2009 P T D (Trib.) 782
[Income-tax Appellate Tribunal Pakistan]
Before Jawaid Masood Tahir Bhatti, Ehsan-ur-Rehman Sheikh, Judicial Members and Ch. Naseer Ahmed, Accountant Member
I.T.As. Nos.820/LB, 821/LB, 1175/LB, 6859/LB of 2004, decided on 21/11/2008.
(a) Interpretation of statutes---
----Fiscal enactment---Distinct types of provisions---Effect.
(b) Interpretation of statutes---
----Fiscal enactment-Interpretation of charging sections, assessment and collection/recovery provisions---Charging sections have to be strictly construed and any benefit found therein has to go to the taxpayer---Assessment and collection/recovery provisions are merely the ordinary sections and can be liberally construed.
(c) Interpretation of statutes---
---Fiscal enactment---Exemptions---Nature and construction of---Generally there are sections providing exemptions from the general rule whereby the income on the subject matter of levy of tax is allowed to escape the tax net and concession in rate of tax or in tax liability are allowed---Such provisions are in the nature of exceptions and can be compared to a proviso through which exception is allowed to the general rule---As there are distinct types of provisions in a fiscal statute and the purpose of each type of provision is different, therefore, the intention to impose or charge upon any subject must be shown by clear and un ambiguous language---By applying the informal interpretation of rules and looking to the context in which the provisions are contained.
1989 PTD 961 rel.
(d) Income Tax Ordinance (XXXI of 1979)---
----Ss.80-D, 80-DD, 50(5), 54, 9, 10, 14, 2(43) & 2(44)---Minimum tax on income of certain persons---Levy of surcharge---Before the assessee was taxed under Presumptive Tax Regime under S.80-D or 80-DD of the Income Tax Ordinance, 1979 his final tax liability was first calculated under the normal tax regime on the basis of total income as the return in this regard was being filed by the assessee in accordance with the law---Provisions of S.80-D or 80-DD of the Income Tax Ordinance, 1979 were applicable only when the liability under the normal law regime was taxed on this basis was less than the tax deducted under S.50(5) of the Income Tax Ordinance, 1979---In some cases it may be more than the tax calculated under the normal tax regime including the surcharge and it was against the very scheme of Income Tax Ordinance, 1979 to levy surcharge on an assessee who was already paying tax at an amount higher than the tax calculated under normal law regime which as per S. 80-D/80-DD of the Income Tax Ordinance, 1979 was the final tax liability including Income Tax and surcharge.
1989 PTD 961 and 2006 PTD 148 rel.
I.T.A. No.4453/KB of 2005 confirmed.
(e) Income Tax Ordinance (XXXI of 1979)---
----Ss.9 & 10---Charge of Income tax, super tax and surcharge---Inducing sections---Schedule had nexus with certain sections in the main enactment, which were called the inducing sections, which control and regulate the Schedule---Inducing sections of the First Schedule are Ss.9 and 10 of the Income Tax Ordinance, 1979.
(f) Income Tax Ordinance (XXXI of 1979)---
----Ss.10, 9, 14, 2(43), 2(44), 80-D, 80-DD & First Sehed., Part-III, Para-C---Charge of super tax and surcharge---Levy of surcharge on minimum tax under S.80-D of the Income Tax Ordinance, 1979---Validity---Under S.10 of the Income Tax Ordinance, 1979 surcharge was levied on the basis of assessed total income meaning thereby that where tax was not levied on the basis of assessed total income, no surcharge could be levied---In the present case it was not contended that tax under S.80-D or S.80-DD of the Income Tax Ordinance, 1979 was levied on the basis of the assessed total income and if tax was not levied on the basis of assessed total income, no surcharge could be levied---When the very scheme of Income Tax Ordinance, 1979 did not support the levy of surcharge on tax recovered, under S.80-D or 80-DD of the Income Tax Ordinance, 1979 in Para-C of Part-III of First Schedule of the Income Tax Ordinance, 1979 as certain sections of the Presumptive Tax Regime had been mentioned in Para-C---Certain sections of the Presumptive Tax Regime had been mentioned in Para-C only to clarify that wherein a person was assessed to tax under normal law regime and his income also includes a portion of income covered under the Presumptive Tax Regime the latter will be excluded---Sections 80-D and 80-DD of the Income Tax Ordinance, 1979 were separate and independent provisions of law having no direct nexus with the provision of the First Schedule and surcharge---Provisions of Part-III of the First .Schedule of the Income Tax Ordinance, 1979 regarding rates of surcharge were not relevant to Ss.80-D & 80-DD of the Income Tax Ordinance, 1979.
2002 PTD (Trib.) 2662 overruled.
I.T.A. no.4453/KB of 2005 confirmed.
Messrs Madni Ghee Mills's case I.T.As. Nos.1761 and 1774/LB of 20021 and Messrs Ellahi Cotton Mills and others v. Federation of Pakistan 1997 SCC 1097 ref.
2005 PTD 944 and I.T.A. No.5804/LB of 2005 not relevant (set aside assessment).
Jalal Ahsan, A.C.A. for Appellants Nos. 1 to 3.
Sh. Muhammad Yousaf, ITP for Appellant No.4.
Rana Javed Iqbal, D.R. (LTU) along with Jan Muhammad Ch., Legal Advisor of the Department.
ORDER
This Full Bench has been constituted by the Hon'ble Chairperson to resolve the issue regarding levy of surcharge on minimum tax under section 80-D of the repealed Income Tax Ordinance, 1979, as there are conflicting decisions of this Tribunal, which needs to be resolved.
In the order of this Tribunal dated 17-5-2002 in I.T.A. No.23/LB of 2002 reported as 2002 PTD (Trib.) 2662, the levy of surcharge under section 80D has been held to be valid and in accordance with law. The relevant portion in this regard is reproduced here under:--
"The learned counsel of the assessee has emphasized on the issue of word "tax" in subsection (1) of section 80-D of the 1979 Ordinance. As regards the use of term "income tax" in subsection (2) of section 80-D of the 1979 Ordinance, the argument of the learned counsel is that this is only for calculation purpose and we are not convinced by such argument. If the argument of the learned counsel for the assessee, that no further tax can be levied once 0.5% tax has been paid, was accepted, then that will granting a license to tax payer to go scot-free and any further penalties on additional tax e.g. for non-filing of return in time, later payment of tax etc. It could not be levied simply because of the use of word "tax" in section 80-D(1) of the 1979 Ordinance and of the definition of "tax" in section 2(43) of 1979 Ordinance. Certainly this cannot be the intention of law. The learned counsel has also made a passing reference to the judgment of the Hon'ble Sindh High Court, Karachi dated 28-8-2001, wherein the levy of WWF in certain cases has been disapproved. However, since this case was not seriously presented not read out by learned counsel of assessee, we are not inclined to discuss the same at this stage because it is not the issue of WWF which is in question before us. The other case of Hon'ble Sindh High Court reported as 2000 PTD 2173, (supra) also has no direct bearing on the facts of the present case. Hence, we are not inclined to accept this appeal of the assessee and we held that levy of surcharge on the tax levied under section 80D of 1979 Ordinance was proper. The appeal is dismissed."
However, in the order of this Tribunal dated 18-10-2003 in the cross appeals for the assessment years 1999-2000 and 2000-2001 in the case of Messrs Madni Ghee Mills bearing I.T.As. Nos.1761 and 1774/LB of 2002 the decision of the learned CIT(A) has been upheld holding that surcharge is not leviable on minimum tax under section 80-D. Relevant portion in this regard is reproduced hereunder:--
"Surcharge in our view, is also not leviable on minimum tax which is levied under section 80D and hence action of the learned Commissioner is legally justified which is maintained on this issue."
Likewise, this Tribunal vide order dated 24-2-2006 in I.T.A. No.4453/LB of 2005 reported as 2006 PTD 1189 has also held that the surcharge is not leviable on minimum tax under section 80-DD. The view of the above two decisions has also been upheld by this Tribunal vide order dated 13-10-2004 in I.T.A. No. 6035/LB of 2003 reported as 2005 PTD 944 and order dated 13-12-2006 in I.T.A. No.5804/LB of 2005 (Assessment Year 2002-03), but in both these cases, the issue was set aside for reconsideration.
2. Four appeals have been filed by three parties namely:--
(i) Messrs Pak Shaheen Roller Flour Mills (Pvt.) Ltd., Faisalabad against the impugned order of the learned CIT(A) dated 3-10-2004 upholding the levy of surcharge with the following observations:--
"Facts of the case and arguments of the learned A.R. have been considered. It is observed that as per of Clause (c) of Part-III of First Schedule to the Income Tax Ordinance, 1979, the surcharge was rightly charged by the taxation officer. So far as the definition of tax is concerned, it speaks that "tax" means income tax, super tax, surcharge and additional tax chargeable or payable under this Ordinance, and includes any penalty, fee or other charge or any sum or amount leviable or payable under this Ordinance". So the taxation officer was justified in rejecting the assessee's application under section 156 of the Income Tax Ordinance, 1979. Hence, the action of the taxation officer in charging of surcharge is maintained."
(ii) Messrs Kohinoor (Gujar Khan) Mills Ltd. objecting the impugned order of the learned CIT(A) dated 1-12-2003 confirming the surcharge with the following observations:--
"During the above year, there was no income chargeable to tax. Therefore, the assessee was subjected to pay tax under section 80-D amounting to Rs.2,244,355, which was further subjected to surcharge @ 5% amounting to Rs.112,218. The assessee aggrieved against this treatment.
The A.R. of the appellant has assailed the above surcharge on the ground that minimum tax rate has been provided under section 80-D and therefore, the surcharge under first Schedule to the Income Tax Ordinance, 1979, could not be applicable to the minimum tax. The A.R. further pointed out that section 80-D is a final discharge of the liability and no tax is payable and no further tax can be levied on the same. The A.R. also pointed out that surcharge could only be levied on the tax determined in accordance with the rates contained in First Schedule to the Income Tax Ordinance, 1979.
It has further been pointed out that the income liable to tax under sections 80-C & 80-CC has been given special exemption from the surcharge of tax for which the rates have been provided in the First Schedule.
The argument put forward by the A.R. of the appellant at bar has been considered. However, the same cannot be accepted due to the reasons that the Hon'ble ITAT in its judgment cited as 2002 PTD 2662, has already adjudicated against the assessee by holding that tax under section 80-D, would be liable to surcharge as given in the First Schedule to the Income Tax Ordinance, 1979. In the light of the case cited above, the arguments put forth by the A.R. of the appellant is rejected and the treatment made by the assessing officer is confirmed.
(iii) Messrs Kohinoor Textile Mills Ltd. Lahore objecting the impugned order of the learned CIT(A) dated 10-12-2003, wherein the levy of surcharge has been upheld with the following observations:--
"During the above year, there was no income chargeable to tax. Therefore, the assessee was subjected to pay tax under section 80-D amounting to Rs.11,258,865, which was further subjected to surcharge @ 5% amounting to Rs.562,943. The assessee aggrieved against this treatment.
The A.R. of the appellant has assailed the above surcharge on the ground that minimum tax rate has been provided under section 80-D and therefore, the surcharge under first Schedule to the Income Tax Ordinance, 1979, could not be applicable to the minimum tax. The A.R. further pointed out that 80-D is a final discharge of the liability and no tax is payable and no further tax can be levied on the same. The A.R. also pointed out that surcharge could only be levied on the tax determined in accordance with the rates contained in First Schedule to the Income Tax Ordinance, 1979.
It has further been pointed out that the income liable to tax under sections 80-C & 80-CC has been given special exemption from the surcharge of tax for which the rates have been provided in the First Schedule.
The argument put forward by the A.R. of the appellant at bar has been considered. However, the same cannot be accepted due to the reasons that the Hon'ble ITAT in its judgment cited as 2002 PTD 2662, has already adjudicated against the dssessee by holding that tax under section 80-D, would be liable to surcharge as given in the First Schedule to the Income Tax Ordinance, 1979. In the light of the case cited above, the arguments put forth by the A.R. of the appellant is rejected and the treatment made by the assessing officer is confirmed.
While the fourth appeal is the cross appeal filed by the Department against the above referred impugned order of the learned CIT(A) dated 10-12-2003 in the matter of Messrs Kohinoor Textile Mills Ltd. on the grounds, which are not subject-matter of this Full Bench. The appeal filed by the Department bearing I.T.A. No.1175/LB of 2004 (Assessment Year 2001-2002) is therefore, directed to be fixed before the regular Division Bench.
3. On behalf of the assessee, it has been contended that decision of this Tribunal reported as 2002 PTD (Trib.) 2662 (order dated 17-5-2002 in ITA No.23/KB/2002) is per incuriam, as it is in conflict with the ratio settled by the Hon'ble Supreme Court of Pakistan in the case of Messrs Ellahi Cotton Mills and others v. Federation of Pakistan reported as 1997 SCC 1097. In this regard, learned counsel has specifically referred paras. 40 & 41 of the decision. It has further been contended that section 80-D of the late Ordinance, 1979 starts with non-obstante clause and deals with minimum tax on income of certain persons. He has argued that section 80-D is a comprehensive section, which provides not only the charge of tax, but also gives the rate of tax within the body of the section. This section provides the levy of minimum tax on income in case no tax is payable due to any reason. According to the learned counsel, any section which contradicts or effect the provision of above section would be in direct conflict with this section, as has been held by the Hon'ble Supreme Court of Pakistan and this section would have over-riding effect. He has submitted that since the provision of surcharge, if applicable to the above section, the same would increase liability of minimum tax, therefore, it would be direct conflict with provisions of section 80-D and as such according to the version of the assessee the interpretation is not tenable under the law.
4. On the other hand, representing the Department, Legal Advisor of the Department and the learned D.R. supporting the above referred impugned orders of the learned CIT(A) (wherein the levy of surcharge has been upheld) have contended that the observations of the Hon'ble Supreme Court of Pakistan in para-41 in the case of Messrs Ellahi Cotton Mills Ltd. reported as PLD 1997 SC 582 are supporting the viewpoint of the Department, as regarding the non-obstante clause, it has been said that non-obstante clause in section 80-D is for the purpose of liability to pay minimum tax of half per cent on the annual turnover. This will exclude any provision of the Ordinance, which may be inconsistent with it. But the same does not exclude the application of other provisions of the Ordinance, which are not inconsistent with section 80-D. According to them provision regarding surcharge are not inconsistent to the section 80-D or 80-DD of the Income Tax Ordinance, 1979.
5. We have heard the learned representatives from both the sides and have' also perused the impugned orders of the learned CIT(A), the assessment orders, the case law referred from both the sides and the decisions of this Tribunal on which the learned C1T(A) placed reliance and are the subject matter of present Full Bench. Before discussing the above referred decisions of this Tribunal it will be appropriate to reproduce hereunder the relevant provisions of law at the relevant period of assessment. Subsections (43) & (44) of section 2 of the late Ordinance, 1979 are regarding meaning of the Tax and Total Income: --
Subsections (43) and (44) of section 2:
(43) "tax" means income tax, super tax, surcharge and additional tax chargeable or payable under this Ordinance, and includes any penalty, fee or other charge or any sum or amount leviable or payable under this Ordinance;
(44) "total income" means the total amount of income referred to in section 11 computed in the manner laid down in this Ordinance; and includes any income which, under any provision of this Ordinance, is to be included in the total income of an assessee;
While section 9 of the repealed Ordinance, 1979 is regarding charge of Income Tax and section 10 is regarding charge of Super Tax and Surcharge:--
9. Charge of income tax.---(1) Subject to the provisions of this Ordinance, there shall be charged, levied and paid for each assessment year commencing on or after the first day of July, 1979, income tax in respect of the total income of the income year or years, as the case may be, of every person at the rate or rates specified in the First Schedule.
10. Charge of super tax and surcharge.---(1) In addition to the income tax charged for any year, there shall be charged, levied and paid for that year in respect of the total income, or any part thereof, of the income year or years, as the case may be, of every person, an additional duty of income tax (in this Ordinance referred to as 'super tax') and surcharge at the rate or rates specified in the First Schedule.
Section 14 of the late Ordinance, 1979 is regarding exemption
14. Exemptions.---The incomes or classes of income, or persons or classes of persons specified in the Second Schedule shall be--
(a) exempt from tax under this Ordinance, subject to the conditions and to the extent specified therein; or
(b) liable to tax at such rates, which are less than the rates specified in the First Schedule, as are specified therein; or
(c) allowed a reduction in tax liability, subject to the conditions and to the extent specified therein; or
(d) exempt from the operation of any provision of this Ordinance, subject to the conditions and to the extent specified therein
Section 80D of the late Income Tax Ordinance, 1979 is regarding Minimum Tax on income of Companies and section 80DD is regarding Minimum Tax on income of importers of edible oils etc.:--
80D. Minimum tax on income of certain companies person.---(1) Notwithstanding anything contained in this Ordinance or any other law for the time being in force, where no tax is payable [or paid] by a company [or a registered firm] [, an individual, an association of persons, an unregistered firm or a Hindu undivided family, *[********] resident in Pakistan or the tax payable [or paid] is less than one-half per cent of the amount representing its turnover from all sources, the aggregate of the declared turnover shall be deemed to be the income of the said company [or a registered firm] and tax thereon shall be charged in the manner specified in subsection (2).
We also find it appropriate to reproduce hereunder the relevant sections 50 and 54 late Income Tax Ordinance, 1979 dealing in the Deduction of Tax at source and Payment of Tax with return of income:--
80DD. Minimum tax on income of importers of edible oils, etc.---Notwithstanding anything contained in this Ordinance, or any other law for the time being in force, the tax collected under subsection (5) of section 50 on import of edible oils shall be deemed to be the minimum amount of tax payable under this Ordinance and where the final tax liability determined under this Ordinance exceeds the amount collected under the said subsection, the said amount shall be adjustable against such liability.
50. Deduction of tax at source.---(1) Any person responsible for paying any income chargeable under the head "Salary" shall, at the time of payment, deduct tax on the amount payable at the average rate of tax computed at the rates specified in the First Schedule on the estimated income of the assessee under this head for the financial year in which the payment is made after making such adjustment, as may be necessary, for any excess deduction or deficiency arising out of any previous deduction or failure to make such deduction during the said financial year.
54. Payment of tax with return of income.---Every person who is required, under this Ordinance to furnish a return of total income shall pay the tax payable, on the basis of such return, on or before the date on which he is so required to furnish such return.
6. After considering the above referred provisions of law we are of the view that before ascertaining the intention of legislature and the purpose of enactment, it is necessary to ascertain as to which category of provision of particular section belongs. There are three distinct types of provisions generally in every fiscal enactment.
(i) The charging provisions which relate to the levy or charge of the tax, which usually state that tax is to be levied and on what matter or grounds or income and in which manner and at which rate and matters relevant hereto.
(ii) The assessment provisions deal with assessment, calculates or quantification of the tax for the purpose of determining the amount of tax due and payable which has escaped collection or has been under assessed or assessed at a lower rate or on which exercise relief of refund has been allowed.
(iii) The Collection/Recovery Provisions which relate to this mode and manner of receipt or Collection of tax.
The charging sections have to be strictly construed and any benefit found therein has to be gone to the tax payer. However, the assessment and collection/recovery provisions are merely the ordinary sections and can be liberally construed.
7. In all the fiscal statutes generally there are sections providing exemptions from the general rule whereby the income on the subject matter of levy of tax is allowed to escape the tax net and concession in rate of tax or in tax liability are allowed. Such provisions are in the nature of exceptions and can be compared to a proviso through which exception is allowed to the general rule. As there are distinct types of provisions in a fiscal statute and the purpose of each type of provision is different therefore, the intention to impose or charge upon any subject must be shown by clear and un-ambiguous language. By applying the informal interpretation rules and looking to the context in which the provisions contained. In this regard we find it appropriate to reproduce hereunder the relevant paragraphs of the decision of the Hon'ble High Court reported as 1989 PTD 961 (Lah. HC) wherein this issue has been discussed in detail:---
"19. The words "levied", "charged", "paid" and "collected" generally used in charging sections do not indicate that assessment provisions or collection provisions are included in the charging sections. These words are only used in a general sense to indicate that the duty or tax would be demanded or collected at the rate or in the manner as provided by the charging section. The procedures as regards assessment and collection are separately provided for. The words "Where any Central Act enacts that income tax shall be charged for any year at any rate or rates, tax at the rate or those rates shall be charged for that years", as appearing` in section 3 of the Income Tax Act, 1922, did not mean that the word "charged" gives any indication that the provisions of assessment are included in that section. Likewise, the words "there shall be charged, levied and paid... income tax in respect of the total income, as appearing in section 9 of the Income Tax Ordinance, 1979, also do not mean that the provisions with regard to levy assessment and collection are provided in this section. They are rather provided separately in Chapters III, VII and IX. Similarly, the words "there shall be levied and collected tax...." In section 3 of the Central Excises and Salt Act, 1944, do not mean that the assessment and the collection provisions all stand included in the said charging sections. The assessment provisions in the Sales Tax Act are to be found in Chapter VII of the said Act and in the Central Excises and Salt Act under rules 53 and 226 and Chapter XI of the Central Excise Rules read with Central Board of Revenue's Letter C. No.667-C (CE)/81, dated 25-4-1981 and the recovery provisions in the Sales Tax Act are to be found in Chapter VII of the said Act and in the Central Excises and Salt Act under section 11 of that Act and rules 238 to 240 and Chapter III of the Central Excise Rules. It is, therefore, clear that if the word "levied" or "collected" is not to be found in the charging section, just as in section 3 of the Income Tax Act, 1922, it does not mean that assessment and collection provisions stand excluded, or that separate provisions of assessment and collection cannot be provided elsewhere in the fiscal enactment.
20. However, it is possible to conceive of cases where the words "levied" or "collected" in the charging sections of certain enactments have perforce to be construed as covering assessment proceedings also, if no separate provisions are found in the enactments to cover assessment proceedings. In such cases the word "levied" or "charged" could validly be construed as including assessment or the entire process of collecting the tax. But this would be on the principle of implied construction or necessity. However, since the present case does not fall in this category, I need not dwell on it any further.
21. The words "levied", "charged", "collected", "paid" and "payable" are generally found connected with charging sections in fiscal enactments. In charging section the words "levied" generally means to raise, impose or collect tax or duty. In Abdul Rashid v. Central Board of Revenue and others (PLD 1965 Pesh. 249) the word "levied", as used in Articles 48 and 237 of the Constitution of 1962, was held to relate to the charging provision i.e. fixation of a rate of duty. By itself the words "levied", "charged" and "collected" do not impose the charge. The charge or impositions arise by virtue of the language of the charging sections itself. These words only point or give indications to the element of demand namely, that it will be demanded, claimed or collected at the rate and/or in the manner provided in the charging section. However, apart from charging sections, the word "levy" or "levied" in other parts of fiscal enactments could indicate not only the power to impose or raise a tax or duty, but also to assess or collect the same, depending upon how, where and in what context the word is used and whether such extended meaning is possible. There is no cardinal rule that wherever the word "levy" or "levied" occurs, the element of assessment or collection must be deemed included. Sections 3 and 4 of the Sales Tax Act fall in Chapter II headed "Charge of Tax", sections 10 and 11 fall in Chapter VI headed "Assessments:. Since Chapter VI in the Sales Tax Act exists to over assessment proceedings, I do not think that the word "levied" in subsection (1) of section 3 and in the proviso to subsection (4) of the same section of the Act is intended to cover the process of assessment or quantification of the tax. What this word means is nothing more than that tax will be raised or collected. The word "levied" in subsection (1) of section 3 and in the proviso to subsection (4) of section 3 of the Sales Tax Act does not warrant the larger meaning to include the power to assess the tax.
22. Under the proviso to subsection (4) of sections 3 of the Sales Tax Act, 1951, sales tax in respect of goods produced or manufactured in Pakistan can be levied and collected, where the Central Board of Revenue so directs, as if it were a duty of excise leviable under section 3 of the Central Excises and Salt Act, 1944 and in which case all the provisions of the said Act and the rules made thereunder are to apply, so far as may be and with necessary modifications, notwithstanding the provisions of the Sales Tax Act. Subsection (4) of section 3 deals with the element of "payment" of the sales tax in respect of the goods mentioned in clauses (a), (c), (d) and (f) of subsection (1) and clause (d) of subsection (6), on the occurrence of the first of the four events mentioned therein. However, the words of the proviso are so large that it not only carves out an exception to subsection (4), but also assumes the form of an independent enactment denuding the scope of the Sales Tax Act. It is a cardinal rule of interpretation that a proviso normally limits or restrains the general language of a provision and that it only embraces the field which is covered by the main provision. It is even said that the proviso should not deal with an entirely different topic or subject, or it is not supposed to be by way of an amendment or addition for dealing with a subject, which is foreign to the main provision. But then the legislative draftsmen are not bound by conventional practices or perhaps they may not be particularly careful in observing technical propriety. In such cases it is the duty of the court to ascertain the legislative intend and to give it effect, where resort to the conventional rules of construction may lead to an impasse. "The Construction of Statutes" by Earl T. Crawford, 1940 Edition, illustrates this in para. 297 as under:---
"Even though the primary purpose of the proviso is to limit or restrain the general language of a statute, the legislature, unfortunately, does not always use it with technical correctness. Consequently where its use creates an ambiguity, it is the duty of the court to ascertain the legislative intention, through resort to the usual rules of construction applicable to statues, generally, and give it effect even through the statute is thereby enlarged, or the proviso made to assume the force of an independent enactment, and although a proviso as such has no existence apart from the provisions which it is designed to limit or to qualify. It should also be construed in harmony with the rest of the statute, o, as the Court stated in Foster v. United States (47 fed: (2) 892):--
"It may be said in general that every part of the Act must be given effect where it is impossible so to do, and that a proviso should, in general be construed as a limitation or qualification upon the otherwise general application of the statute. Whether in a given case the proviso does in fact limit or qualify, and, if so, to what extent, depends primarily on the proviso itself."
The cardinal rules, therefore, not always applicable. If the meaning and purpose of the proviso is plain and deals -with other portions of the Act apart from that portion of the statute which directly precedes it and which is normally expected to be affected, the larger meaning should be given and any inference from its position should be disregarded."
8. After considering all the provisions referred supra, the decisions of the Hon'ble High Court and the decision of this Tribunal, we are persuaded to agree with the decisions of the Double Bench of the Tribunal dated 24-2-2006 in ITA No.4453/KB/2005 and other decisions of the like nature as before the assessee is taxed under Presumptive Tax Regime under section 80-D or 80-DD of the Income Tax Ordinance, 1979 his final tax liability is first calculated under the normal tax regime or the basis of total income as the return in this regard are being filed by the assessee in accordance with the law. The provisions of section 80-D or 80-DD are applicable only when the liability under the normal law regime are taxed out on this basis is less than the tax deducted under subsection (5) of section 50 of the Income Tax Ordinance, 1979. In some cases it may be more than the tax calculated under the normal tax regime including the surcharge under above referred Para-C and it is against the very scheme of the repealed Ordinance 1979 to levy surcharge from an assessee who is already paying tax at an amount higher than the tax calculated under normal law regime which as per sections 80-D/80-DD are the final tax liability including Income Tax and surcharge.
In this regard the decision of the Hon'ble High Court dated 10.8.2005 in the case of M/s. Dawood Corporation (Pvt.) Ltd. reported as 2006 PTD 148 (Kar. HC) has been placed before us. Although the matter is regarding the surcharge under section 10 and the provisions of Part-III of the First Schedule of the repealed Income Tax Ordinance, 1979 but as the issue is regarding surcharge therefore the relevant paras are reproduced hereunder:-
"20. We fully agree with the interpretation of the learned ITAT. We would like to add that a perusal of Part-III of the First Schedule to the Income Tax Ordinance, 1979, shows that the rate of surcharge has been prescribed under this provision, which is 10% of the income tax and super tax, if any payable for the year: The Tribunal has rightly held that the charging section is section 10 of the Income Tax Ordinance, 1979, and therefore, it will control and govern the provision contained in Part-III of the First Schedule to the Income Tax Ordinance; 1979. The Tribunal considered the provision contained in section 10, in sufficient length and has rightly held that under section 10(2) the legislature has expressly provided that the total income of any person shall, for the purposes of super tax and surcharge, be the total income as assessed for the purposes of income tax. A perusal of this provision further shows that the basis of charging surcharge is not the tax payable under section 85 but is total income as assessed for the purposes of income tax. When the provision contained in section 10(2) read-with Part-III of the First Schedule to the Income Tax Ordinance, 1979, nor ambiguity is left to the effect that the total income for the purpose of income tax and surcharge is assessed in the assessment order and the rate of surcharge would be 10% of the income tax and super tax as provided in Part-III of the First Schedule to the Income Tax Ordinance, 1979. The contents raised by Mr. Muhammad Farid and argued before lower forums 1 missed another important point that in section 85 of the Income Tax Ordinance, 1979, it is provided that where any tax is payable in consequence of any assessment or other order under this Ordinance, the Income Tax Officer shall serve upon the assessee or any other person liable to any such tax on behalf of the assessee, a notice of demand in the prescribed form specifying the sum payable and thereupon the sum so specified shall be paid. Thus, the language used in section 85(1) of the Income Tax Ordinance, 1979, indicates that the demand notice is to be issued after adjustment of the taxes paid in advance under sections 53 and 54 in respect of any amount still payable. The demand notice under section 85 is always in respect of the balance tax remaining payable and is never in respect of the tax payable for the year. In Part-III of the First Schedule to the Income Tax Ordinance, 1979, on which reliance has been placed by the learned counsel for the applicant/appellant the legislature has used the expression "surcharge shall be payable at the rate of 10% of the income tax and super tax, if any, payable for the year". The words "for the year" after the word `payable' make the entire difference, distinguishing the provisions contained in section 85 and the provision contained in Part-III of the First Schedule to the Income Tax Ordinance, 1979. It is salutary principle of law that, every word used by legislature is to be interpreted and acted upon. When the provisions contained in section 10, is read with Part-III of the First Schedule to the Income Tax Ordinance, 1979, it becomes abundantly clear that the basis for levy of surcharge is the total income as assessed for the purpose of income tax. Needless to say that the total income is for the entire assessment year, on the basis whereof the income tax and Super Tax is charged regardless of the payment of any advance tax. The surcharge is to be calculated on the amount of income tax and super tax payable on the income tax for the year and not the tax payable after adjustment of the advance taxes."
9. After considering the above referred decision of the Hon'ble High Court, we are of the view that our learned brother members who are also members of this Bench in the decision reported as 2006 PTD 1189 have rightly held that the assessee will be subjected to an additional charge in the shape of surcharge only when it is more than the income tax and super tax if any, payable for that year under the normal tax regime. Further held that where income tax is not levied under section 9 no surcharge can be levied under section 10, which is apparent, if both the sections are read in conjunction. Section 10 clearly states that on additional duty in the form of surcharge will be levied on the income tax Payable under section 9 at the rate as given in the First Schedule of the repealed Income Tax Ordinance.
It is clarified in the above referred-decision that/schedule has nexus with certain sections in the main enactment, which are called the inducing sections, which control and regulate the Schedule. The inducing sections of the First Schedule are the sections 9 and 10 of the late Ordinance, 1979.
Under section 10 surcharge is levied on the basis of assessed total income meaning thereby that where tax is not levied on the basis of assessed total income, no surcharge can be levied. It is no ones case that tax under section 80-D or 80-DD of the late Ordinance, 1979 is levied on the basis of the assessed total income and if tax is not levied on the basis of assessed total income, no surcharge can be levied. When the very scheme of the repealed Ordinance, 1979 does not support the levy of surcharge on tax recovered under section 80-D or 80-DD in Para-C of Part-III of 1st Schedule of the repealed Ordinance, 1979 as certain sections of the Presumptive Tax Regime have been mentioned in above referred Para-C. Additionally we agree with the contention of the counsel for the assessee that certain sections of the Presumptive Tax Regime have been mentioned in Para-C only to clarify that wherein a person is assessed to tax under normal law regime and his income also includes a portion of income covered under the presumptive tax regime the late will be excluded. Sections 80-D and 80-DD are separate and independent provisions of law having no direct nexus with the provision of the First Schedule and surcharge.
10. Accordingly we hold that provisions of Part-III of the First Schedule of the repealed Income Tax Ordinance, 1979 regarding rates of surcharge are not relevant to sections 80-D and 80-DD of the late Ordinance, 1979.
Consequently decision of the Division Bench of the Tribunal dated 24-2-2006 in I.T.A. No.4453/LB of 2005 reported as 2006 PTD 1189 and the similar view taken in this regard by the other benches of the Tribunal are approved and the decision of the Tribunal dated .17-5-2002 in I.T.A. No.23/KB of 2002 reported as 2002 PTD 2662 = 86 Tax 305 and similar view taken in this regard by the other benches of the Tribunal overruled.
11. As this Full Bench was constituted to consider a limited question pertaining to scope of levy of surcharge on minimum tax under sections 80-D and 80-DD of the repealed Income Tax Ordinance, 1979 therefore, the above titled appeals may be placed before the Division Bench of this Tribunal for deciding other issues if any raised in the relevant appeals.
12. All the above titled appeals are disposed of accordingly.
C.M.A./16/Tax(Trib.)Order accordingly.