I.T.As. Nos. 4359 and 4360/LB of 2002, decided on 25th May, 2005 VS I.T.As. Nos. 4359 and 4360/LB of 2002, decided on 25th May, 2005, 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 984 (2005)

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

----Ss.52, 86 & 50(4)---Finance Act (III of 1998), Preamble---Liability of persons failing to deduct or pay tax---Assessee contended that First Appellate Authority had not considered the amendment made in S.50(4) of the Income Tax Ordinance, 1979 through Finance Act, 1998 in which proviso and explanations were added---Said amendment was effective. from assessment year 1999-2000 while the tax had been charged under Ss.52/86 of the Income Tax Ordinance, 1979 for the assessment years 1996-97 and 1997-98---Validity---Appellate Tribunal deleted the tax levied by the Assessing Officer under Ss.52/86 of the Income Tax Ordinance, 1979---Appeal filed by the assessee was accepted by the Appellate Tribunal.

2004 PTD 921 rel.

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

----S.50(4), Explanation---Deduction of tax at source---Explanation added to S.50(4) of the Income Tax Ordinance, 1979 by virtue of Finance Act of 1998, could not be applied retrospectively.

2004 PTD 921 rel.

Khalid Maqbool ,I.T.P. for Appellant.

Muzammal Hussain, D.R. for Respondent.

Date of hearing: 24th May, 2005.

ORDER

The captioned appeals have been filed at the behest of assessee to assail two separate orders both dated 3-6-2002 relating to the assessment years 1996-97 and 1997-98. The common ground taken by assessee in both the years is that the learned C.I.T.(A) has not considered the amendment made in section 50(4) through Finance Act of 1998 in which proviso and explanations in section 50(4) was added as the A above amendment was effective from assessment year 1999-2000 while the tax has been charged under sections 52/86 for the years 1996-97 and 1997-98.

2. Brief facts giving rise to the present appeals are that the assessee, a private limited company, derives income from textile. The assessee was under legal obligation to deduct tax under section 50(4) of the repealed Income Tax Ordinance, 1979 on payments made during the- years under consideration. Since the tax was not deducted under section 50(4) the Assessing Officer raised demands under sections 52/86 amounting to Rs.6,746,003 and Rs.2,979,686 respectively for the years 1996-97 and 1997-98. The assessee feeling dissatisfied with the other passed by the Assessing Officer went in appeal before the learned First Appellate Authority who remanded the case to the Assessing Officer with the direction to provide the assessee another opportunity to the appellant of being heard.

3. The learned A.R. on behalf of the assessee-appellant agitated the action of the authorities below and in support of his ground of appeal the learned A.R. referred to a reported decision cited as 2004 PTD 921 in which it has been held by the learned Sindh High Court that the explanation added to section 50(4) of the Income Tax Ordinance, 1979 B by virtue of Finance Act of 1998 cannot be applied retrospectively. On the other hand, the learned D.R. on behalf-of the Revenue defended the order of the C.I.T.(A).

4. We have heard both the A.R. on behalf of the assessee as well as the D.R. on behalf of the Revenue. We have also perused the orders of the authorities below. There is lot of force in the arguments of the learned A.R. and we are also in respectful agreement with the judgment cited by the A.R. in support of his arguments which is on all fours with the case of the assessee-appellant. In view of this situation, c we, therefore, delete the tax levied by the Assessing Officer under sections 52/86 of the repealed Income Tax Ordinance, 1979 in both the years under consideration. Consequently the appeals filed by the assessee are accepted.

C.M.A./534/Tax(Trib.)???????????????????????????????????????????????????????????? Appeals allowed.