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

‑‑‑‑S. 23‑‑‑Deductions‑‑‑Charity and donation‑‑‑Donation of biscuits to Army during war ‑‑‑Disallowances of‑‑‑Validity‑‑‑Admittedly assessee had provided biscuits to the Army during War which was duly certified by the Army Authorities‑‑‑No more charitable purpose could be than to contribute towards the well‑being of Armed Forces and that too when they were engaged in defence of the country against the enemy‑‑ Recommendation letter issued by the concerned Authorities leaves no doubt about the pious object for which the assessee made the contribution as well as the quantum of donation‑‑‑Assessing Officer was directed to allow the claim in circumstances.

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

‑‑‑‑S. 47(c) & Second Sched., Cl. 91(xxxvii)‑‑‑Allowance for donation for charitable purposes‑‑‑Exemption‑‑‑Donation of biscuits to Army during war‑‑‑Disallowance for the reason that no notification was issued by the Central Board of Revenue in that regard‑‑‑Validity‑‑‑Section 47 of the Income Tax Ordinance, 1979 provides two situations i.e. "sponsored" or "approved" by the Government‑‑‑Law makers envisaged two entirely different situations at the time of enactment‑‑‑In case of sponsorship, the Government itself has to initiate and announce the campaign to arrange relief fund but the use of word "or approved" clearly manifests that any such act may be accorded approval subsequently, though not sponsored initially by the Government i.e. in case of peculiar nature of events i.e. breaking out of sudden war‑‑‑Army Authorities granted requisite approval by issuing the letter of appreciation‑‑‑Assessee's case was fully covered by S.41, read with sub-clause (xxxvii) of Cl. (91) of the Second Schedule of the Income Tax Ordinance, 1979‑‑‑Order of First. Appellate Authority vas vacated by the Appellate Tribunal and Assessing Officer was directed to allow the claimed expenses.  

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

‑‑‑‑S. 13(1)(d)‑‑‑Deemed income‑‑‑Registered sale‑deed‑‑‑Industrial property‑‑‑Addition was made by discarding the value declared according to the registered sale‑deed for the reason that, property was industrial property‑‑‑Validity‑‑‑Assessee purchased property in question through a registered sale‑deed duly authenticated by the Registration Authority‑‑ Assessing Officer did not have any evidence with him to discard, the value mentioned in the sale‑deed‑‑‑While making addition, no parallel case or any other material contrary to assessee's declared value was cited‑‑‑Value quoted by the Assessing Officer was merely figment of imagination having no basis whatsoever‑‑‑Addition deleted by the First Appellate Authority was confirmed by the Appellate Tribunal and departmental appeal was rejected.

Nemo for Appellant.

Bute Khan for Respondent.

Date of hearing: 2nd May, 2003.

ORDER

SEYD NADEEM SAQLAIN (JUDICIAL MEMBER).‑‑‑For the assessment year 2000‑2001 the assessee hays assailed "the impugned findings recorded by the learned CIT(A), Zone 1; Lahore vide his order, dated 28‑5‑2002 whereby 'the learned First Appellate Authority upheld the disallowance made by the Assessing Officer: under the head of charity and donation.

2. As regards assessment year 1995‑96 the Revenue has come up in appeal calling in question the impugned order; dated 28‑5‑2002 deleting the addition made under section 13(1)(d) of the Income Tax Ordinance, 1979.

The titled appeals are being disposed of as under:‑‑

Assessment Year 2000‑2001

3. Briefly stated facts of the case are that assessee, a Private Limited Company, derives income from manufacturing and sale of biscuits in the brand name of "Maz". The return for the assessment year under appeal was filed at net loss of Rs. 116,747. The books of assessee showed that the assessee has claimed allowance of an expense amounting to Rs,1,775,204 in the P&L account under the head charity and donation. The Assessing Officer disallowed the same for the reasons recorded in the assessment order. The assessee approached the learned Firs Appellate. Authority but could not find favour, hence the instant appeals.

4. Mr. Bute Khan, Advocate appeared on behalf of the assessee whereas none appeared on behalf of the Department.

5. The learned AR has forcefully argued the case and contended that the Assessing Officer erred in law while disallowing the expense claimed by the assessee. It was pleaded that the biscuits valuing Rs.1,775,204 were donated to the Pak Army during the Kargil War. Further submitted that the Assessing Officer either deliberately or due to inadvertence misstated in the assessment order with regarding mentioning of amount of expense incurred under the head of `charity and donation', in the letter of appreciation given by the Army authorities. In this regard he produced the above‑mentioned letter wherein it has been clearly mentioned that the assessee provided biscuits to the Pak Army valuing Rs.1,775,204. The learned AR also emphasized that assessee's claim was covered by section 47 read with sub‑clause (xxxvii) of Clause 91 of Second Schedule of the Income Tax Ordinance, 1979.

6. None is present on behalf of the Department to repel the arguments advanced by the learned AR.

7. We have heard the learned AR and have also perused the relevant orders. We feel ourselves persuaded by the arguments tendered by the learned AR. There is no denying the fact that the assessee did provide biscuits to the Pak Army during Kargil War factum of the said provision was duly certified by the Army Authorities. There could not be more charitable purpose than to contribute towards the well‑being of the Armed Forces and that too when they are engaged in defence of the country against the enemy. Even otherwise recommendation letter issued by the concerned authorities leaves no doubt about the pious object for which the assessee made the contribution as well as the quantum of donation.

8. On merit, we would like to observe that the case of the assessee is fully covered by section 47(c) read with sub‑clause (xxxvii) of Clause (91) of the Second Schedule which clearly provides for relief fund sponsored or approved by the Government. The Assessing Officer disallowed the expense for the reason that no notification was issued the C.B.R. in this regard. However, section 47 of the Ordinance provides for two situations (1) sponsored or approved by the Government. We must say that the law‑makers envisaged two entirely different situations at the time of enactment. Obviously, in case of sponsorship, the Government itself have to initiate and announce the campaign to arrange relief fund but the use of word "or approved" clearly manifests that any such act may be accorded approval subsequently, though not sponsored initially by the Government i.e. in case of peculiar nature of the events i.e. breaking out of sudden war. In our view the Army authorities granted requisite approval by issuing the letter of appreciation.

9. In the light of above discussion we are of the considered view that assessee's case is fully covered by section 47 read with sub‑clause (xxxvii) of Clause 91 of second Schedule to the Income Tax Ordinance, 1979. We, therefore, vacate the impugned order passed by the learned CIT(A), the Assessing Officer is directed to allow the claimed expense accordingly.

Assessment Year 1995‑96

10. Necessary facts for the disposal of present appeal are that assessee filed return in response to the notice under section 56 of the Income Tax Ordinance, 1979 declaring, "Nil" income. The Assessing Officer noticed from the balance‑sheet appended with the return that assessee had purchased land measuring 40 Kanals situated at Sheikhupura Road, Lahore at the value of Rs.2,807,070 through registered sale‑deed.. The Assessing Officer was of the view that value declared by the assessee was too low for the reason that property in question was industrial property. The Assessing Officer confronted the assessee that value of the said property should be Rs.100,000 per Kanal against Rs.70,127 and proceeded to make addition of Rs.1,194,930 under section 13(1)(d) of the Ordinance. On appeal, the said addition was deleted by the learned CIT(A) hence the instant appeal at the behest of the Revenue.

11. None is present on behalf of the Revenue to plead in support of their appeal, hence proceeded ex parte.

12. The learned AR has vehemently argued the case and supported the impugned order whereby the addition made under section 13(1)(d) was deleted. It was vociferously agued that property in question was purchased through registered sale‑deed. Therefore, the value mentioned therein is to be treated authentic. Further contended that the Tribunal as well as other higher Judicial Authorities have held in number of cases that sanctity is attached to the value mentioned in registered documents unless proved otherwise. It was averred that onus has been on the Department to prove that assessee expended more money than mentioned in the sale‑deed while acquiring the said property. It was also highlighted by the learned AR that the Assessing Officer did not cite any parallel case while proposing that value of the property should be adopted at Rs.100,000. He submitted that law does not allow to the Assessing Officer to act whimsically in such like cases, because he is under a legal obligation to assign cogent reasons in order to reject the value incorporated in the sale‑deed. To sum up, the learned AR urged that no exception could be taken with regard to the impugned findings given by the learned CIT(A), since he rightly deleted the additions made by the Assessing Officer being in flagrant violations of law and ratio settled by the Tribunal as well as other higher Judicial Forums.

13. We have heard the learned AR and have also perused the relevant orders. We are constrained to observe that there is no merit in the departmental appeal. The impugned order passed by the learned CIT(A), is in consonance with law. Admittedly, the assessee‑company purchased the property in question through a registered sale‑deed duly authenticated by the Registration Authority. The Assessing Officer did not haves any evidence with him to discard the value mentioned in the sale-deed. It was also not brought on record that the assessee expended more money than mentioned in the registered sale -deed. Similarly, while making addition, no parallel case or any other material contrary to the assessee's declared value was cited by the learned Assessing Officer. In such‑like circumstances, the value quoted by the Assessing Officer was merely figment of imagination having no basis whatsoever. The assesee's contention also, stand substantiated by the judgments relied upon by the learned CIT(A) while deleting the impugned addition.

14. For the foregoing reasons we hereby reject the departmental appeal being devoid of any merit.

C.M.A./972/Tax(Trib.) Appeal rejected.