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

----S. 2(16)(a) & (b)---"Company"---"A body corporate"---Definition---Word "under" used in S.2(16)(b)---Meaning---Word "under" appearing in S.2(16)(b) of the Income Tax Ordinance, 1979 would mean those corporate bodies, which had been created in accordance with and in conformity to a statute or in pursuance thereof, whereby the company had been directly created under such statute.

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

----Ss. 2(16)(b) & 80-B---Cooperative Societies Act (VII of 1925)-- Preamble---Company---Statute of cooperative society ---Determination-- Assessee/Cooperative Society claimed benefit of presumptive tax under S.80-B of the Income Tax Ordinance, 1979 being a "artificial juridical person" ---Department pleaded that Cooperative Society was a body corporate founded under the provisions of the Act and falls within the definition of a "Company" as given in S.2i 16)(b) of the Income Tax Ordinance, 1979 and that "Company" had been omitted from S.80-B of the Ordinance and therefore, Cooperative Societies were not entitled to presumptive tax benefit---Validity---Where a corporate body was directly constituted having its origin in a statute, without any reference or the role of the private individuals, it was only such body, which was formed "by" or "under" the law---Intention of the Legislature was to embed only such corporate bodies into the definition of a "company", which were directly established, constituted, and created by the relevant statute itself---Where the body had been formed by private individuals and subsequently registered under the relevant law, it would not be a body formed under the law, rather would be a body formed otherwise, but registered under the law---While creating bodies corporate, both the expressions "by" and "under" have been used by the Legislature and while enacting S.2(16)(b) of the Income Tax Ordinance, 1979, the Legislature was duly conscious of this position and -thus, covered these two expressions in the definition--Held, Cooperative Society was not "company' within the meaning of S.2(16)(b) of the Income Tax Ordinance, 1979.

Harihar Prasad v. Bansi Missir and others AIR 1931 Pat. 321; South Kanara Central Cooperative Bank Ltd. v. Chikumudunur Cooperative Society Ltd. AIR 1934 Mad. 181; Black's Law Dictionary, 6th Edn, p.1525; New Lexicon Webster's Dictionary, 1989 Edn.; Words and Phrases, Permanent Edn., Vol. 143, p.149; Stroud's Judicial Dictionary, 5th Edn.; Words and Phrases, Legally Defined, Third Edn.; Dr. Indramani Pyarelal Gupta and others v. W.R. Natu etc. AIR 1963 SC 274 and Jullunder Cooperative Transportation Society Ltd. v. Income-tax Officer 1977 PTD 288 ref.

Shafqat Mahmood Chohan for Appellant.

Zia H. Rizvi, Syed Ibrar Hussain Naqvi, M. Iqbal Hussain and Khawaja Ibrar Majal for Respondent.

JUDGMENT

The instant appeals also I.T.As. Nos. 434 to 439 of 1998, 468 of 1999, 469 to 472 of 1999, 474 of 1999, '297 to 313 of 1999, involve alike facts and the same question of law, thus are being disposed of together.

2. Although four questions of law were raised in the memo. of appeals,' but at the hearing, the learned counsel for the appellant, has formulated a concise question i.e. whether the cooperative societies registered under the provisions of Cooperative Societies Act (VII of 1925) (the Act), are the companies within the meaning of section. 2 (16)(6) of the Income Tax Ordinance (XXXI of 1979) (the Ordinance).

3. The above question has arisen in the context of section 80B of the Ordinance, which proviles "where any amount referred to in subsection (2) is received by or accrues or arises or is deemed to accrue or arise to an individual, unregistered firm, association of persons. Hindu undivided family or artificial juridical person referred to in clause (32) of section 2 the whole of such amount shall be deemed to be income of such person and tax thereon shall be charged at the rates specified in the First Schedule".

4. Respondents are the Cooperative Societies duly registered under the provisions of the Act, they claim the benefit of section 80-B of, the Ordinance, on the ground that only "Company" has been excluded from the purview of the said section. while their status has been determined by the learned Income-tax Tribunal as "artificial juridical person" vide the ,impugned orders.

5. The case of the appellants is that the respondents are body corporate formed under the provisions of the Act, and therefore, fall within the definition of a "Company" as given in section 2(16)(6) of the Ordinance. According to the learned counsel for the appellant "Company" has been omitted from section 80-B, therefore, the respondents are not entitled to the presumptive tax benefit as envisaged by the said section.

6. Before proceeding any further, we feel expedient to reproduce section 2 (16) of the Ordinance:

Section 2(16). "Company" means---

(a) company as defined in the Companies Ordinance, 1984 (XLVII of 1984); or

(b) a body corporate- formed by or under any law for the time being in force; or

(bb) a trust formed by or under any law for the time being in force; or

(c) a body corporate incorporated by or under the law of a country outside Pakistan relating to incorporation of companies; or .

(cc) a Modaraba as defined in the Modaraba Companies and Modarabas (Flotation and Control) Ordinance, 1980 (XXXI of 1980);

(d) the Government of Province;

(e) the foreign association, whether incorporated or not, which the Central Board of Revenue may, by general or special order, declare to be company for the purpose of this Ordinance for such assessment year or years (whether commencing before, on or after the first day of July, 1979) as may be specified in the said order; )

7. In order to advance his case, the learned counsel for the appellant, has referred to Harihar Prasad v. Bansi Missir and others (AIR 1931 Pat. 321) and South Kanara Central Cooperative Bank Ltd. v. Chikumudunur Cooperative Society Ltd. (AIR 1934 Mad. 181) to contend that after registration of a Cooperative Society under the Act, it becomes a legal entity and thus, attains a status of a corporate body. He contended that formation of a Cooperative society is complete only when it is registered under the Act, which is the law for the time being in force as envisaged by section 2(16)(6). Resultantly, the respondents are the companies within the meaning of the said section:

8. With a view to elucidate the connotation of the words, "form", "under", "under the law" used in section 2(16)(6), reference has been made to various dictionaries including Black's Law Dictionary, 6th Edition, New Lexicon Webster's Dictionary, 1989 Edition, Words and Phrase, Permanent Edition, Stroud's Judicial Dictionary, 5th Edition, Words and Phrases, Legally Defined, Third Edition. Reliance has also been placed on Dr. Indramani Pyarelal Gupta, etc. v. W.R. Natu etc. (AIR 1963 SC 274). On the strength of above, it is submitted that where the formation of a body is deponent upon its registration "under any law", such body is the one "formed under the law", as in the case of the respondent-societies.

9. Conversely, the learned counsel for the respondents have contended; that merely because the respondents are registered under the Act, such registration would not mean to "form" or create the respondents under the law, so as to bring them within the ambit of. section 2 (16)(6). Further, according to the clear intention of the Legislature, only such corporate bodies, which come into being directly under a statute will be the Companies for the purpose of the aforesaid section. The expressions "by" or "under the law" are restricted only. to such bodies and if the intention of the Legislature was to include every corporate body in the aforesaid section which has been registered under any law for the time being in force, there was no need for clause (a), which would be rendered redundant. And no redundancy can be attributed to the Legislature. Likewise, according to clause (c) of the aforesaid section a body corporate, incorporated by or under the law of a country outside- Pakistan relating to incorporation of companies, has been included in the definition of a company. Thus, the Legislature conceived the scope of formation of a corporate body and its incorporation/registration in two different and distinct context and meaning; there are large number of corporate bodies, which have been created or established by various enactments directly, without any reference to their incorporation/registration under any law. It is only these statutory corporate bodies which are covered by section 2 (16) (b). Lastly it is contended that the question about the status of a cooperative society came under consideration in the case reported as Jullunder Cooperative Transportation Society Ltd v. Income-tax Officer 1977 PTD 288, and the Honourable Supreme Court, held the cooperative society as an association of persons. This view as also endorsed by the Single Judge of this Court in W. P. No. 10030 of 1996 in the case of National Cooperative Supply v. Federation of Pakistan.

10. Submissions made by the learned counsel have been considered. In view of the question precisely formulated by the learned counsel for the appellant, the question requiring determination is whether respondents are covered by the definition of company, as defined in section 2 (16) (b) (ibid). However, it is not an issue as to what otherwise is the status of the respondents. Therefore, we are reframing ourselves to dilate upon, the question whether the respondents Fare, 'association of persons" or "artificial juridical person".

11. According to section 23 of the Act, the registration of a cooperative society renders it a body corporate. There is no cavil with this that the respondents are "body corporate". Thus, the limited but key issue, is, whether everybody corporate, which is registered under any law for the time being in force is a company? In this behalf, it is expedient to consider and discern the import of the words "form", "by" or "under the law" appearing in section 2 (16)(b) in their. proper conceptual context. It may be pertinent to state here that the learned counsel for the appellant has, however, conceded that if a corporate body has been constituted by an enactment, it would be a body "formed by the law", duly covered by the definition of a company.

12. According to Black's Law Dictionary, 6th Edition, page 651, "form" means "A model of skeleton of an instrument to be used in a judicial proceeding or legal transaction, containing the principal necessary matters, the proper technical terms or phrases and whatever else is necessary to make it formally correct, arranged in proper and methodical order, and capable of being adopted to the circumstances of the specific case of transaction". As per New Lexicon Webster's Dictionary, page 369 "form" has been defined "to make, shape, to put together; to form a sentence; to mould, to develop, .to conceive, to organize into or become arranged as, to constitute, etc.".

13. From the above definitions, it is clear that the' word "form" used in section 2(16)(b) is to conceive, create, constitute and establish a body. Though there is no specific provisions in the Act, relating to the formation of a cooperative society. However, from the collective reading of the provisions of sections 7 and 9 of the Act, a society is formed when, a society of which no. member is a society, at least 10 members, qualified in accordance with section 7(1) and in case of a society of which a member is a society by duly authorized persons on behalf of every such society and where all the members of the societies arc not a society by 10 other members and where there are less than 10 members, by all of them, through a duly signed application apply to the registrar accompanied with the proposed bye-laws of the society, for its registration. According to section 10 if the Registrar is satisfied that the provisions of the Act and the rules framed thereunder have been complied with and proposed bye-laws, are not contrary to the Act, he may register the society and its bye-laws. According to section 23 of the Act, the registration of a society shall render it a "body corporate" by name under which it is registered. with perpetual succession and a common seal, and with powers to hold the property, to enter into a contract, to institute and defend a suit etc.

13-A. Thus, from,-the, above, it is manifest that the formation of a society takes place through the individuals, by virtue of endorsing to the instrument of the bye-laws of the society. Thereafter, upon registration by the Registrar, it only attains a status- of a "corporate body" with certain rights and obligations.

14. According to section 15 of the Companies Ordinance, 1984, mode of forming a company has been laid down i.e. any seven or more persons, associated for any lawful purpose, may be subscribing their names to a memorandum of association and complying with the requirements of the Ordinance, in respect- of the registration, form a public company arid any two or more persons so associated may, in the like manner form a private limited company. Upon registration with the Registrar of the Company, a company so formed becomes a legal entity and a body corporate. This vividly indicates that the concept and act of forming a company is an independent. act of the individuals and precedes the registration, the latter only confers a legal recognition and status to the company so formed.

15. According to Black's Law Dictionary, 6th Edition, page 1525, the word "under" means "sometimes used in its literal sense of below in position, beneath, but more frequently in its secondary meaning of "interior" or "subordinate". More or less the same meaning is assigned by the Webster's Dictionary. However, the most apt and relevant meaning of this word, as also compared with the word "by" is found in Words and Phrases, Permanent Edition, Volume 143, page 149, which is as follows:

In general.

The word "under" may mean "in accordance with" and "in conformity with"

Words "under" and "by" when used with reference to crime of obtaining money by false pretenses mean same thing.

At page 151. "under" as used in seduction statute, is not used in the sense of "during the existence of," but has the meaning of "by", by reasons of, or "by" means of".

At the same page, "under" has also been defined, equivalent to the words "by virtue of".

16. From the above definition, the word "under" appearing in section 2 (16)(b) would mean those corporate bodies, which have been created in accordance with and in conformity to a statute or in pursuance thereof, whereby the company has been directly created under such statute. The judgment referred to by the learned counsel for the appellant reported as Dr. Indramani Pyarelal Gupta etc. v. W.R Natu and others (AIR 1963 Supreme Court 274), is distinguishable on its own facts and has no application to the matter in hand

17. In the contest of above, we also find expedient o refer to meaning of the word "register". As per Black's Law Dictionary at page 1284 it means, "Recording, enrolling, inserting in an official register Thus seeking registration of a company or a society under the relevant law would not tantamount to its formation, rather assignment of a corporate status.

18. As mentioned earlier, it is not disputed by the learned counsel for the appellants that all those bodies which have been created directly by an enactment, with a corporate status are the bodies "formed by the law" and covered under section 2(16)(b). However, his discord is on the point that even if a body has been conceived and constituted by the individual, through a private instrument or treaty, its registration, under the relevant law, would make it a body formed under such law. To our mind, this plea is not well founded. Where a corporate body is directly constituted having its origin in a statute, without any reference or the role of the private individuals, it is only such body, which is formed "by" or "under" the law. These two words are synonymous and inter changeable terms. The expression law in force for the time being also relates to a particular statue through which a body is directly established and to no other law. The intention of the Legislature is to embed only such corporate bodies into the definition of a company, which are directly established, constituted, and created by the relevant statute itself. However, where the body has been formed by private individual and subsequently, registered under-the relevant law, it would not be a body formed under the law, rather would be a body formed otherwise, but registered under the law.

19. We would here like to cite few examples of the bodies corporate, formed by or under an enactment. Pakistan Insurance Corporation was established by Act No. XXXVII of 1952, and in subsection (2B) thereof, it is provided that the corporation, means "Pakistan Insurance Corporation established by this Act".

National Bank of Pakistan was constituted by Ordinance No. XIX of 1949 and subsection (2-A) provides, that "the bank" means National Bank of Pakistan, constituted by this Ordinance. Pakistan International Airlines Corporation was established under Act XIX of 1956 and it is specified in section 2(b) thereof, that "corporation means the Pakistan International Airlines, Corporation, established under this Act".

Agricultural Development Bank was created through Ordinance IV of 1961 and subsection (2A) provides. "Agricultural Bank" means the Agricultural Bank of Pakistan established under Agricultural Bank Act, 1957 (XXII of 1957).

It is clear that while creating the bodies corporate, both the expressions "by" and "under" have been used by the Legislature. Thus, while enacting section 2(16)(b), the Legislature was duly conscious of this position and thus, covered these two expressions in the definition.

20. We find weight in the submissions of learned counsel for the respondents, that if the contention of appellants about interpretation of section .2(16)(b) is accepted, it will render the provisions of subsection (a) of the section as nugatory. Nothing of the sort can be attributed to a legislative instrument. Obviously, for the reasons, if all body corporate registered under the relevant law, are construed to mean "a company" under clause (b), there would have been no need for the Legislature to include within the meaning of the company, such company as defined in the Companies Ordinance, 1984.

21. Not only that, as per clause (c) of section 2(16), a body corporate incorporated by or under the law of a country outside Pakistan relating to incorporation of the companies is meant to be company. If the intention of Legislature was to include within its definition, the element of incorporation or registration nothing prevented it to legislate in section 2(16)(b) as "a body corporate formed or incorporated by or under the law for the time being in force". This conspicuous omission in subsection (b) indicates a clear intention of the Legislature to embody in the definition only such bodies which have been established or created directly under any statute, without reference to its incorporation or registration.

22. The submission of the learned counsel for the respondents that in the judgment of the Honourable Supreme Court in the case Jullunddur Cooperative Transportation Society Ltd. v. Income-tax Officer (supra), a cooperative society has been assigned the status of an association of person, and therefore, the same status be determined in the present matter. To encounter this submission; the learned counsel for the appellant states that the question in the cited cases was whether a cooperative society was assessable as "association of persons" or "individual" and not the one herein involved. Because at the relevant point of time, the definition of the company 1s given in the Income-tax Act, 1922 was altogether different.

23. We do not intend to travel in this area of controversy, for the reason that according to the formulation of the question of law, we are only required to answer. If the respondents are the "company" or not. If the respondents are not the "company", then irrespective whether they have status of "association of persons" or artificial juridical person", they are covered by the provisions of section 80(b) of the Ordinance. Thus, this submission of the respondents' side has no relevance to the issue.

24. Upshot of the above discussion is, by answering in the negative the question mentioned in para. No.2, (supra), it is held that the respondents are not the companies within the meaning of section 2(16)(b) of the Income Tax Ordinance, 1979. These appeals, thus, have no merits and are hereby dismissed.

C.M.A./M.A.K./C-18/L Appeals dismissed