COMMISSIONER OF INCOME TAX/WEALTH TAX, COMPANIES ZONE, ISLAMABAD VS PAKISTAN MINERAL DEVELOPMENT CORPORATION, ISLAMABAD
2009 P T D 1661
[Islamabad High Court]
Before Muhammad Munir Peracha and Muhammad Ramzan Chaudhry, JJ
COMMISSIONER OF INCOME TAX/WEALTH TAX, COMPANIES ZONE, ISLAMABAD
Versus
Messrs PAKISTAN MINERAL DEVELOPMENT CORPORATION, ISLAMABAD
Tax Reference No.13 of 2003, decided on 29/06/2009.
Income Tax Ordinance (XXXI of 1979)---
----Ss.62, 26(c) & 80-C---Assessment of assessee who was engaged in the business of mining, managing and controlling 13 different projects of mineral deposits-Scope-Section 26, Income Tax Ordinance, 1979 deals with the methodology of computing the profits and gains in respect of extraction of mineral deposits and thus makes 'a special provision in respect of the business of assessee---If there are general provisions in a statute and also special provisions, covering certain. situations, special provisions would prevail over the general provisions---Section 80-C, Income Tax Ordinance, 1979 being a general provision and S.26(c) being a special provision regarding the business of exploration and extraction of mineral deposits, Income Tax Appellate Tribunal was justified in holding that assessee's income was assessable under S.62 read with S.26(c) of the Income Tax Ordinance, 1979 and not under S.80-C of the said Ordinance.
Shahid Iqbal and Hafiz Munawar Iqbal for Petitioner.
Date of hearing: 12th June, 2009.
JUDGMENT
MUHAMMAD MUNIR PERACHA, J.---The respondent/assessee is a private limited company, engaged in the business of mining, managing and controlling 13 different projects of mineral deposits, such as coal, china clay and silica sand. The assessment order passed by the Deputy Commissioner of Income Tax in respect of assessment years 1997-98 and 1998-99 was challenged by the assessee through two separate appeals filed before the Commissioner of Income Tax (Appeals). The contention of assessee before the Commissioner of Income Tax (Appeals) was that the Deputy Commissioner Income Tax misdirected himself by assessing the gross sales under section 80-C of the Income Tax Ordinance, 1979 and that the business of the assessee being of a nature which is specifically covered under the provisions of section 26(c) of the Ordinance, the income was to be computed in accordance with 5th schedule to the Ordinance. This contention of the assessee was accepted by the Commissioner (Appeals) vide order, dated 20-5-2000. Deputy Commissioner of Income Tax challenged the said order before the Income Tax Appellate Tribunal through two appeals. The Tribunal, however, concurred through order, dated 7-1-2002, with the opinion of the Commissioner (Appeals). The Commissioner of Income Tax filed applications for referring the question of law proposed by him as under; to the High Court.
"Whether on the facts and in the circumstances of the case the learned ITAT was justified in holding that the assessee's income is assessable under section 62 read with section 26(c) and not under section 80C of the Income Tax Ordinance, 1979?"
However, the Tribunal rejected the applications. Through the present Tax Reference, Commissioner of Income Tax has approached this Court.
2. We have heard Hafiz Munawar Iqbal Advocate and Mr. Shahid Iqbal Advocate, in support of the Reference.
3. Section 26 of the Income Tax Ordinance, 1979 provides the methodology of computing the profits and gains and tax payable thereon regarding business of insurance and production of oil and natural gas and exploration and extraction of other mineral deposits. Clause "c" of section 26 is relevant in respect of exploration and extraction of mineral deposits, other than petroleum and natural gas and is reproduced:--
"the profits and gains of any business which consists of, or includes, the exploration and extraction of such mineral deposits of a wasting nature (not being petroleum and natural gas) as may be specified in this behalf by the Federal Government carried on by as assessee in Pakistan shall be computed in accordance with the rules contained in Part II of the Fifth Schedule."
However, section 50(4)(a) provides:
"(a) any person responsible for making any payment in full or in part (including a payment by way of an advance) to any person (being resident,) (hereinafter referred to respectively as "payer" and "recipient") on account of the supply of goods or for service rendered to, or the execution of a contract with the Government, or a local authority, or (a company), (or a registered firm,) or any foreign consultant or consortium shall deduct advance tax, at the time of making such payment, at the rate specified in the first schedule, and credit for the tax so deducted in any financial year shall, subject to the provisions of section 53, be given in computing the tax payable by the recipient for the assessment year commencing on the first day of July next following the said financial year, or in the case of an assessee to whom section 72 or section 81 applies, the assessment year, if any, in which the "said debt" as referred to therein, falls whichever is the later."
4. Through Finance Act of 1991, section 80-C was inserted in the Ordinance, the effect whereof was that the tax deducted by the payer on account of supply of goods in terms of section 50(4)(a) discharge the final liability of the recipient. Learned counsel for the department submit that the provisions of section 80-C override the provisions of section 26(c) and the provisions of section 80C are to take effect notwithstanding the provisions of section 26(c). They submit that section 80C was inserted in the Ordinance through an amendment in the year 1991. The Legislature was aware of the provisions of section 26(c) and the phrase "notwithstanding anything contained in this Ordinance or any other law for the time being in force" was employed making the intention of the Legislature clear that section 80-C would override the provisions of section 26(c) of the Ordinance.
5. We are unable to agree with the contention of the learned counsel for the petitioner. The title of the section 26 is, "Special Provisions regarding business of insurance and production of oil and natural gas and exploration and extraction of other mineral deposits". This section also starts with the phrase "Notwithstanding anything contained in this Ordinance". Section 26 deals with the methodology of computing the profits and gains in respect of three businesses namely the business of insurance, production of oil and natural gas and exploration and extraction of mineral .deposits other than oil and natural gas. This section makes special provisions in respect of the above mentioned three businesses. It is accepted principle of law that if there are general provisions in a Statute and also special provisions, covering certain situations, special provisions would prevail over the general provisions. Section 80-C is general in nature whereas, section 26(c) makes special provisions regarding the business of exploration and extraction of mineral deposits other than oil and natural gas. We are therefore, of the opinion that the Income Tax Tribunal was justified in holding that the assessee's income is assessable under section 62 read with section 26(c) and not under section 80-C of the Income Tax Ordinance, 1979. The question proposed by the Commissioner of Income Tax reproduced in Paragraph 1 of the judgment is answered in the positive.
M.B.A./C-17/IslReference answered.