M. A. (Rectification) No. 35/11 of 2003 VS M. A. (Rectification) No. 35/11 of 2003
2004 P T D (Trib.) 452
[Income-tax Appellate Tribunal Pakistan]
Before Syed Masood-ul-Hasan Shah, Judicial Member and Syed Aqeel Zafar-ul-Hasan, Accountant Member
M. A. (Rectification) No. 35/11 of 2003, decided on 25/06/2003.
(a) Income Tax Ordinance (XXXI of 1979)---
----First Sched., Part IV, para. B(2)---Public company---" Shares"-- Connotation---Word "shares" used in para. B(2) of Part IV of the First Schedule of the Income Tax Ordinance, 1979 has been used in the plural form---Had it been used in the singular form, it could be argued to mean extent of ownership---Word "shares" held by the Government, denote any stock of share capital and not the extent of ownership.
(b) Income Tax Ordinance (XXXI of 1979)-----
----5.156 & 2(16)---Pakistan Telecommunication (Re-organization) Act (XVII of 1996)---Rectification of mistake---Scope---Determination of status---Appellate Tribunal determined the status of the assessed as private limited company---Recall. of such order through rectification application to allow the assessee a status of public limited company as 100% of its assets were owned by the Government of Pakistan-- Validity---Order of Appellate Tribunal suffered from no error, rectifiable under S.156 of the Income Tax Ordinance, 1979---Application filed being without merits and unsustainable in law, was rejected by the Appellate Tribunal.
Concise Oxford Dictionary; Black's. Law Dictionary and
Chamber's Encyclopaedic English Dictionary ref.,
1996 PTD 100; 1991 PTD 758 and PLD 1991. SC 630 distinguished.
1993 PTD (Trib) 964 and 1998 SCMR 908 rel.
Khalid Majeed, FCA/AR for Applicant
Abdul Jaleel, DR for Respondent.
Date of hearing: 25th June, 2003.
ORDER
SYED AQEEL ZAFAR-UL-HASAN (ACCOUNTANT MEMBER).---This miscellaneous application seeks rectification of our earlier order bearing I.T.A. No. 669(IB) of 2000-2001 passed on, 21-8-2002. The point at issue is the determination of the tax status of the assessee. While the assessee, a statutory corporation, formed under the Pakistan Telecommunication (Re-organization) Act, 1996, claimed the status of a public limited company on the basis of 100'% ownership of its assets by the Government of Pakistan, the Department rejected the claim and treated it as a private limited company. This resulted in a higher rate of tax becoming applicable to the assessee. In the first appeal, the assessed secured a favourable order from the Commissioner of Income Tax (Appeals) which was contested by the Department. The Tribunal vacated the order of the Commissioner and restored that of the Assessing Officer on the issue of tax status of the assessee.
2. The present miscellaneous application seeks a review of the finding recorded by us in our order dated 21-8-2002. The detailed reasoning given in this regard spanning over 13 pages mainly makes out the proposition that the reliance placed by the Assessing Officer on the provisions of Para. B(2) of Part-IV of the First Schedule to the Income Tax Ordinance, 1979 (hereinafter called the Ordinance) requires 50% of the shares to be held by the Government for becoming entitled to the concessionary tax rates applicable to a public company. The Tribunal in its order has interpreted the word "share" as being synonymous with share capital which, according to the assessed, is an erroneous view as the term shares should be considered akin to ownership and not the share capital. It has been argued that the word "capital" has not been used in the Ordinance in conjunction with the word "shares" and should not as such, `be read into the law. Even though the Ordinance does not define the word "share", the meaning thereof as contained in the Concise Oxford Dictionary; Black's Law Dictionary and Chambers Encyclopedic English Dictionary explain the word also means the right of the owner to share in the profit of the company or enterprises. By reading the word "share" in conjunction with the word "capital % the Tribunal is said to have fallen in error. Reliance has been placed on 1996 PTD 100, where the Tribunal, while interpreting the status, held that for interpretation of fiscal statues, "if there is any doubt in the interpreting of fiscal statute, it is to be resolved in favour of the assessed". Again in 1'991 PTD 758, the Tribunal was quoted to hold that "while interpreting the statutes, it is the duty of the Court to suppress the mischief and advance the remedy." In PLD 1991 SC 630, the case on which the Tribunal had placed reliance while deciding the case of the assessed, it has been held that while construing fiscal statute one must read words and interpret them in the light of what was clearly expressed and could not rely upon the meaning which are not expressed but are implied". In conclusion, the assessee states that the appellant was a company as defined under section 2(16) of the Ordinance and being wholly owned by the Government, also met the condition of the shareholding given in Para. B(2) of the First Schedule to the Ordinance.
3. Detailed arguments based on the above referred written miscellaneous application were addressed by the A.R. of the assessee. While winding up his arguments as recapitulated above, he pleaded that the order passed by us on 21-8-2002 may be recalled and an appropriate decision be announced.
4. The learned D.R. opposed the maintainability of the miscellaneous application requesting a recall of the Tribunal's order on the subject. He pointed out that scope of an application for rectification could not be extended to a review of the findings recorded by the Tribunal in its detailed order. In the present case, the entire order of the Tribunal was based on and confined to the determination of the tax status of the assessee. There was no sanction in law to seek review and recall of the order passed by the Tribunal in the garb of a rectification. There was no error floating on the face of the record which needs to be rectified. Instead, the entire order of the Tribunal was sought to be replaced by what has been termed as an appropriate order. Being beyond the scope of rectification, the application of the assessee was liable to rejection, it was argued.
5. Having heard the parties and carefully re-examined our order of 21-8-2002 in the context of the detailed submissions made in the 13 page application by the assessee, we are inclined to agree with the position taken by the D.R. The assessee has been unable to point out any error of floating nature evident on the face of the record that could be rectified in accordance with law. As has been held in 1993 PTD Trib 964, the power of rectification of mistakes cannot be extended or allowed to be stretched to authorize the Tribunal to sit in judgment as an Appellate Court against its own order and reverse the same by finding conflict or by taking additional grounds to come to a conclusion in favour of the applicant. Also, in 1998 SCMR 908 , the Supreme Court held that where an error of law and facts is discovered in an order by reading the order without reference to any other material, such error would fall within the category of an error apparent on the face of the record. The assessee has, been unable to show that its case satisfies this criterion.
6. The reliance placed by the assessee on the provisions of section 2(16) of the Ordinance, to argue that NTC was a body corporate and hence a `company' as defined in section 2(16), ibid, falls short of establishing that it also at the same time, was to be regarded `a public limited company' under that definition. It has been claimed that the purposes of Para. B(2) of the Part-IV of. the First Schedule to the Ordinance in defining a public company as one in which not less than 50% shares are held by the Government, was to provide benefit of :educed tax rate to a company owned by the Government. On the contrary, the purpose of the law appears clearly to restrict the benefit of lower tax rate to corporate entities with Government-cum-public participation. The law nowhere attempts to create tax privileges only on the basis of the ownership by the Government. Nothing could be farther away from the intent of the Legislature. The tax rebate of -5 % has been designed for companies which promote a corporate culture. That is why quoted companies share this rebate with companies where Government has 50% holdings.
7. The learned A.R. has pointed out that the DCIT has made conflicting and inconsistent interpretations of law to justify assigning the status of a private limited company to the assessee. The nuances of highlighting the conflicting arguments made by the DCIT in the relevant assessment order, however, have nothing to do with the findings of the Tribunal: These are, as such, disregarded as being irrelevant. Reference made to the purposive construction of law based on the findings of the House of Lord is also of no avail to the assessee. It has not been shown that the order of the Tribunal ran contrary to the principles employed in that ruling. Indeed, our interpretation is also driven by a purposive construction in ensuring that the intention of the Legislature is correctly interpreted and applied.
8. As for the arguments of the DCIT while framing the original assessment, it may be observed that the Tribunal is not bound by his line of reasoning. The issue before us was to examine whether the tax status of the assessee had been correctly assigned and this we have done in our order of 21-8-2002. On this count, it may be observed that the wore `shares' in Para. B(2) ibid has been used in the plural form: Had it beer used in the singular form, it could be argued to mean extent or ownership. In the present case, the word "shares" held by the Government, denote any stock of share capital and not the extent 01 ownership as contended by the assessee.
9. The reliance placed by the assessee on the definition of the word "share" in the Concise Oxford Dictionary, Black's Law Dictionary and Chambers Encyclopedic Dictionary does not help its case. In each of the three dictionaries relied upon, the terms "equal numbers" and "units" have been used in relation to the word "share". This evidently, further confirms the treatment accorded and the interpretation made by the Tribunal of treating shares as in share capital .instead of in the ownership sense.
10. As for the case-law quoted by the assessee, notwithstanding the fact that this amounts to raising detailed arguments which militate against the concept of rectification ab initio, 1996 PTD 100 only requires resolving a case in favour of the assessee if there is any doubt in interpreting a fiscal statute. There is no such doubt in our minds in the present case and therefore, the case is of no help to the assessee. Again in 1991 PTD (Trib.) 758, it has been held that it is the duty of the Court to suppress the mischief and advance the remedy while interpreting a statute. However,' the context and substance of the matter then under adjudication of the Tribunal was, whether the Finance Ordinance, 1984, by substitution of the para. prescribing rates of tax, had repealed the earlier Schedule of Rates of Tax. It was contended by the assessee that the earlier rates had been repealed while the new rates had to become applicable a year later with effect from 1-7-1985. The effect of such an interpretation would have been to cause a one year vacuum in the revenue generation and collection process. While striking down such a mischievous interpretation, the ruling now quoted by the learned A.R. was given by the Tribunal. It is clear that in the foregoing context, the case-law quoted by the A.R. has no application to the present case. Regarding action in PLD 1991 SC 630, requiring construing fiscal statute in the light of what has been clearly expressed and not the meaning which was not expressed or implied, we fail to see how the governing provision of Para. B(2) of Part IV of the First Schedule to the Ordinance is anything but a clear expression of law. Any other inference sought to be drawn by the assessee on the basis of non-specific case-law quoted, is certainly misdirected and liable to rejection.
11. For the foregoing' reason, we are of the clear opinion that the order of the' Tribunal suffers from no error, rectifiable under section 156 I of the Ordinance. The miscellaneous application filed in this behalf being without merits and being unsustainable in law, is hereby rejected.
C.M.A/991/Tax(Trib)Application rejected.