COMMISSIONER INLAND REVENUE, MULTAN VS BANK AL-HABIB LTD., 2016 PTD-LAHORE-HIGH-COURT-LAHORE 2548 (2016)

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 132 & 133---Reference---Scope---Jurisdiction of High Court is special advisory jurisdiction and different from its appellate and revisionary jurisdictions under Civil Procedure Code, 1908, or any other law---Essence of advisory jurisdiction under S. 133 of Income Tax Ordinance, 2001 is restricted to order by Appellate Tribunal under S.132 of Income Tax Ordinance, 2001.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 132 & 133---Reference---Maintainability---Remand order---Partial decision---During pendency of appeal before Appellate Tribunal, Full Bench of Tribunal was constituted and matter was remanded to Appellate Authority to re-decide one issue afresh, while remaining issues were still pending before Appellate Tribunal---Validity---Reference was not maintainable against remand order of Tribunal as there was no conclusive finding of the Tribunal on record---Piecemeal order of Full Bench of Appellate Tribunal, where main appeal was yet to be decided under S. 132 of Income Tax Ordinance, 2001, could not be assailed by way of reference before High Court under S. 133 of Income Tax Ordinance, 2001---Both the parties would have a right to challenge final order for disposal of appeals by Appellate Tribunal under S. 132 of Income Tax Ordinance, 2001, before proper forum--- Reference was dismissed in circumstances.

Haji Muhammad Yousaf v. Commissioner of Income Tax and Wealth Tax Companies Zone, Faisalabad 2006 PTD 72; M/s. E.M. Oil Mills and Industries Ltd. v. Commissioner of Income Tax 2011 PTD 2708; The Commissioner of Income Tax, Central Zone B , Karachi v. Messrs Electronic Industries Ltd. 1988 PTD 111; Islamuddin and 3 others v. The Income Tax Officer and others 2000 PTD 306; M/s. Bostan International v. Commissioner of Income Tax, Zone C. Karachi 2010 PTD 1275; Commissioner of Income Tax and Wealth Tax, Sialkot Zone v. Messrs Maqsood Ahmad Gill 2007 PTD 1757; Commissioner of Income Tax v. Bihar Alloy Steels Ltd. 1995 PTD 1189; Messrs Hong Kong Chinese Restaurant, Main Boulevard Gulberg, Lahore 2002 PTD 1878; Commissioner of Income Tax/Wealth Tax, Faisalabad Zone, Faisalabad v. Muhammad Sharif 2009 PTD 536; Commissioner of Income Tax v. Standard Food 2005 PTD 101; Commissioner of Income Tax v. Messrs Rizwan Brothers 2005 PTD 2537 and Commissioner Inland Revenue v. Messrs MACCA CNG Gas Enterprises and others 2015 PTD 515 rel.

Liaqat Ch. and Agha M. Akmal Khan for Applicant.

Dr. Ikram ul Haq, Mansoor Beg and Sarfraz Ahmad Cheema for Respondent (in T.R. Nos. 14, 16, 18 and 21 of 2014).

Syed Naveed A. Andrabi for Respondent.

ORDER

This order shall decide T.R. Nos. 01 to 05 of 2012 and PTR Nos.17 to 40 of 2012 as identical question of law, facts and issue of maintainability are involved in all these reference applications against the same impugned order.

2.The following question of law has been raised.

"Whether on facts and in the circumstances of the case, the receivable amount could be written off by debiting it in the profit and loss account as expenditure with the nomenclature 'provision for bad debts' or not?"

3.Brief facts are that various appeals were filed before the learned Appellate Tribunal Inland Revenue, ( Tribunal ) in different jurisdictions. During pendency of those appeals, to decide one of the common issue of "disallowance of bad debts in those appeals, a full Bench of Tribunal was constituted. The said full Bench after deciding that one issue against the department sent back the appeals to respective Benches for decision of other grounds in the respective appeals. The department being aggrieved of decision of Full Bench of Tribunal filed these references applications.

4.The learned counsel for the respondents at the very outset raises preliminary objection that these applications by way of references are not maintainable. He submits that these applications are filed under section 133 of the Income Tax Ordinance, 2001 ( Ordinance ) by the department against the order dated 10.02,2011 ( impugned order ) of the full Bench of the Tribunal where only one issue has been decided and main appeal under section 132 of the Ordinance is yet to be decided by Tribunal. He submits that under section 132 of the Ordinance unless appeal is disposed of and the order which pertains to assessment be either affirmed, modified, annulled or remanded by the Tribunal, the reference application cannot be filed before this Court under section 133 of the Ordinance. To elaborate he further submits that in present cases, the appeals (number of which are reflected in the first three pages of the impugned order) are still pending and during pendency of these appeals only one following question was referred to the Full Bench of the Tribunal for its opinion i.e. whether receivable amount could be written off by debiting it in the profit and loss account as expenditure with the nomenclature 'provision for bad debts' or not . Submits that full Bench after giving its opinion on the aforesaid one question directed that for other grounds the appeals will be fixed before the respective Benches of the learned Tribunal. He therefore, submits that unless the respective Benches of the learned Tribunal decide the matter finally under section 132 of the Ordinance these reference applications are not maintainable under section 133 of the Ordinance. He also referred to PTR Nos.179 and 180 of 2013 where respective Benches of the Tribunal had finally decided the appeals along with the issue which was opined by the Full Bench and thereafter the references were filed before this Court by the department itself.

5.On the other hand though the learned counsel for the applicant department do not deny that only one question was decided by the learned Full Bench of the Tribunal and the main appeal is still pending before the respective Benches of the learned Tribunal, however, they submit that as the learned full Benches of the Tribunal has already expressed its opinion on this one question, therefore, these reference applications are maintainable under section 133 of the Ordinance.

6.We have heard the learned counsel for the parties and perused the record.

7.The preliminary moot question required determination is that where appeal under section 132 of the Ordinance was not finally decided and only one issue out of various issues was opined by Full Bench of Tribunal, whether reference application before this Court under section 133 of the Ordinance is maintainable? The assessment and tax years involved in these reference applications vary from 1999 to 2009 and therefore to answer this question, it is necessary to examine, the provision of section 133(1) of Ordinance prevailing before and after amendment through Finance Act, 2005 (Finance Act), reproduced as under.

Before Amendment through Finance Act, 2005

Section 133. Reference to High Court.---(1) Where the Appellate Tribunal has made an order on an appeal under section 132, the [taxpayer] or Commissioner may, by application in such form and accompanied by such documents as may be prescribed, require the Appellate Tribunal to refer any question of law arising out of such order to the High Court.

After amendment through Finance Act, 2005

Section 133. Reference to High Court.--- (1)Within ninety days of the communication of the order of the Appellate Tribunal under sub-section (7) of section 132, the aggrieved person or the Commissioner may prefer an application, in the prescribed form along with a statement of the case, to the High Court, stating any question of law arising out of such order.

8.The provision of section 133(1) of the Ordinance before amendment clearly postulates that where Appellate Tribunal has made an order on an appeal under section 132 of the Ordinance, the taxpayer or Commissioner may, by way of application require the Tribunal to refer any question of law to this Court. After amendment under section 133, the reference could still be filed against order under section 132, however, the aggrieved person or the Commissioner could prefer an application directly to this Court in prescribed form along with a statement of the case, upon communication of order of Appellate Tribunal under section 132(7) of the Ordinance. From reading of both pre and post amendment of section 133 of the Ordinance, it is evident that application by way of reference could only be filed before this Court if order of learned Tribunal has been passed under section 132 of the Ordinance.

9.Now for convenience, relevant clauses of section 132 of the Ordinance are reproduced hereunder:-

Section 132. Disposal of appeals by the Appellate Tribunal.---(1). The Appellate Tribunal may, before disposing of an appeal, call for such particulars as it may require in respect of the matters arising on the appeal or cause further enquiry to be made by the Commissioner.

[(2) The Appellate Tribunal shall afford an opportunity of being heard to the parties to the appeal and, in case of default by any of the party on the date of hearing, the Tribunal [***] may proceed ex parte to decide the appeal on the basis of the available record.].

[(2A) The Appellate Tribunal shall decide the appeal within six months of its filing.]

(3) Where the appeal relates to an assessment order, the Appellate Tribunal may [, without prejudice to the powers specified in subsection (2), make an order to---

(a)affirm, modify or annul the assessment order;

or

(b)(xxx)

(c)remand the case to the Commissioner or the Commissioner (Appeals) for making such enquiry or taking such action as the Tribunal may direct.

(7)The Appellate Tribunal shall communicate its order to the taxpayer and the Commissioner.

The caption of section 132(1) of the Ordinance is conspicuously significant and talks about disposal of appeal by learned Appellate Tribunal. Sub-clause 1, 2 and 2A of section 132 of the Ordinance relates to manner, mechanism and time frame for disposal of appeal by learned Tribunal, whereas clause 3 of section 132 of the Ordinance provides that where appeal relates to assessment order, Tribunal may affirm, modify or annul the assessment order or remand the case to the Commissioner or Commissioner Appeal. Under sub-clause (7) of section 132, the appellate Tribunal shall communicate its order to the tax payer and Commissioner, who may file reference application to this Court under section 133 of the Ordinance. From bare reading of section 132 holistically it is clear that this section deal with final disposal of appeal and learned Tribunal will communicate its order to the tax payer and Commissioner once the appeal is disposed of in the manner provided by section 132 of the Ordinance. In the present case, it is admitted position between the parties that appeals are still pending before learned Tribunal and only one legal question was referred to the Full Bench of Tribunal regarding disallowance of bad debts and Full Bench of Tribunal without adverting to facts, circumstances and assessment orders in each individual case separately, expressed its opinion on the said legal question, by referring to law and precedents. The Full Bench of Tribunal after deciding said single issue, sent back those appeals to respective Benches for their decisions on other grounds of appeals. In our view, merely because Full Bench of Tribunal has expressed its opinion on one single issue out of various issues raised in appeals and those appeals are still pending, it cannot be said that appeals have been disposed of in terms of section 132 of the Ordinance for purpose of filing reference before this Court under section 133 of the Ordinance.

10.The provision of section 133 of the Ordinance makes specific reference to order of learned Tribunal under section 132 of the Ordinance. By making specific reference, the legislature has restricted the scope of reference before this Court only to question of law which arises out of order under section 132 of the Ordinance and none-else. The reference jurisdiction of this Court is special advisory jurisdiction and different from its appellate and revisional jurisdiction under Civil Procedure Code or other similar laws. The essence of advisory jurisdiction under section 133 of the Ordinance is restricted to order by appellate Tribunal under section 132 of the Ordinance. The opinion of the Full Bench of the Tribunal will finally culminate into order under section 132 of the Ordinance, only when the said opinion will be applied and incorporated in individual appeals relating to different assessment and tax years and thereafter, final order will be passed on said appeals by learned Tribunal to affirm, modify, or annual the assessment orders or remand the case under section 132 of the Ordinance.

11.This interpretation of sections 132 and 133 of the Ordinance is also in consonance with settled law that reference is not maintainable against remand order of the Tribunal because there is no conclusive finding of the Tribunal on record. Reliance is placed on Haji Muhammad Yousaf v. Commissioner of Income Tax and Wealth Tax Companies Zone, Faisalabad (2006 PTD 72), M/s E.M. Oil Mills and Industries Ltd. v. Commissioner of Income Tax (2011 PTD 2708), The Commissioner of Income Tax, Central Zone B , Karachi v. Messrs Electronic Industries Ltd. (1988 PTD 111), Islamuddin and 3 others v. The Income Tax Officer and others (2000 PTD 306), M/s. Bostan International v. Commissioner of Income Tax, Zone-C, Karachi (2010 PTD 1275), Commissioner of Income Tax and Wealth Tax, Sialkot Zone v. Messrs Maqsood Ahmad Gill (2007 PTD 1757), Commissioner of Income Tax v. Bihar Alloy Steels Ltd. (1995 PTD 1189).

12.Similarly even against decision of Tribunal on miscellaneous application which order does not merge into final order of appeal under section 132, reference is not maintainable. Reliance is placed on Messrs Hong Kong Chinese Restaurant, Main Boulevard Gulberg, Lahore (2002 PTD 1878), Commissioner of Income Tax/Wealth Tax, Faisalabad Zone, Faisalabad v. Muhammad Sharif (2009 PTD 536), Commissioner of Income Tax v. Standard Food (2005 PTD 101), Commissioner of Income Tax v. Messrs Rizwan Brothers (2005 PTD 2537) and Commissioner Inland Revenue v. Messrs MACCA CNG Gas Enterprises and others (2015 PTD 515).

13.The above interpretation of sections 132 and 133 of the Ordinance is also accepted by the department itself when it filed reference applications PTR 179 and 180 of 2013 only after final disposal of pending appeals. If the plea of the department that reference is maintainable against piecemeal order of Full Bench is accepted then the above reference applications after final disposal of appeal will be time barred to the extent of question already determined by the Full Bench of the learned Tribunals, This will not only frustrate the intention of the legislature under sections 132 and 133 of the Ordinance but same will also prejudice rights of the parties.

14.In view of the above discussion and clear position of law without going into the merits of the case lest it may prejudice case of either party, we are of the opinion that the piecemeal order of the Full Bench of the Tribunal, where the main appeal is yet to be decided under section 132 of the Ordinance, cannot be assailed by way of reference before this Court under section 133 of the Ordinance. However, the department as well as the taxpayer will have a right to challenge the final order for disposal of appeals by the learned Tribunal under section 132 of the Ordinance before proper forum.

15.Resultantly all these reference applications are dismissed being not maintainable at this stage.

16.Office shall send a copy of this order under seal of the Court to the learned Appellate Tribunal as per section 133(5) of the Income Tax Ordinance, 2001.

MH/C-7/LApplications dismissed.