COMMISSIONER OF INCOME TAX VS J.D. SUGAR MILLS LTD., 2009 PTD-LAHORE-HIGH-COURT-LAHORE 481 (2008)

2009 P T D 481

[Lahore High Court]

Before Nasim Sikandar and Khawaja Farooq Saeed, JJ

COMMISSIONER OF INCOME TAX

Versus

J.D. SUGAR MILLS LTD.

Income Tax Appeals Nos. 643-644 of 2000 and P.T.R No.20 of 2001, decided on 10/04/2008.

(a) Income Tax Ordinance (XXXI of 1979)---

----Ss.50(4) & 80-C---Loan obtained from Modaraba Company through sale and lease back of assessee's machinery on paper without transfer of possession to company---Deduction of tax by company under S.50(4) of Income Tax Ordinance, 1979 while paying loan amount to assessee---Treatment of such tax as full and final discharge under S.80-C of Income Tax Ordinance, 1979 by Assessing Officer---Validity---Section 50(4) of Income Tax Ordinance, 1979 would not apply to such case for not being a contract with government or case of supply of service---Provision of S.80-C of the Ordinance, in case of recipient would apply only when he was liable to deduction of tax under S.50(4) thereof, but otherwise not---Neither such machinery fastened to earth could be called as goods nor there was transfer of possession by assessee to Modaraba Company---Such sale and lease back arrangement being a financial arrangement to secure loan transaction could not be considered as a supply---Relationship of Bank with borrower in similar transaction was on basis of providing security in terms of pledging of property, thus, there was neither a relationship of buyer and seller nor of demand and supply---if a person was not liable to charge of tax for an activity in normal course, then deduction of withholding tax and considering same as full and final discharge under presumptive tax regime would be nothing more than showing muscles by revenue authorities---Provision of S.50(4)(b)(i) as amended by Finance Ordinance, 1998 had redressed grievance of persons obtaining loan and cured inconvenience being caused to them by authorities by deduction of tax and treating same as tax payable on revenue transaction---Such amendment being remedial and curative would apply to all pending cases---Principles.

Black's Law Dictionary p.1439; Words and Phrases Vol. III of 1996; 2002 PTD (Trib.) 2210 and Kawther Grain (Pvt.) Ltd. v. Deputy Commissioner of Income Tax/Wealth Tax, Circle-I, Companies Zone, Gujranwala 1999 PTD 4028 ref.

(b) Interpretation of statutes---

----Particular connotation not defined in original law---Adopting ordinary dictionary meanings would always be safe.

Handbook of Legal Terms and Phrases Judicially Defined By M. Ilyas Khan rel.

(c) Interpretation of statutes---

----Remedial and curative legislation, unless made prospective in clear and unambiguous terms, would always be retrospective and would apply to pending cases---"Pending cases" defined.

Remedial and curative legislation, unless the law makes it prospective in clear and unambiguous terms, is always retrospective.

The only exception to the principle that curative and remedial legislature is retrospective, is that the same applies only on the pending cases. "Pending" would mean and include at any stage of the proceedings starting from Assessing Officer to the Supreme Court. This obviously means that it would not apply on the cases wherein the concerned persons have not challenged the action of the Revenue authorities before any higher forum and the same is not pending adjudication.

Commissioner of Income Tax v. Shahnawaz Ltd. and others 1993 SCMR 73; Messrs Army Welfare Sugar Mills Ltd. v. Federation 1992 SCMR 1652; Anound Power Generation v. Federation PTCL 2001 CL 277 SC and Government of Pakistan v. Village Devt. Organization 2005 Tax Review 75 SC rel.

(d) Income Tax---

----"Pending cases"---Definition.

Khadim Hussain Zahid for Appellant.

Siraj-ud-Din Khalid, Shahbaz Butt, Ijaz Ahmad Awan and M.M. Akram for Respondent.

Date of hearing: 14th February, 2008.

JUDGMENT

KHAWAJA FAROOQ SAEED, J.---This judgment will dispose of PTR Nos. 20/01, 384/04, 15/02, 394/04, 397/04, 222/04, 112/04, 283/04, 395/03, 188/03, 170/03, 199/02, 189 to 191/02, 193/02, 168/02, ITA Nos. 213 and 214/2000, 433/99, 435/99, 253/99, 434/99, 418/99, 489/2000, 267/2000, 724/2000, 725/2000, 586 to 588/2000, 385 and 386/2000, 643 and 644/2000, 699 and 100/2000 as the common question of law is involved in these cases.

2. The brief facts leading to the question of law in this case are that the petitioners imported or purchased machinery locally and installed in their premises. For the purpose of running the industry or business, they required finances. Modaraba finance companies, therefore, were contacted and finance was obtained through sale and lease back arrangement. During all this period, the machinery which was basically either imported or purchased by the respondent companies remained in their possession but in paper they were transferred and leased back to the petitioners. Modaraba `company while making payment to the company deducted tax under section 50(4). The said tax was considered as full and final discharge under the provision of section 80C of the Income Tax Ordinance, 1979 by the Assessing Officer. The petitioner challenged the treatment which was not accepted by the Assessing Officer. However, when the matter came for consideration before the Income Tax Appellate Tribunal they succeeded. The findings of the Income Tax Appellate Tribunal on the issue is based upon the factual as well as legal discussion.

3. Firstly the Tribunal found the action of sale by the petitioner company to the Modaraba company is not covered within the definition of supply for the simple reason that it is not a perpetual and permanent arrangement and a one time transaction. The arrangement in the opinion of the Income Tax Appellate Tribunal was more in the shape of an arrangement for obtaining finance than actual transfer of the assessments. Furthermore, that the petitioner was neither in the business of purchase and sale of assets nor the custody of the assets was ever, transferred to Modaraba company physically. The arrangement was not even a sale, hence there was no need to call it a supply either. This has been held for the reasons that the arrangement in its essence is a substitute of a similar other method of getting finances, wherein, the borrower provides security by pledging its assets against such loan arrangement. The transaction, therefore, is nothing more than production of a security in terms of pledge of the machinery to the Modaraba company. The department, however, against the order has come before us and its arguments remained that section 80C has been introduced to consider all the transactions as a part of sale and supply if tax has been deducted on such sale. Since in this case deduction of tax under section 50(4) is not disputed, there is no reason for the Tribunal to hold that it is not a case of supply.

4. From the department's side Mr. Khadim Ali Zahid, Advocate, says that the arrangement is undoubtedly the same as' noticed by the Tribunal and there is no factual controversy with regard thereto. However, since section 80C applies on all the cases where deduction has been made under section 50(4) of the Income Tax Ordinance, 1979 (repealed) order should not have been made against the department.

5. From the respondents side Mr. Shahbaz Butt and Mr. Siraj Khalid were the main counsel. Both have referred to long line of judgments by the Tribunal as well as two judgments by the High Court. Their arguments remained that section 80C is not applicable on all the deductions under section 50(4). The with-holding agents deduct tax on behalf of the department fearing that they shall be penalized by the revenue authorities on their default. Under this pressure they collect taxes even on those transactions which do not fall within the language provided under the provision of said section 50(4). However, since section 80C of the Income Tax Ordinance, 1979 (repealed) is clear and unambiguous in its application, the Tribunal has clearly and correctly held that a purchase and lease back arrangement is not covered within the section 80C. Section 80C(1)(a) very clearly identify the payment on which the application of the said section is possible. The law, therefore, being unambiguous there is no question of interference by this Hon'ble Court.

6. Mr. Shahbaz Butt, Advocate, says that the amendment in section 50(4) through which an explanation has been added to include within the definition of the supply of goods, cash as well as credit is prospective because it creates a charge. On the other hand amendment in sub-clause (i) in proviso of section 4, subsection (b) which includes the buy and lease back from the deduction of the tax in the transaction of lease and buy back is retrospective because it has come as a benefit. Reference to various judgments have been given by both the sides which we shall discuss in later part.

7. So far as the main issue is concerned, not much has been discussed at the forum of Hon'ble High Court. There is however, one judgment which has been produced by Mr. Shahbaz Butt, Advocate. This judgment has discussed the issue to a large extent. However, before we take any benefit from the discussion therein it will be worth while if the relevant provision is reproduced. The same speak as follows:--

"Section 50(4). Notwithstanding anything contained in this Ordinance, any person responsible for making any payment in full or in part (including a payment by way of 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 contractor or consultant or consortium shall, 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 years, or in the case of an assessee to whom section 72 or section 81 applies, the assessment year, if any, in which "said date" is referred to therein, falls whichever is the later."

8. As is clear from, the language of the above provision of law the withholding agent has been made responsible for collection of taxes while making a payment to any person on account of supply of goods, for service rendered, or the execution of a contract with the Government/local authorities etc. as advance or full tax at the time of making such payment. The important and relevant language is deduction on account of `supply of goods' or `service rendered' or `execution of a contract' with Government etc. So far as the case before us is concerned, it is obviously not a contract with the Government or a case of supply of service, hence this part of the provision does not attract at all. The doubt in the mind of the department is that the act of sale and lease back is covered within the definition of supply. Now, we move on to provision which makes it a final discharge i.e. section 80C. It speaks as follows:--

"80C. Tax on income of certain contractors and importers...

(1) Notwithstanding anything contained in this Ordinance or any other law for the time being in force, where any amount referred to in subsection (2) is received by or accrues or arises or is deemed to accrue or arise to any person the whole of such amount, shall be deemed to be income of the said person and tax thereon shall be charged at the rate specified in the First Schedule.

(2) The amount referred to in subsection (1) shall be the following namely:

(a) Where the person is a resident:

(i) the amount representing payments on which tax is deductible under subsection (4) of section 50, other than payment on account of services rendered."

9. As is apparent it is a non-obstante clause, thus supersedes the entire Income Tax Ordinance, 1979. The sentence that calls for interpretation is provided in section 80C(2)(a)(i). The language in the above subsection is `the amount representing payment on which tax is deductable' (emphasis added). The obvious impact of the use of above term is that the provisions of section 80C in the case of recipient shall only apply where he was liable to the deduction of the tax under section 50(4). It obviously concludes that if a person was not liable to deduction under section 50(4) and some body under some misunderstanding of law or for the reasons of being afraid from the muscles of the tax department, charges or deducts a tax which actually was not deductible, he cannot be brought to the charge under section 80C of the Ordinance, 1979. The accumulated reading of both the provisions, therefore, gives the impression that if a person has supplied something and the payer of the amount while making the payment deducts tax on the said supply, the deduction will be full and final discharge under section 80C(2)(a)(i).

10. It is in this context that we will discuss the issue in the subsequent lines. For all practical purpose it is the definition of `supply of goods' which would decide or clinch the issue. The term supply has not been defined in Income Tax Ordinance at all. However, it has already been considered as a part of sale but every sale is not a supply. Supply presupposes the existence of a regular arrangement based upon some permanence involving order identification and determination of the items, its quality and the considerations. It can obviously be cash as well as a credit and this did not require any further explanation as has been added in section 50(4) above. The fear of respondents and the claim of the department that the explanation after proviso in subsection (a) of section 50(4) which defines supply of goods has not brought anything new, is baseless. The explanation in fact has confused the situation as it says that the purchase of goods by the payer whether under a contract or not, on credit or in cash shall be a part of the supply. However, the same does not add anything new except that it can be either under a contract or not under a contract. The draftsman is totally ignorant that once a transaction is done the existence of a contract is obvious. However, the term supply even after the above explanation would not cover a window purchase or casual sale purchase transactions like of daily goods in open market.

11. The other connotation that requires interpretation is `goods'. The respondents appear to be correct in saying that the ingredients of supply of goods does not form a part in the deal under discussion. Neither a machinery fastened to earth can be called as goods nor there is any transfer of the same by the impugned company to be Modaraba company.

12. The use of term `goods' in fact further restricts the application of .the section. Defining the term `goods' Mr. Siraj Khalid, Advocate, referred Sale of Goods Act, 1930, which describes it as a moveable property, other than the actionable claims and money etc. That term `goods' in the said Act speaks as follows:--

"goods" means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached to or forming part, of the land which are agreed to be served before sale or under the contract of sale.

Standing timber is `movable property' if under the contract of sale they (the trees) are to be served. But the severance must take place when the timber still vests in the contracting party. Hence trees which are to be served before sale or under the contract of sale are "goods" for the purpose of the Sale of Goods Act."

12A. Mr. Siraj Khalid, Advocate, further adds that the judgments in field at the moment are mostly by the Income Tax Appellate Tribunal. In the said judgments, the discussion is on the basis of supply and sale. The discussion is valid and correct in all respects to which he fully subscribes. However, there is another factor which would require the consideration of this Court. The provision of section 50(4) speaks of `supply of goods".

13. It was pointed out to the learned counsel that it is never 'safe to adopt the definition from some other legislation to which he conceded. It is for the obvious reason that in a particular legislation the definitions are provided keeping in view the peculiar requirements of the said legislation. It is now a settled principle of interpretation that where the original law does not define a particular connotations, adopting the ordinary dictionary meaning is always safe. Learned counsel has further placed before the Court various definitions of sale, supply and goods from, the Handbook of Legal, Terms and Phrases Judicially Defined by M. Ilyas Khan, Advocate, J.C.J.I. (U.S.A.) and some others. In this opinion those which are relevant to the issue are:--

"The word "sale" un-disputedly in general implies an exchange for money and is correlative to purchase. It signifies a substitution of the purchaser for the seller in that the title, right and interest vesting in the thing sold come to vest absolutely and for all intents and purposes in the purchaser--Purchaser in then the master of thing sold in his own right without any interference from the seller. K.R 1984 C.C. 415.

"According to Muhammad Law, a sale is an exchange of property of property with the mutual consent of the) parties. The exchange consists in payment of price by the vendee to the vendor and delivery of possession by the vendor to the vendee" PLD 1964 Dac. 640, DLR 1964 Dac. 45.

The word `sale' means transfer of ownership rights against, payment of price. It is held that where a document contained clear recital that sale price was paid for land and possession thereof delivered, such document would have all the essentials of valid complete sale viz. transfer of ownership rights, payment of sale price and transfer possession. Rights acquired through such oral sale as evidence by document were thus saved. Fateh Muhammad v. Suba Khan (1988 CLC 1520).

The word "sale" has been used here in the generic seems to include all steps, including an agreement to sell, necessary for completing a sale A, Sattar v. Mst. Sardar Begum,(1992 SCMR 417).

"In a very broad sense the term `sale' signifies the transfer of property from one person to another for a consideration of value without reference to particular mode in which the consideration is payable." International Body Builder v. Sales Tax Officer (1979 PTD 488).

14. He claims that the above definition of sale taken in view the relevant phrase `sale of goods' would obviously means existence of relationship of a buyer and seller in respect of the goods in transaction. Further commending that in the relationship under discussion there is neither buyer nor seller nor the items which are transacted in this financial arrangement are goods. The same being fastened to earth have taken the shape of immovable property which by no means can be called as goods. Defining supply he made reference to the Black's Law Dictionary compiled by the Publishers Staff Editorial. Referring its page 1439 he said that the same conveys the relationship of demand and supply which obviously is different from the relationship of buyer and seller. He said that in supply, the person demanding asks for a specific item or items for which consideration is settled on providing specifications etc. The definition of the term in the referred dictionary is as follows:--

Supply.---The word `supply' is defined in the Standard Dictionary as "that which is or can be supplied; available aggregate of things needed or demanded; an amount sufficient for a given use or purpose. In the Imperial Dictionary, "that which is supplied, sufficiency of things for use or want; a quality of something furnished or on hand. As used in a contract to purchase all supplies of a certain description for a certain period from a certain firm, the word means all of the specified goods necessary for the purchaser's business during such period."

15. Further referring Words and Phrases Vol.III of 1996, published by Kashmir Law Times, 19 Temple Road, Lahore, as well as The law Lexicon with Legal Maxims and Words and Phrases, he said that his point of view becomes very clear. The same speak as follows:--

"Supply.---To furnish with what is wanted available aggregate of things needed or demanded, anything yielded or afforded to meet a want and the act of furnishing with what is wanted. Clayton v. Bridgeport Mach Co. Tex Civ App. 38. S. W 2d 787, 789.

The word `supply' in the definition of the `dealer' in section 2(c) of the Bihar Sales Tax Act cannot be interpreted in its liberal absolute sense, but must be given a limited and qualified sense. A person who merely supplied goods in Bihar would not be a `dealer' within the meaning of the Act if the transfer of title took place outside the State. (AIR 1954 Pat 14 (D.B.)"

16. Similarly the term goods in the Dictionary has been defined as follows:--

"Goods" as the Act does not define goods the Legislature must be taken to have use that word in its ordinary dictionary meaning. The dictionary meaning is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market" [Cf Central Excises and Salt Act, 1944. Sections 3 and 2(f) J. South Bihar Sugar Mills (Limited) and another v. Union of India and another (AIR 1968 SC 922)".

17. The department's action of considering the purchase and lease back arrangement as a supply in our view is a misconception as it is only a financial arrangement created to secure the transaction on the basis of earlier experiences of huge bad debts of the banks on the country. The relationship in case of banks for such and similar transactions was on the basis of providing security in terms of pledging of property. This is neither a relationship of buyer and seller nor of demand and supply:---

"The financial leasing industry the world over today considers the acquisition of goods by the lesser and retention of title by him as the owner, only a measure to secure his interest as a financier. The ownership is only a camouflage and there is no real intention on the part of the leasing company to retain it or deal in the same as goods. The financial leasing transactions in reality are loan transactions, which were held to be not even chargeable to sales tax in some cases. This issue came for decision before the Supreme Court of India in the case of "Sundaram Finance Ltd. v. State of Kerala and another" (17 STC 489 (SC). In a majority ruling held against the levy of sales tax on a hire purchase transactions on the ground that the agreement in substance was not of hire purchase, it was held that the accounting bodies all over the world recognize this true essence of a finance leasing as lending on security. The Court further remarked that a prudent law must make distinction between the sale type lease, a financial lease and a hiring transaction."

(The above para has been borrowed by us from the most referred judgment of the Income Tax Appellate Tribunal on the subject reported a "2002 PTD (Trib.) 2210")

18. Learned Legal advisors comment that since the amendment of 1998 has excluded the said arrangement from the purview of section 50(4) from 1998 the obvious conclusion should be that it was a part of the charge earlier also is based upon ignorance of the actual nature of the transaction. The Income Tax Appellate Tribunal has decided the case by holding that the arrangement of purchase and lease back by Modaraba company is neither a sale nor a supply. For this purpose their reliance is on the discussion that in the sale and supply transactions the necessary ingredient is transfer of possession which is non-existence in this case. We feel ourselves convinced from the arguments and discussion given in the impugned judgments. However, the argument which never came for discussion before the Tribunal also are of equal importance.

19. After going through the judgment of the Hon'ble Mr. Justice Nasim Sikandar (one of us) in the case of "Kawther Grain (Pvt.) Ltd. v. Deputy Commissioner of Income Tax/Wealth Tax Circle-I, Companies Zone, Gujranwala" 1999 PTD 4028 it appears that the question whether machinery installed in a factory is `goods' has already been answered. The judgment of this Court has held that machinery fastened to earth is not covered within the definition of goods. It has been held in unequivocal terms that once a machinery is installed in a factory it becomes its integral part and becomes an immoveable property in terms of land, building and machinery.

20. In all the afore-mentioned definitions referred by Mr. Siraj Khalid, Advocate and the discussion in this judgment (supra) it has been concluded that `goods' means moveable items, though, it includes a long list of things. However, none of the definition gives the, impression that an immovable property like machinery fastened to earth can be called as goods. The afore-mentioned judgment has after a detailed discussion held such machinery to be as not a part of `goods' in the following manner:--

"For what has been stated above, it is concluded that the provisions of section 50(4) of the Ordinance were not attracted to the transaction evidencing the sale of land, building and the fixed plant and machinery sold as part of the factory. There was neither a `supply' nor its subject-matter was `goods'. The transaction of sale otherwise being not liable to any incidence of income tax under any of the heads given in section 15 of the Ordinance the question of deduction of advance tax did not arise at all. Accordingly the order of the Assessing Officer, dated 19-6-1999 holding the petitioner as an assessee in default under section 52 was totally beyond jurisdiction. The creation of demand under section 86 was also illegal. The assessment order so framed and the additional tax imposed for the aforesaid reason is declared to be void ab initio and ineffective against the rights of the petitioner."

21. Having come to the conclusion that machinery fastened to earth is not part of goods and the provisions of section 50(4) applies only on `supply of goods' one can conclude easily that the department's point of view is basically a misconception. However, another respect of the matter also needs mentioning for further dilation.

22. The concept of deduction of withholding tax is in furtherance of the application of the basic charge created under the charging provisions of Income Tax Law. If a person is not liable to charge of tax at all for an activity in the normal course, deducting withholding tax from the same and considering the same as full and final discharge under the presumptive tax regime is nothing more than showing the muscles by the revenue, authorities. What is the nature of the transaction in these cases? A person either purchases from local market or imports machinery for running some industry and then contacts some financial institution for getting more finances. On providing finances the said institution in return on paper purchases the machinery and through either the same or another contract leases it back to the company. The machinery at no stage changes hands and on fulfilment of the contract of lease it returns to its original owner even on papers. Can any' body say that this is trading transaction in which the parties especially the money receiving persons are doing an adventure in the nature of trade? Is there any concept of generation of income? Whether the arrangement in any manner, can be brought to the charging provision of income tax? The answer would be an empathetic, No. It is true that the term income is very wide in its application and in recent times through legislative measures even the sale and supply and turn-over have been brought, under the definition of income. Furthermore, there is a long list of `deemed income' provisions which have been made a part of the income tax laws. However, still the transaction under discussion does not come under any of the said charges, provisions or the definition of income even if extended as much as possible. The machinery in most of the cases under discussion transferred to the Modaraba company is at less than the cost price. If it is considered as a trading transaction, in that case, the petitioner would be obviously entitled to the loss of the same. However, since this is neither an issue nor entering into the said discussion shall be of any help the same is ignored. The obvious conclusion, however, is that it is not a case where any charge can be created either under section 3 or any other section of the Income Tax Ordinance, 1979 (repealed). This is neither an adventure in the nature of trade not any sale/supply in any sense. Besides the item under discussion is not a part of goods.

23. This case has got still another angle. As already mentioned the legislature vide Finance Ordinance, 1998 has amended the provisions of section 50(4)(b)(i). Consequent upon amendment withholding tax under section 50(4) shall not be attracted in the case of sale of an asset, to a leasing company or a modaraba which is to be leased back to the same person by a lease back arrangement. The exact language of the section after insertion is as follows:--

"Nothing contained in clause (a) or clause (b) shall apply ("any payment on account of securitization of receivables by a special purpose vehicle to the originator or") to any payment made on account of the refund of any security deposit (or to the purchase of an asset under a lease and buy back agreement by a modaraba or a leasing company) (or a banking company or a financial institutions.)

24. The respondent's claim is that this amendment has come out with a cure and to provide a remedy. This is a legal recompense for an invasion of right by the revenue authorities who had extended their arms by deducting tax on an arrangement which on the face of it was neither a trading transaction nor in the true sense of sale/supply. The amendment brought in by the legislature is for curing a disease or remedying an ill. Such remedial statutes as defined in Law Terms and Phrases published by PLD Publishers is an act "which remove some defect in the existing law and redress any difficulty or inconvenience without any penal provision". The above definition though is precise, is quite comprehensive. Applying above principle if we look into the provision as above after amendment the amendment that has excluded the purchase and lease back arrangement the amendment that has excluded the purchase and lease back arrangement from the purview of section 50(4) has obviously come as a relief to the concerned persons. It is obviously a remedial and curative legislation. On one hand it has redressed the grievance of the companies obtaining loan and on the other than cured the inconvenience which was being rendered to them by the authorities by deduction of tax and subsequent treatment by treating the deduction as tax payable on a revenue transaction. This, Court, therefore, does not have any doubt in its mind that the amendment is curative as well as remedial.

25. This is where the next argument advanced by Mr. Siraj Khlaid, advocate, would require dilation. The claim is that all the provisions introduced to cure an inconvenience or remedy an ill in the society are always retrospective. Since it is now almost settled that remedial and curative legislation, unless the law makes it prospective in clear and unambiguous terms, is always retrospective, detailed discussion would not be required. However, mentioning some of the relevant judgments on this issue shall definitely of help. There is plethora of the judgments on this issue. However, for the purposes of brevity this Court would refer the judgments of the Hon'ble Supreme Court bf Pakistan in terms of "Commissioner of Income Tax v. Shahnawaz Ltd. and others" (1992) 66 Tax 122 (S.C.) 131 = 1993 SCMR 73, "Messrs Army Welfare Sugar Mills Ltd. v. Federation" (1992 SCMR 1652/1673), "Anound Power Generation v. Federation"(PTCL 2001 CL 277 SC) and "Government of Pakistan v. Village Devt. Organization"(2005 Tax Review 75 SC).

26. The only exception to the principle that curative and remedial legislature is retrospective, is that the same applies only on the pending cases. `Pending' would, however, mean and include at any stage of the proceedings starting from Assessing Officer to the Supreme Court of Pakistan. The obviously means that it would not apply on the cases wherein the concerned persons have not challenged the action of the revenue authorities before any higher forum and the same is not pending adjudication. In this regard the reference is made to the prime judgment on the issue Messrs Shahnawaz Limited and others (supra).

27. The above discussion obviously concludes that the provision added by the Finance Act, 1998 is curative and remedial legislation and applies on all the reference applications before us. All the P.T.R can be rejected for this very reason alone in addition to the earlier discussion.

28. We, therefore, have no doubt in our mind that the amendment brought in 1998 was brought advisedly. It is to save the all concerned from necessary haste and to clear the misconception in the minds of all concerned. We also have no doubt that this financial arrangement is just a substitute of the other such like measures wherein properties are pledged as a surety as in these cases the surety is machinery. All the petitions filed by the department, therefore, are considered of no merit, hence dismissed. The answer to the question posed, therefore, is in "negative".

29. Order accordingly.

Question Posed in Private Tax Reference Answered in the Negative.

S.A.K./C-1/LAnswered in negative.