I.T.As. Nos.293/LB and 2312/LB of 2005, decided on 12th May, 2006. VS I.T.As. Nos.293/LB and 2312/LB of 2005, decided on 12th May, 2006., 2007 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 163 (2006)

(a) Income-tax---

----Sales---Estimation of---Estimated sales were reduced by the Appellate Tribunal on the ground that it had been explained by the assessee that there was decline in the business and assessee's plea in this regard had been accepted by the Taxation Officer as well as by the First Appellate Authority in their respective orders.

(b) Income-tax---

----Profit and loss expenses---Disallowance of---Disallowances should be made, if required, after giving specific justification under each of the head of expenses claimed by the assessee---Disallowances made by the Taxation Officer in the profit and loss account expenses were deleted by the Appellate Tribunal, as no reason under each of the expense had been given.

(c) Workers' Welfare Ordinance (XXXVI of 1971)---

----S. 4(4)---Income Tax Ordinance, (XXXI of 1979), Preamble---Charge of workers welfare fund---No order had been passed regarding workers welfare fund but it had been charged on IT 30-A Form---Validity---Written order for the charge of workers welfare fund was the mandatory requirement as provided under the Workers' Welfare Fund Ordinance, 1971 and the violation of the mandatory requirement of law made the order ab initio illegal and void---IT-30 may be treated an order to the extent of computation of tax demand under the Income Tax Ordinance, 1979 but in no way was a substitute for an order in writing as provided under Workers' Welfare Fund Ordinance, 1971---Taxation Officer for the charge of workers welfare fund had to pass order determining the amount due from the industrial establishment on the basis of income assessed under the Income Tax Ordinance, 1979 and may subsequently convey same through IT-30 Form indicating the liability of the tax payer---No order in writing existed regarding workers welfare fund and the charge had been made only through IT-30, there was no justification for upholding the levy of workers welfare fund by the First Appellate Authority---Charge so. made was deleted by the Appellate Tribunal.

1990 PTD (Trib.) 1014 rel.

Kh. Abdul Jaleel for Appellant.

Mrs. Sabiha Mujahid, D.R. for Respondent.

ORDER

JAWAID MASOOD TAHIR BHATTI (JUDICIAL MEMBER).---Through these two appeals, the appellant has objected to the two separate impugned orders of the learned CIT(A), dated 22-11-2004 for the assessment year 2001-2002 and dated 1-8-2003 for the assessment year 2002-2003 objecting the treatment regarding estimated sales and disallowances out of P&L A/c expenses for both the years. While for the assessment year 2001-2002, the levy of Workers' Welfare Fund has also been objected.

I have heard the learned representatives from both the sides and have also perused both the impugned orders of the learned CIT(A) and the assessment orders.

Brief facts of the case are that the declared sales of Rs.15,50,000 were estimated at Rs.21,80,000 which have been reduced to Rs.20,00,000 by the learned CIT(A) for the assessment year 2001-2002. While for the assessment year 2002-2003, sales declared at Rs.13,50,000 have been estimated at Rs.20,50,000 which have been reduced to Rs.18,00,000 by the learned CIT(A).

It has been contended on behalf of the appellant that the estimation of sales is without any basis and the relief allowed by the learned CIT(A) while reducing estimated sales is also not sufficient.

Keeping in view the facts, circumstances, turnover and history of the case I, therefore, direct to adopt the estimated sales at Rs.18,00,000 for the assessment year 2001-2002 and at Rs.17,00,000 for the assessment year 2002-2003 for the reason that it has been explained by the learned counsel for the appellant that there is decline in the business and assessee's plea in this regard has been accepted by the Taxation Officer as well as by the learned CIT(A) in their respective impugned orders.

Regarding the disallowances out of P&L A/c expenses, I have found that the Taxation Officer has made the disallowances for both the years under review without giving specific reasons under each of the head of expenses. As it has been the consistent view of this Tribunal that disallowances should be made, if required, after giving specific justification under each of the head of expense claimed by the assessee. The disallowances made by the Taxation Officer in the P&L A/c expenses are, therefore, deleted for both the years, as no reason under each of the expense has been given.

Regarding the levy of Workers Welfare Fund, I have found that the learned CIT(A) has deleted the levy of Workers Welfare Fund for the assessment year 2002-2003, as the Taxation Officer has charged Workers' Welfare Fund on IT-30 without passing orders in writing, which is mandatory under the Workers Welfare Fund Ordinance, 1971. But for the assessment year 2001-2002, similar action of the Taxation Officer has been upheld rejecting appeal filed by the assessee on the issue of W.W.F. While perusal of the assessment order for the assessment year 2001-2002, I have found that no order has been passed regarding W.W.F. by the Taxation Officer, but it has been charged on IT-30-A.

The learned counsel for the appellant in this regard has placed before me the order of this Tribunal reported as 1990 PTD (Trib.) 1014 wherein, it has been held as under:

"The words by order in writing would really mean that, there has to be a separate order determining the amount due from the industrial establishment on the basis of income assessed under the Income Tax Ordinance by the I.T.O.

It has been further observed in that order as under:

"An IT-30 Form indicates only the manner of computation of the tax demand and is not a substitute for an order in writing.

and it has been finally held by this Tribunal that:--

"The intimation by the I.T.O. by way of an IT-30 Form did not constitute an order in writing determining Workers' Welfare Fund. The demand so made by the I.T.O. was illegal."

Even otherwise, under subsection (4) of section 4 of Workers Welfare Fund Ordinance, 1971, it has been specifically legislated that:--

"At the time of making an assessment under the Ordinance, or as soon thereafter as may be, the income tax officer shall by order in writing determine the amount due from industrial establishment under subsection (1), if any, on the basis of the income so assessed after taking into account the amount paid by the industrial establishment under subsection (3) in respect of the year and the industrial establishment shall pay the amount so determined on or before the date specified in the order".

After perusal of the above provisions of the law and the case law referred supra, I am of the considered view that the written order for the charge of Workers' Welfare Fund is the mandatory requirement as provided under the Workers' Welfare Fund Ordinance, 1971 and the violation of the mandatory requirement of law makes the order ab initio, illegal and void. The IT-30 may be treated an order to the extent of computation of tax demand under the Income Tax Ordinance, as has already been held by this Tribunal in some cases but in no way, is a substitute for an order in writing as provided under the Workers Welfare Fund Ordinance. The Taxation Officer for the charge of Workers Welfare Fund has to pass order determining the amount due from the industrial establishment on .the basis of income assessed under the Income Tax Ordinance and may subsequently convey it through IT-30 Form indicating the liability of the tax payer. I have found that in the present case, there is no order in writing regarding Workers Welfare Fund and the charge has been made only through IT-30. I, therefore, find no justification for upholding the levy of W.W.F. by the learned CIT(A). The charge so made for the assessment year 2001-2002 is therefore, also deleted.

Both the appeals filed by the assessee are allowed to the extent and in the manner as indicated above.

C.M.A./147/Tax (Trib.)Appeal allowed.