Before Muhammad Tauqir Afzal Malik, Judical Member and Amjad Ali Ranjha, Accountant Member VS Before Muhammad Tauqir Afzal Malik, Judical Member and Amjad Ali Ranjha, Accountant Member
2002 P T D (Trib.) 885
[Income‑tax Appellate Tribunal Pakistan]
Before Muhammad Tauqir Afzal Malik, Judical Member and Amjad Ali Ranjha, Accountant Member
I.T.As. Nos.3820/LB to 3824/LB of 1999, decided on 29/09/2001.
Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑S. 66‑A‑‑‑Second Sched., Part IV, para. B(2)‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑ Private company or public company‑‑‑Determination of Status ‑‑‑Assessee contended that assessee‑Company and the company which produced the fertilizer were one entity as the management of the said company was under the Government of Pakistan‑‑‑Validity‑‑‑Majority shareholder of NFC was not the Government ‑‑‑Assessee‑Company, therefore, did not fall within definition of the 'public company'‑‑‑Status given by the Inspecting Additional Commissioner to such company as private limited company was upheld by the Appellate Tribunal.
C.B.R. and another v. S.I.T.E. PLD 1985 SC 97; Messrs Rice Export Corporation of Pakistan Ltd. v. Karachi Metropolitan Corporation, Fire Stone Tyre and Rubber Co. Ltd. All ELR 561; Smith Stone and Knight Ltd. v. Lord Mayor Aldermen and Citizens of the City of Birmingham 4 All ELR 116; All ELR 462; DHN Food Distributors 1998 PTD (Trib.) 273 rel.
Asad Munir for Appellant.
Imran Raza Kazmi, D.R. for Respondent
Date of hearing: 11th September, 2001
ORDER
MUHAMMAD TAUQIR AFZAL MALIK (JUDICIAL MEMBER).‑‑‑These are five appeals on behalf of the assessee against the order of IAC passed under section 66‑A, dated 18‑6‑1999.
2. The grounds of appeals in all the appeals are the same which are as under:
3. They have called in question that the IAC while exercising his powers under section 66‑A of the Income Tax‑.Ordinance, 1979 has erred in holding NFML to be a private company as against our claim of it being a public company as provided for in para. B(2) of Part IV of First Schedule to the Ordinance.
4. Arguments heard. Record perused.
5. It has been contended by the A.R. that the assessee‑Company and NFC which produces the fertilizer are one entity. It has vehemently contended that the management of the Company is under the Government of Pakistan. In support of his contention he has produced a letter, dated May 12, 1999 in which one Mr. Ahmed Farooq, Deputy Secretary (Personnel), Ministry of Industries and Production, Government of Pakistan, Islamabad has been appointed as Director. The other letter, dated June 25, 1997 by which one Lt.‑Col. (Retd.) Muhammad Farooq Umer has been appointed as Director and Mr. T.I. Chughtai was advised to hand over the charge to Lt.‑Col. (Retd.) Muhammad Farooq Umer and report for duty for General Manger (Planning), NFC Head Office, Lahore alongwith Notification of the appointment of Lt.‑Col. (Retd.) Muhammad Farooq Umer as Managing Director, National Fertilizer Marketing Ltd. vide Notification No.7/7/97‑PR.II, dated 17th June, 1997 and amendment of Service Tribunals (Amendment) Act, 1997, Amendment No.F9(14)/97 Legis, dated 10‑6‑1997 insertion of new section to which is as follows:‑‑‑
Insertion of new section 2A, Act LXX of 1973.‑‑‑In the said Act, after section 2, the following new section shall be inserted, namely:‑‑‑ .
"2A. Service under certain corporations, etc. to be service of Pakistan. ‑‑‑Service under any authority, corporation, body or organization established by or under a Federal law or which is owned or controlled by the Federal Government or it, which the Federal Government has a controlling share or interest is hereby declared to be service of Pakistan and every person holding a post under such authority, corporation, body or organization shall be deemed to be a civil servant for the purposes of this Act. "
4. Amendment of section 4, LXX of 1973.‑‑‑In the sod Act, in section 4, in subsection (1) the word "final" shall‑ be omitted.
6. They have also relied on PLD 1985 Supreme Court 11 C.B.R. and another v. S.I.T.E. PLD 1990 Karachi 186 Messrs Rye Export Corporation of Pakistan Ltd., Karachi Metropolitan Corporation, Fire Stone Tyre and Rubber Co. Ltd, v. Lewellin (Inspector of takes) All England Law Reports 561, Smith Stone and Knight Ltd. v. Lard Mayor Aldermen and Citizens of the City of Birmingham All England Law Reports Annotated Vo1.4 page 116, All England Law Report, page 462 DHN Food Distributors Ltd. and others v. London Borough of Tower Hamlets, AIR 1955 Cal. 132 (Vol. 42, C.N. 33) page 132.
7. The A.R. contends that the status of the petitioner is of a public limited company and the IAC was wrong in giving the stills to the petitioner of a Private limited company resultantly invoking provisions of para. B(2) of Part IV of the First Schedule to the Income Tax Ordinance, 1979.
8. The D.R. has supported the impugned order.
9. IAC in view of this Tribunal's Full Bench Judgment cited as 1998 PTD (Trib.) 273 and after giving an opportunity of being heard to the assessee after having incorporated their replies, first of all, discussed the questions in issue which are impugned in this appeal also. For ready reference, operative part from the above cited judgment is reproduced as below:‑‑‑
In para. 17 of the order it was held:‑‑‑
"The meanings of the word `Government' as explained in the above‑referred two cases do not leave any room to mate a guess in favour of the assessee Board. The use of word `Government' in the definition clause cannot be extended to include bodies created by Provincial or Federal Statutes or incorporated as companies by these governments. The accepted rules of interpretation‑ of fiscal statutes do not permit us to f, strict or enlarge the meaning of express words used in the state. In the case re: Rahe Manzil Transport (supra) relied upon by the assessee to support its interpretation of the word `proceedings' their Lordships of the Karachi High Court observed that `nothing is to be implied in statutes or documents which is inconsistent with words expressly used'. If the Legislature had intended to include the institutions through which the Federal or Provincial Governments are holding equities ink companies or corporations created by them, nothing was easier to say so in so many words. "
Learned ITAT also referred to the remarks of Judicial Member in the case of C.B.R. v. SITE and PIDB v. CIT which are as under:‑‑‑
"The holding of the Supreme Court and for that purpose any jurisprudential rule does not lay down that a company owned by a Government shall for all purposes be deemed to be a Government Department. The Supreme Court explained that 'in a controversy like the present one the final decision would rest on the facts and circumstances of the case'. On facts the Supreme Court found that the company in that‑‑‑‑case was carrying on the functions of industrial development on behalf of the Provincial Government and the income of that company in fact was destined to be the income of the Province. In the case before us it is no one's case that the assessee‑Company's income is the income of the Federation. If one accepts the prepositions that a company cent. per cent. owned by the Federal Government is a Government Department as contended by the assessee, then one has to accept that all the employees of such company are the Government servants, all the properties owned by that company are owned by the Government and all contracts made by that company are owned by the Government and all contracts made by that company will be made only by the President as required by Article 173 of the Constitution of Pakistan. No one will be ready to contend or accept the above preposition. After going through the judgment of the Supreme Court and of Lahore High Court and perusing the jurisprudential principles we are of the view that holding of the Supreme Court that a company or a corporation owned by the Government shall be deemed be a Department of the Government was confined for the purposes of its immunity to tax granted by Article 165 of the Constitution. The broad contention that company owned by the Government shall be deemed to be the Government for all purposes including the definition of the Company cannot be the order reads as under:‑‑‑
" In the presence of these decision as said above, the issue stands resolved of these decisions as said above, the issue is for the Tribunal is concerned. The assessee having failed to challenge the reasons as well as the ratio settled in the above three cases we entertain no doubt that shares held by the Board in the assessee‑Company cannot be taken to have held by the Government as contemplated in the aforesaid definition of a public‑ company. Also mere fact that in the earlier years the status of the assessee‑Company was accepted as ‑a public company or that in the case of another concern managed by the P. I.D.B. the Revenue had accepted the claimed status .as a public company will not be of any significance. There is no estoppel against law and one wrong cannot be acted upon as a precedent when it comes to give effect to the express words of a Statute."
10. And then held that NFC majority shareholder is not the Government. Therefore, the assessee‑Company does not come within four walls of definition of the public company and thus gave it a status of a public limited company.
11. Agreeing with the arguments of the D. R. and the order passed under section 66‑A, in view of a Full Bench judgment of this Tribunal cited supra, is binding on us. We uphold the order passed under section 66‑A impugned in this order, dated 18‑6‑1999 and dismiss all the appeals of the assessee.
C.M.A./M.A.K./208/Tax (Trib.) Appeals dismissed.