I.T.A.- No.23/KB of 2002, decided on 17th May, 2002. VS I.T.A.- No.23/KB of 2002, decided on 17th May, 2002., 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2662 (2002)

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

‑‑‑‑S.80D & First Sched., Part III, Para. C‑‑‑Minimum tax on income of certain persons‑‑‑Surcharge‑‑‑Levy of special surcharge @ 0.5 % of the amount of minimum tax charged under S.80D of the Income Tax Ordinance, 1979‑‑‑Validity‑‑‑Paragraph C of Part III of the First Sched. to the Income Tax Ordinance, 1979 excludes the income‑tax payable only under Ss. 80BB, 80C, 80CC & 80DD of the Income Tax Ordinance, 1979 from the levy of surcharge and not the income‑tax payable under S.80D of the Income Tax Ordinance, 1979‑‑‑Had the intention of the Legislature been to exclude the tax under S.80D from the levy of surcharge, S.80D would also have been specifically mentioned in the exclusions contained in para.C of Part III of the First Sched. of the Income Tax Ordinance, 1979‑‑‑Income‑tax payable or paid under S.80D in the present case, being not the final discharge of liability levy of surcharge on the income‑tax under S.80D of the Income Tax Ordinance, 1979 was upheld by the Tribunal.

2000 PTD 2173 no direct bearing.

1994 PTD (Trib.) 100 distinguished.

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

‑‑‑‑Ss.80D & 2(43)‑‑‑Minimum tax‑‑‑Word "tax" in S.80D,' Income Tax Ordinance, 1979‑‑‑Connotation‑‑‑"No further tax"‑‑‑Effect‑‑‑If the contention of the assessee, that no further tax could be levied once 0.5 % tax had been paid, was accepted, that will be granting a licence to the taxpayer to go scott free and any further penalties or additional taxes e.g. for non‑filing of return in time, late payment of tax etc. could not be levied simply because of the use of word "tax" in S.80D(1) of the Income Tax Ordinance, 1979 and of the definition of "tax" given in S.2(43) of the Income Tax Ordinance, 1979 which could not be the intention of the law.

Muhammad Arshad, C.A. for Appellant.

Bakht Zaman, D.R. for Respondent.

Date of hearing: 15th May, 2002.

ORDER

INAM ELLAHI SHEIKH (CHAIRMAN). ‑‑‑This is the appeal of a public limited company directed against an order dated 1‑11‑2001 recorded by the learned Commissioner of Income‑tax (Appeals), Zone‑I, Karachi. The learned A.R. of the assessee only pressed the following ground at the time of hearing of the appeal:‑‑‑

"That the learned Commissioner of Income‑tax (Appeals) has erred in confirming the action of the learned DCIT who levied surcharge on your appellant. It is contended that the action is arbitrary and without any lawful basis."

2. The relevant facts in brief are that the assessment of the appellant was made under section 62 of the 1979 Ordinance in the following manner:‑‑

3. In view of the brought forward losses the Assessing officer levied minimum tax at 0.5 % under section 80D of the 1979 Ordinance at Rs.3,890,180 in the order passed under section 80D of the 1979 Ordinance. In the Form IT‑30‑C special surcharge of Rs.194,509, being 5 % of such amount of tax under section 80D of the 1979 Ordinance was also levied, against which the assessee is aggrieved. The learned Commissioner of Income‑tax (Appeals) confirmed the levy after discussing the issue in the following manner:‑‑‑

E????????? LEVY OF SURCHARGE

In respect of levying surcharge @ 5 % on the tax assessed by the learned Assessing Officer, the A.R. contended that the action of the Assessing Officer was arbitrary, misconceived and without any lawful and legal justification. They referred to section 80D of the Ordinance which starts with the non obstante clause "notwithstanding anything contained in this Ordinance", which means that while applying section 80D of the Ordinance all the other sections of the Ordinance have to be ignored. In other words it could be said that the tax liability determined under section 80D of the Ordinance constituted full and final discharge of the tax liability of an assessee. In the instant case also when the Assessing Officer had imposed and charged the tax under section 80D of the Ordinance on the appellant no other tax could be imposed. The A.R. referred to the decision given by the Honourable High Court reported as 2000 PTD 2173 wherein it was held as under:‑‑‑

Whether when a provision of statute starts with expression `notwithstanding' or with `non‑obstante' clause, the effect thereof would be that such provision would have to be given preference and would override any other provision or section of statute ‑ Held yes.

The learned A.R. also referred to the judgment in the case reported as 1994 PTD (Trib.) 100 wherein surcharge levied on the income of the assessee covered under section 80AA of the Ordinance which section also starts with section also starts with the non‑obstante clause `notwithstanding anything contained', had been deleted. They also referred to a decision which was given by me as Commissioner of Income‑tax (Appeals), Zone-?III, Karachi, in another case wherein the levy of surcharge, on minimum tax under section 80D of the 'Ordinance had been deleted.

The above arguments of the learned A.R. of the appellant have been considered but cannot be accepted in view of the fact that para. C of Part‑III of the First Schedule to the Income‑tax Ordinance, 1979 exclude the income‑tax payable only under sections 80BB, 80C, 80CC and 80CD from the levy of surcharge and not the income‑tax payable under section 80D had the intention of the Legislature been to exclude the tax under section 80D from the levy of surcharge section 80D would also have been specifically mentioned in the exclusions contained in para. C. The ratio of the judgment in the case reported as 1994 PTD (Trib.) 100 on the basis of which had given a decision as Commissioner of Income‑tax (Appeals), Zone‑III, Karachi, is also not applicable on the instant case of the appellant since the same was in respect of tax payable under section 80AA on fee for technical services received by a non‑resident where the tax paid under section 80AA was deemed' to be the final discharge of the tax liability under the Ordinance. In this particular case the income‑tax payable or paid under section 80D is not the final discharge of liability. In view of all the aforesaid factors the levy of surcharge on the income‑tax under section 80D is upheld."

4. The main and foremost contention of the learned counsel of the assessee is that the assessee having been taxed under section 80D of the 1979 Ordinance, cannot be subjected to levy of surcharge prescribed under para.C of Part‑III of the First Schedule to the Income‑tax Ordinance, 1979, because 'the liability of total tax of the assessee has been fixed at 0.5% of the turnover by the provision of section 80D of the 1979 Ordinance which starts with an obstante clause "notwithstanding anything contained in this Ordinance or any other law for the time being in force?. The learned counsel of the assessee has emphasized that in subsection (1) of section 80D of the 1979 Ordinance statute has referred to the term "tax" which is inclusive of income‑tax, additional tax, surcharge, penalty etc. Thus according to the learned counsel, once the assessee has been subjected to tax of 0.5 % under section 80D of the 1979 Ordinance no further levy of any tax could be made on the assessee. The learned counsel of the assessee has again referred to the decision of the Tribunal 1994 PTD (Trib.) 100 wherein the issue of further tax liability in the case of an assessment under section 80AA of the 1979 Ordinance was discussed. The learned counsel of the assessee also referred to a decision of the Honourable Karachi High Court reported as 2000 PTD 2173.

5. The learned D.R. on the other hand submitted that the tax levied under section 801) of the 1979 Ordinance is only a minimum tax liability as suggested by the learned A.R. of the assessee. The learned D.R. also pointed out that in the provision of Para. C of Part III of the First Schedule to the Income Tax Ordinance, 1979 specific reference of exclusion have been made to section 80‑C of the 1979 Ordinance etc. and that the absence of section 80‑D of the 1979 Ordinance was conspicuous by absence in such exclusion. The learned D.R. also submitted that the case‑law relied upon by the learned A.R. was not applicable to the fact of the case.

6. The parties have been heard and the relevant orders perused. We have also perused the relevant provisions of the law as contained in section 80‑D of the 1979 Ordinance and in the First Schedule to the 1979 Ordinance. We have also considered the case‑law relied upon by the learned counsel of the assessee. In the case reported as 1994 PTD (Trib.) 100 the issue involved was whether surcharge could be levied on tax computed under section 80AA of the 1979 Ordinance. A perusal of section 80AA of the 1979 Ordinance shows that it lays down for levy of fixed tax at 15% of the total receipt without allowing for admissibility of any expenditure. In the case of section 80D of the 1979 Ordinance, the tax is said to be a minimum tax and as per section 80D(1) of the 1979 Ordinance, if the tax payable by the assessee on the income is less than 0.5 % of the amount representing its turnover, a minimum tax has to be charged at 0.5 % . In subsection (2) of the same section it has been specifically laid down that the specified assessees "shall pay as income tax"'.

"(a) an amount, where no tax is payable or paid, equal to o half per cent. to the said turnover ; and

(b) an amount, where the tax payable or paid, is less than half per cent. of the said turnover, equal to the calculated accordance with clause (a)."

7. The learned counsel of the assessee has emphasized on the use of word `tax' in subsection (1) of section 80D of the 1979 Ordinance. As regards the use of term `income‑tax' in subsection (2) of section 80D of the 1979 Ordinance, the argument of the learned counsel is that this is only for calculation purpose and we are not convinced by such argument. If the argument of the learned counsel of the assessee, that no further tax can be levied once 0.5 % tax has been paid, was accepted, then that will be granting a licence to the taxpayer to go scott free and any further penalties or additional taxes e.g. for non‑filing of return in time, late payment of tax etc. could not be levied simply because of the use of word `tax' in section 80D(1) of the 1979 Ordinance and of the definition of `tax' in section 2(43) of the 1979 Ordinance. Certainly this cannot be the intention of the law. The learned counsel has also made a passing reference to the judgment of the Hon'ble Sindh High Court Karachi dated 28‑8‑2001 wherein the levy of WWF in certain cases has been disapproved. However, since.this case was not seriously presented nor read out by the learned counsel of the assessee, we are not inclined to discuss the same at this stage because it is not the issue of WWF which is in question before us. The other case of the Hon'ble Sindh High Court reported as 2000 PTD 2173 (supra) also has no direct bearing on the facts of the present case. Hence we are not inclined to accept this appeal of the assessee and we hold that the levy of surcharge on the tax levied under section 80D of the 1979 Ordinance was proper. The appeal is dismissed.

M. A. K. /C. M. A./399/Tax(Trib.) ????

Appeal dismissed.