2008 P T D (Trib.) 319
[Income-tax Appellate Tribunal Pakistan]
Before Zafar Ali Thaheem, Judicial Member and Ch. Nazir Ahmad, Accountant Member
I.T.As. Nos.256/KB and 300/KB of 2006, decided on 08/06/2007.
(a) Income Tax Ordinance (XXXI of 1979)---
----Ss.80C, 143-B, 50(4), 62 & Second Sched., Part-IV, Cl. (9C)---C.B.R Circular No.11 of 1991-dated 30-6-1991---S.R.O. 55(I)/2000, dated 10-2-2000---Tax on income of certain contractors and importers---Throughput charges---Receipts in relation to implementation Agreement called `Throughput Charges' on the basis of throughput of oil per month regardless of quantity of oil actually handled at the oil Terminal---Tax was deducted at source---Return was filed under presumptive tax regime but the department assessed it under normal law due to insertion of Cl. (9C) in Part-IV of the Second Schedule of the Income Tax Ordinance, 1979 to the effect that S.80C of the Income Tax Ordinance, 1979 will not apply in respect of receipts on account of `providing services' by way of operation of a container, chemical or oil Terminal at a sea port---First Appellate Authority maintained the order of Assessing Officer on the ground that Appellate Tribunal in the assessee's own case decided the issue and held that assessee's income was not covered under S.80C of the Income Tax Ordinance, 1979---Assessee contended that assessment was based on Cl. (9C) in Part-IV of the Second Schedule of the Income Tax Ordinance, 1979 which was `ultra vires' in the light of various judgments of higher judiciary---Validity---For the earlier assessment years Appellate Tribunal had found that assessee's receipts qualified as income from `services rendered' which should have been assessed under normal law---S.R.O. was non-existent at the time when the judgment was passed---Appellate Tribunal found itself not competent to hold the Tribunal's said order `per incurium' for want of jurisdiction---First Appellate Authority had rightly followed the Appellate Tribunal's judgment while deciding the issue---Order was maintained by the Appellate Tribunal.
CIT v. Kashmir Edible Oil 2006 SCMR 109; Messrs Caltex Oil (Pakistan) Limited v. Collector (Adj.) GST 2006 CL 404; 2002 PTD 2850; 2002 CLC 1819; Central Insurance v. C.B.R 1993 SCMR 1232; Ellahi Cotton v. Federation of Pakistan PLD 1997 SC 582; Excise and Taxation Officer v. Burma Shell 1993 SCMR 338(b); 1997 PTD (Trib.) 1143; CIT v. Sir F.H. Jaffer and Sons Private Limited ITC 98 of 1998; CIT v. Sir E.H. Janet. and Sons (Pvt.) Limited Civil Petitions Nos.265-K and 362-K of 2000; Fauji Oil Terminal Distribution Company Limited v. Additional Commissioner 2006 PTD 734; 1999 PTD (Trib.) 1494; PLD 1997 SC 351 and 2004 PTD (Trib.) 2749 ref.
2007 PTD (Trib.) 803; I.T.As. Nos. 728 to 733(IB) of 1998-99; Messrs International Tanners Industries v. Federation of Pakistan 2004 PTD 2180 and 1995 Tax 28 rel.
(b) Income Tax Ordinance (XXXI of 1979)---
----S. 25(c)---Amounts subsequently recovered in respect of deductions, etc.---Trading liabilities written-back---Amount claimed on account of trading liabilities written-back was disallowed as no such disallowance under S.25(c) of the Income Tax Ordinance, 1979 was made by the department in the previous assessment years---Assessee contended that amount did not figure in the accounts as assessment for previous years were finalized under presumptive tax regime---Position became clear after the revision of the previous assessments---Addition was deleted by the First Appellate Authority---Validity---First Appellate Authority had erred in accepting the futuristic suggestion of revision of assessments and determination of the claim---Assessee having not proved the claim to the entire satisfaction of the department, the amount could not be allowed---Finding of the First Appellate Authority was reversed and assessment order was restored by the Appellate Tribunal on the issue.
Muhammad Farogh Naseeni for Appellant.
Dr. Farrukh Ansari; D.R. for Respondent.
Dr. Farrukh Ansari, D.R. for Appellant (in I.T.A. No. 300/KB of 2006).
Muhammad Farogh Naseem for Respondent (in I.T.A. No.300/KB of 2006).
ORDER
Through these cross-appeals, the taxpayer as well as the department have assailed the CIT(A)'s combined Order No.27, dated 18-1-2006. The taxpayer is aggrieved with the decision of endorsing the assessment order under section 62 instead of acceptance of the statement filed under section 143B read with section 80C of the repealed Income Tax Ordinance, 1979. The department, on the other hand, has challenged the order on the issues relating to relief allowed with regard to' (i) excess perquisites under section 24(i); (ii) ground rent and maintenance expenses; (iii) house rent; (iv), travelling and conveyance expenses; and (v) trading liabilities under section 25(c).
2. Facts, in brief, are that the taxpayer is a joint venture set up and sponsored by Messrs Fuji Foundation for the purposes of financing, designing, constructing, maintaining and operating and' oil terminal facility at Kadiro Creek, Port Muhammad Bin Qasim. The Oil Terminal has been set up under an Implementation agreement, dated 8-12-1992 entered into between the appellant taxpayer and the Port Qasim Authority (PQA). The oil terminal facility had been established on build, own and operate basis for the handling of specified types of oil for supply within the country. The oil terminal became operational on or about 18-4-1995.
3. The appellant receives payments from PQA (only), in relation to; the Implementation Agreement, and reportedly, is entitled to receive) monthly payments, called `Throughput Charges' on the basis of throughput of 330,000 tons of oil per month regardless of the quantity of oil actually handled at the oil terminal. At the time of commissioning the payments by the PQA were liable to deduction of income tax at source in terms of section 50(4) of the Ordinance, 1979.
4. For and from the assessment years 1995-96 to 1997-98, the appellant filed returns under section 55, that is, under normal law. The department, however, assessed the liability under the Presumptive Tax Regime (`PTR) in terms of section 80C of the Ordinance. On appeals against the aforesaid assessment, the Tribunal vide a common order, dated 13-4-1999 was observed that the receipts from PQA were on account of `service rendered' which were not covered under section 80C of the Ordinance, therefore, the income was not to be taxed under the PTR. The decision of the ITAT has been challenged by the department, and the appeal was still pending adjudication with the High Court.
5. Subsequently, like in the earlier assessment years, the appellant filed return under section 55 in respect of the assessment years 2000-2001, but the department assessed it under the PTR. The taxpayer did not pursue the matter further by way of appeal. For the succeeding assessment year, 2001-2002, the return was filed under PTR. The department accepted it. However, for the next assessment year 2002-2003 i.e. the year under appeal, the appellant again filed its return under PTR but the department assessed it under normal law.
6. The main reason for. the finalization of the assessment under normal law, as per Assessing Officer, was the insertion of Clause (9C) in Part-IV of the 2nd Schedule to the Ordinance through S.R.O. 55(1) of 2000 to the effect that section 80C will not apply in respect of receipts on account of `providing services' by way of operation of a container, chemical or oil terminal at a sea port in Pakistan. For the sake of ready reference the said Clause (9C), is being reproduced hereunder:--
"(9C) The provisions of section 80C shall not apply in respect of payments received by a resident person for providing services by way of operation of a container or chemical or oil terminal at a sea-port in Pakistan of an infrastructure project covered by the Government's Investment Policy, 1997."
7. The Commissioner of Income Tax (Appeals) rejected the taxpayer' Appeal when the assessment order was challenged before him. Vide his Impugned order the learned First Appellate Authority had dismissed the taxpayer's contention regarding applicability of section 80C to the declared receipts, for the following reasons:--
(i)With regards to assessment under section 62, it was observed that;--
(a) "I have considered the arguments of the learned A.R. However, the fact is that the issue stands decided by the Hon'ble Income Tax Appellate Tribunal in the appellant's own case and I am bound to follow such decision. Therefore, following the ITAT's decision on this issue for the earlier years, I confirm the assessment of company's income under normal tax regime. "[3rd C para on page 11].
(b) "..the main dispute is whether income of the appellant derived under the Implement Agreement is covered under section 80C or not. As the Tribunal held in the earlier years that the appellant's income is not covered under section 80C, therefore, arguments raised under this ground would also fail." [First para on page 14]
(ii) In respect of change of stance by the Revenue-first treating the income under PTR (1994-95 to 1997-98) and then finalizing the assessments under normal law (2002-2003), the learned CIT(A), in para one on page 18 of his order observed as under:
"Again I have considered the submission of the learned A.R. but the fact is that the appellant has also changed its stance which it had earlier taken all along up to the stage of Income 'Tax Appellate Tribunal: Therefore, till the ITAT's decision in the appellant's own case is reversed by the Tribunal or the High Court, the appellant cannot seek remedy on the ground that the department was unjustified in changing its stance."
(iii) On the issue of insertion of clause (9C) in Part IV of 2nd Schedule of the Ordinance, the lower appellate forum, in 3rd para on page 20 of the impugned order, observed as under,:--
"...Again the arguments of the learned A.R. would carry force had it not been held by the Tribunal in appellant's own case that it is a service provider and not a contractor. As the Tribunal has already held that the appellant is providing services, therefore, this ground of the appellant also fails."
The above decision of the Appellate Authority below has grieved the taxpayer, hence, this appeal.
8. The learned AR of the taxpayer, while assailing the impugned order, has contended that the only reason as to why the Revenue would not accept the appellant's claim of the business receipts being covered under PTR was because of the availability of Clause (9C) in Part IV of 2nd Schedule to Ordinance. The learned counsel of the appellant was of the view that law cannot be amended through an S.R.O., unless it was placed before, and approved by the Parliament. He averred that the Apex Court, in the case of CIT v. Kashmir Edilbe Oil (2006 SCMR 109) has held that law/statute cannot be amended through a notification. This Judgment of the Supreme Court has been applied by the Customs, Excise and Sales Tax Appellate Tribunal in the case of Messrs Caltex Oil (Pakistan) Limited v. Collector Adj. cited as GST 2006 CL 404. In this case the Tribunal held that the amendment made through an S.R.O. was of no legal effect. Therefore, the learned AR argued that in the light of-the above judgment, Clause (9C) was not available to the department for its invocation. As such, he prayed that the impugned order may be annulled and it should be declared that the appellant was to be assessed; under the PTR [under section 80C] read with section 143-B of the Ordinance, 1979. He further pointed out that S.R.O. 55(1) of 2000, dated 10-2-2000, introducing Clause (9C), was issued under section 14 of the Ordinance. In terms of proviso to subsection (2) of section 14, notifications issued by the Federal Government introducing amendment in the Second Schedule are to be laid before the National Assembly for ratification during the financial year. He claimed that, since, the S.R.O. was never placed before either the National Assembly or legislated through an Ordinance; therefore, Clause (9C) did not hold the field. The learned AR also submitted that section 14 of the Ordinance, 1979 related to exemptions. This, necessarily, meant that any S.R.O. to be issued under section 14 of the Ordinance ought to have the effect of reducing the tax liability, whereas, in the present case, instead of reducing, it had increased the liability. As such the impugned S.R.O. was against letter and spirit of section 14 of the Ordinance. He further elaborated that an elementary principle of statutory interpretation was that any S.R.O. repugnant to the parent' section of the statute was `ultra vires'. In this regard reliance was placed on case-law reported as 2002 PTD 2850 and 2002 CLC 1819. He contended that the S.R.O. in question was nothing but a colorful exercise of power undertaken on irrelevant/extraneous considerations, hence void. The learned AR went on to argue that Clause (9C) mandates that a particular type of transaction should not be classified under section 80C. This was nothing but usurpation of the judicial and quasi-judicial power vested in the Assessing Officer. It was a settled principle of law that the C.B.R or for that matter the Federal Government does not figure in the adjudication hierarchy. In this respect reliance was placed upon the ratio `decidendi' in the case of Central Insurance v. C.B.R. (1993 SCMR 1232). He contended that on this principle as well, Clause (9C) was invalid. The learned counsel for the taxpayer further argued that section 80C, like sections 80CC and 80D of the Ordinance Contained a `non-obstante' clause. By using the word "notwithstanding" it has an overriding effect on all other provisions of the Statute. In Ellahi Cotton v. Federation of Pakistan (PLD 1997 SC 582), Supreme Court had held that in view of the `non obstante' clause in sections 80C, 80CC and 80D the said provisions were to have an overriding effect and the same would apply even if there were other provisions in the shape of exemptions, contained in Second Schedule or otherwise. In other words, he contended, the Supreme Court had held that generally speaking even where companies were given exemptions in the Second Schedule, they would continue to pay tax under sections 80C, 8000 and 80D because of the `non obstante' clause, unless they were covered under the Protection of Economic Reforms Act, 1992, in such cases, he said, sections 80C, 80CC and 80D would not apply, for, Protection of Economic Reforms Act, 1992 itself contained a `non obstante' clause. From this analogy, he asserted that, since, in the present case Clause (9C) was not covered by the Protection of Economic Reforms Act, 1992, therefore, it had to yield to section 80C.
9. The learned counsel further submitted that without prejudice to the above, there was an apparent conflict between section 80C and Clause (9C) which was irreconcilable. In this regard the case of Excise and Taxation Officer v. Burma Shell (1993 SCMR 338(b)), was cited wherein the Apex Court had held that if there was an irreconcilable inconsistency between the charging section and the Schedule, the later had to yield to the Act. On this principle also, he averred, that Clause (9C) would be invalid. He also contended that in the present case the appellant had filed a statement under section 143B for the contractual receipts under PTR as well as return under section 55 (only) for a very small amount of interest income. Despite this, the Assessing Officer ventured to frame assessment order under section 62. He further contended that it was a settled law that for the income for which statement under section 143-B was filed, the Assessing Officer could not ignore the same and issue notices or orders under section 62 or section 65. Any notice or order issued under section 62 or section 65 for that portion of the income which was covered by section 143B read with section 80C would be void 'ab initio' and of no legal effect. In this regard the learned AR placed reliance on case-law reported as 1997 PTD (Trib.) 1143; CIT v. Sir F.H. Jaffer and Sons Private Limited (ITC 98 of 1998, dated 27-4-2000 H.C. Kar.); CIT v. Sir E.H. Jaffer and Sons (Pvt.) Limited (Civil Petitions Nos.265-K and 362-K of 2000, dated 3-5-2001 S.C.); and Fauji Oil Terminal Distribution Company Limited v. Additional Commissioner (2006 PTD 734 H.C. Kar.). The learned counsel went on to say that in the present case, for the assessment years 2000-2001 and 2001-2002, the department had itself finalized the assessments under PTR which had attained finality as the taxpayer had not filed any appeals thereagainst. As regards the Tribunal's earlier judgment, dated 13-4-1999 in this very case, it was submitted by the learned AR that the same was per `incuriam' as it was rendered sans arguments in relation to the invalidity of clause (9C). The learned AR asserted that the orders/judgments which were per `incuriam' had no binding effect. In this regard reliance was placed on the reported ' cases: 1999 PTD (Trib.) 1494, 2007 PTD (Trib.) 803 and PLD 1997 SC 351.
10. On merits, he submitted that the appellant's case was covered under PTR. In this regard reliance is placed on 2004 PTD (Trib.) 2749 and Circular No.11 of 1991, dated 30-6-1991. The learned counsel asserted that the carriage contracts fall under section 80C. He contended that the arrangement made by his client for transportation of oil was also in the nature of a carriage contract. Therefore, he prayed that the impugned order be vacated and his client's appeal be allowed.
11. The learned DR, on the other hand, supporting the reasons recorded by the Authorities below, prayed for the dismissal of the taxpayer's appeal. According to him, since the Tribunal had given its verdict on the same issue for the assessment years 1994-95 to 1997-98 vide its order bearing I.T.As. Nos.728 to 733 (IB) of 1998-99, dated 13-4-1999, further indulgence from this Tribunal was not called for. He argued that the Tribunal was not empowered to declare any S.R.O. `ultra vires'. Furthermore, he explained, since the Tribunal's said judgment had been subject-matter of the reference before the Honourable High Court, and decision was still awaited, so far as this Tribunal was concerned, its order had attained finality. Offering, a case-wise rebuttal, the learned DR briefly stated that the judgments referred to at the bar were not relevant for the following reason:--
(i) The case reported as GST 2006 CLC 404 was not on the same footing as the exemption from Sales Tax granted to petroleum products was withdrawn through S.R.O. In the instant case no such exemption was withdrawn.
(ii) The case reported as 2002 CLC 1819 was not relevant, as the amendment was not in conflict with the main provisions of the statute; which keeps the `services rendered' out of the ambit of PTR.
(iii) The case reported as 1993 SCMR 1232 was not on the same footing as the matter did not relate to interpretation, but to delegated legislation.
(iv) The case reported as 1993 SCMR 338 was not relevant, as there was no inconsistency with the main provision, which keeps the 'services rendered' out of the ambit of PTR.
(v) The case reported, as 1993 SCMR 338 was also not on the same footing as it had nowhere mentioned that a return had also been filed. Same were the facts in the case of E.H. Jaffer and Sons
(vi) The case of Engro Vopak, he stated, in fact, favours the department and was very relevant.
12. We have given our anxious thought to the averments of both the parties and have also perused the available record and case-law relied upon by the parties. The issue regarding assessment of income under 'PTR' or otherwise, in this very case had come under discussion for the earlier assessment years and Tribunal vide its order cited supra, after detailed discussion, had held that the appellant's receipts qualified as income from 'services rendered' which should have been assessed under normal law. For the sake of convenience the relevant, operating part of the said judgment is reproduced hereunder:--
"We have seen the word "service". as defined in the Law Lexicon 1997 Edition and we have found that the word "service" has been defined as (i) action of serving; helping or benefiting; of employment....(2) .(3) a regular scheduled transport trip over a public transpiration route. From all the dictionary meanings of the word "service" it implies that whatever is done, communicated or transported to the help or assistance to the other is covered by term `service' or `services'. Therefore, we are left with no alternative but to assign liberal, plain and ordinary dictionary meaning to the term `services rendered' because no definition has been offered to the said term in the definitions clause of the law. What we could find and infer from the nature of job of the assessee-company was exactly falling within the term `service' and `services' because it was engaged simply in off loading/unloading the ships and then piping out the oil to the distribution systems and not more than that. At least we have to give beneficial interpretation wherever there appear any ambiguity in law although the interest of the revenue is also to be kept in mind but the advantage to the assessee if given through the interpretation of law cannot be taken away by applying the said law for the benefit to the Revenue in the context of interpretation made through any Circular Notification by the C.B.R. In the above circumstances, we are of the view that the nature of job of the assessee was clearly falling within the term 'services rendered' and the payments were excepted from the application of provisions of section 80C of the Ordinance."
13. The mainstay of the learned AR's arguments was that the assessment as well as the impugned order was based on clause (9C) of Part-IV of II Schedule to the Ordinance, which he termed as 'ultra vires' in the light of various judgments of the higher judiciary. However, the said argument, in fact, does not get support from the findings given in the impugned order. Vide his impugned order the learned First Appellate Authority had dismissed the tax payers' contentions regarding applicability of section 80C to the declared receipts for the following reasons:--
(i) With regards to assessment under section 62, it was observed that:
(a) "I have considered the arguments of the learned A.R. However, the fact is that the issue stands decided by the Hon'ble Income Tax Appellate Tribunal in the appellant's own case and I am bound to follow such decision. Therefore, following the ITAT's decision on this issue for the earlier years, I confirm the assessment of company's income under normal tax regime." [3rd para on page 11].
(b) "...the main dispute is whether income of the appellant derived under the Implement Agreement is covered under section 80C or not. As the Tribunal held in the earlier years that the appellant's income is not covered under section 80C, therefore, arguments raised under this ground would also fail." [first para on page 14].
(ii) In respect of change of stance by the Revenue-first treating the income under PTR (1994-95 to 1997-98) and then finalizing the assessments under normal law (2002-2003), the learned CIT(A), in para one on page 1'8 of his order had observed as under:--
"Again I have considered the submissions of the learned A.R. but the fact is that the appellant has also changed its stance which it had earlier taken all along up to the stage of Income Tax Appellate Tribunal. Therefore till the ITAT's decision in the appellant's own case is reversed by the Tribunal or the High Court, the appellant cannot seek remedy on the ground that the department was unjustified in changing its stance."
(iii) On the issue of insertion of clause (9C) in Part-IV of II Schedule of the Ordinance, the lower appellate forum, in 3rd para. On page 20 of the impugned order, had observed as under:--
"...Again the arguments of the learned. A.R. would carry force, had it not been held by the Tribunal in appellant's own case that it is a service provider and not a contractor. As the Tribunal has already held that the appellant is providing services, therefore, this ground of the appellant also fails."
From perusal of the above findings it would be clear that the impugned order was passed by placing reliance on the Tribunal's earlier judgment in the taxpayers' own case and not as per the learned AR's assertions. For arguments' sake, if the learned AR's plea regarding non availability of aforementioned clause on the statute book is accepted, even then the Tribunal's judgment, dated 13-4-1999 (regarding the appellant's receipts being in the nature of `services rendered' and assessable under normal law) would hold good. The learned AR's other most important argument was that the Tribunal's order, dated 13-4-1999 was `per incuriam', hence it could not be relied upon, is also not tenable. The parameters which render an order `per incuriam' have already been dealt with by the Lahore High Court in the case of Messrs International Tanners Industries v. Federation of Pakistan (2004 PTD 2180) by observing as under:--
"Issue being raised in the petition had already been considered by the Supreme Court in one of the cases contention of the petitioners was that number of issues which ought to have been raised before the Supreme Court were not raised and therefore, the judgment passed by the Supreme Court was per incuriam---Validity---Petitioners failed to come up. with any authority which could directly or indirectly lead to a conclusion that a subordinate Court could hold a judgment of the superior Court to be per incuriam - Interference with a judgment per incuriam was only for the author of judgment or for a higher strength in terms of number of Judges in a Bench - Author of a judgment of a superior Court could record a finding that his earlier view was wrong on account of its being per incuriam---Judgment sought to be declared per incuriam must by itself be under attack before a higher strength of Judges belonging to the same court or a higher Court. All the issues being raised by the petitioner in the constitutional petition were found to be adequately considered by the Supreme Court, which had found the provisions of Finance Act, 1991 to be intra vires of the Constitution - Issues which were decided by the apex Court settled once and for all - Constitutional petitions were dismissed."
In another case cited as 1995 Tax 28(sic): (2007) PTD 803), the Tribunal has observed as under:--
"...whether `per incuriam' is decision given through want of care or decision which is result of oversight - Held yes - whether concept of per incuriam only comes to surface when ratio decidendi of Bench of equal strength appears to have been ignored by other Bench of similar strength - Held yes."
A careful perusal of the Tribunal's judgment in question would show that it did not suffer from any lacunae. All the issues raised at the bar were adequately replied. The impugned S.R.O. was non-existent at the material time when the judgment was passed. Moreover, we find ourselves not competent to hold the Tribunal's said order `per incuriam', for want of jurisdiction-per parameters laid down in the Lahore Court's judgment cited/reproduced supra. In the light of above facts and circumstances of the case we endorse the findings of the learned CIT(A), who had rightly followed the Tribunal's order, dated 13-4-1999 while deciding the issue at hand. For the reasons that the petitioner having failed to make out a case for our interference, the impugned order, on the issue; is maintained.
DEPARTMENTAL APPEAL
14. The department has assailed the order of the CIT(A), on the issues of allowance of relief in:--
(i) Additions made under section 24(i);
(ii) Ground rent and maintenance expenses;
(iii) House rent;
(iv) Travelling/conveyance expenses; and,
(v) Addition under section 25(c).
The learned DR argued the case in the light of grounds of appeal. He supported the departmental action for the reasons contained in the assessment order. All the grounds taken by the department are discussed, separately, as under;
(i) Addition under section 24(i) was made for want of employee-wise working which the appellant had failed to submit even in response to notice under section 62. In the absence of such information the Assessing Officer resorted to calculate the amount of excess perquisites on the basis of statement filed under section 139. He grossed up the amounts claimed under the heads salary, honorarium/reward/bonus, and dearness allowance at Rs.15,126,334. The amounts claimed on account of various allowances was separately worked out at Rs.14,969,244,' and 50% of such amount was treated as excess for the purposes of section 24(i). On appeal the addition was reduced to Rs.3,000,000 for the reason that the officer had, originally, intended to make the addition to that extent as conveyed to the taxpayer under section 62. The learned DR has questioned the decision of the learned First Appellate Authority because the reduction in the amount was merely based on guess work whereas the officer's calculation was based on actual figures. The learned AR defended the impugned decision because; according to him, the department had failed to confront the taxpayer with the amount of the impugned addition. After hearing the parties and perusing the record we are of the opinion that the assessee as well as the department had not discharged their onus properly. The former failed to submit employee-wise working of the perquisite whereas the latter erred in confronting the amount of addition in the absence of requisite information.
The learned CIT(A) also erred in reducing the addition on estimate basis. In these circumstances we deem it proper to vacate the impugned order and remand the case back to the Assessing Officer for `de novo' adjudication of the issue after obtaining the employee-wise detail of perquisites.
(ii) Add-backs out of ground rent and maintenance charges were made being mere provisions and not ascertainable expenses. The learned CIT(A) stuck down these add-backs for the reason that the officer was mislead by the nomenclature and that the assessee had claimed these expenses on mercantile basis hence these were ascertainable. Before us, the parties have not budged from their respective claims and prayed for a decision favourable to them. After hearing, we tend to agree with the decision of the appellate forum below. The Revenue has failed to make out a case for our interference; hence the impugned order on this issue is maintained.
(iii) The guest house rent was disallowed being not related to business. The learned CIT(A) deleted the addition by accepting the taxpayer's plea that the premises in question were being used for conducting official meetings. Both the representatives have argued on the basis of their respective points of view as expressed at lower fora. After hearing the parties and perusing the available record, in our opinion the department has acted on mere guess work and not done proper home-work in order to arrive at a judicious conclusion. In these circumstances we endorse the impugned order.
(iv) Travelling and conveyance expenses were partly disallowed doubting the purpose of en-masse visit to Singapore by the executives of the Company. The officer presumed that such expenses were of personal and non-business in nature. Before the CIT(A) it was pleaded that a Board meeting was held in Singapore by the major sponsors of the Company holding 39% shares of the respondent-Company, which was supposed to be attended by the executives: The authority below was convinced and deleted the impugned addition. After hearing the opposing contentions of the learned representatives, and going through the available record we are persuaded to endorse the learned CIT(A)'s decision on this issue. Hence no interference is called for on our part.
(v) An amount of Rs.560,764,549 claimed on account of trading liabilities written-back was disallowed as the officer found that no such disallowance under section 25(c) was made by the department in the previous assessment years. Before the CIT(A), it was pleaded that the amount did not figure in the accounts as assessments for previous years were finalized under PTR. The counsel for the taxpayer submitted that the position would become clear after the revision of the previous assessments in the light of decision of the Tribunal/CIT(A). Thus the taxpayers' plea was accepted and the addition was deleted. Before us the same arguments have been repeated by the learned AR, whereas the learned DR has opposed his plea. After hearing the parties we are of the opinion that the department had rightly disallowed the claim. The learned CIT(A) has erred in accepting the futuristic suggestion of revision of assessments and determination of the claim thereafter. So far as the assessee does not prove the claim to the entire satisfaction of the department the impugned amount cannot be allowed. We, therefore, accept the departmental appeal, reverse the finding of the learned First Appellate Authority and restore the assessment order on this issue.
15. As a result, the appeal filed by the taxpayer is dismissed and that preferred at the instance of the department is allowed in the manner and to the extent as discussed above.
C.M.A./152/Tax (Trib.)Order accordingly.