Per Syed Kabirul Hasan, Judicial Member‑‑‑

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

‑‑‑‑S. 156‑‑‑Rectification of mistake‑‑‑Conflicting decisions‑‑‑Issue not raised at the time of main appeal‑‑‑Rectification of‑‑‑Validity‑‑‑Issue not raised at the time of main appeal could not be considered by way of rectification.

I.T.A. No. 14/KB of 1994‑95; I.T.As. Nos. 13/KB and 13A/KB of 1994‑95; I.T.As. Nos. 313/KB and 313A/KB of 1997- 98; I.T.A. No. 314/KB of 1997‑98; 4.T.As. Nos. 69 to 379/KB, 77 & 388/KB of 1998‑99; I.T.As. Nos.371 to 379/KB of 1998‑99; I.T.A. No. 41/KB of 1997‑98 and I.T.A. No. 212‑A/KB of 1989‑90 ref.

Per Abdul Ghafoor Junejo, Accountant Member‑‑

(b) Income‑tax‑‑‑

‑‑‑‑Precedents‑‑‑Coordinate jurisdiction‑‑‑Tribunal was bound to decide by the Authority of precedent where the Court or Tribunal have considered the matter, which is of coordinate jurisdiction.

(c) Income Tax Ordinance (XXXI of 1979)

‑‑‑‑S. 156‑‑‑Rectification of mistake‑‑‑Ex parte assessment‑‑‑Agreement for extraction of oil from agricultural land‑‑‑Lease money/rent‑‑ Taxation of‑‑‑First Appellate Authority deleted the addition holding that amount was received by the assessee as compensation on the basis of capital loss of the agricultural land‑‑‑Ex parte assessment against assessee‑‑‑Rectification of on the strength of precedents ‑‑‑Validity‑‑ Compensation lease money which the assessee received out of compulsory acquisition of agricultural land being capital asset for indefinite period was capital loss‑‑‑Compensation received for the loss of a capital asset had been rightly treated as compensation for the loss of the capital‑‑‑Assessing Officer was not justified to tax income/compensation received on. account of compulsory acquisition of agricultural land‑‑‑Order was rectified accordingly.

I.T.A., No.14/KB of 1994‑95; I.T.As. Nos.13/KB and 13A/KB of 1994‑95; I.T.As. Nos.313/KB and 313A/KB of 1997‑98; I.T.A. No.314/KB of 1997‑98; I.T.As. Nos.69 to 379, 77 & 388/KB of 1998‑99; I.T.As. Nos. 371 to. 379/KB of 1998‑99; 41/KB of 1997‑98; I.T.A. No. 212‑A/KB of 1989‑90; I.T.A. No. 146/KB of 2000-2001 and 1999 PTD 1313 ref.

Per Muhammad Akhtar Nazar Mian, Accountant Member.---

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

‑‑‑‑S. 156‑‑‑Rectification of mistake‑‑‑Presumption based order,‑‑Order based merely on presumptions was rectifiable when it was established that the presumptions were not rightly made.

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

‑‑‑‑S. 156‑‑‑Rectification of mistakes‑‑‑Ex parte assessment‑‑‑agreement for extraction of oil from agricultural land‑‑‑Lease money/rent‑‑ Taxation of‑‑‑First Appellate Authority deleted the addition by holding that amount was received by the assessee as compensation on the basis of capital loss of the agricultural land‑‑‑Ex parte assessment by the Appellate Tribunal against assessee‑‑‑Rectification of on the strength of precedents‑‑‑Validity‑‑‑Payment received by land owners on acquisition of their lands by the Government for exploration‑and drilling of oil by the oil company were compensated for the loss of capital assets and not chargeable to tax‑‑‑Appellate Tribunal, by following its earlier decision, held .that the decision made by the First Appellate Authority was a good decision and needed no interference‑‑‑Order was rectified accordingly.

1987‑88/KB 212‑A of 1989‑90 rel.

A.S. Jafri for Applicant.

Ghulam Nabi Sethar, D.R. for Respondent.

Date of hearing: 7th February, 2002.

ORDER

SYED KABIRUL HASAN (JUDICIAL MEMBER).‑---By these miscellaneous rectification applications, the applicant/assessee wants us to rectify the order of the Tribunal passed in I.T.A. No. 508 to 514/KB of 1996‑97, dated 4‑11‑1997.

2. We have heard Mr. A.S. Jafri, learned counsel for the applicant/assessee and Mr. Ghulam Nabi Sethar, learned D.R. We have also perused the relevant record.

3. Mr. A.S. Jafri, learned counsel, has submitted that the main ground of the assessee was not considered as the lease money or rent received from agricultural land was a capital loss of agricultural income, therefore, it should have been treated as exempt income but was wrongly assessed by the Assessing Officer. He has also submitted that there are various unreported cases of the Tribunal wherein this issue has been considered and the lease income has been treated as exempt income and not taxable, whereas in this case, the Tribunal has taxed the exempt income. He has also contended that there are conflicting decisions on this issue. According to him in his case there is a mistake which should be rectified by recalling the order and deciding it in favour of the assessee.

4. We have heard the contention of learned counsel and also perused the unreported case as submitted by him. We have also perused the grounds of appeal and other points as well. In these applications, the following ground has been taken for the rectification of the mistake which, according to him, is apparent from the record.

(I)There are several decisions on record made by the other benches of the learned Tribunal in various cases of similar nature and nearly in the same oil extracting areas in which the said lease money of rent agricultural lands have been dealt with as "CAPITAL LOSS OF AGRICULTURAL LANDS" and treated to be "EXEMPT INCOME". These decisions were almost made as a result of 2nd appeals filed by the department.

The cases and decisions are quoted for necessary reference.

(II)Para (6) of the learned Tribunal's order for which rectification is being sought through this application may kindly be seen. The conclusive sentence of the said paragraph is quoted as under:‑‑

(1)Since assessee has made an agreement for extraction of oil from his agricultural land, then it can be presumed that the assessee completed all legal formalities.

(2)We, at this stage, can only request that whether decisions involving any sort of presumption, can be held as `good decisions." ignoring the facts and merits of the case? This aspect may also kindly be reviewed in the interest of law and justice.

Beside, another amazing aspect is worth noted where the Accountant Member of Bench, and co‑author of the order passed (for which rectification is being sought) had himself treated the similar nature of income as "EXEMPT FROM TAX BEING A CAPITAL LOSS OF AGRICULTURAL LAND" in the case of Dr. Iazharul Haq through his order No. 1 56/Hyd. dated, 21‑6‑1999 when he was designated as Commissioner of Income Tax (Appeals) Hyderabad, and this order was also confirmed by this Honourable ITAT vide ITA No.212‑A/HQ of 1989‑90, assessment year 1987‑88, dated 10‑9‑1997. This contradictory action thus tantamounts to difference of opinion and bears no justification in the eyes of law. This aspect also needs proper revival. "

5. We cannot consider this issue now because it was not raised before us at the time of argument of the main appeals and also the conflicting decisions have not rendered the judgment invalid or incorrect. As regards the conflicting view adopted by the same Member, it does not mean that the order passed is incorrect or improper. No doubt, the appellate authority may take into consideration this point as well but this point was also not raised at the time of argument of the main appeal. In view of this, these applications are also devoid of merits and are hereby, dismissed.

(Sd.)

(Syed Kabirul Hasan), Judicial Member

I had the privilege to go through the order of the learned Judicial Member. By the instant miscellaneous applications, the applicant assessee respondent seeks rectification of the I.T.A.T., dated 4‑11‑1997 vide I.T.A. No.508/KB of 1996‑97 to 514/KB of 1996‑97 relating to the Assessment Years 1987‑88 to 1994‑95 which was passed ex pane against the assessee while disposing of appeal filed at the instance of the Revenue.

Facts leading to these Rectification applications are that the appellant is a contractor at Badin and has agricultural land out of which 17‑9 Acres were acquired by Messrs Union Texas Ltd. for exploring oil under the agreement executed. According to the agreement, the assessee was to receive lease amount from Messrs Union Texas Company. The Deputy Commissioner of Income tax in all the years assessed this amount of Rs.157,896. In appeal, the learned CIT(A) deleted this amount in all the years, holding that the amount was received by the assessee applicant as compensation on the basis of capital loss of the agricultural land suffered by the applicant assessee.

The Tribunal has upheld the order of the DCIT and vacated the CIT(A)'s order in a consolidated order passed through I.T.A. No.508/KB of 1996‑97 to 514/KB of 1996‑97, dated 4‑11‑1997. This said order was passed without attendance of assessee or his AR.

The A.R. contests the ex parte order and pleads that the similar issue has been decided by another Benches of the Tribunal in favour of the other assessees whose lands were acquired in the same District of Badin and lease agreements were also executed by the Union Texas Company on the same pretext and the A.R. produced the following decisions:----

Apart from the above, the AR further produced a latest unreported decision in which same issue was thoroughly examined by the single Bench of the Tribunal who also allowed exemption on the same pari material facts in the case namely Messrs Khan Mohammad Halipota vide I.T.A. No. 146/KB of 2000‑2001 decided on 16‑10‑2001, and the A.R. emphasized that the order in the case of respondent may be rectified so as to bring it in conformity with the orders passed by another Benches of this Tribunal on the same issue.

5. We had asked Mr. A.S. Jafri to show any mistake apparent on record falling within the purview of section 156 of the Income Tax Ordinance 1979. The A.R. relied on the arguments advanced in rectification applications and the material parts of the rectification application are hereby reproduced:‑‑

"Para (6) of the learned Tribunal's Order for which rectification is being sought through this application may kindly be seen. The conclusive sentence of the said paragraph is quoted as under:‑‑

(1)Since assessee has made an agreement for extraction of oil from his agricultural land, then it can be presumed that the assessee completed all legal formalities.

(2)We, at this stage can only request that whether decisions involving any sort of presumption, can be held as "good decision" ignoring the facts and merits of the case? This aspect may also kindly be reviewed in the interest of law and justice."

6. Coming to the main contention, the A.R. pointed out in para 6 of the findings, which he read, and invited our attention as mentioned under:

"From the assessment order, it is clear that purpose for which the land was let out was not agricultural purpose but the land was let out for the purposes of exploration and utilization for oil extraction, therefore, the purpose for which the land was let out was not agricultural purpose. The only issue in this case is that whether an agricultural land can be used for any other purposes or not? In our opinion, if land is used for any other purposes, than the agricultural purposes, then some permission is required from the relevant authorities for such conversion. In this case, nowhere this point has been considered. Also without conversion of agricultural land into commercial land, such land cannot be utilized for other purposes than the agricultural purposes. Since assessee has made an agreement for extraction of Oil from his agricultural land, then it can be presumed that all the legal formalities were completed by the assessee".

While arguing the case Mr. A.S. Jafri has specifically pointed out an unreported decision of this Bench as I.T.A. No. 146 KB of 2000‑2001 assessment year 1990‑91 namely Khan Mohammad Halipota, Math District Badin, dated 16‑10‑2001, decided by learned Judicial Member who was sitting singly and has also authored the main order against which present rectification is being argued. As per A.R. in the instant case the facts are pari materia which read as verbatim.

Learned counsel for the assessee submitted that the land of the assessee was agricultural land and was compulsorily acquired by the Government and the amount paid was compensation therefore, it cannot be assessed to Income‑tax as held in ITA No.371 to 379/KB of 1998‑99 (ACIT v. Ashfaque Hussain). ITA No.508 to 514 of 1996‑97 (ACIT v. Nihal Khan Bhatti), ITA No.69 to 77/KB of 1998‑99 (ACIT v. Haji Shafi Muhammad), ITA No. 13 & 13A/KB of 1994‑95 (ITO v. Mr. Ismail and ITA No.212‑A/KB of 1989‑90 (ITO v. Dr. Izharul Haq).

The order of the ITAT relied upon by the learned counsel for the assessee is not applicable in case of assessee as in that case, the only question was that whether an agricultural land can be used for any other purposes or not, but herein this case, it has been proved that the amount received was compensation on acquisition of agricultural land. On the same instance the learned CIT(A) has observed as under:‑‑

"The point in issue is considered and respectfully following the decisions of the Tribunal, the Income Tax Officer is not justified to tax income/compensation received on account of compulsory acquisition of agricultural land. Therefore, the income is not chargeable to income‑tax and accordingly the impugned order is annulled. "

In view of this, the appeal of the department is devoid of any merits and is liable to be dismissed.

The A.R. stressed on the strength of the another reported case 1999 PTD 1313 which relates, to balance of convenience, and in which is pleaded that the plaintiff was not given a fair hearing in the matter.

On the other hand D.R. also confines his arguments to the facts and reasons as elaborated in the rectification application and prays to remove the contradiction as emerging from the decisions of other Benches which includes earlier decision of this Bench which was also allowed exemption in the unreported decision as captioned above namely Khan Mohammad Halipota Math vide I.T.A. No.146/KB of 2000‑2001, dated 16‑10‑2001 (Assessment year 1990‑91).

7. The first question that arises for determination is whether we should follow this Tribunal's latest decision, dated 16‑10‑2001 (unreported) or the decisions of other Benches which are earlier in line, while rectifying the order, dated 4‑11‑1997 (unreported and against which the appellant argues before us). It is an accepted position that this Tribunal's holding in the above noted cases are inconsistent on the basis of independent scrutiny of the relevant provisions of law as well as the facts. The decision, dated 4‑11‑1997 was entirely assisted by the D.R. who was present before the Bench, and the latest decision, dated 16‑10‑2001 was a deliberate and considered finding which is also in line with all the decisions on this issue decided by the other Benches of this Tribunal.

The contradictory views are not attracted from any other decision except in this case. The Tribunal is bound to decide by the authority of precedent where the Court or Tribunal have considered the matter, which is of coordinate jurisdiction. The inconsistent precedents are taken note of and the matter is decided on the facts of the case. All the earlier decisions of this Tribunal are, so far as we are concerned, decisions by a forum of co‑ordinate jurisdiction and in such cases the subsequent forum is at liberty to decide the issue independently. The reasons for the above view are that if we are bound by this Tribunal's decision, dated 16‑10‑2001, (which was singly decided) as contended by the learned A.R. of the assessee, the Bench giving that decision was bound by this Tribunal's earlier decisions at other Benches. In view of the above principle I proceed to examine the facts if any differing from those assessees who have succeeded in appeals.

8. Arguments advanced by both the representatives have been heard and relevant record perused. On the face of the facts there are similarities in all the parallel cases cited at bar which are relevant to discuss as under:----

(1)The agreements of leased agricultural lands are of the same Company i.e. Messrs Union Texas Co. Ltd.

(2)The contents of agreements are on same draft.

(3)The compulsory acquisitions are almost the same which are as per Land Revenue Act.

Until this date the judgment in field is I.T.A. No. 146/KB of 2000‑2001, dated 16‑10‑2001, which was finally put to rest by this Bench. This judgment is produced by the learned AR before us whereas the judgments of the other Benches are considered as judgments per incurriam. The reason being the relevant law was not produced before the Honourable Bench.

It is an admitted fact that neither the assessee nor his A.R. was present at the time of passing the impugned order vide, dated 4‑11‑1997 and no proper assistance was provided and that various other Benches had already allowed relief on the point that compensation lease money which the assessee received out of compulsory acquisition of agricultural land being capital asset, for indefinite period, as capital loss. The compensation received for the loss of a capital asset has therefore, been rightly treated as compensation for the loss of the capital asset.

I am therefore, of the view that by following the earlier decisions of previous Benches of Tribunal at Karachi on the same issue in the cases of some other land holders of the same area and regarding the same oil company, the same treatment should also be accorded to this assessee.

Therefore my finding in this regard is as under;

"The point in issue is considered and respectfully following the majority of decisions of the ITAT on this issue of similar facts the Income Tax Officer is not justified to tax income compensation received on account of compulsory acquisition of agricultural land. Therefore, the income is not chargeable to income tax and accordingly the impugned order is annulled".

(Sd.)

(Abdul Ghaffoor Junejo) Accountant Member

Since difference of opinion has arisen between the learned members, therefore, it is requested that the learned Chairman may refer this matter to any member for resolving the issue on the following point:‑‑

"(i)Whether under the facts and circumstances the application filed under section 156 is liable to be dismissed?

(ii)Whether under the facts and circumstances the order passed on 7‑2‑2002 may be recalled and may be disposed of afresh?"

Sd/-

(Syed Kabirul Hasan), Judicial Member

Due to difference of opinion between the learned Members who heard the miscellaneous applications, the Chairman has referred the case to me for resolving the difference. The following questions have been framed by the learned Members for resolving the issue and taking decision accordingly:‑‑

(i)Whether under the facts and circumstances, the application filed under section 156 is liable to be dismissed?

(ii)Whether under, the facts and circumstances, the order passed on 7‑2‑2002 may be recalled and may be disposed of afresh?

2. With due respect to the learned Members who framed the questions, I may state that the question No.(ii) need not be considered at all because on 7‑2‑2002 the learned Judicial Member had only initiated the order to which the learned Accountant Member had not agreed so there is no final order, dated 7‑2‑2002. In this view of the matter there is no question of recalling an order which is non‑existent. With this observation I am left with only one question on which difference of opinion has arisen between the two learned Members and that is that whether under the facts and circumstances of the case, the Tribunal's order in I.T.A. No.508 to 514/KB of 1996‑97 may be rectified or not?

3. The learned Judicial Member is of the view that the order cannot be rectified as this issue now raised "was not raised before the Tribunal at the time of argument of the main appeals". According to him the applications need to be dismissed. The learned Accountant Member has discussed the matter in detail and he has come to the conclusion that the order of this Tribunal in I.T.As. Nos. 508 to 514/KB of 1996‑97 need to be rectified so as to bring it in line with the decision of the Tribunal in other cases where different decision had been taken. After hearing representatives of both tile parties, perusing all the relevant orders and in the circumstances of the case I tend to agree with the decision of the learned Accountant Member for the following reasons:‑‑

(i)The original appeals were decided ex parte and therefore, there was no occasion of arguing the case before the Tribunal by the assessee or on behalf of the assessee. These departmental appeals were disposed of ex parte after hearing the D.R. only:

(ii)The CIT(A) whose order was imposed before this Tribunal vide I.T.As. Nos. 508 to 514/KB of 1996‑97 (Assessment Years 1987‑88 to 1990‑91 and 1992‑93 to 1994‑95) and I.T.A. No.1703/KB of 1996‑97 (Assessment year 1991‑92) had held the receipts by the assessee as compensation for the change of character of land and therefore, it was held to be receipt not liable to tax. The Tribunal in its order now sought to be rectified nowhere gave any reason as to why these receipts were not to be treated as compensation for loss of agricultural land specially when it was being so treated in similar circumstances in other cases:

(iii)When the Tribunal was proceeding ex parte while disposing the original appeals, it should have exercised diligence in finding out as to whether any decision of this Tribunal is available on the issue. Had this been done at that time the Tribunal would have noticed that in I.T.A. No. 212‑A/HQ of 1989‑90 (Assessment year 1997‑98); dated 10‑9‑1997 the Tribunal had in similar circumstances held such receipts, to be compensation for the loss of capital assets and not for the loss of income and the departmental appeal on this issue was rejected. This view of the Tribunal has consistently been followed by this Tribunal in other cases of similar nature, so much so that even the department has accepted this decision in the case of this assessee as well when the assessments for the succeeding years 1995‑96 and 1996‑97 were set aside by this Tribunal in I.T.As. Nos.60 and 61/KB of 2000‑2001 decided on 6‑4‑2002 and the department reframed assessments; and

(iv)While deciding the original appeals the facts were not properly appreciated by this Tribunal in so much so that observations were made merely on surmises and supposition to the effect that "if land is used for any other purposes than the agricultural purposes; then some permission is required from the relevant authorities for such conversion. In this case, nowhere this point has been considered. Also without conversion of agricultural land into commercial land, such land cannot be utilized for other purposes than the agricultural purposes. Since the assessee has made an agreement for extraction of oil from his agricultural land then it can be presumed that all the legal formalities were completed by the assessee." Needless to say that the order based mere on presumptions is rectifiable when it is established that I the presumptions were not rightly made. In this case no legal formalities were required to be undertaken as supposed by the Tribunal while deciding the original appeals since the land was acquired under the law by the Government for use by Union Texas for the purposes of oil exploration.

4. For all these reasons I hold that the consolidated order in the original appeals made by the Tribunal which is now impugned before us is rectifiable under section 156 of the Ordinance. Accordingly the order in I.T.A. No.1703/KB of 1996‑97 (Assessment year 1991‑92) is being rectified suo motu as the same question is involved as is the case in the orders in I.T.A. No.508 to 514/KB of 1996‑97 which is being rectified on the application of the assessee. It is directed that paras 6, 7 and 8 in consolidated order in I.T.As. Nos. 508 to 514/KB of 1996‑97 (Assessment years 1987‑88 to 1991‑92 and 1992‑93 to 1994‑95) and I.T.A. No.1703/KB of 1996‑97 (Assessment year 1991‑92) shall be substituted as under:‑‑

"(6) The department has challenged the order of the learned CIT(A) Hyderabad stating that the payment received by the respondent assessee was not compensation received for requisition of agricultural land but it was rental money for the use of agricultural land for purposes other than agriculture. We have however, noticed that in similar circumstances payments received by other land owners from Union Texas Limited on acquisition of their lands by the Government for exploration and drilling of oil by the said oil company had been held to be compensation for the loss of capital assets and therefore, held to be not chargeable to tax. In this connection we may refer with advantage to the decision in I.T.A. No.212‑A/HQ of 1989‑90 (Assessment year 1987‑88) decided on 10‑9-1997. Respectfully following the decision of the Tribunal we hold that the decision made by learned CIT(A) Hyderabad and impugned before us was a good decision and needs no interference.

7. All the departmental appeals are accordingly dismissed."

5. The rectification applications are disposed of as above.

C.M.A./792/Tax (Trib.)Order accordingly.