2008 P T D 1809
[Income Tax Appellate Tribunal of Pakistan]
Before Khalid Waheed Ahmed, Chairman, Munsif Khan Minhas, Judicial Member and
Istataat Ali, Accountant Member
M.A. (R) Nos.69/IB, 60/IB to 65/IB of 2004 in I.T.A.No.2142/IB of 1995-96, I.T.As. Nos.114/IB and 115/IB of 2002, I.T.As. Nos.849/IB to 852/IB of 1998-99 and I.T.As. Nos.438/IB to 441/IB of 2007 and I.T.A No.446/IB of 2007, decided on 03/06/2008.
Workers' Welfare Fund Ordinance (XXXVI of 1971)---
----Ss. 2(f) & 4---Income Tax Ordinance (XLIX of 2001), S.221---Companies Ordinance (XLVII of 1984), S.2(4)---Rectification of mistake---Scope---Assessee company was engaged in the manufacture and sale of commercial explosives, majority shares of which were owned by Government of Pakistan---Issue agitated in the case was about the chargeability of Workers' Welfare Fund which was levied by the Assessing Officer and confirmed by Commissioner (Appeals) as well as the Appellate Tribunal---Assessee moved miscellaneous applications in respect of Tribunal's order claiming that Workers' Welfare Fund was not chargeable---Validity---Held, mistake pointed out by the assessee was apparent and floating on the surface of record as Tribunal had observed in its order that "Corporation" had not been defined in any Act which observation was factually not correct-'Corporation', 'Company'-Definitions---Workers' Welfare Fund was not chargeable on the income of the assessee--Principles.
1999 PTD 4147; PLD 1996 Quetta 21; PLD 1973 Notes 1; PLD 1976 Kar. 1257; Word and Phrases, 'Volume 9A, pages 415, 416 and 439; Black's Law Dictionary; Corpus Juris Secundum (C.J.S.); Halsbury's Laws of India Volume 27; Indian Company Law -- Jehangir M. J. Sethan, 11th Edition, (2005), Volume 1; Hand book of Legal Terms and Phrases Judicially defined (by M. Ilyas Khan); Halsbury's Laws of England, Volume 9(2) (p.630); S.P. Mittal v. Union of India AIR 1983 SC 1; Board of Trustees, Ayurvedic and Unani Tibia College v. State of Delhi AIR 1962 SC 458 :Corporation Corporate Offences Dr. Sanjeev Kumar p.3 para 13; Shalimar Recording and Broadcasting Company v. DCIT, Circle-13, Islamabad (and vice versa) in I.T.As. Nos.915 to 918, 354, 355, 331, 1259 to 1261(IB) of 1998-99; Commissioner of Income Tax v. National Food Laboratories 1992 SCMR 687 = 1992 PTD 570; 2007 PTD(Trib.) 2358 and Black Law Dictionary 8th Edition ref.
Tahir Razzaq, F.C.A/AR for Applicant.
Mir Alam Khan, D.R. for Respondent.
ORDER
The assessee has filed these miscellaneous applications in respect of I.T.A No.2142(IB) 1995-96 (assessment year 1993-94), dated 13-9-1999, I.T.As. Nos.114 and 115(IB) of 2002 (assessment years 1994-95 and 1998-99), dated 219-4-2003 and I.T.As. Nos.849, 850, 851 and 851(IB) of 1998-99 (assessment years 1994-95 to 1997-98), dated 19-1-2002. The only issue agitated in these miscellaneous applications is about the chargeability of WWF which was levied by Assessing Officer and confirmed by CIT(A) as well as the Tribunal in aforementioned impugned orders.
2. As per facts ft the time of assessment for assessment years 1993-94 the assesse was assigned the status of private limited company against its claim of being public limited company on whose income the Assessing Officer charged. Workers Welfare Fund (WWF). Certain other issues were also involved at assessment/appellate stage, which were decided at Tribunal level, vide aforementioned impugned order, dated 13-9-1999 in I.T.A. No.2142. It was held in the impugned assessment as well as appellate orders that the assessee is not a "government owned corporation" to which exemption could be given from the levy of WWF. It is rather a "company" which is liable to pay WWF on its income. The relevant part of Tribunals order, dated 13-9-1999 reads as under:--
"We are afraid that we cannot agree with this interpretation as made by the learned A.R. "Company" is defined in the Companies Ordinance, 1984 while corporation is not defined in any Act. A body corporate is formed or established or created by the following three modes:
(i) directly by the legislature under the law enacted by it;
(ii) when it owes its existence to any instrument such Memorandum and Articles of Association and the registration thereof; and
(iii) directly by an order or notification issued by the Government, and in that case, it would be an organ of the state, or its department.
It is clear from above that no doubt a `company' is a body corporate as it is established and registered under the Companies Ordinance, 1984 but all corporations are not `companies' under the law. Hence, we cannot read the word `company' instead of the word `corporation' in the provisions referred to above. If the intention of the legislation was to exclude the industrial establishment owned by a company established by the Government or owned by a company, the majority of shares of which is owned by the Government then there was nothing to prevent the legislature to insert the word `company' instead of corporation in the above referred provision of law. It is a cardinal principle of taxation law that the tax is to be levied on clear and unambiguous provision and not on mere presumption and intendment. The observation Rolawtt Judge and approved by the House Lords in the case of Canadian Eagle Oil Co. Ltd. v. King (27 TC 205) has attained the statute of classical and. basis principle which is as under:--
"in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.
We, therefore, cannot substitute the word `company' in place of the word `corporation' so as to give exemption to an industrial establishment by the Government. In these circumstances, the assessee being a company and not a corporation is not exempt form the levy of WWF under the provisions of Workers Welfare Ordinance, 1971. Accordingly we find no infirmity in the order of the learned CIT(A) which is maintained."
3. For assessment years 1994-95 to 1997-98, the Workers Welfare Found (WWF) was charged by the Assessing Officer which was confirmed by CIT(A) and in second appeal the Tribunal following their previous orders in ITA No.2142(IB) of 1995 (assessment year 1993-94), dated 13-9-1999 confirmed vide order, dated 19-1-2002 in ITAs Nos.849 to 852(IB) of 1998 (assessment years 1994-95 to 1997-98) that the assessee was liable to the levy of WWF. For assessment year 1998-99, WWF was charged by the Assessing Officer and when 'the matter came to the Tribunal they confirmed the order of the Assessing Officer vide order, dated 29-4-2003 in ITA No.114-115(IB) of 2002. The assessee has moved miscellaneous application in respect of these Tribunal's orders claiming that WWF was not chargeable for the following reasons (reproduced along with errors):--
(i) that the order of ITAT was bad in law, arbitrary, non-judicial and opposite to the facts and circumstances of the case;
(ii) that in order of ITAT an error has crept in and the learned members of the Bench have lost the sight of material facts, the error being apparent and floating on the surface of record and should be rectified;
(iii) that the ITAT erred in interpreting section 2(4) of the Companies Ordinance, 1984, and claiming that the definition of "corporation" in the said clause does not include a company whereas a plain reading of the said clause clearly shows that the said definition does include companies;
(iv) that the ITAT was wrong in assessing the different meaning to the "company" or "corporation" and rejecting the exemption available to the industrial establishment (Wah Nobel (Pvt.) Ltd.);
(v) that the ITAT has erred in establishing the view that no doubt a "company" is a body corporate and it is established and registered under the Companies Ordinance, 1984 but all corporations are not companies under the law. The learned members failed to apply noscitur sociis principle, whereby a word or phrase is not to be construed as if it stood along but in the light of its surroundings;
(vi) that the ITAT was not justified in concluding that we (ITAT) cannot read word "company" instead of "corporation" in the provision of section 2(f) of the Workers Welfare Fund Ordinance, 1971. They have ignored the fact that the term "corporation" and "Company" are used as interchangeable. There are 1332 companies, which are using the word "corporation" and are private, unlisted public companies. Any company (whether private or public) can name it as corporation and every corporation is a company and in corporation by statute is not necessary under the corporate law or any other law for the time being in force:
(vii) that the ITAT has wrongly concluded that we cannot substitute the word "company" in place of word "corporation" so as to give exemption to an industrial undertaking which is owned by a company established by the government. And assessee being a company not a corporation is exempt from levy of WWF under the provisions of Workers Welfare Fund Ordinance, 1971;
(viii) that the ITAT was not justified in rejecting the exemption to the industrial establishment (Wah Nobel (Pvt.) Ltd.), which was squarely available in terms of well settled and cardinal principles of taxation law. It is an indisputable proposition that fiscal statute must be interpreted for the benefit of the subject rather than the State in case the provision of taxing statute can be reasonably interpreted in two ways. As such this `golden rule of interpretation' that the interpretation which is beneficial to the assessee has to be adopted was ignored;
(ix) -----------------------------------------------------------------------
4. For assessment years 1990-00 and 2000-01 WWF was charged by the Assessing Officer and it was confirmed by CIT(A) vide his order, dated 28-3-2007. In assessment years 1994-95, 2001-02 and 2002-03 WWF charged by the Assessing Officer vide his order under sections 62/132 was confirmed by CIT(A), vide his separate order, dated 28-3-2007. The assessee has filed second appeals for all these years on the following common grounds (reproduced along with errors):--
(i) -------------------------------------;
(ii) that the CIT(A) erred in confirming the levy WWF on the appellant. The appellant is exempt from the levy of WWF under section 2(f) of Worker's Welfare Fund Ordinance, 1971. The appellant is wholly owned subsidiary company which is managed and directly controlled by a company 100% owned by Government of Pakistan;
(iii) that the CIT(A) was not justified in ignoring the true meaning of corporation/company postulated in Companies Ordinance; 1984, Civil Procedure Code, 1908, judicial literature and case-law of the Courts of Pakistan jurisdiction;
(iv) that the CIT(A) has erroneously relied on the judgment of ITAT in ITA No.2142(IB) 1995-96, dated 13-9-1999 which is patently per incurrium;
(v) that the CIT(A) has travelled beyond his jurisdiction and ignoring the directions of his predecessor in the same assessment year;
(vi) -------------------------------------------
5. Before recording arguments of both the sides it would be advantageous to reproduce the relevant provisions contained in section 2(f) of the Workers Welfare Fund Ordinance, 1971 (hereinafter referred to as WW'F Ordinance) which defines the "industrial establishment" and section 4 of the WWF Ordinance which relates to the levy of WWF.
"Section 2. Definition.---In this Ordinance, unless there is anything repugnant in the subject or context,---
(a) ------------------
(b) ------------------
(c) ------------------
(d) ------------------
(e) ------------------
"(f) Industrial establishment" means---
(i) any concern owning and managing a factory, workshop or other establishment in which article are produced, adopted or manufactured with the aid of electrical, mechanical, thermal, nuclear or any other form of energy transmitted mechanically and not generated by human and animal agency;
(ii) any concern working in a mine, a quarry or natural gas or oilfield;
(iii) any concern running a tramway or motor omnibus service;
(iv) any concern engaged in the carriage of men and goods by inland mechanically propelled vessels;
(v) any other concern engaged in the growing of tea, coffee, rubber or cinchona; and
(vi) any other concern or establishment which the (Federal Government) may be notification in the officials Gazette, declare to an industrial establishment for the purpose of this Ordinance,
but does not include any concern or establishment which is owned by Government or by a corporation established by Government or by a corporation the majority of the shares of which is owned by the Government.
Section 4. Mode of payment by, and recovery from the industrial establishment.---(1) Every industrial establishment, the total income of which in any year of account commencing on or after the date specified by the Federal Government in Official Gazette in this behalf is not less than one lakh rupees shall pay to the fund in respect of that year a sum equal to two per cent of so much of its total income as is assessable under the Ordinance or would have been so assessable but for the exemption made by section 48 thereof.
(2) ------------------
(3) ------------------
6. Learned A.R. stated that Wah Nobel (Pvt.) Ltd. (WNL) was incorporated in 1962 under Companies Act, 1913 (now, Companies Ordinance, 1984). The company is engaged in the manufacture and sale of commercial explosives. Wah Industrial Limited (WIL) own majority shares (51.75%) In WNL and is, thus, a holding company. WIL's 100% shares are owned by Government of Pakistan (P.O.F. Board is invested with powers and functions of Central Government). WNL is a `body corporate' or `company' or `corporation' which is covered by one of the exclusions enumerated in the definition of `industrial establishment" as defined in Workers Welfare Fund Ordinance, 1971 and is therefore, exempt form the levy of WWF.
7. Learned A.R. stated that the bare perusal of the WWF Ordinance reveals that the legislature in section 2(f) of the WWF Ordinance has specifically excluded certain corporation from the levy of WWF which are directly or indirectly owned by the government. In the instant case 51.75% shares of WNL are held by Wah Industrial Limited (WIL), which is 100% owned by Government of Pakistan (Pakistan Ordinance Factories Board). Therefore, the appellant (WNL) being a `corporation' or `company' or `body corporate' is exempt from the charge of WWF.
8. Learned A. R. stated that the word 'corporation' has been used in exclusions stipulated in section 2(t). The word "corporation" has not been defined in WWF Ordinance. When a word is not defined in a statute, the Courts have to follow the following rules:--
(a) When word is not defined in a statute, Court is to follow its general/ordinary meaning given in the dictionary. 1999 PTD 4147; PLD 1996 Quetta 21.
(b) In order to ascertain its meaning the rule is to ascertain as to what assistance may be derived, firstly from statutes which are in pari materia, with the statute under consideration; and secondly, from earlier statute not precisely in pari materia but in some way relating to or effecting the same subject-matter. PLD 1973 Notes 1; PLD 1976 Kar. 1257.
9. Learned A.R. stated that in the light of guidance available from the aforesaid rulings of the Courts it has to be seen as where this word `corporation' has been defined or used. These statutes which may be called statutes pari material, are as follows:
(i) Companies Ordinance 1984.---`Body corporate' or `corporation' has been defined in section 2(4) of the Companies Ordinance, 1984 in the following words:--
"Body corporate" or "corporate" includes a company incorporated outside Pakistan, but does not include----
(a) a corporation sole; or
(b) a cooperative society registered under any law relating to the registration of cooperative societies; or
(c) any other body corporate, not being a company as defined in this Ordinance, which the Federal Government may, be notification in the official Gazette, specify in this behalf.
(ii) Constitution of Pakistan 1973 in 4th Schedule, Federal Legislative List, Part-1, Entry No.31:
(a) Corporations, that is to say, the incorporation, regulation and winding-up of trading corporations, including banking, insurance and financial corporations, but not including corporations owned or controlled by a Province and carrying on business only within that Province, or cooperative societies, and of corporation, whether trading or not, with objects not confined to a Province, but not including universities.
(b) Article 260 --- Definition (of corporation tax) "corporation tax" means any tax on income that is payable by companies and in respect of which the following conditions apply:
(i) the tax is not chargeable in respect of agricultural income;
(ii) no deduction in respect of the tax paid by companies is, by any law which may apply to the tax, authorized to be made from dividends payable by the companies to individuals;
(iii) no provision exists for taking the tax so paid into account in computing for the purposes of income tax the total income of individual receiving such dividends, or in computing the income tax payable by, or refundable to, such individuals;
(iv) In the Civil Procedure Code, 1908, in Order XXIX, rule 1, the topic under consideration is "Suit by or against the Corporation and subscription and verification" along with "Service on Corporation" etc., has been elaborated where the word `corporation' is used.
(iv) In the General Clauses Act, 1897, Section 18.--- Successors. There is reference in respect of law relating to express its relation to the functionaries and corporation for the pur pose of indicating the relation of the law the successors of any functionaries or of corporation having perpetual succession.
10. Learned A.R. stated that the word `corporation' has been defined in legal dictionaries and major legal works, like Corpus Juris Secundum, Halsbury's Law of England, Halsbury's Law of India etc., for Example:
(i) "Words and phrases -- Permanent Edition" ; `Corporation' has been defined in the Words and Phrases, Volume 9A, pages 415, 416 and 439 in the following words:--
(a) A "corporation" is not a person but has a legal and real individuality. (p.415)
(b) A "corporation" is a creation of law and its powers are defined by the certificate of incorporation. (p. 416).
(c) "Company" and "Corporations" are commonly used as interchangeable terms. (p. 439).
(ii) Black's Law Dictionary -- Eighth Edition Corporation, n. An entity (usually a business) having authority under the law to act as a single person distinct from its shareholders who own it and having right to issue stock and exist indefinitely; a group or succession of person established in accordance with legal rules into a legal or juristic person that has legal personality distinct from the natural persons who make it up, exist indefinitely apart from them, and has legal powers that it is constitution gives it.---Also termed Corporation aggregate; aggregate corporation; body corporate; corporate body. (p.365).
(iii) Corpus Juris Secundum (C.J.S.)" `Corporation' has been defined in the Corpus Juris Secundum, Volume 18, p.266:
"A Corporation is body of individuals united as a single separate entity under common name and having succession while it exits. It is an artificial being, invisible and intangible and existing only in contemplation of law, and the status before the law is that of an individual, despite the fact that one corporation may be a subsidiary or affiliate of any other or of others.
A corporation is set up to provide legal and economic benefit to those who invest in it and participate in its activities, and, though an artificial person, is entitled to rights under the law and must enforce its own rights and privileges".
(iii) Halsbury's Laws of India --- Volume --- 27, Business Association (Companies and Corporation) Lexis Nexis Butterworths --- (2007 Edition) "Corporation" has been defined as under:--
"Corporation is `an artificial person or legal entity created by or under the authority of the laws of a state or nation, composed, in some rare instances, of a single person and his successors, being the incumbents of a particular office, but ordinarily consisting of an association of numerous individuals.
A corporation is an artificial being, invisible, intangible and existing only in contemplation of the law. Being, a mere creature of law, it possesses only those properties which the charter of its creation confers upon it, either expressly or as incidental to its very existence. These are such as are supposed best calculated to effect the object for which it was created. The most important ones being immortality, and if the expression may be allowed, individuality. Properties by which a perpetual succession of many persons are considered as the same, and may act as a single individual. They enable a corporation to manage its own affairs, and to hold property without perplexing intricacies, the hazardous and endless necessity of perpetual conveyances for the purpose of transmitting it from hand to hand. It is chiefly for the purpose of transmitting it from hand to hand. It is chiefly for the purpose of clothing bodies of men, in succession with those qualities and capacities, that corporation were invented and are in use. By these means a perpetual succession of individuals are capable of acting, for the promotion of the particular object, like one immortal being". (p. 18).
Indian Company Law -- Jehangir M. J. Sethan, 11th Edition, (2005), Volume 1. Corporation -- Sir Edward Coke in the case Sutton's Hospital in 1612 described the corporation as `invisible immortal', and existing `only in intendment and consideration of law'. Kyd on Corporations define a corporation as `collection of many individuals, united into the body, under a denomination, having perpetual succession under an artificial form, and vested by the policy of the law, with the capacity of acting, in several respects, as an individual "Some jurists have seized upon such statements as supported for the proposition that a corporation is essentially a legal fiction. However, all that Coke and Kyd were putting forward was a theory of law, a statement of how a corporation is to be treated legally. In law all persons recognized by law are legal persons and hence, in a sense, legal fictions.
(vi) Hand book of Legal Terms and Phrases Judicially defined (by M. Ilyas Khan) "Corporation is an association of persons invested by law with the attributes of perpetuity, in law it is a fictitious or imaginary person and as such a suit by it or against it can be filed in a Court of law under Order XXIX, C.P.C.
According to Osborne it is a body of persons having in the estimation of law an existence and rights and duties distinct from those of the individual person who from time to time form it."
(vii) Halsbury's Laws of England Volume 9(2), Corporations. A corporation may be defined as a body of persons (in the base of a corporation aggregate) or an officer (in the case of a corporation sole) which recognized. by the law as having a personality which is distinct from the separate personalities of the individual holder for the time being of the office in question. There are many associations and bodies of persons which are not corporation. (p. 570).
11. It was stated by learned A.R. that following explanation is given about creation of "corporation" in Halsbury's Laws of England --Volume 9(2), (p.630):
(i) corporation created by public general Act of Parliament;
(ii) corporation created by registration under public general Act of Parliament;
(iii) corporation created by special, namely local or personal, Act of Parliament; and
(iv) corporation created under authority delegated by Act of Parliament.
12. learned A. R. stated that in the case of S. P. Mittal v. Union of India AIR 1983 SC 1, it was held that the essential elements in the legal concept of a corporation are: (i) a continuous identity, i.e., the original member or members or his or their successors are one (ii) the persons to be incorporated, (iii) the name by which the persons are incorporated, (iv) a place, and (v) words sufficient in law to show incorporation. A corporation aggregate can express its will by deed under a common seal. Learned A.R. further stated that in the case of Board of Trustees, Ayurvedic and Unani Tibia College v. State of Delhi AIR 1962 SC 458 : (1962) 1 Supp (1) SCR 156 it was held that; a corporation may be defined as a body of persons (corporation aggregate) or an office (in the case of a corporation sole) which is recognized by law as having personality which is distinct from the separate personalities of the members of the body or the personality of the individual holders.
13. Learned A.R. stated that the term `body corporate' is used as synonym for the term 'corporation'. It is wider in scope than the term `company' and used in several sections of the Companies Act to denote not only a company incorporated but also a foreign company. It also includes a corporation formed under special law or a foreign country except as expressly excluded by the definition.
14. Learned A.R. stated that in the book `Corporation Corporate Offences by Dr. Sanjeev Kumar (p.3, para 1.3) it is stated that the term `corporation' is derived from the Latin word `corpus', which means 'body'. A corporation is an artificial being, invisible intangible, and existing only in contemplation of law. It possesses only those properties, which charter of its creation confers upon it. Corporation is an entity, usually business entity, having authority under the law to act as a single person distinct from the shareholders, who own it and having rights to issue stock and exist indefinitely; a group of succession persona legally established in accordance with the rules into a 'legal or juristic person that has legal personality distinct from the natural persons who make it up, exists indefinitely from them and has the legal powers that its constitution has given it. Thus, it means anybody or institution enjoying perpetual succession and status of an independent legal entity.
15. Learned A.R. stated that ITAT's order in the Shalimar Recording and Broadcasting Company v. DCIT, Circle-13, Islamabad (and vice versa) in ITAs Nos.915 to 918, 354, 355, 331, 1259 to 1261(IB) of 1998-99, it was held that WWF is not chargeable on government owned companies. The relevant part of this order reads as under:-
"26. We have considered the above contentions of the parties and are of the considered view that the assessee company is a company owned by the corporation which in turn are established and owned by the Government and obviously attracting the exception as provided under the definition of industrial establishment given in section 2(f) of Workers Welfare Fund Ordinance, 1971. There can be no doubt in the above character of assessee company being a concern owned by the corporations which are established by the Government. The learned DT could not advance any plausible arguments or reasoning to substantiate the stance of the department or to negate and rebut the contentions of the learned AR of the assessee-company.
30. Therefore, we agree with the interpretation placed by the learned AR to the above character of the assessee-company that the assessee-company was not liable to be charged WWF because it was a corporation owned and established by the Government and to be termed as a company directly owned by the corporation owned by the Government. Hence the assessee company was not liable to the levy of W.W. Fund. Accordingly, the assessee's appeals on this issue stand accepted."
16. Learned A.R. contended that in the decision cited supra, the ITAT was pleased to taken the liberal legal view and allowed the appeal. In the above appeals Shalimar Recording and Broadcasting Company (Pvt.) Limited was owned, inter alia, by corporations like (i) Pakistan Television Corporation Limited (PTV) and (ii) National Film Development Corporation Limited. Both were companies incorporated under Companies Act, 1913 (now, Companies Act, 1984). It was held in the said decision that WWF is not chargeable on income of a company, which is wholly owned by the government.
17. Learned AR emphasised that the issue raised through these miscellaneous applications is rectifiable in the light of ratio settled in case reported as Commissioner of Income Tax v. National Food Laboratories 1992 SCMR 687 = 1992 PTD 570. The law confers a power to rectify any order where a mistake is apparent from record. Such power can be exercised suo motu or if it is brought to the notice by an assessee. Therefore, the essential condition for exercise of such power is that mistake should be apparent from the record; mistake must be floating on the surface and does not require investigation or further evidence. The mistake should be so obvious that on mere reading the order it may strike on the face of it.
18. Learned A.R. stated that no appeals/reference was filed before the High Court against all orders of the Tribunal in respect of which instant miscellaneous applications have been moved. He stated that a mistake crept in for the first time in Tribunal's order for assessment year 1993-94, dated 13-9-1999 and the same mistake was repeated in the subsequent orders. He stated that there is a' mistake floating on the surface of record because it was held in para. 8 of Tribunal's order, dated 13-9-1999 that a "company" is defined in the Companies Ordinance, 1984 while "corporation" is not defined in any Act. He stated that this observation/findings is not correct because "corporation" has been defined in section 2(4) of the Companies Ordinance, 1984 which provides that a "body corporate" or "corporation" includes even a company incorporated outside Pakistan. He stated that in the same provisions it is also explained that "corporation" does not include a "one mean corporation" (corporation sole), a cooperative society or any other body corporate, not being a "company" which is so notified by the Federal Government. He contended that this definition of "corporation" is very clear and with the exception of certain specific exclusions, all companies registered under the Companies Ordinance are covered under the definition of "corporation". He contended that definition of "corporation" is provided not only in the Companies Ordinance but also in various other works of eminent scholars and it cannot be said that definition of corporation is not given in any Act.
19. Learned A.R. up his averments by placing emphasis on the following points:--
(a) that the impugned orders of the Tribunal are rectifiable as there is patent mistake apparent from record;
(b) that the appellant is not subject to levy of WWF for the reason that it was a corporation owned and established by the government and to be termed as a company directly owned by the corporation owned by the government;
(c) that the word `corporation' includes the companies incorporated under Companies Ordinance, 1984 (or Companies Act, 1913);
(d) that the word `corporation' company or `body corporate' are used interchangeably;
(e) that the scope of the word `corporation' is wider than the `company'; and
(f) that the legislature has intentionally used the word `corporation' in the Workers Welfare Fund Ordinance, 1971. By using the word `corporation' legislature deliberately and consciously, intended to include all the companies incorporated under company law or created by special statute.
20. Learned D.R. stated that the word "company" has not been used in the relevant provisions of the Workers Welfare Fund Ordinance, 1971. He stated that intention of the legislature was very clear on this issue and if the "government owned companies" were intended to be included in the loop of exemption, a specific provision could have been made in the relevant law. When the legislature did not specifically include the "government owned companies" in the list of taxpayer exempted form levy of WWF then the law could not be stretched by anyone in such a manner that cover of exemption could be given to such companies. He further stated that WNL is not essentially a "government owned company". It is rather a subsidiary of Wah Industries Ltd., who holds 51%(+) shares in it. It is a joint venture where a non-resident company is also a major shareholder. Learned D.R. contended that this "joint venture" cannot be termed/treated as a "corporation" under the relevant provisions of Workers Welfare Fund Ordinance, 1971 or any other law of the land. He stated that WNL is an industrial establishment whose income exceeds the limit chargeable to WWF. In this manner the Assessing Officer had rightly charged WWF on its income. He further stated that this issue was thoroughly examined at assessment as well as appellate stage and it was confirmed upto the Tribunal's level that the assessee is not a "government owned corporation".
21. Learned D.R. further stated that there is no mistake floating on the surface, which could be rectified without any further investigation or evidence. The requested rectification amounts to reappraisal of facts and law. It will be tantamount to circumventing the law by avoiding adjudication on the same issue from higher appellate forum(s). There is no rectifiable mistake in Tribunal's impugned orders who had given conscious decision after proper application of mind and taking into account submissions made at bar by both the parties. All the issues involved in this case were thoroughly dilated upon and all the submissions made by both the parties were properly taken into account before arriving at the final conclusion(s).
22. Learned D.R. emphasised that in the light of decision given by Honourable Supreme Court of Pakistan in Civil Petitions Nos.752, 753, 754, dated 27-2-2008 in the case of Shaukat Masood, Islamabad v. Federation of Pakistan, it was held that when a decision is given after careful consideration of facts, rectification cannot be made in the same set of circumstances and in such situation no attempt can be made to circumvent the law.
23. We have considered arguments of both the sides and we agree with learned D.R. that scope of rectification is very limited and only those mistake can be rectified which are floating on the surface of record and for which no reappraisal or review is required. But in this case the mistake pointed out by the assessee is apparent and floating on record because it was observed/held in Tribunal's order, dated 13-9-1999 for assessment years 1993-94 that "corporation" has not been defined in any Act. This observation/finding is factually not correct because definition of "corporation" is available at many places in different statutes. The mistake made in Tribunal's first order, dated 13-9-1999 was also repeated in the subsequent orders about which miscellaneous applications have now been filed. We, therefore, admit 'the miscellaneous applications of the assessee for rectification of mistake in question.
24. We have noted that the Tribunal in its judgment reported as 2007 PTD (Trib.) 2358 settled the following ratio about rectification of a mistake for the purposes of "damage control":--
"S.221---Rectification of mistake---Rectification was a legal remedy which allowed a Court in certain circumstances, to correct or amend documents that do not properly record the issues on facts as well as on law---In contemporary literature of law `development rectification' also had assumed an obvious form of "damage control" on law and on facts which should be considered whenever an error was detected---However, such conceptual approach should remain within domain envisaged in statutory provisions of Income Tax Ordinance, 2001 (.2368) C."
25. The legal analysis of the issue under consideration will make it clear that "company" is included in the definition of "corporation". Definition of "company" as well as "corporation" has been specifically provided in law, which clearly shows that a "company" is included in the definition of "corporation". Every "corporation" cannot be treated as a "company" but every "company" can be treated as a "corporation" under the law. Therefore, WWF is not chargeable on the income of WNL because it has been exempted from this levy under the relevant provisions of Workers Welfare Fund Ordinance, 1971.
26. The "corporation" and "company" have common features i.e. (i) a continuous entity, (ii) incorporation of the entity, (iii) a name by which incorporation is made, (iv) a place of operation and (v) the ability to perform its functions and implement its objectives. The "corporation" however, has a broader perspective of existence as well as operation. Generally a "corporation" is an entity (including a business entity) having authority under the law to act as a single person distinct from the shareholders who own it. The "corporation" like "companies" have rights to issue stocks and exist indefinitely with a legal personality. The "corporations" as well as "companies" are legal persons who can act and operate individually for the purposes for which they are constituted.
27. The "corporation" is wider in scope than the "company". Like a "company" it is an entity, including a business concern which can act as a single person under the law and it is distinct/distinguishable from its shareholders who own it. It has a legal personality and exist indefinitely. It has legal powers to implement its objectives. Similarly, like a "company" a "corporation" may be subsidiary or affiliate of any other "corporation". It provides benefits (including economic benefits) to those who hold it and participate in its activities. A "corporation" like a "company" has also artificial legal personality and has the powers to enforce its rights and privileges.
28. A "corporation" like is an artificial person, which is invisible as well intangible. It comes into existence through an authority like "charter", "memorandum" or "articles of association" which confer upon it the rights, duties and obligations. It is separate and distinct from the individuals who form it. It has perpetual and independent existence. It can issue stock/shares. It can own properties with perpetual succession. It can purchase as well as alienate rights in properties. It can act independently. It can manage its own affairs. It can have its own name. It has place to perform functions for achieving its objective. The "company" and "corporation" are synonymous with each other and they alike in nature. These words i.e. "company" or "corporation" can be used interchangeably. A "company", therefore, can be treated as a "corporation" in all respects.
29. We have noted that "corporation" has been defined in section 2(4) of the Companies Ordinance, 1984. If this definition is analysed, it will reflect that a "corporation" also includes not only Pakistani companies but even the "companies" incorporated outside Pakistan". However, it does not include and one man corporation (corporation sole), cooperative society or a body corporate not being company which is specifically so notified by the Federal Government in the official gazette. In 'Black's Law Dictionary 8th Edition, the "corporation" has been specifically explained as an entity having right to issue stock (shares), which exists indefinitely; having its legal personality distinct from natural persons and has legal powers given by its constitution. In the common parlance, the words "corporation" and "company" are synonymous with each other. They are interchangeably used for each other. Although all "corporations" are not "companies but all "companies" can be treated as "corporations". It is also worthwhile to note that the Tribunal in their order in the case of Shalimar Recording Company, as referred to supra, have held in similar set of circumstances that WWF was not chargeable because it was a corporation owned and established by the Government. The facts and circumstances of Shalimar Recording Company and WNL are almost identical. Therefore, the ratio settled by the Tribunal in the case of Shalimar Record Company is squarely applicable in the instant case of WNL. Consequently, WWF will not be chargeable on income of WNL.
30. WWF will not be chargeable on income of the assessee. Miscellaneous applications for assessment years 1993-94 to 1998-999 and second appeals for assessment years 1994-95 and 1999-00 to 2000-03 succeed accordingly.
M.B.A./84/Tax (Trib.)Order accordingly.