Messrs MILLAT TRACTORS LTD., LAHORE VS COMMISSIONER OF INCOME TAX/WEALTH TAX, COYS, ZONE I, LAHORE, 2002 PTD-LAHORE-HIGH-COURT-LAHORE 1201 (2002)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 50(4-A), 52, 52-A & 136(1)---Reference---Question of law Requirement---Authority found the assessee-company to have withheld tax at a lesser rate from its dealers---Tribunal was of the view that Department had made credit in the cases of recipients to the amounts actually withheld in their cases, and if assessee, was still of the view that parts of amount required to be withheld had already been received by Department after framing of assessments in the cases of recipients, the assessee could make application for rectification giving the details of amount of tax deducted or received by Department from recipients-- Validity ---Assessee had made only partial deductions from amounts paid to various recipients---Tribunal had not found that all recipients having been assessed in their respective circles, the Revenue had not suffered any loss--Question framed, if at all to be termed a question of law, could arise only if there was a finding of fact by Tribunal that all moneys belonging to Department had been received arid provisions of S.52 of the Ordinance were not attracted in such case---Tribunal had rightly left such matter open to- be established by assessee before Assessing Officer through rectification application---Question framed did not raise a legal controversy to be resolved by High Court under S.136 of the Ordinance--Answer was declined by the High Court.

2000 PTD (Trio.) 2883; Bismillah & Co., v. Secretary, Finance 1997 PTD 747 and re: Messrs Tapal Energy Ltd. and others v. Federation of Pakistan and others 1999 PTD 4037 ref.

Dr. Ilyas Zafar for Appellant.

Mian Yousaf Umar for Respondent.

Date of hearing: 14th January, 2002.

JUDGMENT

NASEEM SIKANDAR, J.---This is a case stated by the Lahore Bench of the Income Tax Appellate Tribunal under section 136(1) of the Income Tax Ordinance, 1979. Following questions -of law have been referred for our consideration and reply:---

"(1) Whether on the facts and the circumstances of the case, the learned Tribunal was justified in holding the applicant as an assessee in default, when the tax chargeable under the Income Tax. Ordinance has been paid by the recipients of commission, and service charges?

(2) Whether under the facts and circumstances of the case, the learned Tribunal was justified to ignore the decision of ITAT's Full Bench reported as 2000 PTD (Trio.) 2883 by observing that it related to non-charging of withholding tax and the issue in this case is of short charging of withholding tax?

2. The petitioner is a listed company. The concerned A.C.I.T. held the company to be an assessee in default under section 52 of the Ordinance on its failure to have withheld tax under the provisions of section 50(4A)/50(4). The company withheld tax of 5% on commission paid to its dealers while it was required to withhold that tax at the rate of 10% under section 50(4A). Likewise the tax was withheld under section 50(4) at the rate of 3% of amount disbursed to dealers for service of tractors, while it was required to withhold sums at the rate of 5% of the amounts so doled out.

3. Before the Assessing Officer it was alleged that the recipients of commission and service income charges disbursed by the appellant-company having already been assessed in their respective circles no action under section 52 could legally be taken against the Company. Particularly in view of the amendments introduced in the Ordinance through Finance Act, 1999 whereby an explanation was added to section 52 and the provisions of section 52-A were introduced.

4. The assessee, petitioner-Company failed before the C.I.T. (Appeals), Faisalabad. The Tribunal by way of the impugned order also refused to entertain the aforesaid objections. It was found that the assessee withheld tax at a less rate and no explanation whatsoever came forth for not deducting the tax at the stipulated rates. As far the assessments allegedly made in the case of the recipients, the Tribunal was of the view that the Department had allowed credit only to the amounts actually withheld in their cases. However, still if the assessee was of the view that parts of the amount required to be withheld had already been received by the Revenue after framing of assessments in the case of recipients, the assessee-Company was advised to make an application for rectification giving all the details of the amounts of tax deducted or received by the Revenue from the recipients. Thereafter at the request of the petitioner company the aforesaid questions were referred with the following observations:---

"In view of what is stated above, we find that the questions formulated supra strictly speaking do not arise out of Tribunal aforesaid orders. However, as the law laid down in section 52 is yet evolving, we find it expedient that in the present case too and authoritative ruling be given by a superior judicial forum. We accordingly agree to refer the cited questions. "

5. Learned counsel for the parties have been heard. Learned counsel for the petitioner in support of his submission that in the given situation the Revenue wrongly treated the assessee-company in default, places reliance upon re: Bismillah & Co. v. Secretary, Finance (1997 PTD 747) and Re: Messrs Tapal Energy Ltd. and others v. Federation of Pakistan and others (1999 PTD 4037).

6. Learned counsel for the Revenue however, opposes the entertainment of the questions as framed on the ground that firstly these are based upon pure findings of fact and secondly that these are mere in nature of arguments rather than raising a legal controversy.

7. We will agree that the assessee-company was required to make deduction of tax at a particular rate in respect of a particular payment which was disputed all along. It is also admitted that only partial deductions were made from the amounts paid to various recipients. There is however, no finding by the Tribunal that all the recipients having been assessed in their respective circles the Revenue had not suffered any loss directly or indirectly. Before us the learned counsel for the petitioner-company has attempted to introduce that fact through a chart given in respect of as many as 50 recipients. However as noted earlier, question No. 1 if at all it could be termed as a question of law, could arise only if there was a finding of fact by the Tribunal that all monies belonging to the Revenue having been received by it, the provisions of section 52 were not attracted in its case. The learned Tribunal rightly left that matter open to be established by the assessee before the assessing officer through an application for rectification.

8. As far question No.2 is concerned, it was never mooted before, the Tribunal nor ruled upon by them.

9. Accordingly we will hold that question No.1 as framed does not raise a legal controversy to be resolved by this Court under section 136 of the Income Tax Ordinance, 1979. Particularly in view of lack of finding of fact that the tax chargeable under the Ordinance had already been paid by the recipients of commission income and service charges. Question No.2. as noted above does not arise out of the order of the Tribunal. That being so the case-law relied upon by the learned counsel for the assessee-company. is hardly of any relevance.

10. Answer declined.

S.A.K./M-994/LOrder accordingly.