I.T.As. Nos.5138/LB to 5149 of 2004; decided on 30th November, 2005. VS I.T.As. Nos.5138/LB to 5149 of 2004; decided on 30th November, 2005., 2007 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 139 (2005)

(a) Income-tax---

---Addition-"--Cost of purchase---Transportation expenses---Difference of expense of cost of purchase of sugarcane with the parallel cases was due to the transportation, as the cane had to be purchased from far areas to run the sugar mill and the extra transportation expenses had to be borne by the parties which were being compensated by the assessee Mill---Assessing Officer had not pointed out any instance of unverifiability despite the fact that the books had been maintained and had been produced before the Taxation Officer, who had to examine the same---No justification was available for addition in cost of sale's and same was deleted by the Appellate Tribunal.

(b) Income-tax---

---Addition-Sale rate of sugar---Due to teething problem, the quality of sugar was not up to the market, the new markets had to be discovered, the assessee had to offer special incentives for sale for sugar and the declared sale rate of sugar was fully justified---Addition was made by referring a parallel case while for making a addition in respect of cost of sales, another parallel case was referred----Addition in sale rate of sugar was without justification and the same was deleted by the Appellate Tribunal.

(c) Income-tax---

---Addition---Sale of molasses by sugar mill---Assessing Officer had not pointed out any instance of unverifiability and had not considered the explanation given by the assessee that the assessee-company having no storage facility had to make instant sales to keep the funds intact---Addition in this respect had also not been made in the rest of the years---Addition on account of sale of molasses was deleted by the Appellate Tribunal being unjustified.

(d) Income-tax---

---Addition---Consultancy charges---Opportunity of being heard---Issue regarding addition of consultancy charges was set aside by the Appellate Tribunal as the same had not been confronted and directed for affording an opportunity of being heard.

(e) Income-tax---

---Addition---Interest accrued on loan---Difference of amount shown as interest accrued on loan from directors and adopted in Profit and Loss account was added towards total income---Assessee had not given any justification for difference in the figure---Appellate Tribunal declined interference by upholding the addition by the First Appellate Authority and appeal regarding interest on loan from directors was dismissed.

(f) Income-tax---

----Depreciation---Disallowance of---Depreciation was claimed for 141 days---Taxation Officer restricted the depreciation on plot and machinery for 53-days only on the ground that capacity of sugar mill was 8000 MT, per day and it had crushed 424,486 MT sugarcane and Mill had worked at full capacity for 63 days only---Assessee contended that record of Central Excise Department was with the Taxation Officer showing that Mill had worked for 141 days---Issue was set aside by the Appellate Tribunal with the direction that addition should not be made on the basis of presumption and if there was concrete evidence available on record that the Mill had worked for 141 days, the extra depreciation on plant and machinery should be allowed for that period.

(g) Income-tax---

----Recovery rate---Sugar mill---Declared recovery rate of 6.79% for the preceding years was accepted and there was no justification for the recovery rate of 8%-Assessing Officer was directed to accept the declared recovery rate at 7.2% for the assessment year 1992-93.

(h) Income-tax---

----Disallowances out of profit and loss expenses---Disallowances had been made without specifically pointing out the instance of un verifiability or the element of expense of personal nature under each of the head---Books of accounts had been maintained, produced before the Taxation Officer and examined---No justification was available for the disallowances without specifically pointing out the defects in the accounts---Assessee was a listed public company and all the expenses were genuine and duly verifiable from the record and supportive evidences---Disallowance made in respect of Profit and Loss Account expenses were deleted by the Appellate Tribunal.

1991 PTD 531; 1998 PTD 806; 2004 PTD (Trib.) 2231; 1994 PTD 174; 1987 PTD 730; 2001 PTD 406 and 2001 PTD 987 ref.

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

----S. 12(18)---C.B.R. Circular No.3 of 1992, dated 27-1-1992---Deemed income---Advances---Business advances---Addition was made "on the ground that advances received from the parties were not through cross cheques---Validity---Advances were 'the business advances and the expression "advance" used in S.12(18) of the Income Tax Ordinance, 1979 means non-business advance---Expression "advance" as used by the legislature' in S.12(18) of the Income Tax Ordinance, 1979 should not be taken in an isolated or detached manner disassociated from the text, but was to be read together and construed in the light of the purpose and object of the provisions of law---Expressions "loan" and "gift" were related to non-business transaction, therefore, the expression "advance" being connected to other was also in the nature of non-business financial transaction---Advances were business advances and were not hit by the mischief of S.12(18) of the Income Tax Ordinance, 1979---Purpose of section 12(18) of the Ordinance was to check fictitious transactions' but the Taxation Officer had not observed that the advances were fictitious---Trading advance will become income as per accounting process for computation of income in the subsequently year and will tantamount to double jeopardy---Additions made were deleted by the Appellate Tribunal being without justification.

1992 PTD (Trib.) 1346; 2004 PTD (Trib.) 151; 1973 PTD 453; 1992 PTD 576 and (2004) 89 Tax 295 (Trib.) ref.

(j) Interpretation of statutes---

----Fiscal statute---While interpreting any provision of statute, plain meanings of the expression and the words used in a statute shall be adhered to and no other meaning shall be deduced therefrom which was not available from a plain reading of the expression and the words used in the statute---If there are two possible constructions of the words of the statute, then the effect is to be given to the one that is in favour of the citizen and not the one that enhances or increases the burden on him---Neither any tax nor higher rate of tax can be imposed by any interpretation---No provision in fiscal statute can be extended on analogy---Straining the language in order to hold a subject liable to tax or to a higher rate of tax cannot be held to be justified when by looking at the clear words used by the legislature their meanings are clear.

(k) Interpretation of statutes---

----Fiscal statute---While interpreting any provision of statute, plain meanings of the expression and the words used in a statute shall be adhered to and no other meaning shall be deduced therefrom which was not available from a plain reading of the expression and the words used in the statute---If there are two possible constructions of the words of the statute, then the effect is to be given to the one that is in favour of the citizen and not the one that enhances or increases the burden on him.

(l) Interpretation of statutes---

----Deeming provision---Deeming provisions are to be applied strictly in accordance with law as the deeming provisions are the fiction of law and all fiction of law are to be interpreted and applied strictly and the doubt, if any, is to be resolved in favour of assessee.

Muhammad Ayub Aftab for Appellant.

Shahid Jamil Khan, L.A. and Mrs. Sabhia Mujahid, D.R. for Respondent.

ORDER

The assessee through these twelve appeals has objected to the 12-separate impugned orders of the learned CIT(A), dated 6-7-2004 for the assessment years 1991-92 to 2002-2003.

2. For the assessment years 1991-92 to 1993-94 and 1998-99, the issue of addition in "cost of sales" (on account of excess cost of cane purchased) is the common issue. On this issue, the learned counsel for the assessee has contended that the Department has made the assessment in a very hasty manner without properly scrutinizing the complete documentary evidence. He has contended that the reason for excess cost of cane purchased was explained that it was due to the fact that the assessee-company was new entrant in 1991-92, therefore, comparison in this respect with the established company Messrs Pattoki Sugar Mills Ltd. was not justified. He has submitted that as the assessee-company was a new one, it has to bear extra cost to get into business and the units of the assessee-company are quite larger than the cases which have been mentioned by the Taxation Officer. The cost of purchase of sugarcane alone is much lesser than the parallel cases cited by the Taxation Officer. According to the learned counsel, main difference of expense is due to the transportation, as the cane has to be purchased from far areas to run the mill and the extra transportation charged have to be borne by the parties and due to this fact, the cost has also been increased and further assessee has to pay the quality premium expenses. According to the learned counsel, as the assessment year 1991-92 was the first year of set up of the Mill and for this year, most of the cane has already been sold out, therefore, the appellant-company has to bear extra cost on late purchase. He has, in this respect, referred the parallel case of Messrs Crescent Sugar Mills Ltd. Faisalabad whereby the Department has accepted the declared rate at Rs. 401 PM.T. He has contended that the Taxation Officer except assessment year 1991-92 to 1993-94 and 1998-99 has accepted the declared cost of sales for all the remaining years under review.

The second issue raised by the appellant for the assessment years 1991-92 to 1993-94 and 1995-96 is regarding additions in sale rate of sugar as produced by the assessee Mill. The learned counsel has contended that the quality of sugar as produced by the assessee Mill was not up to the market standards due to the teething problem. The assessee had to discover new markets regarding sale of sugar and has to offer special incentives for the sale of sugar. He has further contended that the rate of Pattoki Sugar Mills Ltd. has not been picked up by the Taxation Officer in this regard, which was less than the sale rate declared by the assessee despite the fact that regarding cost of sales, the Taxation Officer has made the addition keeping in view the case- of Messrs Pattoki Sugar Mills Ltd. He has contended that the Department has accepted the rate of Rs.10,336 as declared by the Crescent Sugar Mills Ltd. Faisalabad, but the assessee's rate of Rs.10,263 has not been accepted despite the fact that the assessment year 1991-92 was the first year of production. He has further pointed out that the sale rate of sugar as declared by Messrs Ittefaq Sugar Mills Ltd. at Rs.10,196 for the assessment years 1991-92 and for the year 1992-93 at Rs.9,861 has been accepted. The learned counsel for the assessee has submitted that the Taxation Officer has applied the rate keeping in view the sale rate declared by Messrs Thal Industries which is far from the appellant's Sugar Mill area. According to the learned counsel for the assessment year 1995-96, the declared sale rate of Rs.10,872 has not been accepted, but the same Assessing Officer has accepted the sale rate of Rs.10,753 in another case of Messrs Punjab Sugar Mills Ltd., He has further submitted that for all the remaining years, the sale rate as declared by the assessee has been accepted.

The next issue is regarding additions on account of sale of molasses, which is for the assessment years 1991-92 to 1993-94. In the respect, it has been contended on behalf of the assessee that all sales of molasses are to the limited companies and are fully verifiable. He has contended that as the assessee-company has no storage facility, therefore, the instantly sales were to be made to keep the funds intact. He has submitted that except for these assessment years 1991-92 to 1993-94, no additions have been made for the rest of the years by the Department.

The next issue objected by the appellant only for the assessment year 1991-92 is regarding addition on account of waste/impurities. In this respect, the learned counsel for the assessee has contended that the addition has been made without any justification. He has submitted that the Assessing Officer has made the addition referring the parallel case of Messrs Pattoki Sugar Mills Ltd. which is no way can be compared to the case of the assessee, as the assessee has shown the income for the' assessment year at Rs.28,98,504, while the income declared by Messrs Pattoki Sugar Mills Ltd. for this year was only Rs.580. He has contended that no addition in this respect has been made for the remaining assessment years.

The next issue for the assessment years 1991-92 to 1993-94 is regarding addition in "Consultancy Charges" paid to Messrs Ittefaq Group Services Ltd. In this respect, it has been contended by the learned counsel for the assessee that no specific notice under section 62 was issued confronting this issue. He has contended that all the receipts as declared by the assessee in this respect are fully verifiable and the tax on these receipts has been paid by the recipient company, therefore, there was no justification for the addition. Likewise, no addition in this respect has been made for the remaining assessment years.

The next issue is regarding addition on account of "Interest to Bank". This issue has been raised for the assessment year 1991-92. In this respect, it has been contended that the entire expense is fully verifiable and should have been accepted for the year under review.

The issue of disallowance of "Depreciation" has been raised by the appellant for the assessment year 1991-92. It has been contended that the assessee's Mill worked for the assessment year 1991-02 for 141 days only and this fact is confirmed from the record of the Central Excise Department, which has already been examined by the Assessing Officer and no formal addition while calculating the depreciation is allowed under the law.

Regarding the issue of recovery of sugar, which has been raised only for the assessment year 1992-93, it has been contended that the low recovery was due to the certain factors which have been explained to the Assessing Officer, but he has not taken the same into consideration. According to the learned counsel, the unit of the assessee-company was new. There was some family dispute and the assessment year 1992-93 was a bad year for the sugar mill. He has contended that the Assessing Officer has made the addition on the basis of the industries, which had the highest recovery rate and has not considered while comparing the case of the assessee with other industries and has not considered specific factors of the assessee-company. The learned counsel has contended that it is not possible to suppress the cane purchased, as the purchase in this regard is recorded in the prescribed Excise register and the production is also noted in the register by the Excise staff. He has submitted that in the subsequent assessment year, the recovery rate of 6.79 has been accepted by the Assessing Officer and for rest of the years, no addition in this respect has been made.

Regarding the add backs in the Profit and Loss A/c expenses, the learned counsel has contended that the assessee-company is a listed public company, all the expenses are genuine, duly verifiable from the record and all the supportive documentary evidences had been placed before the Assessing Officer. He has contended that this Tribunal as well as Hon'ble Supreme Court have not appreciated the petty additions/add backs in P&L A/c expenses. He has, in this respect, placed reliance on the decision of this Tribunal reported as 1992 PTD (Trib.) 1346.

For the assessment years 1999-2000 to 2002-2003, the addition made under section 12(18) of the repealed Income Tax Ordinance, 1979 has also been objected. In this respect, the learned counsel has contended that no advance is actually involved. Explaining the actual position, learned counsel for the appellant has submitted that the sale of sugar has to be made through advance payments. In some cases, the sales have been completed, but due to delay in lifting sugar, the amount is shown as advance at the end of the closing year. He has submitted that all the payments in this respect are through banking channels. All the parties are fully verifiable and their N.T.Nos. are also available on record and there was no justification of addition under section 12(18). He has submitted that for the assessment year 1999-2000, the above said provision is not applicable, as the amendment in this section was incorporated in July, 1999 applicable to the income year starting from July, 1999, as for the assessment year 1999-2000, but the assessee's year ended on 30-9-1998, therefore, for the assessment year 1999-2000, the addition made under section 12(18) is not applicable. He has, in this respect, placed reliance on the decision of this Tribunal reported as 2004 PTD (Trib.) 151.

Learned counsel has contended that advances in the case of the assessee, if any, were purely the business advances, whereas the expression "advance" used in section 12(18) of the repealed Income Tax Ordinance, 1979 means non-business advance. He has contended that the expression "advance" as used by the legislature in section 12(18) should not be taken in an isolated or detached manner disassociated from the text, but is to be read together and construed in the light of the purpose and object of the act itself. He has, in this respect, referred the decision of the Hon'ble High Court reported as 1973 PTD 453 wherein it has been held that "meaning or expression is to be assigned in the light of other expression used by the legislatures in a statutory provision". The learned counsel has contended that the expression "loan" and "gift" clearly related to non-business transaction, therefore, the expression `advance' being connected to other is also in the nature of non-business financial transaction. He has contended that since the advances on which the provisions of section 12(18) have been invoked are business advances, therefore, these are not hit by the mischief of section 12(18). He has contended that the purpose of this section is to check fictitious transactions. He has, therefore, submitted that as in the present case, the Taxation Officer has not in any way contended that the advances were fictitious, therefore, provisions were not applicable in the case of the appellant. He has, in his respect, referred Circular No.3 of 1992 whereby the C.B.R. has explained that "the basic purpose of section 12(18) is to check fictitious loans and to preclude back dated introduction of purchases in the books of accounts". According to the learned counsel, C.B.R. has directed that the Assessing Officer should not invoke the provisions of section 12(18) in respect of genuine loan. According to the learned counsel, in addition to the above submissions, another angle of consideration can also been taken. He has submitted that the action of the Assessing Officer taxing the above mentioned amounts of advances tentamounts to double taxation, as the advances being subjected to tax, form of sales of succeeding years and hence taxed again in succeeding years. He has, in this respect, referred the judgment of the Hon'ble Supreme Court of Pakistan reported as 1992 PTD 576. He has further submitted that the legislatures has amended this law and in the new Income Tax Ordinance, 2001, the advance taken for the sale of goods or supply of services has been excluded from the compulsion of payment through cross cheque or through-banking channels. The learned counsel has also referred the decision of this Tribunal reported as (2004) 89 Tax 295 (Trib.) wherein it has been held that "any amount of advance, receipt, cost of sale of goods do not fall under the ambit of section 12(18).

The learned counsel has also contested the rejection of declared version on the basis of the case law reported as 1991 PTD 531; 1998 PTD 806, 2004 PTD (Trib.) 2231; 1994 PTD 174; 1987 PTD 730; 2001 PTD 406 and 2001 PTD 987.

3. On the other hand, learned DR is supporting the impugned orders of the Officers below. Mr. Shahid Jameel Khan, Legal Advisor of the Department along with Mrs. Sabiha Mujahid, learned DR has appeared and has contended that the Assessing Officer has rejected the declared version specifically pointing out discrepancies in the declared version. He has contended that the direct expenses on sugarcane purchases reveals that the same are highly excessive in comparison with the sugarcane purchased and direct expenses shown in a parallel case of Messrs Pattoki Sugar Mills which is situated at a distance of about 25 kilometers. He has, in this respect, .referred the figure of sugarcane purchased by both the sugar mills. He has further contended that the assessee has made the payments of quality premium and transportation charges in cash while the payment of sugar has been made through cheques and in this way, an inflated amount than that of actual payment has been declared to enhance cost of production thereby reducing gross profit. The learned department representatives have contended that the action of the Taxation Officer rejecting the declared version is, therefore, fully justified. They have contended that the Taxation Officer has estimated the sales after discussing the issue in detail and referred the parallel cases in this respect. Likewise, the additions out of profit and Loss A/c expenses and other additions have been made after giving full justification.

The learned departmental representatives have also supported the treatment of the Taxation Officer regarding addition in sale rate of sugar, sale of molasses, additions on account of waste/impurities, the addition in consultancy charges, the addition on account of interest to banks, the disallowances out of Profit and Loss A/c expenses and the additions made under section 12(18) of the repealed Income Tax Ordinance, 1979.

Regarding the addition made under section 12(18), the learned representatives of the Department have contended that the Assessing Officer specifically confronted the assessee for the assessment years 1999-2000 to 2002-2003 regarding the individual ledger accounts of the parties from whom advances were received which show that advances were received, which were not received through cross cheques. As the assessee could not establish that the advances were through cross cheques, therefore, the aggregate of sums in this respect was assessed as deemed income under section 12(18) of the repealed Income Tax Ordinance, 1979. According to the learned representatives of the Department, the learned CIT(A) has also upheld the treatment meted out after discussing all the issues in detail placing reliance on the decisions of this Tribunal.

4. We have heard the learned representatives from both the sides and have also perused the impugned orders of the learned CIT(A), assessment orders, the case-law relied upon by both the parties and other relevant record of the case.

The common issue for the assessment years 1991-92 to 1993-94 and 1998-99 is regarding addition in cost of sales on account of excess cost of cane purchased. In this respect, we have found that the assessment year 1991-92 was the first year of the establishment of the sugar mill being the new company, the excess cost of cane purchased was to bear to get into the business. It has further been contended on behalf of the assessee that the unit of the assessee-company is a large unit, as compared to the unit referred by the Taxation Officer as a parallel one. Even otherwise, we have found that the cost of purchase of sugarcane alone declared by the assessee is much lesser than parallel cases cited by the Taxation Officer. In this respect, we have found that the main difference of expense is due to the transportation, as the cane has to be purchased from far areas to run the mill and the extra transportation expenses have to be borne by the parties which are being compensated by the assessee. We have further noted that the Assessing Officer has not pointed out any instance of unverifiability despite the fact that the books have been maintained and have been produced before the Taxation Officer, who has to examine the same. We have further noted that except these four years, for all the remaining years, the cost of sales has been duly accepted by the Taxation Officer. We, therefore, find no justification for the addition in this respect. The addition made in cost of sales for the assessment years 1991-92 to 1993-94 and 1998-99 is therefore, deleted.

Regarding the sale rate of sugar, which has been objected for the assessment years 1991-92 to 1993-94 and 1995-96, we are of the view that as already discussed, 1991-92 was the first year and as it has been explained by the learned counsel for the assessee that due to teething problem, the quality of sugar was not up to the market, the new markets have to be discovered, the assessee has to offer special incentives for sale for sugar, therefore, the declared sale rate of sugar by the assessee is fully justified. We have noted that the Taxation Officer has made the addition in this respect referring the parallel case of Thal Sugar Mills Ltd. Faisalabad inspite of the fact that for making the addition in respect of cost of sales, the parallel case of Messrs Pattoki Sugar Mills has been referred by the Taxation Officer. On behalf of the assessee, it has been contended that the lesser sale declared by Messrs Ittefaq Sugar Mills and Messrs Punjab Sugar Mills Ltd. has been accepted by the Department for the years under review. We have further noted that the declared sale rate in rest of the years under review has been accepted by the Department. In view of these submissions, we find no justification for the addition in this respect also. The addition sale rate of sugar for the assessment years 1991-92 to 1993-94 and 1995-96 is, therefore, deleted.

Regarding the addition in sale of molasses, which is the subject-matter of the appeal for the assessment years 1991-92 to 1993-94, we have found that the Assessing Officer has not pointed out any instance of unverifiability and has not considered the explanation given by the assessee that the assessee-company having no storage facility has to make instant sales to keep the funds intact. In this regard also, we have noted that no addition has been made by the Taxation Officer in rest of the years. We, therefore, find no justification in this respect and the addition on account of sale of molasses is also deleted.

Regarding the disallowance of consultancy charges to Messrs Ittefaq Group Limited, which is the subject-matter of the appeals for the assessment years 1991-92 to 1993-94, it has been contended by the appellant that Messrs Ittefaq Sugar Mills Ltd. is a Group being formed for the purposes of providing central services to all the units and companies of the Group. It has been contended that due to this expense of consultancy charges, the expenses of the assessee-company which had to occur due to cost of central establishment like salary of Finance Manager, Accountants at the Head Offices, arranging for legal and tax representation, insurance, coverable, secretarial services etc., being provided. The learned counsel for the assessee has submitted that this

expenditure is being allowed to all other companies of the Group and has been taxed in the hands of Messrs Ittefaq Group Services Limited, but the Taxation Officer has misunderstood the position and wrongly considered it to be a capital expenditure. The learned counsel has further contended that no specific notice in this regard confronting the assessee has been issued. According to the learned counsel, all the receipts in this respect have been declared and tax has been paid by the recipient company and no addition in this respect has been made for rest of the years.

After considering the above said position, we find it reasonable to set aside the assessment on this issue for the reason that the Taxation Officer has not confronted the assessee on this issue for the assessment years 1991-92 to 1993-94. The Taxation Officer is, therefore, directed to pass the order afresh regarding the consultancy charges paid to Messrs Ittefaq Services Group Limited after taking into consideration and affording the assessee an opportunity of being heard.

The addition on account of interest to bank has been objected by the appellant for the assessment year 1991-92. In this respect, it has been submitted that the entire expense in this regard is fully verifiable and should be accepted. We have noted that the Assessing Officer in the assessment order has concluded in this respect that as per books of accounts, the amount of interest accrued on loan from directors was shown at Rs.3,94,59,183, whereas in the Profit and Loss A/C, the amount adopted on this account was Rs.4,47,62,189 which shows a difference of Rs.53,03,006 which has been added towards total income of the appellant and the learned CIT(A) has upheld the addition. We find no warrant for interference in the impugned order of the learned CIT(A) in this regard, as the assessee has not given any justification for difference in the figure. The appeal of the assessee for the assessment year 1991-92 regarding interest on loan from directors is, therefore, dismissed.

For the same assessment year i.e. 1991-92, the appellant has objected to the disallowance of depreciation. The appellant has claimed the depreciation for 141 days, but the Taxation Officer has restricted the depreciation on plot and machinery for 53 days only with the observation that the capacity of the appellant's mill was 8,000 M.T. per day and it has crushed 424,486 MT sugarcane and therefore, according to the Taxation Officer, the mill has worked at full capacity for 63 days only. On the other hand, on behalf of the appellant, it has been argued that the record of the Central Excise Department is already with the Taxation Officer showing that the assessee mill has worked for 141 days.

After considering the above said position, we find it reasonable to set aside this issue also for fresh consideration with the directions to the Taxation Officer that the addition should not be made on the basis the that of presumption and if there is concrete evidence available on record mills has worked 141 days, the extra depreciation on plant and machinery should be allowed for that period.

Regarding the recovery of sugar, which is the subject-matter only for the assessment year 1992-93, we have found that the appellant has declared production of 6250220 MT of sugar yielding recovery percentage of 7.2%. The Assessing Officer has made the comparison of the same with the parallel cases of Messrs Ittefaq Sugar Mills Ltd. (8.2%) and Messrs United Sugar Mills Ltd. (8.2%) and Messrs Noon Sugar Mills Ltd. (8.5%). The Taxation Officer has adopted 8% rate in accordance with the parallel cases. On behalf of the assessee, the reason for low recovery for the year under review i.e. 1992-93 has been mentioned, as the mill of the assessee was a new sugar unit, there was some family dispute and the year under review was a bad year for sugar mills. We have further noted that the Taxation Officer for the preceding years has accepted the declared recovery rate of 6.79%. We, therefore, find no justification for the recovery rate of 8%. The Assessing Officer is, therefore, directed to accept the declared recovery rate at 7.2% for the assessment year 1992-93.

Regarding the additions out of Profit and Loss A/c expenses, we have found while perusal of the assessment order that Assessing Officer has made the disallowances without specifically pointing out the instance of unverifiability or the element of expense of personal nature under each of the head. As in this case, books of accounts have been maintained, produced before the Taxation Officer and examined, we find no justification for the disallowances without specifically pointing out the defects in the accounts. We have observed that the case of the assessee is of listed public company. All the expenses are genuine and duly verifiable from the record and supportive evidences, we find no justification for the disallowances. The disallowances made by the Taxation Officer in respect of Profit and Loss A/c expenses are, therefore, deleted.

The last objection now only remains, is regarding the addition under section 12(18) of the repealed Income Tax Ordinance, 1979, which is for the assessment years 1999-2000 to 2002-2003. In this respect, we have found that the Assessing Officer has made the additions for the reason that while examining the individual ledger accounts of the parties from whom advances were received by the assessee company for the 'years under review, which are not through cross cheques, he has, therefore, assessed that amount as deemed income under section 12 (18), which has been upheld by the learned CIT(A). In this behalf, it has been contended by the appellant that no advance is actually involved in the matter. Explaining the position, it has been submitted that the actual sales have been completed, but due to delay in lifting the sugarcane, the amount has been shown as advance at the end of the closing year. It has been further submitted on behalf of the assessee that all the payments are through proper banking channels and all the parties are fully verifiable and their N.T. Nos. are also available on record. On the legal score regarding the assessment year 1999-2000, it has been contended by the appellant that the amendment incorporated in statute was applicable to the income year starting from July, 1999 while in the case of the appellant, assessment year ended on 30-9-1998 and therefore, the provision of law has been misinterpreted by the Assessing Officer as well as by the learned CIT(A). He has submitted that the said amendment in the law in the provisions of section 12(18) of the repealed Income Tax Ordinance, 1979 are not applicable in the instant case for the assessment year 1999-2000. The learned counsel in this regard has placed reliance on the decision of this Tribunal reported as 2004 PTD (Trib.) 151.

We are of the view that the subject advances in the present case were the business advances and the expression "advance" used in section 12(18) of the repealed Ordinance, 1979 means non-business advance. We are of the view that the expression "advance" as used by the legislature in section 12(18) should not be taken in an isolated or detached manner disassociated from the text, but is to be read together and construed in the light of the purpose and object of the provisions of law. The expression "loan" and "gift" are related to non-business transaction, therefore, the expression "advance" being connected to other is also in the nature of non-business financial transaction. In the present case, the advances on which the provision of section 12(18) have been invoked are business advances and are not hit by the mischief of section. The purpose of this section is to check fictitious transactions, but in this case, Taxation Officer has not observed that the advances were fictitious. We find force in the contention of the learned counsel that the subject amount of trading advance will become income as per accounting process for computation of income in the subsequently year, therefore, it will tentamount to double jeopardy. As it has been held by this Tribunal as well as by the higher Courts that "while interpreting any provision of statute, plain meanings of the expression and the words used in a statute shall be adhered to and no other meaning shall be deducted therefrom which is not available from a plain reading of the expression and the words used in the statute. If there are two possible construction of the words of the statute, then the effect is to be given to the one that is in favour of the citizen and not the one that enhances or increases the burden on him. Neither any tax nor higher rate of tax can be imposed by any interpretive process. No provision in fiscal statute can be extended on analogy. Thus, straining the language in order to hold a subject liable to tax or to a higher rate of tax cannot be held to be justified then by looking at the clear words used by the legislature. Deeming provisions are to be applied strictly in accordance with law as the deeming provisions are the fiction of law and all fiction of law are to be interpreted and applied strictly and the doubt, if any, is to be resolved in favour of assessee".

After considering the above said submission of the learned counsel for the assessee, we are of view that in view of the above said decision of the Tribunal, we find no justification for the addition made by the Taxation Officer under section 12(18) of the repealed Income Tax Ordinance, 1979, therefore, the addition made in this respect for the assessment years 1999-2000 to 2002-2003 are deleted.

The ground of appeal regarding addition tax has not been pressed by the learned counsel for the assessee, as the learned CIT(A) has already set aside this issue for fresh consideration to the Assessing Officer.

5. The appeals filed by the assessee for the assessment years 1991-92 to 2002-2003 are decided in the manner as indicated above.

C.M.A./143/Tax (Trib.)Order accordingly.