I.T.A. No. 788/LB of 2002, decided on 11th March, 2003. VS I.T.A. No. 788/LB of 2002, decided on 11th March, 2003.
2004 P T D (Trib.) 1038
[Income-tax Appellate Tribunal Pakistan.]
Before Munsif Khan Mihas, Judicial Member and Muhammad Sharif Chaudhary, Accountant Member
I.T.A. No. 788/LB of 2002, decided on /01/.
th
March, 2003. (a) Income Tax Ordinance (XXXI of 1979)----
----S. 59(1)---C.B.R. Circular Letter No. 7(31)S/Asstt/93, dated 16-9-1998---Self-assessment---Explanation of a provision of Self- Assessment Scheme which had been formulated under S.59(1) of the Income Tax. Ordinance, 1979, by the Central Board of Revenue in its Circular Letter No.7(31)S Asst/93, dated 16-9-1998 was not a judicial explanation and had no authority against the Self-Assessment Scheme.
(b) Income Tax Ordinance (XXXI of 1979)
----Ss. 59(1), 50(4) & 80-C---C.B.R. Circular No.9 of 1998, dated 21-7-1998, para. 8(d)(i)---C.B.R. -Circular No. 14 of 1998, dated 9-10-1998---C.B.R. Circular Letter No. 7(31).S/ Asst/93,dated 16-9-1998---Self-assessment---Assessment year 1998-99---Inclusion .of presumptive income and claim of tax credit deducted under S.50(4) of the Income Tax Ordinance, 1979 for the purpose of comparison with the tax paid for the previous year---Validity---Since the Self-Assessment Scheme clearly provided for the inclusion of deemed income for the purpose of comparison, said provision could not be withdrawn by Central Board of Revenue by issuing a clarificatory circular letter--- Assessee had rightly taken into account his deemed income under S.80-C of the Income Tax Ordinance, 1979 for the purpose of comparison and case was qualified under Self-Assessment Scheme-- Orders of the Authorities below were vacated by the Appellate Tribunal with direction to accept assessee's return under Self-Assessment Scheme.
1993 SCMR 1232 = 1993 PTD 766 and (1999) 80 Tax 51 rel.
Farid Adil for Appellant. Muhammad Zulfiquar Ali, D.R. for Respondent.
Date of hearing: 11th March, 2003.
ORDER
Appeal has been filed by an assessee for the year 1998-99 against appellate order, dated 13-12-2001 passed by Commissioner Income lax Appeal Zone-IV, Lahore under section 132 of the Income Tax Ordinance. It has been contended in the grounds of appeal that the case of the assessee qualified for Self-Assessment Scheme but the same has wrongly been ,excluded for normal law assessment. It has been further contended that the estimate of sales tax has been made at a very excessive level and the alleged enquiry report is not relevant. Expenses allowed have also been assailed on the ground that the same do not commensurate with the enhanced level of income.
2. Brief facts of the case are that the assessee filed his return of income for the year under consideration under Self Assessment Scheme as framed by Central Board of Revenue vide C.B.R. Circular No.9 of 1998, dated 21-7-1998. Later on the assessee revised his return of income to claim immunity under C.B.R Circular No. 14, dated October, 9, 1998. Assessee took into account his income assessed under presumptive tax regime and claimed credit of tax deducted under section 50(4) of the Income Tax Ordinance for the purpose of comparison with the tax paid for the year 1997-98 relying on clause d(i) of para. 8 of C.B.R Circular No. 9, dated 21-7-1998 which relates to simplified Self Assessment Scheme for the assessment year 1998-99. However, the Income Tax Officer rejected assessee's claim of inclusion of deemed income relying on Circular Letter No. 7(31) (S. Asstt/93, dated September 16, 1998) which explained that deemed income under para. 8(d)(i) of Self Assessment Scheme of assessment year 1998-99 shall not include income assessable under section 80B, 80C and 80CC. Thus, assessee's case was excluded from Self-Assessment Scheme and a normal law assessment was framed under section 62/80C. Against this treatment of the Assessing Officer assessee filed an appeal but the same was rejected by Commissioner Appeal Zone-IV, Lahore in his' appellate order, dated 13-12-2001 which has now been impugned before us.
3. Appellant's AR and Revenue's DR have been heard and available records have been perused.
4. We have gone through the assessment order of the DCIT, the impugned appellate order of the learned Commissioner and we have also considered the arguments given at the bar by the authorized representatives of both the parties. The question before us is whether deemed income assessable under section 80C of the Income Tax Ordinance and the tax deducted from the assessee under section 50(4) has to be taken into account for the purpose of comparison of income tax with the preceding assessment year for the purpose of determining assessee's eligibility under Self-Assessment Scheme for the year 1998-99? We have deliberated on this issue in the light of statutory law Self-Assessment Scheme, circulars issued by C.B.R. and case law produced by the AR of the assessee. Our answer to the said question is as under:
5. The Central Board of Revenue has been authorized by the legislature to frame Self-Assessment Scheme for each assessment year under section 59(1) of the Income Tax Ordinance, 1979. For the assessment year 1998-99 which is now under our active consideration, the C.B.R. made Self-Assessment Scheme under the title "Simplified Self-Assessment Scheme of income tax" vide its Circular No.9 of dated July 21, 1998 para. 8(d)(i) of this circular reads as under:--
(d)For comparison of income tax following items are to be included in the total income:--
(i)Agricultural income to the extent and in the cases in which it is includable or any sum deemed to be income under the provisions of the Income Tax Ordinance, 1979."
6. From the para which has been reproduced above, it is crystal clear that any sum deemed to be income under the provisions of the Income Tax Ordinance, 1979 has to be taken into consideration for the purpose of comparison. Relying on this para. the assessee includes his deemed income assessable under section 80C as well as tax paid under section 50(4) for the purpose of comparison. Later on the C.B.R. issued a circular letter clarifying that deemed income under the said para. would not include income assessed under section 80B, 80C and 80CC. The Income Tax Officer relied on this Circular letter and has excluded assessee's case from Self-Assessment Scheme.
7. It has been held by the Honourable Supreme Court of Pakistan in its judgment cited as 1993 SCMR 1232 = 1993 PTD 766 that Central Board of Revenue has administrative control over the officials discharging their functions under Income Tax Ordinance but it does not figure in the hierarchy of the forums' provided for adjudication of assessee's liability as to the tax. In this view of the matter any interpretation placed by the Central Board of Revenue on statutory provision cannot be treated as a pronouncement by a forum competent to adjudicate upon such a provision judicially or quasi-judicially The interpretation placed by the Central Board of revenue on the relevant provisions of the Income Tax Ordinance in the circular can be treated as administrative interpretation and not judicial interpretation. In view of these observations by the apex Court, explanation of a provision of Self Assessment Scheme, which had been formulated under section 59(1) of the Income Tax Ordinance, by the Central Board of Revenue in its Circular Letter No. 7(31)S. Asstt/93, dated September 16, 1998 is 'not a judicial explanation and has no authority against the Self-Assessment Scheme. Since the Self-Assessment Scheme clearly provided for the inclusion of deemed income for the purpose of comparison, this provision cannot be withdrawn by the C.B.R. by issuing a clarificatory circular letter. Therefore, in our opinion the assessee has rightly taken into account his deemed income under section 80C for the purpose of comparison and his case qualifies under Self-assessment Scheme: We are strengthened in our this view by a reported judgment of the ITAT cited as 1999 PTD (Trib.) 4107 wherein it has been held by the ITAT in similar circumstances that deemed income under section 80C or any other provision of Income Tax Ordinance would be included for the purpose of comparison for the assessment year 1997-98.
8. In view of the foregoing discussion we accept assessee's appeal and vacate the order passed by the Authorities below. The Assessing C Officer is directed to accept assessee's return under Self-Assessment Scheme.
C.M.A./976/Tax (Trib.)Appeal accepted