I.T.A. No. 5144/LB of 2005, decided on 25th February, 2006. VS I.T.A. No. 5144/LB of 2005, decided on 25th February, 2006., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1965 (2006)

Income Tax Ordinance (XXXI of 1979)---

----Ss.50(4A), 59(A) & 156---Deduction of tax at source---Commission--Assessment was finalized under Self-Assessment Scheme but credit of tax deducted on commission was disallowed on the ground that commission/incentive received by the assessee was subjected to tax @ 10% under S.50(4A) of the Income Tax Ordinance, 1979 and these were covered under Presumptive Tax Regime and tax so deducted was final discharge of tax liability---First Appellate Authority directed to accept the contention of assessee to process rectification application on the ground that assessment framed under S.59(A) of the Income Tax Ordinance, 1979 was in existence and was valid to all purposes of the provisions of Income Tax Ordinance, 1979---Validity---Assessment was finalized under S.59(A) of the Income Tax Ordinance, 1979 and it was intact till the assessee filed rectification application as such it was valid to all purposes of provisions of law under Income Tax Ordinance, 1979---Rejection of rectification was not well-founded---Finding of First Appellate Authority was fair and judicious---Department sought vacation of order of First Appellate Authority merely on the basis of presumptions and conjectures, which could not be allowed at all---First Appellate Authority had passed a speaking order, which sufficiently met the ends of justice and could not be interfered in the absence of plausible reasons put forth from revenue side---Order of First Appellate Authority was upheld and departmental appeal was dismissed by the Appellate Tribunal being devoid of legal substance.

2005 PTD (Trib.) 668 and (2005) 91 Tax 157 (FTO) ref.

Anwar Ali Shah, D.R. for Appellant.

Zafar-ul-Islam for Respondent.

ORDER

The instant departmental appeal pertaining to assessment year 2001-2002 has been directed against the impugned order, dated 27-6-2005 recorded by CIT(A) Multan, whereby the following issue has been raised as per memo. of appeal for adjudication:

"That the credit of tax deducted @ 10% under section 50(4A) of the repealed Income Tax Ordinance, 1979, on incentive is contrary to law as the same is final discharge of tax liability and covered under section 80C."

Brief facts of the case are that return for the charge year was filed declared income at Rs.107,000 inclusive of commission (incentive) received from Messrs Pakistan Suzuki Motors Limited on which tax @ 10% was also deducted and also shown by the assessee. The Assessing Officer finalized assessment under section 59(A) but credit of tax deducted on commission was disallowed. Feeling aggrieved, the assessee moved Rectification Application for allowance of credit of tax deducted under section 50(4A) of the repealed Income Tax Ordinance, 1979, which was rejected by the Taxation Officer with the observation that commission/incentive received by the assessee from Messrs Pakistan Suzuki Motors Limited, was subjected to tax @ 10% under section 50(4A) of the repealed Income Tax Ordinance, 1979 and these are covered under presumptive tax regime and so deducted was final discharge of tax liability. Against the action of Taxation Officer, the assessee went in appeal before the Learned CIT(A) Multan, who accepted assessee's appeal as per finding given below:--

"I have considered the position and examined the arguments and record as well as relevant provisions of law and authorities quoted by the appellant. Perusal of the same shows that the assessment for the year under appeal has been finalized under section 59A on 22-4-2001 and till date the said order is in existence. The contention of the AR of the appellant vide para-3 of the written arguments that the assessment framed under section 59(A) is in existence and is valid for all purposes of the provisions of the Income Tax Ordinance, 1979 is valid. Accordingly, rejection of rectification application by the Taxation Officer is against law. He is directed to accept contention of the appellant and to process rectification application in the light of provisions of law and judgment of Superior Higher Courts."

The learned DR has vehemently argued that the relief allowed by the first appellate authority is arbitrary and contrary to facts of the case. He has further contended that while allowing such a drastic relief to the assessee, the learned CIT(A) has not bothered to evolve any proper basis, which is not sustainable in the eyes of Law. He has stressed that while disallowing credit of tax deducted on commission, the Taxation Officer credit of tax deducted on commission, the Taxation Officer had given due consideration to this material aspect of the case that commission/incentive received by the assessee from Messrs Pakistan Suzuki Motors Limited, was subjected tax @ 10% under section 50(4A) of the repealed Income Tax Ordinance, 1979 being covered under presumptive tax regime and tax so deducted was final discharge tax liability. He, therefore, prays for vacation of the impugned order and restoration of the treatment meted by assessing authority.

In rebuttal, the learned AR has fully supported the action of learned CIT(A) by maintaining that although the assessee's business is of services rendering but the Taxation Officer was unable to understand the nature of receipts. In order to lend credence to his submission, he has referred before us reported judgment of ITAT cited as 2005 PTD (Trib.) 668, whereby it has been held that receipts on account of services rendered would fall outside the purview of presumptive tax regime under section 80C and tax deducted in their case would not be final discharge of tax liability. In order to further strengthen his viewpoint, he has referred before us another reported judgment cited as (2005) 91 Tax 157 (FTO) wherein, the similar viewpoint has been endorsed.

We have heard the arguments advanced on behalf of rival partie and also carefully gone through the relevant record available on file. We do not find ourselves in agreement with the assertions made on behalf of the Revenue, which are weightless being not supported by plausible reasons or any dictum of Law. It is admitted position that assessment for the charge year was finalized under section 59(A) and it was intact till the assessee filed rectification application as such it was valid for all purposes of provisions of law under repealed Income Tax Ordinance, 1979. Thus, rejection of rectification by the Assessing Officer was not well-founded. Viewing the matter in this context, the impugned finding by CIT(A) is fair and judicious. On the contrary, the learned DR has sought vacation of the impugned merely on the basis of presumptions and conjectures, which cannot be allowed at all. Keeping in view the foregoing discussion, we are of the considered view that learned CIT(A) has passed a speaking order, which sufficiently meets the ends of justice and cannot be interfered in the absence of plausible reasons put forth from Revenue side. Consequently, the impugned order on the issue under consideration is upheld and the departmental appeal is dismissed being devoid of legal substance.

C.M.A./65/Tax (Trib.)????????????????????????????????????????????????????????????? Appeal dismissed.