M.A. No.591/LB of 2000, decided on 23rd October, 2003. VS M.A. No.591/LB of 2000, decided on 23rd October, 2003., 2004 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 745 (2003)

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

‑‑‑‑S. 156 & Second Sched., Cl. (126‑D)‑‑‑Protection of Economic Reforms Act (XII of 1992), preamble‑‑‑Rectification of mistake‑‑‑While determining the issues, Appellate Tribunal by mistake considered that Cl; (126‑D) of the Second Sched. of the Income Tax Ordinance, 1979 under which the assessee was claiming exemption, did form part of the Sched. of the Protection of Economic Reforms Act,. 1992‑‑‑Such mistake was rectifiable under S.156 of the Income Tax Ordinance, 1979.

1997 PTD (Trib.) 879 rel.

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

‑‑‑‑S. 156‑‑‑Rectification of mistake‑‑Mistake in determining the‑ facts was apparent from the record‑‑‑Appellate Tribunal recalled its‑order for reconsideration of the issue on the basis of facts‑‑‑Ignorance of binding judgments amounted to "definite information" and was a mistake apparent from record which could be rectified.

2001 PTD 303 and 2001 PTD (Trib.) 865 ref.

1998 PTD (Trib.) 2896; 1992 PTD 570; 1997 PTD Note 123 at p.201 and 1997 PTD Note 62 at p:106 rel.

Abdul Rasheed Ch., D.R. for Appellant.

Shahbaz Butt for Respondent.

Date of hearing: 16th October, 2003.

ORDER

KHAWAJA FAROOQ SAEED (JUDICIAL MEMBER).‑‑‑This Miscellaneous Application has been filed by the Department. It calls for our indulgence on the issue that whether there was a mistake, which requires rectification of our order or not.

It was said that the learned Tribunal was misled by the assessee that the judgment of Ellahi Cotton Mill squarely applied on the facts and circumstances of this case. The facts of this case were totally different in the manner that the assessee did fall within the provisions of clause 126(D) but the Economic Reforms Act on the basis of which it has been allowed exemption does not grant protection to the exemption given in said clause. It was also said that the judgment of Lahore High Court reported as 2001 PTD 303 which earlier was announced on 6th October, 1999 was also not produced before the Honourable Bench which alone is enough to hold that the Tribunal was not properly assisted and as such they omitted to take cognizance of the facts of the case.

The learned DR further remarked that the subsequent detailed and reported judgment of the ITAT for the next year in the case of this assessee supported their view that the order was a mistaken view hence it should be recalled and be decided in the light of the judgments of the superior Courts as well as of the ITAT itself.

The learned AR firstly challenged the very initiation of MA. He said that the learned Tribunal has given a bona fide view, which is open for further discussion before the superior judiciary. He remarked that there is no mistake floating from the order of the ITAT and section 156 have very strict and limited scope. The judgment he remarked has been given after putting reliance upon a judgment of the Supreme Court of Pakistan and there is no difference in the facts of the two cases. Furthermore, even if for argument sake it is accepted that the two judgments one under discussion and other given by the learned Tribunal in the subsequent order are in conflict, it cannot be called as a mistake floating from the order.

Regarding judgment of the Lahore High Court, which was said to have not been presented earlier, learned AR remarked that it is not against but in fact in favour of the assessee. He brought our attention to the relevant para. of the judgment that speaks as follows:‑‑

"A cumulative reading of section 2(b) and the preamble would show that the saving clause applies only to the economic measures taken after 5th November, 1990 pursuant to the economic policy of the Government which granted the incentives. The intention of the Legislature becomes manifest from a perusal of the Schedule. If the argument of the learned counsel is correct that section 6 applies to all the notifications issued before the promulgation of the Act, then there was no necessity of specifically mentioning two notifications in the Schedule: It is thus obvious that what section 6 says is the measures taken by the Government after 5th November, 1990 which Was the date on which the then Government came into power."

He remarked that the learned High Court is very clear in .its finding that this applies on the measures taken by the Government after 5th November, 1999 and clause 126‑D of the Second Schedule is fully covered for exemption under section 80D.

So far as this last argument of the learned AR is concerned, we do find ourselves convinced that the judgment is in favour of the assessee claim. The para. should be read as a whole and the language "if argument of learned counsel is correct that section 6 applies to all the notifications issued before promulgation of the Act, then there was no necessity of mentioning two notifications in the schedule" leaves no reason for us to believe this very clear and unequivocal finding of the Honourable High Court. Our finding in the judgment reported as 2001 PTD (Trib.) 865 is also the same. We have held that only those reforms can enjoy exemption from section 801), which have been mentioned .in the schedule of the Economic Reforms Act. 'We have also held that. the Government could always add, amend or modify the said schedule for the purpose of granting exemption to any association or organization to fulfil the purpose of Economic Reforms. Having not done so the Government has restricted the scope of said Economic Reform to the extent of the two notifications mentioned in the schedule. The exemption from section 80D therefore, was not allowable in the present case, which has been allowed the Tribunal under, a mistaken understanding of the, facts of the case. It was never brought to the notice of the Tribunal that this class of assessees does not find place in .the schedules of the Economic Reforms Act, which was a factual and mistaken understanding of the case.

We have full respect for the judgments given by the AR on the subject of rectification which are as follows:‑‑

1998 PTD (Trib.) 2896; 1992 PTD 570; 1997 PTD Note 123 at p.201 and 1997 PTD Note 62 at p.106.

(i) In this case we, therefore, hold that while determining the issues we by mistake considered that clause 126‑D under which the assessee is claiming exemption, does form part of the schedule of the protection of Economic Reforms Act, 1922 (XII of 1992) which obviously is rectifiable under section 156.

(2) The binding decision of the Lahore High Court in terms of Zahoor Cotton, Mill, which has been discussed‑by us supra now, was ignored.

These omissions do amount to mistake apparent from record, which we consider as rectifiable under section 156. In support of this finding we take benefit from the judgment reported as 1997 PTD (Trib.) 879 which speaks as follows:‑‑

"Consequent to the above conclusion we are of the considered opinion that a mistake of law has taken place whereby the earlier decisions of Division Bench of the Tribunal has been ignored and a different view has been taken by the learned Accountant Member sitting in the Division Bench and the learned third Member to whom the difference of opinion was referred. It appears that the learned third Member was not assisted properly on this aspect of the legal decision and consequently a different view was taken whereby the earlier view taken by the Division Bench was dissented and contrary view was taken instead of making reference To the Chairman for constitution of larger Bench. The order of this Tribunal, dated 24‑12‑1992 is, therefore, hereby recalled. The rectification application is allowed accordingly."

In view of above discussion we consider that in this case the mistake of determining the facts is apparent from the record and in view of the famous judgment of the Supreme Court of Pakistan that says that ignorance of binding judgments amounts to definite information ref: Central Insurance Company Ltd., we recall our order for reconsideration of the issue on the basis of facts. The AR of the assessee has referred certain judgments of the ITAT with reference to the main issue, which we shall discuss at the time of the regular hearing of the appeal for which we direct the Roster to fix the case at an earlier date.

The result is obvious. This MA of the Department succeeds in the manner and to the extent mentioned herein above.

M.B.A./ 1028/Tax (Trib.) Order accordingly.