VS, 2009 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 961 (2008)

Income Tax Ordinance (XXXI of 1979)---

----Second Sched., Cl. (126-D) & S.80-D---Protection of Economic Reforms Act, (XII of 1992), Preamble---Exemption---Assessee claimed exemption under Cl. (126-D) of the Second Schedule to the Income Tax Ordinance, 1979 and consequent to it, exemption from the provision of minimum tax under S.80-D of the Income Tax Ordinance, 1979---Validity---Provisions of S.80-D of the Income Tax Ordinance, 1979 will not be attracted as the exemption under Cl. (126-D) of the Second Schedule to the Income Tax Ordinance, 1979 was covered in the Economic Reforms Act, 1992---Preamble to Second Schedule to the Income Tax Ordinance, 1979 had clear cut overriding effect on the provisions of the Income Tax Ordinance, 1979 and had made the exemption available particularly the insertion of Cl. (126-D) of the Second Schedule to the Income Tax Ordinance, 1979 was later to insertion of S.801) of the Income Tax Ordinance 1979 in the main statute---Provisions of S.80D of the income Tax Ordinance, 1979 will not become applicable as the assessee was enjoying exemption under Cl. (126-D) of the Second Schedule to the Income Tax Ordinance, 1979.

2001 PTD 1829; 2006 PTD (Trib.) 1968 and Ellahi Cotton Mills's case 1997 PTD 1555 rel.

2001 PTD 1203; 2007 PTD 1999 and 2001 PTD (Trib.) 865 ref.

Shahbaz Butt, A.R. for Appellant.

Masood Akhtar Shaheedi, D.R. (ITU) for Respondent.

ORDER

EHASAN-UR-REHMAN, (JUDICIAL MEMBER).---At the instance of the appellant company, the titled appeals are directed to impugn the following first appellate orders recorded by the learned CIT/WT(A), Multan:--

(i) Order dated 10-11-2003 in I.T.A. No.391 pertaining to the assessment year 1999-2000;

(ii) Order dated 12-5-2004 in I.T.A. No.464 pertaining to the assessment year 2000-01; and

(iii) Combined Order Nos.281 and 282 dated 21-6-2005 pertaining to the assessment years 2001-02 and 2002-03.

2. Commonly, it is the claim for exemption under clause 126-D of the 2nd Schedule to the repealed Income Tax Ordinance, 1979 and consequent to it, exemption from the provision of minimum tax under section 80-D of the repealed Ordinance. It is pertinent to mention here that clause 126(D) was inserted vide SRO No. 810(1)/1995 dated 7-8-1995 while section 80D was inserted by Finance Act, 1991 with effect from the assessment year 1991-92.

3. The learned A.R. has referred to the following case law:

(i) 2001 PTD 1829, (ii) 2006 PTD (Trib.) 1968, (iii) 2001 PTD 1203, (iv) 2007 PTD 1999 and (v) 2001 PTD (Trib.) 865.

4. Heard both sides and perused relevant available record.

5. The appellate orders as well as judgments with citations as quoted have also been minutely gone through by us. Earlier, after examining the case law cited before us in similar circumstances, this Tribunal after proper appraisal of the situation has already recorded the following findings in case law reported as (2006) PTD (Trib.) 1968:--

"13. We have heard the argument vis-a-vis the counter-arguments. We have perused the available record. We had the benefit of going through minutely the write up submitted by both and also the case-law referred before us. The first question as referred by the learned L.A. that as to whether the Protection of Economic Reforms Act, 1992 shall override the provisions of section 6 i.e. "The fiscal incentives for investment provided by the Government through the statutory orders listed in the Schedule or otherwise notified shall continue in force for the term specified therein and shall not be altered to the disadvantage of the investors" is hardly a question of law which requires to be dilated upon because of its settled nature as per judgment referred by the learned L.A. in the case of Elahi Cotton Mills. Now precisely what we are to took into is the issue with particular reference to the facts of the instant case that as to whether exemption under clause (102B) Part-I of the Second Schedule inserted by S.R.O. No. 337(I)/93, dated 25-4-1993 allow the concession of exemption from section 80D or not. In this respect the learned AR has mainly relied on the preamble of the Economic Reforms Act by laying stress on the later part of the language of this Preamble which for quick reference is reproduced as under:-

Preamble

And whereas a number of economic reforms have been introduced and are in the process of being introduced to achieve the aforesaid objectives."

14. As expressed earlier that later part refers to such Economic Reforms which are in the process of being introduced to achieve the objectives of the Economic Reforms Act and secondly that such legal protection in the form of Economic Reforms Act is meant to create confidence in the establishment and continuation of the liberal economic environment created thereby. In this respect the learned AR has referred to the case of Fecto Belarus cited ibid wherein on question of imposition of customs duty and sales tax the Hon'ble Supreme Court has brought this notification though not listed in the schedule to the Economic Reforms Act as steps covered under the Economic Reforms Act and allowed the necessary relief. In the instant case, before us the notification by which the clause (102B) ibid, has been introduced has not been listed in the schedule to section 6 of the Act, 1992. So the learned AR by drawing a parallel has pleaded for a concession in the light of principles enunciated by the Hon'ble Supreme Court in reference to the preamble of the Act, 1992. The Hon'ble Supreme Court has already held that Economic Reforms Act, 1992 overrides the other provisions as per Customs, Sales Tax and Income Tax Ordinance. Now the leviability of tax under section 80D is taken up as per plain language of Ordnance and its Schedule. The clause (102B) ibid, has been introduced vide S.R.O. No. 337(1)793, dated 25-4-1993 which is inserted after the promulgation of the Economic Reforms Act and importantly after the insertion of section 80-D also. The findings as recorded in the case of Elahi Cotton Mills were in respect of (presently omitted) clauses (118C), (118D) and (118E) by Finance Act, 1995 earlier inserted by a Notification, dated December 13, 1990, which were brought within the scope of Economic Reforms Act, 1992. In contrast the clause (102B) ibid, has been inserted after the omitting of these clauses (118C) to (118E), it was insertion of section 80D subsequent to insertion of clauses (118C) and (118D) that a situation arose on the implementation of non obstente language of section 80D by that holding the overriding effect of Economic Reforms Act, 1992, that exemption from leviability of section 80D was allowed. But before us the matter is quite distinct because as per the plain opening language of Part-I of the Second Schedule the assessee company undisputedly was qualifying for exemption under clause (102B), so the controversy put before us could also be resolved in favour of assessee even as per the historical order of insertion of clause (102B) and language of section 80D and opening paras of Part I of the Schedule. The case law as cited on the point of leave to appeal has entirety different background where a claim for exemption was a result of clause (122C) of Part-I of the Second Schedule. As this clause was introduced in 1987 so it is to be resolved as to whether it is covered under Economic Reforms Act or not. The arguments advanced by the learned L.A. also support to the cause of assessee also.

The case as cited by the learned AR though in respect of customs duty and sales tax has its applicability because both such laws are the part of fiscal laws like income tax, so the principles as laid down while granting exemption would be available in the income tax proceedings. The learned L.A.'s contention is incorrect that it is by "Doctrine of Estoppel" that relief to the appellant has been allowed by Hon'ble Supreme Court of Pakistan in the ease of Facto Balarus cited by the learned A.R. as even a cursory look at concluding para of this judgment would prove it that notification entitling concessions from Duty, Sales tax has specifically been made part of Economic Reforms Act. To conclude this order in an unequivocal manner we hereby declare by following the expressed legal provisions as explained supra regarding the dates of introduction of section 80D, the opening paras of Part-I of the Second Schedule and the principles upheld by the Hon'ble Supreme Court in the reported case as Eluhi Cotton Mills as well as Fecto Belarus that the section 80D is not leviable in the instant case, thus the assessee's appeals succeed."

6. The principles as laid down in our earlier order reproduced supra squarely apply in the instant case before us. Therefore, by respectfully following the Ellahi Cotton Mills's case (1997 PTD 1555) as well as the earlier orders on an exactly identical issue, we do not have any reluctance in holding that the provisions of section 80D will not be attracted as the exemption under clause (126-D) is covered in the Economic Reforms Act, 1992. Secondly, we hold that the principles as enunciated in the judgment cited as 2001 PTD 1829 are also applicable here, though it was in reference to the Customs Duty but the principles are having application in the instant case also. Thirdly, that Preamble to the 2nd Schedule to the repealed Ordinance has clear-cut overriding effect on the provisions of the Income Tax Ordinance thereby has made the exemption available particularly the insertion of clause (126-D) is later to insertion of section 80D in the main statute. So, we hold that provisions of section 80D will not become applicable in the instant case enjoying exemption under clause (126-D) of the 2nd Schedule to the repealed Ordinance.

7. All the appeals succeed in the above terms.

C.M.A./33/Tax(Trib.)Appeals succeeded.