MILKO (PVT.) LTD. VS DEPUTY. COMMISSIONER OF INCOME-TAX, CIRCLE 16, COMPANIES ZONE-1, LAHORE
2001 PTD 2141
[Lahore High Court]
Before Nasim Sikandar and Jawwad S. Khawaja, JJ
MILKO (PVT.) LTD.
Versus
THE DEPUTY COMMISSIONER OF INCOME‑TAX,
CIRCLE 16, COMPANIES ZONE‑I, LAHORE and 2 others
I.T.A. No.339 of 1998, heard on 13/02/2001.
(a) Income Tax Ordinance (XXXI of 1979)‑‑‑--
‑‑‑‑S.136‑‑‑Appeal to High Court‑‑‑Scope‑‑‑Estimation of receipts application of G.P. rate profit treatment of a particular item in the balance sheet and profit and loss disallowances cannot be converted into question of Law‑‑ and Rejection of accounts having not been contested before the Tribunal, node of the questions contested before the Tribunal as framed could possibly be ruled upon by High Court in its Appellate Jurisdiction.
(b) Income Tax Ordinance (XXXI of 1979)‑‑‑--
‑‑‑‑S.136‑‑‑Appeal to High Court‑‑‑Scope‑‑‑Question of law‑‑ ‑ Determination‑‑‑Question of law can be said to have arisen out of an order of the Tribunal only if the issue was raised and it was ruled upon by the Tribunal‑‑‑No authoritative pronouncement with regard to the stated question of law could possibly be made in the absence of any finding recorded thereupon by the Tribunal.
Messrs Sultan Textile Mills Ltd. v. CIT, Central Zone‑A 1990 PTD 241; Messrs Abbot Laboratories Ltd. v Commissioner of Income Tax, Central Zone, Karachi 1989 PTD 602; Sunderam & CO. (Pvt.) v. CIT, Madras (1967) 66 ITR 604; Bhanji Bagawandas v. CIT, Madras (1968) 67 ITR 18; Raza Textile Ltd. v. CIT (1972) 86 ITR 673; C.M. Francis & CO . (P.) Ltd. v. CIT, Kerala (1970) 77 ITR 449 and Dowager Maharani Saheb of Gondal v. CIT, Karnataka (1982) 135 ITR 393 ref.
Dr. Ilyas Zafar for Appellant.
Muhammad Ilyas Khan for Respondents.
Date of hearing 13th February, 2001.
JUDGMENT
NASIM SIKANDAR, J.‑‑‑-This further appeal under section 136 of the income Tax Ordinance, 1979 assails an order recorded by the Lahore Bench of the Income Tax Appellate Tribunal on 23‑4‑199.8 on the cross appeals filed by the assessee as well as the Revenue.
2. The assessee is a private limited company and derives income from packing of milk and other allied products. For the assessment year, 1994‑95 a return was filed to declare income as Rs.797, 263. The Assessing officer rejected the returned version inter alia on the ground that A.R. had not provided any quantitative details to explain that decline in sales was due to competition, less availability of raw material and increase in production costs. Noting that it had a history of rejection of accounts, he proceeded to make trading additions of Rs.19,06,124. Also on examination of accounts he noted that the assessee had added the contract packing receipts amounting to Rs.11,90,114 in the total sales. In his view these receipts ought to have been included in gross profit as, the company had earlier deducted expenses from this contract. Further, that on being confronted the assessee failed to make a plausible explanation. Hence the aforesaid amount was added in the gross profit: After making a number of adjustments in profit and loss account total income for the year was assessed as Rs.49,73,073. The learned first appellate authority maintained the rejection of accounts, reduced the estimation of sales but maintained the treatment of contract receipts. However, partial relief was allowed in profit and loss: disallowances.
3. In appeal before the Tribunal although rejection of declared trading results was not contested as such yet it was claimed that sales could have been verified/estimated by reference to the quantum of packing material which was fully verifiable. Though the learned Tribunal noted the fact that in the immediate preceding year it had maintained the estimated sales as well as G.P. rate still it proceeded to further reduce the estimation of sale to Rs.7,10,00,000. Some ‑relief was allowed in profit and loss account disallowances while the cross‑appeal filed by the Revenue was found to be unjustified and accordingly dismissed.
4. For the appellant it is claimed that following questions of .law have arisen out of the said order of the Tribunals:‑‑‑
(i)Whether under the facts and circumstances of the case the Tribunal was justified to fix the sales at Rs.71,000,000 against declared sales at Rs.69,437,618 which were commensurate with the purchase of Packing Material which is fully verifiable.
(ii)Whether under the facts and circumstances of the case Tribunal was justified to treat the contract packing receipts as outright income ignoring the expenditure of packing material consumed and other expenses, when these receipts at the most could be assessed under section 80C of the Income Tax Ordinance, 1979?
(iii)Whether the Tribunal is justified to fix the net profit at 49.73 % in contract packing receipts against GP rate at 13.5 % in regular sales?
(iv)Whether the Tribunal is justified to confirm the disallowances in P & L Account, which, have been made without giving any specific instance of unvouched or unverifiability?
(5)Learned counsel for the appellant claims that rejection of accounts of the assessee was totally unwarranted as these had to be accepted in view of the fact that all expenses of packing materials were verifiable and no sale otherwise through packing material could have been effected by the assessee. Also complaints against the treatment given to contract receipts. It is stated that in the given circumstance; the aforesaid questions of law have arisen out of the order of the Tribunal. In support of the proposition reliance is placed on re Messrs Sultan Textile Mills Ltd. v. CIT Central Zone‑A 1990 PTD 241. Messrs Abbot Laboratories Ltd. v Commissioner of Income Tax Central Zone Karachi 1989 PTD 602, re: Sunderam & Co. (Pvt.) v. CIT Madras (1967) 66 ITR 604, re: Bhanii Bagawandas v. CIT Madras (1968) 67 ITR 18, re. Raza Textile Ltd. v. CIT (1972) 86 ITR 673, re: C. M. Francis & Co. (P.) Ltd. v. CIT Kerala (1970) 77 ITR 449 and Dowager Maharani Saheb of Gondal v. CIT Karnataka (1982) 135 ITR 393.
5. Learned counsel for the Revenue, however, states that estimation of receipts application of G.P. rate, treatment of a particular item in the balance sheet and profit and loss disallowances cannot be converted into questions of law. Also by, referring to certain portions of the order of the Tribunal claims that rejection of accounts having not been contested before the Tribunal none of the questions as framed could possibly be ruled upon by this Court in its appellate jurisdiction.
6. We will agree with the learned counsel for the respondents. As noted earlier rejection of accounts as such was not contested before the Tribunal. Also there is nothing on record to rebut the findings of the Assessing Officer. The contract packing receipts could only be included in gross profit as the company itself had deducted expenses from that contract. It is further noted that no explanation whatsoever was put forth before the Assessing Officer or the Tribunal. At this stage, learned counsel attempts to introduce a factual claim that the amount of receipts were wrongly taken by the Tribunal. Since nothing has been brought home to support that either rejection of account or the treatment of the aforesaid contract packing receipts were without any basis, reliance of the learned counsel on the aforesaid reported judgments is of no use at all. Accordingly we are of the view that none of the questions as framed arises out of the order of the Tribunal.
7. A question of law can be said to have arisen out of an order of the Tribunal only if the issue was raised and it was ruled upon by the Tribunal. In the present case, however, we find that none of the issues now being raised by way of these questions were ever raised before the Tribunal. In absence of any finding recorded thereupon no authoritative pronouncement with regard to the stated question of law can possibly be made.
Appeal rejected.
M.B.A./M‑498/LAppeal dismissed