W.T.As. Nos. 205/LB to 207/LB of 1982-83, 356/LB, 357/LB of 1989-90, 300/LB of 1986-87 and 205/LB of 1987-88, decided on 24th .February, 2007. VS W.T.As. Nos. 205/LB to 207/LB of 1982-83, 356/LB, 357/LB of 1989-90, 300/LB of 1986-87 and 205/LB of 1987-88, decided on 24th .February, 2007., 2007 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2122 (2007)

(a) Wealth Tax Act (XV of 19G3)---

----Second Sched:, CI. (25)---Income Tax Ordinance (XXXI of 1979), 8.2(14)---S.R.O. 650(I)/85 dated 1-7-1985---Exemption---Chambers or Associations of Commerce, Trade and Industry---Issuance of S.R.O. regarding exemption during the period when assessments and appeals were pending adjudication---Assessee contended that during the pendency of proceedings by way of assessment and appeals, beneficial circular issues and amendments made would operate retrospectively and assessee was entitled to reap the benefits thereof and a liberal interpretation concerning retrospectivity prospective application of S.R.O./amendment was to be given---Validity---Legislature had granted exemption through Cl. (25) of the Second Schedule of the Wealth Tax Act, 1963---Said and such other provision that granted exemption had never been allowed retrospective effect in the absence of specific and clear impression by the legislature---Departmental appeal was allowed subject to earlier finding that for the assessment year 1985-86 and. onwards the assets of the assessee were exempt.

Shahtaj Sugar Mills Ltd, through Chief Executive v. G.A. Jahangir and 2 others 2004 PTD 1621; Iftikhar Hussain Alvi C/o Kaghan Ghee Mills (Pvt;) Ltd. v. Income Tax Officer/Dy. Commissioner of In4 me Tax and others 2003 PTD 812; Commissioner of Income Tax v. Shahnawaz Ltd. and others 1993 SCMR 73; Brother Engineering (Pvt.) Ltd. v. Deputy Collector 2004 PTD 2928; UDL Industry v. Collector of Customs 2005 PTD 940; Haseeb Waqas Sugar Mills v. Federation of Pakistan 2002 PCTLR 287; Anoud Power Generation v. Federation of Pakistan PLD 2001 SC 340; Ellahi Cotton Mills and others v. Federation of Pakistan PLD 1997 SC 582 = 1997 PTD 1555; Rijaz (Pvt.) Ltd. v. Wealth Tax Officer, Circle-III, Lahore 1996 PTD 484; Dawood Cotton Mills v. Commissioner of Income Tax 2000 PTD 285; Messrs Army Welfare Sugar Mills Ltd. v. Federation 1992 SCMR 1652; Government of Pakistan v. Village Devt. Organization PLD 2005 SC 577 = 2005 PTD 2178; C.I.T. v. Late. Gen. Muhammad Ziaul Haq LT.A No. 51 of 2000; C.I.T, v. Shennion Steamship Co. PLD 1971 Kar. 605; H &Sons v. C.B.R. 2005 PTD 147; Collector of Sales Tax Lahore. v. Hoechst Ravi Chemicals Ltd., 2003 PTD 1817; Commissioner of Income Tax v. Olympia 1987 PTD 739; Messrs Bisvil Spinners Ltd. v. Superintendent Central Excise PLD 1988 SC 370; Messrs Irum Ghee Mills Ltd. v. Income Tax Appellate Tribunal (2000) 82 Tax 3; C.I.T. v. Pulikkal Medical Foundation (Pvt.) Ltd. (1994) 210 ITR 299; Muhammad Ali Khan and others v. C.W.T. (1983) 140 ITR 948; C.LT. v. South Rcot District Cooperative (1989). 176 ITR 117; C.I.T. v. Pondicherry Cooperative Housing Society Ltd. (1991) 188 ITR 671 and C.I.T. v. Gwalior Rayon Silk Manufacturing Co. Ltd. (1992) 196 ITR 149 ref.

(b) Wealth Tax---

----Exemption---Retrospectivity---If one is in a position to satisfy with clarity that the provision has come out to redress an injury or to cure a disease or to provide remedy to an unjust situation it has to be applied retrospectively---Remedy can be by way of a notification, by legislation or through an administrative order but it .has to be for the purpose of redressing some grief or a situation which is patently unjust.

(c) Interpretation of statutes---

----Remedial statute and its object---Remedial statute is the one that provides for a remedy for an injury, its object is either to redress some existing grievance or to introduce some new regulation for proceedings conducive to the public interest such statutes arc made to remove defects and to abridge superfluity in law.

(d) Words and phrases---

----`Cure'---Meanings---Term cure would mean of a disease may that be of any kind.

(e) Wealth Tax Act (XV of 1963)---

----Second Sched., Cl. (25)---S.R.O. 650(1)/85 dated 1-7-1985---Chambers or Associations of Commerce, Trade and Industry---Exemption which had been provided by S.R.O.650(I)/1985 dated 1-7-1985 was a special facility to all Chambers and Associations of Commerce, Trade and Industry by the Federal Government which would require strict interpretation---Giving it effect prior to the said exemption would amount to entering into the legislation which was beyond the scope of the courts---Government, while issuing such notification could always; by an express word, say that the said amendment was retrospective and applicable even for the earlier years---Notification had come for as an exemption of the income and of the immovable property, the same will have to be read strictly and in favour of the Revenue.

Messrs Bisvil Spinners Ltd. v. Superintendent Central Excise PLD 1988 SC 370 rel.

(f) Wealth Tax Act (XV of 1963)---

----Second Sched., Cl. (25)---Exemption---Chambers or Associations of Commerce, Trade and Industry---Charity and welfare institutions---Supporting a charity, doing welfare or providing any benefit to the public at large did not provide any right or exemption from tax unless law so specifically provided it---If a charitable institution did not qualify for exemption being not covered within the parameters of some such provision and was subjected to tax, whether could be called as a disease or ill, could readily be answered by an empathetic `No'; similarly if one of such an organization was allowed exemption and the legislature intended to grant the same prospectively, could courts or Tribunals allow it retrospectively for the reason that they were providing some welfare services to the public at large, again could not be answered as positive.

(g) Wealth tax---

. ----Exemption---Principles---Only those persons are granted exemption who arc firstly chargeable to tax and no one can be granted an exemption unless the legislature intends it so by clear and unambiguous direction.

Muhammad Aslam Bhatti, D.R. for Appellant.

Siraj ud Din Khalid for Respondent.

ORDER

These appeals, riled under the Wealth Tax Act by the department, originally decided on 13-2-1998, are being taken up under the directions of the Honourable Lahore High Court, Lahore vide its order under LT.As. Nos. 156 0l' 1999 and 162-167 of 1999, decided on 12-5-2005. The order of the learned High Court reads as under:---

"2. During the pendency of the proceedings the appellant by way of C.M. No.688 of 2004 has sought to raise an additional ground/ question of law, which reads as under:---

"Whether, the provisions of S.R.O. 650(I)/85, dated 1-7-1985 and clause (25) of the Second Schedule to the Wealth Tax Act, 1963, introduced in 1986 (1996), are retrospectively applicable for the years 1979-80 to 1985-86 for which years the appeals were pending when the said provisions were introduced`?"

3. According to the learned counsel the aforesaid S.R.O. issued on1st of July, 1985 clearly attracts or is applicable in respect of one pending .appeal for the year 1985-86. He argues that the concession given by the aforesaid S.R.O. being beneficial in nature, it could be given retrospective effect in view of the various judgments of the superior Courts including. re: Shahtaj Sugar Mills Ltd. through Chief Executive v. G.A, Jahangir and 2 others 2004 PTD 1621; re: Iftikhar Hussain Alvi C/o Kaghan Ghee Mills (Pvt.) Ltd. v. Income Tax Officer/Dy. Commissioner of Income Tax and others 2003 PTD 812 and re: Commissioner of Income Tax v. Shahnawaz. Ltd. and others 1993 SCMR 73.

4. We have heard the learned counsel for both the parties and in our view the admission of the new ground or the question at this stage is likely to create complication in as much as the S.R.O. was in the field when the impugned judgment of the Tribunal was passed. Therefore, the issue cannot be said to have arisen out of the order of the Tribunal or a natural consequence thereof. However, since the S.R.O. had the force of law at the relevant time and apparently due to inadvertence on the part of the appellant it was not brought to the knowledge of the Tribunal nor the matter was argued on the basis of the concession given by the S.R.O., we, will consider it appropriate to set aside the order of the Tribunal and remit the matter to it for consideration of the effect of the aforesaid S.R.O. for the assessment year 1985-86 as well as all the earlier years involved".

The brief facts of the case arc that the chamber let out a part of its immovable property to different parties. The Wealth Tax Officer issued notices for filing of Wealth Tax Returns. The returns were riled claiming exemption from levy under section 5(1)(i), before substitution in 1996, of the Wealth Tax Act. The exemption was disallowed by the Assessing officer. However, the Commissioner of Wealth Tax (Appeals) accepted the appeals of the assessee and allowed exemption from wealth tax under section 5(1)(i) of the Wealth Tax Act, being "property held for legal obligation for public purpose of a charitable nature in Pakistan". The Department filed appeals before this Tribunal challenging the exemption granted by the learned C.LT.(A) for- the assessment years 1979-80 to 1985-86. The appeals of the department were accepted by the Tribunal under its original order dated 13-2-1998. Against the orders of the Tribunal, the. chamber filed appeals under section 27 of the Wealth Tax Act before the Honourable Lahore High Court. The Honourable Lahore High Court, remanded the case back to the Tribunal by the orders reproduced above.

The main contentions of the counsel on behalf of the assessee are, firstly that during the pendency of proceedings by way of assessment and appeals, beneficial circular issued and amendments made in the .Wealth Tax Act, would operate retrospectively and the assessee is entitled to reap the benefits thereof. Secondly, since the objects of the assessee are of charitable nature, as defined under section 2(14) of the Income Tax Ordinance, 1979 (read with subsection (2) of .section 2 of the Wealth Tax Act) and as held by this Tribunal in the original appeal order at para. 8 at page 392 (2000 PTD (Trio.) 376), a liberal inter A pretation concerning retrospectively/prospective application of S.R.O./ Amendment is to be given.

It is very relevant to mention that during the period when some of the Assessments and Appeals were pending adjudication, S.R.O. 650(I)/85 dated 1-7-1985 was issued and clause (25) of the second schedule to the Wea1Ch Tax Act was introduced in 1996. The said S.R.O. and the clause are reproduced whereas under:---

S.R.O. 650(I)/85 dated 1-7-1985.

"In ,exercise of the powers conferred by subsection (2) of section 5 of the Wealth Tax Act, 1963 (XV of 1963), the Federal Government is pleased to exempt the immovable property held by the Chambers or Associations of Commerce, Trade; and Industry recognized by the Federal Government from the tax payable under the said Act".

Clause (25) of the Second Schedule.

"Immovable property held by the Chambers or Associations of Commerce, Trade and Industry recognized by the Federal Government" .

While arguing the first contention, the learned counsel for the Chamber, Mr. Siraj-ud-Din Khalid, besides the cases cited before the Honourable High Court in term of Shahtaj Sugar Mills Ltd. through Chief Executive v. G.A. Jahangir and 2 others 2004 PTD 1621; Iftikhar Hussain Alvi C/o Kaghan Ghee Mills (Pvt.) Ltd. v. Income Tax Officer/ Dy. Commissioner of Income Tax and others 2003 PTD 812 and Commissioner of Income Tax v. Shahnawaz Ltd. and others 1993 SCMR 73 (emphasis added) also placed reliance on the following cases:---

Brother Engineering (Pvt.) Ltd. v. Deputy .Collector 2004 PTD 2928, UDL Industry .v. Collector of Customs 2005 PTD 940 (H.C. Kar.), Haseeb Waqas Sugar. Mills v. Federation 2002 PCTLR 287 (H.C. Lah.:), Anoud Power Generation v. Federation PLD 2001. SC 340, and Ellahi Cotton Mills and others v. Federation of Pakistan PLD 1997 SC 582 = 1997 FTD 1555.

The counsel for the assessee also placed reliance on the fallowing cases:---

Rijaz (Pvt.) Ltd. v. Wealth Tax Officer, Circle-III, Lahore 1996 PTD 484, Dawood Cotton Mills v. Commissioner of Income Tax 2000 PTD 285, Messrs Army Welfare Sugar Mills Ltd. v. Federation 1992 SCMR 1652, Government of Pakistan v. Village Devt. Organization PLD 2005 SC 577 = 2005 PTD 2178, C.I.T. v. Late Geri. Muhammad Ziaul Haq I.T.A.No. 51 of 2000, decided on 24-4-2003, C.I.T. v. Shennion Steamship Co. PLD 1.971 Kar. 605, H &Sons v. C.B.R. 2005 PTD 147 (H.C. Lah.), Collector of Sales Tax Lahore v. Hoechst Ravi Chemicals Ltd. 2003 PTD 1817 and Commissioner of Income Tax v. Olympia 1987 PTD 739.

While supporting his contention that a liberal interpretation be given to the applicability of the subsequent S.R.O. and the amendment made, Mr. Siraj Khalid vehemently submitted that the chamber is in fact sharing the responsibilities of the State to build a welfare society. He submitted that the chamber is helping to boost up the economy of the Industry by way of promoting and protecting the Trade, Commerce and Industry. The Chamber is promoting and proposing legislative and other measures for enhancing the Trade, Commerce acid Industry and to establish just an equitable principle therein and to do all such things as may lie conducive to the extension of Trade, Commerce and Industry. The subsequent favourable and beneficial S.R.O./Amendments to such an institution are to be applied for all the years where the proceedings -were pending by way of assessment and appeal. In this behalf, Mr. Khalid for the assessee placed reliance on the following cases:---

PLD 1988 SC 370, 2000 SCMR 1571. , (1994) 210 ITR, 299 (H.C. Kar.), (1983) 140 ITR 948 (HC Del)/952, (1989) 176 ITR 117 (H.C. All.), (1991) 188 ITR b71 (H.C. Mad.) and (1992) 196 ITR 149. (SC).

The relevant observation, in the cases relied upon on behalf of the assessee, are reproduced here as under:---

Shahtaj Sugar Mills Ltd. v. G.A. Jahangir and 2 others 2004 PTD 1621

"14 Even in case of amendment in law providing for remedial measures, according to the Hon'ble Supreme Court of Pakistan in re: Commissioner of Income Tax v. Shahnawaz Ltd. and others 1993 SCMR 73 it will effective and applicable only to those cases where assessment had not been made by the Assessing Officer or where the matter was pending in appeal before the Tribunal or was sub judice before the High Court at the time the amending law was enacted". (P-1630) Iftikhar Hussain Alvi v. LT.O. 2003 PTD 812.

"Clause (8) is beneficial in nature: It is also by now established principle of law that if any notification/circular is a benevolent nature, the same would go to the assistance of the assessee," Page 221

"It is not always necessary that retrospective application is found in express words. In the absence of express words whenever there is intendment to the effect that some provisions will be retrospective in its application, effect can be given to that intendment." Page 222-23.

" 11. The net result of the above discussion is that the Income Tax Officer and learned Income Tax Appellate Tribunal have failed to properly appreciate that the petitioner was entitled to benefit of clause (8) of Part-I (VI) of the Ordinance. We, therefore, while answering this Tax Reference hold that the petitioner was entitled to benefit of clause (8) of Part I (IV) of the Second Schedule of the income Tax Ordinance, 1979." Page 223

Commissioner of Income Tax v. Shahnawaz Ltd. and others 1993 SCMR 73

"However, nothing has been adduced before us in support of the last mentioned submission. As explained in Crawfords "Statutory Construction" a statute relating to remedial law may properly in several instances, be given retrospective operation and we are of the opinion that as the amendment in the instant case was introduced to redress an injury which in the words of Circular No.6 of 1973 (Income-tax) issued on 7th July, 1973 by the Central Board of Revenue itself was "designed to soften the law in favour of the taxpayers who could previously be charged to additional tax upto the date of assessment even though the finalization of assessment was delayed due to no fault of theirs". This was a proper case in which retrospective operation, to the extent the High Court gave to it, could be given to the amending law". (P-131)

Brother Engineering (Pvt.) Ltd. v. Deputy Collector 2004 PTD 2928

" It is well settled that a notification or an executive order adversely affecting rights of any person cannot operate retrospectively but if the same confers benefits, it can be made applicable retrospectivelyWe, therefore, "allow this appeal, set aside the impugned order and remand the case to the collector sales tax for determination of the effect of the aforementioned circular/notification and their application to the instant cases"---Page 74

Messrs UDL Industry v Collector of Customs 2005 .PTD_ 940 (H.C. Kar.)

"The petitioner has prayed as follows;---

(c) To declare that the issuance of subsequent amending notification dated 10-9-1991 is an act Of receding/rectifying the error committed in the original notification and to direct the respondent to refund the extra tunount recovered under I.T.P.,` dated l 6-5-1991. "

While deciding, the issue the Honourable Karachi High Court held..:...

"9. We, therefore, allow this petition and hold that the issuance of the notification, ,dated 7-9-1991 (10-9-1991) would be retrospective in nature by virtue of the dicta laid down in the Army Welfare Sugar Mills case referred Co above."--Page 943-44

Haseeb Wages Sugar Mills v. Federation of Pakistan 2002 PCTLR 287 (H.C. Kar.)

"2. The learned counsel for the respondent, however, submits that the notification, whereby duty was withdrawn is applicable prospectively.

3. The contention of the learned counsel for the respondent has pia force. The notification by its voids has been made operative from July, 1999 and is in accordance with section 12(a) of the Central Excise Act, 1944. The law is well settled that right of a person cannot be taken away by the subordinate legislation but beneficial retrospective operative is permissible. See Army Welfare v. Federal Government. 192 SCMR 1652."---Page 288

Anoud Power Generation Ltd. and others v. Federation of Pakistan PLD 2001 SC 340

"If the notification has been used for the benefit of the subject then it can be made operative retrospectively but if its operation its to the disadvantage of a party who is the subject of the notification then it would operate prospectively. "--Page 295

Ellahi Cotton Mills and others v. Federation of Pakistan PLD 1997 SC 582 = 1997 PTD 1555

"An executive order/notification, which is detrimental or prejudicial to the interest of a person, cannot operate retrospectively. However, a beneficial executive order/ notification issued by an executive functionary can be given retrospectively effect. "-=Page 91

Rijaz (Pvt.) Ltd. v. Wealth Tax Officer 1996 PTD 484

"As regards question of retrospectivity suffice it to say that the power of legislature to legislate retrospectively is well recognized and in the present case the retrospective operation to the explanation has been given by a specific provision in the amending law, Be, that as it may it is trite law that an amendment, which is explanatory, or clarificatory always operates retrospectively. Maxwell in his Interpretation of Statutes, 12th Edition, at page 224 has stated that "If a statute is in its nature a declaratory Act the argument that it is not to be construed so as to take away previously vested rights is inapplicable. Similar statement of law appears in Crawford on .`The Construction of Statutes' in para. 74 at page 107 and Craies on Interpretation of Statutes, .7th Edition at page 395. "--(Page 12)

Dawood Cotton Mills v. Commissioner of Income Tax 2000 PTD 285

"We have given our .due consideration to the respective arguments advanced by the learned counsel for the parties. The issue to be decided, in the question referred to us is, as pointed out by Mr. Nasrullah Awan, whether the amended ,provision of section 1.0(4)(bb) of the repealed Act would apply to the case of the Applicant/Assessee for the assessment year. 1977-78. In this connection, it is to be observed that this is not purely a question of fact. The question to be determined is whether the amendment in section 10(4)(bb) made by the Finance Ordinance effective from 1-7-1978 was to be operative with effect from assessment year 1978-79 or it was to be given retrospective effect so as to cover assessment year 1977-78 for providing the benefit of the amendment to .the 1pplicant/assessee. Such determination would require an examination whether the amendment was intended to be prospective or retrospective which, in turn, would require consideration of the principles of interpretation of Statutes. Thus, it cannot be said the question does not involve an issue of law. The objection raised by Mr. Nasrullah Awan is not well-founded and is overruled". (p. 190)

"It was further observed that retrospective operation of a curative or remedial Statute could be extended only to such cases which were pending at the time the amending law was enacted, i.e., cases which had not been finally determined or proceedings which had not attained finality". (P-193)

Army Welfare Sugar Mills Ltd. v. Federation 1992 SCMR 1652

"It seems to be well-settled proposition of law that a notification which purports to impair an existing or vested right or imposes a new liability or obligation, cannot operate retrospectively in the absence of legal sanction, but, the converse i.e. a notification which confers benefit cannot operate retrospectively, does not seem to be correct proposition of law". (P-1672)

"The High Court has wrongly placed reliance on the general proposition that a notification cannot operate retrospectively without realizing that there is a marked distinction between a .notification which purports to impair existing/vested rights or imposes new liabilities or obligations retrospectively and a notification which purports to confer benefit retrospectively". (P-1673.)

Government of Pakistan v. Village Devt. Organization PLD 2005 5C S77 = 2005 .PTD 2178

"As per record, facility/permit `to export allowed to the respondent by MINFAL has not yet been withdrawn but is subsisting as such a vested right has accrued in its favour. It is well settle principle of law that the executive orders or notifications, which confer right and are beneficial, would be given retrospective effect and those which adversely affect or invade upon vested right cannot be applied with retrospective effect. In the instant ease also permission to export was accorded by Government of Pakistan, Ministry Food, Agriculture and Livestock on 2-3-2000 with NOC. The copy of the said letter was sent to Ministry of Commence. It was for the first time that petitioner informed the respondent vide letter dated 9-1-2004 that ECC has taken decision to export 50,000. M. Tons of urea through manufacturers only. Since the said order had adversely affected the vested right of the respondent as such, it would not be appropriate to apply it with retrospective effect. For better appreciation, reference can be made to the case of Anoud Power Generation Limited and others v. Federation of Pakistan and others PLD 2001 SC 340 = -2001 PTD 795, wherein this Court while dealing with the similar aspect of the matter held that if the notification has been used for the benefit of the subject then it eau be made operative retrospectively but if its operation is to the disadvantage of a party who is the subject of the notification then it would operate prospectively". [ Pp-78-79].

C.I.T, v. Late Gen. Muhammad Ziaul Haq LT.A No. 51 of 2000 decided on 24-4-2003

" 14. The legal position after the aforesaid judgment as well as the amendments introduced in section 56 of the late Ordinance, 1979 till the time of its repeal in year 2001 emerges as such, it is that a notice under section 56 of the late Ordinance could not be issued or any year prior to the year of the enforcement of the late Income Tax Ordinance, 1979 i.e, 1-7-1979. Secondly, the late Income Tax Ordinance as it stood at the time of its, repeal provided for issuance of a notice under section 56 only for five years from the end of the Assessment Year for which a return of income was due. The last amendment made in these provisions being beneficial in nature and this appeal coming up for hearing alter the introduction of the amendment in the late Ordinance under the provisions of which this appeal is being heard, we will hold that the revenue could not issue any notice under section 56 of the late Ordinance after the expiration of five years from the end of the Assessment year for which the return of income was due". (Pp-10-11)

C.I.T, v. Messrs Shennion Steamship Co. PLD 1971 Kar. 605

"An amendment is often indicative of the intention of the Legislature to acknowledge an existing defect and to remove it by the amendment. In the words of Maxwell on Interpretation of Statutes:

"There is some presumption .that statutes passed to amend the law arc directed against defects which have come into notice about the time when those statutes passed".

"The presumption, however, does not necessarily arise in every case because sometimes amendments arc made to clarity an intention which was existing from the beginning",

H & Sons v, C.B.R. 2005 PTD 147

4. After hearing the learned counsel for the parties, I am persuaded to agree that the service of notice under section 61 of the late Ordinance after 30-6-2001 was not legally justified. It is correct that subsection (4) was inserted by Finance Ordinance, 2001 and obviously was effected from 1st July, 2001. It is also a fact that these provisions having exactly similar words used in subsection (4) were part of the statute but were omitted by Finance Act, 2000. It means that the provisions of subsection (4) were part of the statute till 30-6-2000 and were re-introduced w.e.f. 1-7-2001. 1t is also correct that no parallel or similar provision existed in the late Ordinance for the period 1-7-2000 to 20-6-2001."

"5. That fact, however, does not mean that newly-inserted subsection (4) of section 59 was not applicable to returns filed under Sell'-Assessment Scheme for the year, 2000-2001. A bare reading of the newly-inserted provision shows that no exception was made in respect of other a pending return filed earlier to the insertion of subsection (4) or otherwise with referenceto any assessment year. The provisions arc very clear that no order under subsection (4) to section 59 could be made after 30th clay of June of the financial year next following the income year in respect of which a return of total income hart been furnished under section 55 of the late Ordinance". (Pp-148-49)

Collector of Sales Tax v. Hoechst Ravi Chemicals Ltd., 2003 PTD 1817

"4-A. After hearing the learned counsel for the parties we are not inclined to entertain the appeal for two reasons firstly, that in substance the adjustment of input lax by the assessee during High Court aforesaid period caused no prejudice to the interest of the Revenue. Secondly, the learned counsel for the assessee is correct in pointing out that the amendment introduced in section 7(1) of the Sales Tax Act, 1990 by Finance Act, 1996 was not only clarificatory but also curative in nature. Therefore, the ratio settled in, re: Prime Commercial Bank and others v. Assistant Commissioner of Income Tax 1997 PTD 605 is attracted to the facts in hand. Learned counsel for the assessee is also correct in pointing out that in the departmental interpretation is accepted then the provision of section 10 of Sales Tax Act providing for adjustment and refund would be rendered superfluous". (P-4A).

C.I.T. v. Olympia 1987 PTD 739

"18. Iv our view, as the amending provision under consideration hart been inserted in subsection (6) of section 18-A to remedy a wrong that was being done to the assessees, and the amending provision does not affect any vested right or create any new obligations, the amending provision is to be given retrospective operation for extending benefit to the affected parties in pending cases, to give effect to the intent of the Legislature. As observed earlier, a wrong was being done to the assessees by providing for au indefinite period during which they were made liable for payment of additional tax at the rate of 2 per cent per mensum and this wrong was sought to be remedied by the remedial and curative amendment brought about by the Finance Act, 1973. If the intention of the Legislature had been that this remedy should be available only in respect of assessments for the year 1973-74 and subsequent years, the Legislature would have used appropriate words to express such intention. No such appropriate words are mentioned in the amending provision. There is no reason why the remedial provision of the amending law should not be applied to pending proceedings. In fact, this appears to the intent of Legislature". (P-89)

Messrs Bisvil Spinners Ltd v. Superintendent Central Excise PLD 1988 SC 370

"As a general rule grants of tax exemptions are given a rigid interpretation against the assertion of the taxpayers and in favour of the tax in power. The basis for the rule here is the same as that supporting a rule of a strict construction of positive revenue laws-that the burden of taxation should be distributed equally and fairly among the members of the society. However, exemptions claimed by the State or its sub-divisions are usually liberally construed and the same rule has frequently been applied to exemptions masts in favour of charitable organizations". (P-375)

Messrs Irum Ghee Mills Ltd. v. The Income Tax Appellate Tribunal 2000 SCMR 1871

"11. For the reasons discussed above, the appeal is allowed, the ex parts order dated 30-6-1997, the subsequent appellate orders -and .judgment of the High Court, dated 26-6-1998 are set aside, and the appellant is declared entitled to the exemption granted by clause (118-E) of the Second Schedule to the Income Tax Ordinance, 1979. Since the principal object of the clause was to encourage setting up of industrial undertakings by offering tax incentives to boost up industrial growth a benefit view was to be taken rather than to defeat its object on technical grounds". (P-9)

C.I.T. v. Pulikkal Medical Foundation (Pvt.) Ltd. (1994) 210 ITR 299

"Whether the exemption under section 10(22A) is to be construed strictly or liberally may now be examined. One view is that being an exemption given in a fiscal statute the exemption is to be strictly to be construed (see 'Municipal Corporation of Delhi v. Children Book Trust (1992) 3 SCC 390 and Deputy Commissioner of Sales Tax v. Carmal Book Stall (1989) 74 STC 89. It is well recognized that the hardship of an assessee is not a factor to be considered in examining whether the exemption is applicable or not. However, it would appear that the present trend is that a liberal interpretation has to be given to such exemption clauses". (P-319)

Muhammad Ali Khan and others v. C.W.T. (1983) 140 ITR 948

"We have already mentioned, that section can be interpreted either as completely denying any exemption to the assessee or as conferring on him a benefit of exemption to the extent of occupation of the building by the Ruler. In our opinion, the tribunal, in adopting the second of these interpretations has construed the provision in a liberal manner, consistent with the objects of the statute and its intendment, and also given effect to its language in such a way as to benefit to the assessee". (P-952)'

C I T v. South Rcot District Co-operative (1989) 176 ITR 117

"The decision of the High Court, (i) that the provision for exemption was intended to encourage cooperative societies to construct warehouses which were likely to be useful in the development of rural economy and exemption was granted from income tax in respect of income derived from the letting of such warehouses for the Storage of fertilizer and allied commodities concerned with cooperative; marketing, and having regard to that object, a liberal construction had to be given to the language of section 14(3)(iv) ".

C. I. T v Pondicherry Cooperative Housing Society Ltd. (1991) 188 ITR 671

"As the provision is intended to encourage cooperative societies; a liberal construction should be given to the language employed in the provision. Hence, if a cooperative society is engaged in carrying on the business of providing credit Facilities to its members, that would suffice to attract the benefit of deduction under section 80P(I) and (2)(a)(i)".

C.I.T. v. Gwalior Rayon Silk Manufacturing Co. Ltd. (1992) ; 196 ITR 149

" .A provision of deduction, exemption or relief should be construed reasonably and in favour of the assessee."

The learned departmental representative, on his turn opposed the submissions made on behalf of the assessee and contended that retrospective effect cannot be allowed to the S.R.O./amendments subsequently made and that the exemptions are to be allowed 1'or the period subsequent to the issuance of S.R.O. or introduction of the amendments.

The departmental view remains that the exemption is a special concession in deviation to the normal charge. It is allowed to the persons under certain special and specific circumstances which obviously is in derogation to the rights available to every one. All persons in a country as a matter of duty and responsibility are required to contribute towards their national duties which include payment of taxes. Anybody who is declared as not responsible for this obligation is obviously provided a special treatment for which specific circumstances are obviously the pre condition.

So far as providing of exemption w.e.f. first of July, 1985 is concerned one thing becomes obvious that it was taxable earlier. Thus the earlier judgment of the ITAT on this issue gets support from this specific notification. Now if the Government intended to .provide exemption for the earlier years is well, there was obviously no bar in declaring it in clear and specific words. It is undoubtedly the decided principle of jurisprudence that remedial and curative legislation is retrospective. However, whether charge of tax was a mistake that required a cure or remedy cannot be answered in positive. The D.R. therefore, urged that the earlier judgment on the issue in respect of the years prior to 30th, of June 1985 should be considered as correct and valid.

So Par as the application of the notification w.e.f. 1-7-1985 and onwards is concerned. Neither the D.R. has airy objection on the same nor can any body ignore its application. Since this situation was not before the Tribunal at the time of earlier decision the same obviously did not propound or announce the correct state of law. The assessment year 1985-86 and onwards till the said notification remains in field, are exempt and the tax charged thereon consequentially stands hereby deleted by us. However, as to whether the same is retrospective would require some more dilation of the issue.

Our finding on the charge in the earlier round obviously finds support from this issuance of notification by the Government of Pakistan. It has been announced on the initiation of the assessee and obviously the exemption is given if there was earlier a charge. The assessee claim that the organization is sharing the responsibility of the Government obviously is of no help. There is nothing provided in law under which a charge can be ignored for the reason that the said income is utilized for the purposes other than some individual's benefits. There are specific provisions in law wherein exemptions have been provided but there also parameters have been fixed. If some one is not covered within the said requirements or parameters, which Ire very strict and rigid, he cannot get the benefits therefrom. However, since we at the moment are not dealing with the said issue now having decided the same earlier, we still revert back as to whether this notification can be considered as curative and remedial legislation or not. Learned A.R. has referred over a dozen of cases iii support of the claim that remedial and curative legislation should always be retrospective which we have referred in detail.

Having gone through all the relevant excerpts in each case we are convinced that if one is in a position to satisfy with clarity that the provision under discussion has come out to redress an injury or to cure a disease or to provide remedy to an unjust situation it has to be applied retrospectively. The remedy can be by way of a notification, by legislation or through an administration order but it has to be for the purpose of redressing some grief or a situation which is patently injustice. Iii the present case the assessee is a Chamber of Commerce and Industry which is an organization of the business houses working for the welfare and benefit of the traders, businessmen and industrialist by providing them a forum. It is true that such forums do help a lot in the national building and also help in boosting economy by providing a joint forum to small and big business enterprises at one place. However, are they the only organization which is doing this job or the individuals doing trading at large scale to come out with bigger industries rather business empires in Pakistan are also having the same nature of work. There are a number of families who are providing such and similar services and are employing thousands of people. Are they not contributing to the national economy`? Moreover, whether charge of tax is an ill that needs a cure would not require a long discussion to say "No." The terms used by the learned A. R. i.e. curative and .remedial as defined in by various dictionaries are: as follows:---

"remedial, adj. 1. Affording or providing a remedy; providing the means of obtaining redress < a remedial action. 2. Intended to correct, or remove, or lessen a wrong, fault, or defect < a remedial status. 3. Of or relating to a means of enforcing an existing substantive right; procedural <a remedial right >, "

As is evident from above a remedial statute is the one that provides for a remedy for an injury. Its object is either to redress some existing grievance or to introduce some new regulation for proceedings conducive to the public interest. These are made to remove defects and to abridge superfluity in law. The term cure again also would mean of a disease may that be of any kind. On the strength of the referred judgments learned A.R. wants us to hold that charge of income tax from persons was a disease, an injustice, a mischief which has been subsequently cured by way of exemption.

One needs not re-emphase that the exemption which has been so provided by S.R.O. 650(I)/1985 is a special facility to all Chambers and Associations of Commerce, Trade and Industry by the Federal Government hence would require strict interpretation. Giving it effect prior to the said exemption would amount to entering into the legislation which is beyond the scope of the Courts. The Government while issuing this notification could always, by an express word say that the said amendment is retrospective .and applicable even for the earlier years. However, since it has come for as an exemption of the income and of the immovable property, the-same will have to be read strictly and in favour of the revenue. Reference can be made to the following judgment.

PLD 1988 SC 370.

Above judgment has been referred by learned A.R. and we have reproduced the same in earlier part of this judgment. It is in the case of Messrs Bisvil Spinners Ltd. v. Superintendent Central Excise. It clearly says that as a general rule the grant of exemptions are to be given rigid interpretation and in favour of the revenue for the reason that the tax should be charged fairly, justly end equally among the members of the society. It is not that we are trying to defeat the incentive given by the Government of Pakistan. We are only trying to court: up to the correct meanings of what all the judgments referred by learned A.R. are highlighting. On further reliance is on another judgment referred by learned A. R. in terms of (1994) 210 ITR 299 in the case of C.I.T. v. Polical Medical Foundation. (Pvt.) Ltd. This judgment has also discussed both the views with regard to the exemption. It does agree that the hardship of the assessee is not a factor to be considered in examining whether the exemption is applicable or not. Moreover, in the said judgment reference is made to two other judgments which speak of strict construction of the exemption provisions. It does speak of a latest trend regarding liberal interpretation to solve special type of exemption provisions but the same is not relevant for the provision under discussion before us. Besides the issue is that whether the notification has come to provide cure of disease or remove an ill:

The upshot of above discussion obviously does not give any impression that charge of section 9 on persons in Pakistan for equitable and fair distribution of taxes can be called as a mistake and ill or disease etc. Supporting a charity, doing welfare or providing any benefit to the public at large does riot provide any right or exemption from tax unless law so specifically provides it. However, if a charitable institution does not qualify for exemption being not covered within the parameters of some such provision and is subjected to tax, whether can be called as a disease or ill, can readily be answered by an empathetic `No'. Similarly if one of such an organisation is allowed exemption and the legislature intends to grant the same prospectively, can Courts or Tribunals allow it retrospective for the reason that they were providing some welfare services to the public at large, again cannot be answered as positive. Charge of tax from individuals, bodies of individuals, associations of persons etc. on their incomes is an equally shared responsibility. This is not only a responsibility towards national building but also towards the self well being. If some body wants to establish a charity for the purpose of having a place in life after death, he should better do it at his own cost and expense and vat at the expense of the revenue through exemptions. However, by saying so we are only trying to establish that it is only those persons who are granted exemption who are firstly chargeable to ax and no one can be granted an exemption unless the legislature intends it so by clear and unambiguous direction. Since in the present case the fact of the case does not give any such impression that it was some redressal of some mischief we are not in agreement with learned A.R. that retrospectivity can be attached to the said provision automatically. The legislature has granted this exemption through clause (25) of the 2nd Schedule of the Income/Wealth Tax Ordinance. Said and such other provision that grants exemption have never been allowed retrospective effect in the absence of the same specific and clear impression by the legislature. The appeals of the department, therefore, are allowed subject to our earlier finding that for the assessment year 1985-86 and onwards the assets of the assessee are exempt. This though not a practice in ITAT', however, we have no hesitation in offering our thanks and appreciation for the valuable assistance offered by the learned A.R. in this judgment for arriving at our conclusion.

Order accordingly.

C.M.A./74/Tax(Trib.)Order accordingly.