance of section 14 of the Income Tax Ordinance, it is very important to keep in view the; purpose and the purport of, the legislation. In view of the discussion which I will make presently it is not possible to agree with the following views of my learned brother, the Accountant Member:

"Now the supplies of imported items will not suffered tax once again under the presumptive tax regime only upon furnishing an option to opt out of the presumptive tax regime as per proviso to this clause. We, therefore, hold that learned CIT (A) was not justified to grant the relief in the light of this Tribunal's judgment reported as 1997.PTD (Trib.) 1143 which pertains to earlier period i.e. assessment year 199,4-95. Any tax burden can be imposed by the Legislature by a clear and explicit provision of law, though the same may not always be bored on good logic or reason, or to which no exception could be taken. The purpose of insertion of clause (9B) of Part IV of the Second Schedule appears to be to tax the imported goods which suffered tax 50(5) read with section 80-C once again on supply thereof either under section 80-C or under section 22/23."

10. I agree with the views of my learned brother to the extent that any tax burden can be imposed by the. Legislature by a clear and explicit provision of law though it may not always be based on good logic or reason to which no exception can be taken. However, I am unable to reconcile with the idea that the purpose of insertion of clause (9B) of Part IV of Second Schedule is to tax the imported goods again, on supply thereof in spite of the fact that the same goods have already suffered the incidence of tax at the import stage. The issue has been discussed in detail and elaborately in the Tribunal's judgment reported as 1997 PTI) (Trib.) 1143, and, therefore no further discussion is required on this point.

11. It appears that my learned brother lost sight of the established principles of the interpretation of statutes which are equally applicable `to general statute as well as fiscal statute. The principles have been discussed in depth in a Full Bench judgment of - this Tribunal reported as 1999 PTD (Trib.) 2949. In the said judgment we have cited the following quotation from the 'Crawford on Statutory Construction at (page 241):

"A Court will resort to interpretation when it endeavours to ascertain the meaning of a word found in a statute, which when considered with the other words in the statute may reveal a meaning different from the apparent when this word is considered abstractly or When given its usual meaning."

12. The above principle is applicable not only for ascertaining the meaning of a word but for ascertaining the meaning and purpose of a particular provision. It is further observed in the above Full Bench judgment that, 'there is accordingly growing recognition by Courts that a statute should be construed, rather than interpreted with due regard to its avowed object and to its character. 'It has been further held in the above Full Bench judgment as follows:--

"As stated earlier the Court is required to ascertain the real meaning of a legislation. In order to arrive at the real meaning, it is necessary to get an exact conception of the aim, and object of the whole Act. The true meaning of' any passage is to be found not merely in the words of the passage but in comparing it with other parts of the law. Construction is to be made of all parts together and not of one part only by itself, because the true meaning is that which is harmonised with every other passage of the statute. In interpreting an enactment all its parts must be construed together as forming one whole and it is not in accordance with sound principles of construction to consider one section, or group of-sections alone, divorced from the rest of the statute. The intention of the Legislature is to be derived from a consideration of whole enactment and the words may be given a wider or more restricted meaning than they ordinarily bear if the context requires it. It is also well-settled that the language of a statute constitutes the depository or reservior of the Legislative intent, and in order to ascertain or discover that intent, the statute must be construed as a whole just it is necessary to consider a sentence in its entirety, in order to grasp its true meaning. Meaning of certain words used in a section may be construed by attending to such other provisions of the statute as may tend to throw light upon them. When construing the terms of any provisions found in a statute, the Court is bound to consider other parts of the statute which throw light on the intention of the Legislature and serve to show that the particular provision ought not to be construed as it would be alone and apart from the rest of the statute. No part of a statute should be construed in isolation. For the intention of the law-maker is to be found not in one part of the statute or another but in the entire enactment and that intention can best be gathered by viewing a particular part of the statute not detached from its context in the statute but in connection with its whole context."

13. Another principle of the fiscal statute pertaining to the imposition of fiscal burden or charging of tax has been discussed in the above Full Bench judgment as follows:-

"There is another important principle of law pertaining to the imposition of fiscal burden or charging of tax, that it should be imposed by unequivocal and unambiguous language. Taxing statute must state with the utmost clearness what and whom and in what manners they are taxing. Likewise the extent of fiscal burden should also be in clear words and without any ambiguity. In any taxing provision if there are two possible constructions of the words of the statute then effect is to be given to the one that is in favour of the citizen and not the one that enhances a burden or increased burden on him. Neither any tax nor any higher rate of tax can be imposed by any interpretative process. No provision in fiscal statute can be extended on analogy and, therefore, the Court would never be justified in straining the language in order to hold a subject liable to tax or to a higher rate of tax than by looking at the clear words used by the Legislature."

14. I would like to observe that while ascertaining the real purpose and intent of Legislature in enacting a particular provision the principles of purposive interpretation and informed interpretation rule should also be kept in view. Under these principles the intention of Legislature and the purpose of enactment is discovered in the overall context of the enactment as the overall context of the act provides the colour and background of a particular provision of law which helps in interpreting the meaning intended by the Parliament.

15. 1 am fortified in my views by the judgment of Hon'ble Supreme Court of Pakistan in the case of CIT, East Pakistan v. Hussain Qasim Dada (PLD 1961 SC 375), wherein it has been held by his Lordship Mr. Justice Hamoodur Rehman as follows:---

"If we may say, so with respect, we find ourselves unable to agree that the intention of the Legislature is to be gathered from the words only of a particular section falling to be interpreted. We would have thought that the conventional method 'of ascertaining the intention of the Legislature after reading the Statute as a whole was more likely to lead to the discovery of its true intent and is always the safer rule to follow."

16. Keeping the above principles in view. I am of the opinion that before ascertaining the intention of Legislature and the purpose of enactment it is very necessary to ascertain as to which category of provision a particular section belongs. Once the category to which a particular section belongs is found it would be easy to ascertain the intent and purpose of the legislation. However, I would like to add a note of caution at this stage that, such method of discovery of the intention of Legislature is always subject to any intention manifested clearly by expressed words in the enactment. If the words of any section or enactment are clear and obvious and admit of no ambiguity then the Court would be bound to follow and implement the same without any search for any intendment, intention or purpose. Dealing with the general character of a fiscal statute it has been held by Mr. Justice Rustam S. Sidhwa in the case M/s. Friend Sons v. Deputy Collector, Central Excise and Sales Tax (PLD 1989 (Lah. H. C.) 337) as follows:-

"There are three distinct types of provisions generally in every fiscal enactment. The charging provisions, which relate to the levy or charge of the tax, which usually state that tax is to be levied and on what matter, or goods or income and in which manner and at what rate and matters relevant thereto. The assessment provisions, which deal with the assessment, calculation or quantification of tax for the purposes of determining the amount of tax due and payable or which has escaped collection or has beet, under-assessed or assessed at a lower rate or on which excessive relief or refund has been allowed. The collection provisions, which relate to the mode and manner of receipt or collection of the tax. The charging sections have to be strictly construed and any benefit found therein has to be given to the taxpayer. However, the assessment and collection provisions are merely the machinery sections and they can be liberally construed."

17. I would humbly like to add that in all the fiscal statutes generally there is a section providing exemption from the general rule whereby the incomes or the subject-matter of levy of tax is allowed to escape the tax net and/or some concession in rate of tax or in tax liability are allowed. Such provisions are in the (sic) through which exception is allowed to the general

18. After finding that there are distinct types of provisions in fiscal statute and the purpose of each type of provision is different, I find no difficulty in referring to another principle of imposing a tax or charge, that the intention to impose a charge upon any subject must be shown by clear and unambiguous language. Thus, applying the informed interpretation rule and looking to the context in which the provisions contained in Second Schedule in the Income Tax Ordinance appears, the scope, intent and purpose of clause (9B), Part IV IInd Schedule is to be construed. I can say without any hesitation that it would be against the manifest language of statute and the intention of Legislature to say that any new charge, tax liability or enhanced liability is created by insertion of any clause in any part of the Second Schedule. In order to ascertain the true meaning of section 14 and Second Schedule in pursuance thereof it would be appropriate to reproduce section 14 and opening words in each part of Second Schedule:---

"14. Exemptions. (1) The income or classes of income or person or classes of persons specified in the Second Schedule shall be---

(a) exempt from tax under this Ordinance, subject to the conditions and to the extent specified therein; or

(b) liable to tax as such rates, which are less than the rates specified in the First Schedule, as are specified therein; or

(c) allowed a reduction in tax liability subject to the conditions and to the extent specified therein; or

(d) exempt from the operation of any provision of this Ordinance, subject to the conditions and to the extent specified therein:

Provided that, where any income which is exempt from tax under any provision of the Second Schedule, such income as may be specified in the said Schedule and subject to such conditions as may be specified therein, shall be included in the total income, so however, that the tax shall not be payable iii respect of such income.

(2) the Federal Government may, from time to time, by notification in the official Gazette, make such amendment in the Second Schedule by---

(a) adding any clause or condition therein;

(b) omitting any clause or condition therein; and

(c) making any change in any clause or condition therein,

as it may think fit, and all such amendments shall have effect in respect of any such year beginning on any date before or after the commencement of the financial year in which the said notification is issued.

Provided that the Federal Government shall place before the National Assembly all amendments made by it in the Second Schedule during a financial year."

"THE SECOND SCHEDULE

(See section 14(1))

Part I

(Exemptions) from Total Income

Income, or classes of income, or persons or classes of persons, enumerated below, shall be exempt from tax, subject to the conditions and to the extent specified hereunder. "

Part-II

REDUCTION IN TAX RATES

Incomes, or classes of income or persons or classes of persons, enumerated below, shall be liable to tax at such rates which are less than the rate -specified in the First Schedule as are specified hereunder,

Part-III

REDUCTION IN TAX LIABILITY

Incomes, or classes of income or persons or classes of persons, enumerated below, shall be allowed reduction in tax liability to the extent and subject to such conditions as are specified hereunder.

Part-IV

EXEMPTION FROM SPECIFIC PROVISIONS

Incomes, or classes of income, or persons or classes of persons, enumerated below, shall be exempt from the operation of such provisions of this Ordinance subject to such conditions and to the extent, as are specified hereunder."

19. The general charging sections in the Income Tax Ordinance. are contained in sections 9 and 10 which read as follows:

"9. Charge of-income-tax.--- (1) Subject to the provisions of this Ordinance, there shall be charged, levied and paid for each assessment year commencing on or after the first day of July, 1979, income-tax in respect of the total income of the income year or years, as the case may be, of every person at the rate or rates specified in the First Schedule:

Provided that where, by virtue of an amendment in the First Schedule, the rate or income-tax, for the purpose of assessment in respect of any assessment year, is altered, the rate of income-tax existing prior to the said alteration shall continue to apply in respect of any assessment year to which the said existing rate is applicable.

(IA) Notwithstanding anything contained in section 37 of the Modaraba Companies and Modaraba. (Flotation and Control) Ordinance, 1980 (XXXI of 1980), or any other law for the time being in force, there shall be charged, levied and paid for each assessment year commencing on or after the first day of July, 1993, income-tax in respect of the total income of a Modaraba at the rate specified in the First Schedule:

Provided that the, total income of a Modaraba shall not be chargeable to tax for the first three assessment years after commencement of its business of not less than ninety percent. of its profits in a year is distributed to the Modaraba certificate holders.

(2) Where, by virtue of any provision of this Ordinance, income-tax is to be deducted at source or collected or paid in advance, it shall be so deducted, collected or paid, as the case may be, accordingly.

10. Charge of super-tax and surcharge. ---(I) In addition to the income- tax charged for any year, there shall be charged, levied and paid for that year in respect of the total income, or any part thereof, of the income year or years, as the case may be, of every person, an additional duty of income-tax (in this Ordinance referred to as 'super-tax') and surcharge at the rate or rates specified in the First Schedule.

Provided that where, by virtue of an amendment in the First Schedule, the rate of super-tax and surcharge, for the purpose of assessment in respect of any assessment year, is altered, the rate of super-tax and surcharge existing prior to the said alteration shall continue to apply in respect of any assessment year to which the said existing rate is applicable.

(2) Subject to the provisions of this Ordinance, the total income of any person shall, for the purposes of super-tax and surcharge, be the total income as assessed for the purposes of income-tax for any year, the assessment shall also be final and conclusive for the purposes of super-tax or surcharge, as the case may be, for the same year.

(3) All the provisions of this Ordinance relating to the charge, assessment, deduction at source, collection or payment; in advance, recovery and refund of income-tax shall apply, so far as may be, to the charge, assessment, deduction at source, collection, payment in advance, recovery and refund of super-tax and surcharge, as the case may be."

20. In addition to above general charging provisions there are other charging provisions also contained in various other sections of the Ordinance, such as sections 86 to 89 which deal with the charging of additional tax. There are other charging provisions also which deal with the presumptive tax regime. I do not intend to give any exhaustive list of the charging provisions contained in the Income Tax Ordinance, 1979. My purpose is to show that there are various charging provisions in the Income Tax Ordinance and whenever the Legislature intends to charge any income tax on any income, deemed income or for any default under the normal law or under the special law of presumptive tax regime, the specific amendments, additions or insertions are made in the charging provisions. When the Legislature intends to make any amendment in the machinery sections or recovery provisions the relevant provisions are amended or in the relevant category, new provisions are inserted and they take their place in their particular sphere of category without any overlapping. likewise if any concession, exemption, reduction in tax rate, reduction in tax liability or exemption from operation of any provision of the Ordinance is intended, the additions, amendments or insertions are made in the relevant part of Second Schedule which never has the effect of creating a new charge or liability but always has the manifest effect specifically provided in each part of the Second Schedule.

21. Now, when we read section 14(1)(d) with the opening words in Part IV of the Second Schedule, we find that the purpose of insertion of any clause in Part IV of the Second Schedule is to exempt any income or classes of income or persons or classes of persons from the operation of such provision of the Ordinance subject to such conditions and to the extent as specified in each clause.' Thus, the exemption allowed in Part I or Part IV of the Second Schedule would always mean, an exception to the rule i.e. exclusion of any income from the total income for the purpose of computation of tax, as it is further manifested from a reading of section 49 or to exclude any income or classes of income or persons or classes of persons from the operation of any provision in the Ordinance. If any income is otherwise not taxable or any transaction is not to be subjected to the levy of tax or any persons or classes of persons are not included in or governed by the charging provisions they cannot be so included or subjected to tax by insertion of any clause in Part I or Part IV of the Second Schedule to the Income Tax Ordinance. Such interpretation would be against the manifest scheme of the taxation contained in the Income Tax Ordinance and shall be against the clear provisions of law. Since the purpose of section 14 and Second schedule in pursuance thereof is to allow relief to the assessee from the charging of tax it would amount to straining the provisions of law and the language to the extent of doing violence to the manifest scheme which emerges by reading the entire statute, if it is held to the contrary.

22. I am of the considered opinion that the provisions contained in Second Schedule to the income Tax Ordinance are for the benefit of assesses and can never be strained to the detriment or disadvantage of an assessee. Moreover, a reading of the opening words contained in Part IV of the Second Schedule read with provisions contained in section 14(1)(d) makes it clear that the provision of clause (9B) of Part IV of the Second Schedule shall come into play only if the conditions specified therein are fulfilled. If the conditions provided therein are not fulfilled the exception provided therein shall not be operative with the consequence that the normal provisions contained in the Income Tax Ordinance shall remain and continue to be operative. Clause (9B) of Part IV of the Second Schedule reads as follows:---

"Clause (9B).---The provisions of section 80-C in so far as they relate to the payments on account of the supply of. goods on .which tax. is -deductible under subsection (4) of section 50 shall not apply to any person, being an importer of goods, from whom tax is collectable under subsection (5) of section 50 if supplies are made by the same importer under the same name and title and he opts out of the presumptive tax regime:

Provided that a declaration of option is furnished in writing within three months of the commencement of the income year and such declaration shall be irrevocable and shall remain in force for three years.

Provided further that nothing contained in this clause shall apply to any manufacturer of goods for which special rates of deduction of tax are specified under clause (c) of subsection .(4) of section 50:

Provided also that the aggregate overall tax liability in respect of such goods shall not be less than four percent. of the value of goods supplied. "

23. There is no dispute on the proposition that it shall become operative on furnishing of declaration of option by an assessee. My learned brother has observed that the assessee in this case has not exercised the option and thus, according to my humble opinion the result is that clause (9B) shall not be operative. The exception envisaged under clause (9B) of Part IV of the Second Schedule shall not come into play with the result that the law as contained in section 80-C shall apply in its entirety. It will not have any other effect and particularly shall not have the effect of creating a charge which otherwise is not envisaged in the totality of scheme of presumptive tax contained in section 80-C of the Income Tax Ordinance. On this point I would not like to dilate in' this order, as this issue has been considered elaborately and in detail in the order reported as 1997 PTD (Trib.) 1143.

24. For the foregoing reasons and with due deference to my learned brother, the Accountant Member, I am not persuaded to agree with the departmental view and hold that in the facts and circumstances of the present case clause (9B) of Part IV of the Second Schedule to the Income Tax Ordinance, 1979 never became operative with the result that the assessee is entitled to be governed according to law contained in section 80-C of the Income Tax Ordinance. It is further held that the learned CIT (A) has rightly held that once the assessee is finally discharged of his tax liability under section 50(5) read with section 80-C he cannot be charged again on supply of same goods second time under section 50(4) read with section 80-C. The relief allowed by the learned CIT(A) is not open to any exception with the result that the appeal at the instance of department is liable to be dismissed. The appeal at the instance of department stands dismissed accordingly.

(Sd.)

Dated: 1-1-1999 (Muhammad Mujibullah Siddiqui Chairman)

Order of the Bench

In order to resolve the difference of opinion the following question is referred to the Chairman for reference to Third Member under section 133(7) of the Income Tax Ordinance.

Question

Whether the insertion of clause (9B) in Part IV of the Second Schedule has the effect of creating a new charge and whether the exemption/concessionary treatment as prescribed in this clause is available only to type of cases and extent specified, and subject to conditions laid down therein or to all persons suffering deduction under section 50(5) in the light of judgments of this Tribunal announced when there was no specific statutory stipulation on the issue?

(Sd.)

(MUHAMMAD MUJIBULLAH SIDDIQUI),

(CHAIRMAN).

(Sd.) (MUHAMMAD DAUD KHAN),

(ACCOUNTANT MEMBER)

Date of hearing: 13-5-2000

Date of Order: 16-5-2000

Mr. Zaki Ahmad, D.R. for Appellant.

Mr. M. Javed Zakaria for Respondent.

25. SHAHID JAMAL (ACCOUNTANT MEMBER).---Due to difference of opinion between by my learned brothers, the Accountant Member and the Judicial Member, following question has been referred to me for resolution:--

"Whether the insertion of clause (9B) in Part IV of the Second Schedule has the effect of creating a new charge and whether the exemption/concessionary treatment as prescribed in this clause is available only to type of cases and extent specified, and subject to conditions laid down therein or to all persons suffering deduction under section 50(5) in the light of judgments of this Tribunal announced when there was no specific statutory stipulation on the issue?"

26. The facts have been stated in the order but in order to refresh the memory and to have focussed attention on the issue, these are restated at the cost of repetition. The respondent is a Public Limited Company, engaged in deriving income from manufacturing and sale of Manmade Fibre Yarn. It has also done trading in respect of the imported yarn, there is no dispute to the fact that the import of Fibre Yarn, to the extent of trading, was commercial in nature and attracted section 80-C. 'The Assessing Officer, while bringing this import within the ambit of 80-C, has held that it fell both under 80-C(2)(a)(i) and (a)(ii), and was assessable both at the import stage as well as at the supply stage. He, therefore, brought it to tax in the following manner, with his pertinent observation:--

"That irrespective of increase/decrease in the above results, sale of imported raw material is in fact commercial import of assessee which attract section 80-C. Similarly, sale of this raw material to different companies as per details is supply for further treatment under section 80-C. Thus, the liability under section 80-C is worked out as under after confronting assessee through notice, dated 27-1-1997 para. 3.

"Imports (Purchases)	3,70,38,299
Tax @ 4%	14,81,532
Paid Nil
Balance payable
Supplies	4,11,74,429
Tax @ 3.5 %	14,41,105
Paid Nil	---
Balance payable	14,41,105
Total payable	29,22,637"

27. The aggregate tax charged is Rs.29,22,637 and the cumulative rate is 7.9% . It also needs to be mentioned that the respondent did not file any option either under clause (9) for the presumptive regime or under clause (9B), out of presumptive tax regime of Part IV of the Second Schedule, nor did he file any statement under section 143(B). He filed his normal tax return under section 55 of the Income Tax Ordinance declaring loss of Rs.16,40,583. The assessment was completed under section 62 of the Income Tax Ordinance.

28. On subjection of income, at two stages, under section 80-C(2)(a)(i) and (ii), at the import and the supply stage, respondent took objection and learned CIT (A) placing reliance on this Tribunal's decision reported as 1997 PTD (Trib.) 1143 held that tax charged at the import stage was full and final and deleted the charge under section 50(4) at the supply stage. The Department took objection holding that with the insertion of (9B) it was to be doubly taxed under section 50(4) or 50(5) in respect of those assessees who had not exercised the option for normal assessment

29. My learned brother, the Accountant Member had held as under:---`

"It is a fact that position of law has changed due to insertion of clause (9B), Part IV of 2nd Schedule w.e.f. 1-7-1996. Now supplies of imported items will not suffer -tax once again under the presumptive tax regime only upon furnishing of an option to opt out of he presumptive tax regime as per proviso to this clause. We, therefore, hold that CIT (A) was not justified to grant the relief in the light of this Tribunal's order reported u 1997 PTD (Trib.) 1143 which pertains to earlier period i.e. assessment year 1994-95 .

A 30 The learned Judicial Member, on the other hand, after a full scale discussion on interpretation of statute, the charging sections and the exemption clauses and citing several case-laws in support of his contention has held as under:

"I am of the considered opinion that the provisions contained in 2nd Schedule to the Income Tax Ordinance are for the benefit of assessees and can never be strained to the detriment or disadvantage of an assessee. Moreover, a reading of the opening words contained in Part IV of the Second Schedule read with provisions contained in section 14(1)(b) makes it clear that the provision of clause (9B) of Part IV of the 2nd Schedule shall come into play only if the conditions specified therein are fulfilled. If the conditions provided therein are not fulfilled the exception provided therein shall not operative with the consequence that the normal provisions contained in the Income Tax Ordinance shall remain and continue to be operative. "

"There is no dispute on the proposition that it shall become operative on furnishing of declaration of option by an assessee. My learned brother has observed that the assessee in this case has not exercised the option and thus, according to my humble opinion, the result is that clause (9B) shall not be operative. The exception envisaged under clause (9B) of Part IV of the 2nd Schedule shall not come into play with the result that the law as contained in section 80 ,C shall apply in its entirety.-

31. In view of the above difference of opinion the question posed to me is whether insertion of clause (9B) of the Part IV of the Second Schedule has in any way altered the charging provisions of 80C or created a new charge?

32. I have heard Mr. 'kaki Ahmed, the learned D.R. for the appellant and Mr. Javed Zakaria, Advocate, for the respondent Mr. Zaki Ahmed has repeated the same plea that the assessee had not opted out of the presumptive tax regime and hence the exemption envisaged under clause (9B) of Part IV of the Second Schedule was not admissible to the importer-supply Mr. Javed Zakaria argued that the view held by the learned Accountant Member was not consistent with the decisions given by several Division Benches of this Tribunal. To begin with it was inconsistent with the decision reported as 1997 PTD (Trib.) 1143 and the reason stated by the learned Accountant Member that this decision had now restricted application, only up to assessment year 1994-95 and with the insertion of clause (9B) in Part IV of the Second Schedule conditions of chargeability under 80-C have changed, is not harmonious with principles of interpretation or law of precedent. He cited several decisions to emphasise his point that in any situation where two interpretations ' were possible, the one favourable to the assessee should be adopted. He relied on CIT v. Hossein Kasam Dada (1961) 4 Tax 96, Dreamland Cinema v. CIT PLD 1977 Lah. 292 and CIT v. Muhammad Kassim 2000 PTD 280. Apart from being inconsistent with the accepted principles of interpretation, the view -field by the learned Accountant Member, he submitted, was also not consistent with his own decisions, given lately, on this very specific issue, in I.T.A. No.282/KB of 1999-2000, dated 18-1-2000, and I.T.A. No.1917/KB of 1988-89, dated 29-7-1999 both the above judgments are Division Benches' judgments and these were binding upon the learned Accountant Member. To reinforce his point he cited 1997 PTD (Trib.) 879 a decision from Headquarter Bench of this Tribunal, whereas it has been held as per principles of precedence, a decision given by a Division Bench should be followed and any disagreement should be referred to a Larger Bench. He further cited this Tribunal's order in I.T. As. Nos. 42 and 43/KB of 1999-2000, dated 28-10-1999, where on difference of opinion the Third Member had held that Division Bench always had to be followed.

33. I have read the view of my learned brothers carefully and heard the two representatives and given my anxious thought to the issue before me. I am inclined to agree with my learned Judicial brother that clause (9B) inserted in Part IV of the Second Schedule is m the nature of concession rather than in the nature of imposition, charge or additional burden on the taxpayer. The Second Schedule is exemption from total income and all the our parts of the Second Schedule are intended to give relief to the tax payer, in various forms, from the normal taxing provisions, these are classified as (i) exemption from total income, (ii) reduction in tax rate, (iii) reduction in tax liability (iv) exemption from specific provisions. In this way clause (9B) of Part IV of the Second Schedule should be interpreted as concessionary and riot charging or over-bearing. The purpose of the enactment was to provide relief to importer-cum-supplier from the operation of subsection (4) of section 50, against - double and enhanced deduction and bring it to a level more or, less closed to the tax paid at import stage. This was explained by C. B. R. vide its Circular No. 10 of 1996 as under:---

"Importers engaged in supply of goods imported by them hart been agitating that the tax is collected from them twice: once 4 % at the time of import and again @.2.5% at the time of supply. Through the insertion of clause (9B) in Part IV of the 2nd Schedule such importer can now opt out of the presumptive tax regime provided that the total tax liability in respect of such goods shall not be less than 4% of the value of goods supplied i.e. the sale price. Such reduction in tax rate will be admissible only to those importers who made the supply of imported goods under the same business name and style."

34. The purpose was, therefore, to rationalise the rate of deduction/taxation in respect of importer-supplier. In this case the tax charged is 7.09% of the value of supplies and 7.89% of the import value, which according to the relief provided by clause (9B) should have been 4 % . It is highly irrational to suggest that tax of importer-supplier, under presumptive, regime should not be less than 7.09 % and in the same case; under normal regime, a minimum 4 % but final tax to any limit with all the hastles of Accounting and Assessment, and that too by way of concession. At 7% or higher rate of sale value, it would require an unheard of G.P. under the normal regime, but minimum 4 % was prescribed in order to preclude the possibility of refund of the tax paid at import stage. The legislative intent of 9(B), therefore, is not to disturb the presumptive tax provisions but to provide relief for normal regime taxpayers, also to subtly ensure minimum tax thereon. It is admitted, rather agreed position that assessee, not having opted out was assessable under presumptive regime; the only question whether it was, in addition to section 50(5), also assessable under section 50(4)? Casually it seems that for a non-opted the two regimes will apply, but this apparent proposition is wholly inconsistent with section 80(C)(4). Such an inconsistency is repugnant to the charging scheme of 80-C as well as relief envisaged under section 14(1). I cannot, with due deference and regard to my brother, the learned Accountant Member, persuade myself to agree to such a proposition. Once an assessee has paid tax at import stage, he acquires a right, as per scheme of presumptive taxation, not to be bothered with any other charge under the Ordinance. As the assessee has chosen to remain within the presumptive fold and protection, by not opting out, the right cannot be taken away or violated. I am, therefore, firmly of the view that 9(B) has not either altered or enhanced changeability under section 80-C, and this Tribunal's judgment reported as 1997 PTD (Trib.) 1143 remains intact and fully applicable to the facts of this case.

C.M.A./M.A.K./35/Tax(Trib.) Order accordingly.