(a) Interpretation of statutes‑‑‑

‑‑‑‑Special provision of law‑‑‑General provision of law‑‑‑Preference‑‑‑If case of an assessee of a specific business was totally covered in the ambit of one provision of law then there would be no question to attract another provision of law which is general in nature‑‑‑General provision cannot be preferred over a special provision in the same statute‑‑‑If a statute is having two provision out of which one is of specific character and the other is of general character then the specific provision will be applied and preferred over the general provision.

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

‑‑‑‑Ss.136(1), 26(c) & 80‑C‑‑‑Reference to High Court ‑‑‑Assessee was a private limited company, engaged in the business of mining and managing and controlling different projects of mineral deposits etc.‑‑ Inspecting Additional Commissioner by passing an order under S.66‑A of the Income Tax Ordinance, 1979 directed the Assessing Officer to frame 'assessments by subjecting the entire supply/receipts to tax under S.80‑C of the Income Tax Ordinance, 1979 and the income under the head "other income" should also be determined after allowing attributable expenses on proportionate basis‑‑‑Appellate Tribunal directed the Assessing Officer to compute assessee's business income under S.26 of the Income Tax Ordinance, 1979 while making re‑assessment‑‑ Question for reference to High Court, was whether income of the assessee was assessable under normal law under S.62 of the Income Tax Ordinance, 1979 read with S.26(c) of the Income Tax Ordinance, 1979 and not under presumptive tax regime under S.80‑C of the Income Tax Ordinance, 1979‑‑‑Validity‑‑‑Case of the assessee fully an" clearly fell within the provisions of S.26(c) of the Income Tax Ordinance, 1979 and there was no room for ambiguity in the same necessitating for attracting any other provision of law‑‑‑No question of law as proposed by the Department arising out of the order of the Tribunal for being referred to the High Court for decision‑‑‑Request of the Department for making a reference to High Court was declined.

PLD 1961 SC 373; 1951 ITR 579 and 1940 ITR 41 ref.

PLD 1989 SC 384; PLD 1985 Lah. 358; PLD 1988 Lah. 171 and PLD 1956 SC (Pak.) 331 rel.

Muhammad Ishfaq Ahmad, D.R. for Applicant.

Khalid Majid, FCA/AR for Respondent.

Date of hearing: 2nd August, 2002.

ORDER

SYED MASOOD UL HASSAN SHAH (JUDICIAL MEMBER).‑‑‑The department has filed these Reference Applications in respect of order, dated 17‑1‑2002 passed by the Tribunal vide I.T.A. No.1159(IB) of 1998‑99 and I.T.A. No.1160(IB) of 1998‑99 for the assessment years 1992‑93 and 1993‑94 by proposing the following question of law stated to be arising out of the said order of the Tribunal for being referred to the Honourable High Court in terms of subsection (1) of section 136 of the Income Tax Ordinance, 1979 (hereinafter referred as called the Ordinance;‑‑‑

"Whether on facts and in the circumstances of the case, the learned ITAT was justified in holding that the assessees income is assessable under section 62 read with section 26(c) and not under section 80C of the Income Tax Ordinance, 1979".

2. We have heard learned representatives of the parties and perused the respective orders.

3. Briefly the relevant facts are that the assessment of the assessee (stated to be a State owned corporation incorporated as private limited company engaged in the business of mining and managing and controlling different projects of mineral deposits etc.) was finalized under normal law but the order of the Assessing Officer was set aside by the learned IAC by passing an order under section 66A of the Income Tax Ordinance, 1979 with the directions to frame assessments by subjecting the entire supply/receipts to tax under section 80C and the income under the head "other income" should also be determined after allowing attributable expenses on proportionate basis. The assessee, against the said order of the learned IAC, preferred appeal before the Tribunal and the Tribunal vide order, dated 17‑1‑2002 directed the Assessing Officer to pass order in line with earlier decision of the Tribunal as referred in the order. The Tribunal in the order referred firstly the order, dated 25‑9‑1999 passed in I.T.A. No.788/IB of 1997‑98 etc., relating to assessment years 1994‑95 to 1995‑96 wherein it was held that "both sections 26 and 80C start with non‑obstente clause and section 80C does not deal with any specific business and hence it is dust a provision viz‑a‑viz section 26 which is a special provision dealing with computation of income from specified business". It was further held in the said referred order that "therefore, the provisions of section 26 shall apply in the present case." Accordingly, the Assessing Officer was directed in that order to compute assessee's business income under section 26 while making reassessment'. Thereafter, the Tribunal vide order, dated 25‑3‑2000 in I.T.A. No.385 of 1999‑2000 for the assessment year 1996‑97 followed the above referred earlier decision of the Tribunal. While deciding the appeals of the assessee for the assessment years under consideration (1992‑93 and 1993‑94), the Tribunal by following the earlier decision as referred to above directed the Assessing Officer to pass order in line with the earlier decision.

4. Hence the department has moved these Reference Applications.

5. The learned D.R. contended that the proposed question of law as framed by the department was arising out of the order of the Tribunal because, it was to be seen as to whether income of the assessee was assessable under normal law under section 62 read with section 2 6(c) and trot under presumptive tax regime under section 80C of the Ordinance. He informed that the department has filed appeal in the Honourable High Court in respect of order, dated 25‑5‑1999 passed by the Tribunal for the assessment years 1994‑95 and 1995‑96 and order, dated 25‑3‑2000 passed by the Tribunal for the assessment year 1996‑97. He further informed that the department has also filed reference applications before the Tribunal against the order of the Tribunal in the case of the assessee for the assessment years 1997‑98 and 1998‑99. He then contended that the question proposed in the instant reference applications involved question of applicability of either of the two provisions of law (section 26 or section 80C) and was of substantial importance for being referred to the Honourable High Court for decision.

6. On the other hand, the learned A.R. vehemently argued that the proposition involved in the case was with regard to the provisions of law covering the cases generally and the provisions of law covering specified cases. He contended that section 80C was, of course, a later inserted provision but was having general applicability to certain cases. He, while distinguishing the provisions of section 26 with that of section 80C, contended that the provisions of section 26 were special provisions in the law covering cases of specified business or trade. He further contended that the proposition in respect of applicability and preference of a general provision of law and a special provision of law has already been answered in several decisions of the Superior Courts. He then referred PLD 1989 Supreme Court 384 and stated that principles with regard to interpretation of statutes in consequence to their repeal or amendment have been laid down in the said case‑law. He also referred PLD 1961 Supreme Court 373 and stated that principle regarding interpretation of taxing statutes has been laid down favouring the subject/assessee when two equally reasonable constructions were possible. He also referred two cases from Indian jurisdiction reported as 1951 ITR 579 (Madras High Court) and 1940 ITR 4 (Madras High Court) and stated that the assessee has a right to claim that he should be taxed under one provision which is burdening lesser if the income falls under more than one head. He finally contended that the case of assessee was clearly falling within the provisions of section 26 being special provision for the class of the business conducted by the assessee and hence there was no question of law arising from the order of the Tribunal referable to the Honourable High Court.

7. We have considered the respective contentions of the parties and have gone through the respective orders and the case law as referred by the learned A.R. The admitted position is that the department is in appeal before the Honourable High Court in respect of order, dated 25‑5‑199 passed by the Tribunal for the assessment years 1994‑95 and 1995‑96. The department, as informed by learned D.R., is also in appeal before the Honourable High Court against the order, dated 25‑3‑2000 passed by the Tribunal for the assessment year 1996‑97. The department, in respect of order of the Tribunal for the assessment years 1997‑98 and 1998‑99, has filed Reference Applications pending before another Division Bench of Tribunal as the order was passed by that Bench. The instant Reference Applications are against order, dated 17‑12002 passed by this Bench for the assessment years 1992‑93 and 1993‑94.

8. First of all, in order to have a clear view of the basic order of the Tribunal on the issue in question which was relating to assessment years 1994‑95 and 1995‑96 passed on 25‑5‑1999 vide I.T.A. No.788/IB of 1997‑98 and I.T.A. No.854/IB of 1998‑99, we may like to reproduce relevant part of para. 4 of the order, as under:‑‑‑

"We have considered the arguments of both sides in the light of the relevant provisions of law. Section 22 deals with income from business and profession and section 23 specifies the deductions allowable in computing the income from business or profession. However, section 26 contains special provisions regarding income from business of insurance, exploration and production of petroleum and exploration and extraction of specified mineral deposits. The methods of computation of income from these businesses are laid down in Vth Schedule. Section 80C which was inserted by Finance Act, 1991 deals with presumptive income in certain situations where tax under the specified provisions of section 50 is deductible or collectable. Under the provisions of subsection (1) of section 80C, the amount referred to in subsection (2) of the said section is deemed to be income of the assessee. Both section 26 and section 80C start with non‑obstante clause. Section 80C does not deal with any specified business and hence it is a general provision viz‑a‑viz section 26 which is a special provision dealing with the computation of income from specified businesses. Therefore, the provisions of section 26 shall apply in the present case. The orders of the authorities below are vacated and the Assessing Officer is directed to compute assessee's business income under section 26 while making reassessments."

9. The above findings of the Tribunal were followed in subsequent decisions of the Tribunal on the issue in question which are now subject of appeals and references as mentioned earlier.

10. While seeing to findings of ‑me Tribunal reproduced above, obviously, we find that legal effect and implications of provisions of section 26 and section 80C have been dilated upon culminating to a definite conclusion. Section 26 has been termed as a special provision dealing with computation of income from specified business. Section 80C has been termed to be not dealing with a specific business and hence regarded as general provision by comparing it with section 26. Undoubtedly both the provisions start with non‑obstante clause. In these circumstances, there cannot be an iota of doubt in applying the provisions of section 26 to the case of the assessee because the assessee was dealing in a business which fully fell within the said special provision of law relating to the said specified business. We may like to add here that if a case of an assessee of a specific business is totally covered in the ambit of one provision of law then there would be no question to attract another provision of law which is general in nature. A general provision cannot be preferred over a special provision in the same statute. If a same statute is having two provisions out of which one is of specific character and the other is of general character then obviously the specific provision will be applied and preferred over the general provision. In saying so, we find support from the rule of interpretation as laid down by the Honourable Lahore High Court in the case reported as PLD 1985 Lahore 358 in para. 17 at Page 364. Moreover, in a somewhat similar context of the proposition which was concerning the interpretation of two enactments (one previous Act and the other subsequent Act), the principles of interpretation of the statutes with regard to effect of general law on a special statute have been laid down by the Honourable Supreme Court of Pakistan in the case reported as PLD 1989 Supreme Court 384 which we refer here for the principles and rules of interpretation of statutes in respect of general provision and special provision to be followed for the proposition of the case in hand.

11. Further, we may also refer here a case reported as PLD 1988 Lahore 171, wherein the Honourable High Court has affirmed the well accepted principle of interpretation of statutes that a general provision in the same statute cannot operate to control the special provision. Moreover, in a similar context respecting rule of interpretation of statutes with regard to general provision followed by other for a particular class and the scope of the maxim "expresso unius est exclusio alterius" (mention of one is the exclusion of other), the Honourable Supreme Court of Pakistan in the case reported as PLD 1956 Suprsme Court (Pak.) 331 has been pleased to observe at page 383 as under:‑‑‑

"It seems obvious that where provision has been made in cleat terms for the general case and in a following provision, worded in the affirmative, a provision is made for a particular class of cases, the rule of exclusio alterius has no application whatsoever. The later affirmative provision must be limited in its application by its own terms, and no indirect inference may be drawn there-from to affect the principles laid down in the earlier provision."

12. In the light of the above discussion and case‑laws, we are of the considered opinion that the case of the assessee was fully and clearly falling within the provisions of section 26(c) and there was no room for ambiguity in the same necessitating for attracting any other provisions of law.

13. Therefore, we hold that no question of law as proposed by the department was arising out of the order of the Tribunal for being referred to the Honourable High Court for decision and accordingly decline the request of the department for making a reference to the Honourable High Court.

14. Resultantly, the Reference Applications stand refused.

C.M.A./550/Tax(Trib.) Application refused.