COMMISSIONER OF INCOME-TAX, B-ZONE, LAHORE VS LAHORE CANTONMENT COOPERATIVE HOUSING SOCIETY, LAHORE, 2002 PTD-LAHORE-HIGH-COURT-LAHORE 629 (2001)

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

‑‑‑‑Ss. 54, 88, 166(2)(d) & Second Sched., ('1. (103)‑‑‑Income‑tax Act (XI of 1922), S.45‑A‑‑‑Assess'de declared nil income in assessment years 1976‑77 to 1983‑84‑‑‑Assessing Officer rejected assessee's claim that its income was exempt from levy of tax and proceeded to frame assessments at various sums charging additional tax . under S.88 of the Income Tax Ordinance, 1979 read with S.45‑A of Income‑tax Act, 1922 in the light of saving provisions of S.166(a)(d) of the Income Tax Ordinance, 1979‑‑‑Assessee failed before First Appellate Authority, but Tribunal found that having declared nil income, assessee was not required to pay any tax therewith as .required under S.54 of the Income Tax Ordinance, 1979, thus, cancelled additional tax levied in all years involved‑‑ Validity‑‑‑Payment of tax was only on admitted liability, which had no reference or relation to income which might be finally determined by Assessing Officer‑‑‑Person declaring nil income either on the ground of its being not chargeable to tax or exempt from levy of tax, would not be required to pay tax on the basis of such return‑‑‑Determination of claim or enhancement of income at a subsequent stage would not change the legal requirements of S.54 of the Income Tax Ordinance, 1979 which was a substituted version of S.45‑A of Income‑tax Act, 1922‑‑‑An admitted, liability or the one determined by Assessing Officer after long drawn proceedings were absolutely two different things‑‑‑Concession given by law to pay tax with return only to the extent of admitted liability or income being returned therein, could not possibly be circumvented by ignoring the express words of statute, which did not admit of any interpretation other than the one made by Tribunal‑ Penal provisions of S.88 of the Ordinance were not attracted to the case of assessed, who had returned nil income in all the years involved‑‑ View adopted by Tribunal was perfectly in accordance with law.

(b) interpretation of statutes‑‑‑

‑‑‑‑ Fiscal statute‑‑‑Provisions to be construed strictly.

Muhammad Ilyas Khan for the Revenue.

Zia Haider Rizvi for Respondent.

ORDER

This is a case stated by the Lahore Bench of the Income Tax Appellate Tribunal. The following question has been framed for our consideration and reply;-----

"Whether on the facts and in the circumstances of the case the Tribunal correctly held that notwithstanding the quantum of income assessed, additional tax under section 88 of the Income Tax Ordinance could not be charged when the assessee had claimed exemption resulting in nil return?"

2. On being required through a notice to file return, the assessee Lahore Cantonment Cooperative Housing Society, Lahore declared nil income in the assessment years involved viz. 1976‑77 to 1983‑84. The Assessing Officer, however, proceeded to frame assessment at various sums after rejecting the claim of the assessee that its income was completely exempt from levy of income tax. According to the Assessing Officer under clause (103) of the Second Schedule to the Income Tax Ordinance, 1979 the income of the assessee only to the extent of its dealing with its members was exempt while any income received as a result of its dealings with the persons other than its members was chargeable to tax.

3. Thereafter, the Assessing Officer proceeded to levy/charge additional tax under section 88 of the Income Tax Ordinance 1979 read with provisions of section 45‑A of the Income‑tax Act, 1922 in the light of saving provisions of section 166(2)(d) of the Ordinance. The assessed failed before the First Appellate Authority while the Tribunal agreed that having declared nil income the assessed was not required to pay any tax therewith as required under section 54 of the Ordinance. 'Accordingly the additional tax levied in all the assessments years were cancelled. Thereafter, at the instance of Commissioner, Income‑tax Zone‑B, Lahore the aforesaid question was framed and referred.

4. After hearing the learned counsel for the parties, we will agree with the learned counsel for the respondent that the view adopted by the Tribunal is perfectly in accordance with law. Section 54 of the Income Tax Ordinance which is a substituted version of section 45‑A of the late Income‑tax Act, 1922 requires every person filing a return of total income to pay "tax payable", on the basis of such return". In other words the payment of tax is on admitted liability only. It has no reference or relation to the income which may finally be determined by the Assessing Officer. Where a person declares nil income either on the ground of his being not chargeable to tax or for the reason that income earned by him 'was exempt from levy of tax, he is not expected to pay any tax on the basis of such return. The determination of claim or enhancement of his income at a subsequent stage does not change the legal requirement as detailed in section 54 of the Ordinance. The words of the statute are clear and do not admit of any interpretation other than the one already made by the Tribunal. Since the provisions of fiscal statutes are to be construed strictly we entertain no doubt that penal provisions of section 88 were not attracted to the case of the assessed. An admitted liability or the one determined by an Assessing Officer after long drawn proceedings are absolutely two different things. The concession given by law to pay tax with return only to the extent of an admitted liability or the income being returned therein, cannot possibly be circumvented by ignoring the express words of the statute.

5. That being so we will hold that the Tribunal correctly held that the provisions of additional tax under section 88 of the Ordinance were not invokeable when the assessee had returned nil income in all the years involved.

Answered accordingly.

S.A.K./C‑135/LReference answered