I.T.A. No.620/KB of 2003, decided on 8th April, 2005. VS I.T.A. No.620/KB of 2003, decided on 8th April, 2005., 2007 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1191 (2005)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 87 & 53---Finance Act, (XXII of 1997), Preamble---Charge of additional tax for failure to pay advance tax---Assessment year 1998-99---Levy of additional tax on the basis that latest completed assessment before 15-9-1997 was the assessment year 1994-95 completed on 30-5-1997---Assessee contended that amended provision of S.53 of the Income Tax Ordinance, 1979 was made applicable w.e.f. 1st July, 1997 and would be applicable in assessment year 1998-99 whereas the Assessing Officer had applied old S.53 of the Income Tax Ordinance, 1979---Validity---Treatment meted out reflected application of un-amended S.53 of the Income Tax Ordinance, 1979, whereas in the case of assessee, the amended provision of S.53(a), 53(b) and 53(c) of the Income Tax Ordinance, 1979 would be applicable---Case was fit. one for charge of additional tax for failure to pay advance tax, but in accordance with amended S.53 of the Income Tax Ordinance, 1979 substituted vide Finance Act, 1997 as amended provision of law was distinguishable and provided a different treatment to the assessee other than a company or a registered firm and also provided a different schedule for the companies and registered firms---Charge of additional tax under substituted provisions would be a correct and judicious approach, whereas charge under the old provisions did not warrant interference---Assessing Officer was directed to pass a fresh order keeping in view the amended S.53 of the Income Tax Ordinance, 1979 substituted vide Finance Act, 1997.

Ghulam Muhammad Gangat, FCA for Appellant.

Riaz Ahmed, D.R.

ORDER

2.(sic) The only ground agitated in the, appeal is regarding order confirming the treatment meted out by the Assessing Officer under section 87 of the Income Tax Ordinance, 1979, besides it is additionally alleged that the additional tax charged under section, 87(1) at Rs.81,597 is excessive, therefore, liable to be reduced, if not deleted.

3. As per learned DCIT, the latest completed assessment before 15-9-1997 was the assessment year 1994-95 completed on 30-5-1997, hence be afforded an opportunity of hearing to the assessee providing complete working to charge additional tax. Version of the assessee that the assessment for the assessment year 1994-95 was set aside in appeal, hence no additional tax would be leviable, appears to have been discarded by the Assessing Officer observing "that order for the base year, 1994-95 was confirmed by the learned CIT(A) on 21-3-1998 and was set aside by the learned ITAT vide order, dated 26-8-1998'thereafter revised order, dated 30-4-1999 was also set aside on 30-6-1999 for de novo proceedings, as such on the dates when the various instalments fell due, the base year order of 1994-95 was intact, hence levy of additional tax is in accordance with law".

4. The learned CIT(A) also dismissed the assessee's appeal vide order, dated 28-2-2003 observing "that the appeal is without any substance whereby warrants no interference".

5. We have heard the learned representatives of the two parties. The learned counsel for the assessee argued that section 87 pertains to charge of additional tax for failure to pay advance tax when an assessee who is required to pay tax under subsection (1) of section 53, fails (i) to pay any instalment, (ii) any instalment on or before the specified date, (iii) the full amount payable by him, whereas section 53 is substituted vide Finance Act, 1997 which reads as under:

53. Advance payment of tax.---(1) An assessee--

(a) other than a company or a registered firm, whose total income (excluding income to which section 27, section 80B, section 80C, section 80CC or subsections (1) and (2) of section 50 applies) for the latest assessment year in respect of which the tax payable by him has been determined under sections 59, 59A, 60, 62, 63 or 65, is not less than one hundred and fifty thousand rupees shall be liable to pay by way of advance tax an amount equal to one-fourth of the full amount of income tax and super-tax so determined to be payable in respect of that assessment year (without making any adjustment for any tax already paid by way of advance tax or otherwise), as reduced by the tax, if any, already collected or deducted and paid under section 50 in the said financial year; and

(b) being a company or a registered firm shall, in respect of its income (excluding income to which section 27, section 80C or section 8UCC, applies) be liable to pay by way of advance tax an amount which bears the same proportion to the company's or a registered firm's turnover for that year as the tax assessed, bears to the turnover assessed, for the latest assessment year in respect of which the tax payable by the company or registered firm has been determined under sections 59, 59A, 60, 62, 63 or 65, as reduced by the tax already paid under section 50 other than the tax attributable to income covered by sections 80C and 8UCC in the said financial year.

It is argued that the amended provision of section 53 is made applicable w.e.f. 1st July, 1997, hence would be applicable in the assessment year 1998-99 (Appeal under consideration pertains to 1998-99) whereas the learned DCIT has applied old section 53 which reads as under:

Section 53---Substitution.---Before substitution section 53 read as follows:--

"53. Advance payment of tax.---(1) Where the total income of any assessee (excluding income to which section 27 or section 80B or section 80C or section 80CC or subsection (1) and (2) of section 50 applies) for the latest assessment year in respect of which the tax payable by him has been determined under sections 59, 59A, 60, 62, 63 and 65 is, in the case of a company not less than fifty thousand rupees, and in other cases not less than one hundred and fifty thousand rupees, he shall pay, by way of advance tax, to the credit of the Federal Government, on or before the fifteenth day of September, the fifteenth day of December, the fifteenth day of March and the fifteenth day of June in each financial year, an amount equal to one-fourth of the full amount of income-tax and super-tax) so determined to be payable in respect of that assessment year (without making any adjustment for any tax already paid by way of advance tax or otherwise), as reduced by the tax, if any, already collected or deducted and paid under section 50 in the said financial year."

Perused the record in view of arguments of the representatives of the two parties. Section 53 as amended vide Finance Act, 1997, would be applicable in the assessment year under consideration, besides section 53 as amended, distinguishes an assessee from the company or registered firm, whereas section 53(a) & (b) provides that a company or a registered firm shall be liable to pay by way of advance tax an amount which bears the same proportionate to the companies or a registered firm's turn over for that year as the tax assessed bears to the turn over assessed for the latest assessment year in respect of which, the tax payable by the company or registered firm, has been determined under sections 59, 59A, 60, 62, 63 or 65, as reduced by the tax already paid under section 50 in the said financial year. It is also provided that advance tax by the company or registered firm shall be paid to the credit of Federal Government according to old provision which is reproduced hereunder:--

From 1st of July to 30th of September, the seventh day of October from 1st of October to 31st of December the seventh day of January.

From 1st of January to 31st of March the seventh day of April

From 1st of April to 30th of June, the seventh day before

(Turnover for 16th June to 30th June shall be taken equal to the turnover of between 1st of June to 15th of June).

6. We, in the circumstances supra, find that the treatment meted out by the two officers below, reflects application of old section 53 of the Income Tax Ordinance, 1979 related to advance payment of tax, whereas in case of assessee, the amended provision of sections 53(a), 53(b) and 53(2) would be applicable, as such, we are of the considered opinion and find sufficient reasons to hold that it is a fit case for charge c of additional tax for failure to pay advance tax, but in accordance with amended section 53 substituted vide Finance Act, 1997 as amended provision of law is distinguishable and provides a different treatment to the assessee other than a company or a registered firm and also provides a different schedule for the companies and registered firm. The charge of additional tax under substituted provisions would be a correct and judicious approach, whereas charge under the old provision does not warrant interference, as such the Assessing Officer is directed to pass a fresh order in this context keeping in view to the amended section 53 substituted vide Finance Act, 1997.

7. The appeal of the assessee is disposed off to the extent and in the manner indicated above.

C.M.A./13/Tax (Trib.)Order accordingly.