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Petitioner: Amjad Ikram Ali, Accountant MemberMessrs NEW LIGHT HOUSE (PVT.) LTD., LAHORE VS Respondent: C.I.T., R.T.O., LAHORE
Court Name: Appellate Tribunal Inland Revenue Judge(s): Nazir Ahmad, Jawaid Masood Tahir Bhatti Title:Amjad Ikram Ali, Accountant MemberMessrs NEW LIGHT HOUSE (PVT.) LTD.,
LAHORE vs C.I.T., R.T.O., LAHORE Case No.: I.T.As. Nos.806/LB of 2008, 258/LB to 261/LB of 2009 Date of Judgment:2009-10-29 Reported As: 2012 PTD (Trib.) 761 Result: Order accordingly Judgment ORDER JAWAID MASOOD TAHIR BHATTI (JUDICIAL MEMBER).--Out of these five appeals four are against the consolidated impugned orders of the learned CIT(A) dated 22-10-2008 for the assessment years 2000-2001 to 2002-2003 and Tax Year 2003 on the following common grounds:-- "That the learned CIT(A) Lahore has wrongly confirmed the order under sections 62/132 of the Income Tax Ordinance, 1979 read with section 129 of the Income Tax Ordinance, 2001 made by Taxation Officer, Audit-1, Coys. Zone-I, Regional Tax Office, Lahore." While the remaining one appeal for the tax year 2006 is against the impugned order of the learned CIT(A) dated 13-5-2008 on the following ground:- "That the learned CIT(A) Lahore has wrongly confirmed the order under section 170(4) of the Income Tax Ordinance, 2001 made by Taxation Officer/ACIT, Enforcement and Collection Unit-3, Enforcement Division-I, Regional Tax Office, Lahore." Learned counsel giving the facts of the case has contended that in the assessments for the years under review originally the presumptive incomes against imports were finalized adopting the value of imports inclusive of the sales tax. The assessee filed first appeal contending thereon that the said issue has already been resolved upto the level of the honourable Supreme Court of Pakistan and he in this respect placed reliance on the following decisions:-- (1) 2003 PTD (Trib.) 735 which is for the assessee's on case. (2) 2005 PTD (Trib.) 280 in this case the difference of opinion was arisen but ultimately it was decided that the import value should be adopted excluding the sales. (3) 1994 PTD 848 (Lahore High Court)
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(4) 2005 PTD 194 (Supreme Court of Pakistan) The learned CIT(A) set aside the assessment but the Assessing Officer has again finalized the assessm ent by assessing imports value exclusive of sales tax on the grounds that the department had filed appeal before the Honourable High Court against the above orders of this Tribunal reported 2003 PTD (Trib.) 735. The assessee again filed appeal before the learned CIT(A) which has been dismissed placing reliance on the decision of the Karachi Bench of this Tribunal in the case reported as 2006 PTD (Trib.) 2895 which was based upon the decision of the Karachi High Court in Writ Petition No.598 of 2008. The learned counsel has contended that the action of the authorities below is contrary to law and against the facts and circumstances of the case. He has contended that the finding of the honourable Supreme Court of Pakistan on the issue cannot be reversed by the honourable High Court. He has contended that in the assessee's on case the department has not filed any appeal against the order of this Tribunal before the honourable High Court as neither any notice was served on the assessee so far nor any order in this respect has been placed before this Bench. He is therefore of the view that the order of this Tribunal reported as 2003 PTD (Trib.) 735 is still in the field which is in the case of' the assessee. He has further contended that for the tax years 2004 and 2005 the contention of the taxpayer has been accepted by the department and the refund for these years has also been issued. According to learned counsel it is a settled principle that the assessee's on history in the similar circumstances would be the best guide for making the assessment. He is therefore of the view that since the order of this Tribunal in assessee's on case is still in the field. Therefore the department was not justified to follow the decision made in other cases. Learned counsel regarding decision of the honourable High Court reported as 2005 PTD 1328 on which the Taxation Officer has placed reliance has contended that the facts and law point of that case are quite different from the case of the assessee. Distinguishing that case from the instant case of the assessed, he has submitted that decision of the honourable High Court relates to section 80-DD of the late Ordinance whereby the Tax collected on the import the inclusion of amount of sales tax towards income of importer could not be deemed to be income of importer and not to be subjected to payment of income tax. We have further noted that in the case of the present assessee in the previous assessment years, this Tribunal has already held that the tax liability under section 80-C of the repealed Income Tax Ordinance, 1979 be calculated exclusive of Customs duty and Sales Tax placing reliance on the decision of this Tribunal and the decision of the honourable High Court. Learned counsel representing the assessee in this regard has placed before us the order of this Tribunal dated 1-12- 2007 in I.T.A. No.1102/LB/2006 (Assessment Year 1998-99). Considering all these cases referred by the learned counsel for the assessee and due to the fact that in the case of the assessee himself version of the assessee has been accepted by the department in the subsequent tax years, therefore, there was no justification for deviating from the previous history and the subsequent treatment. Specifically due to the fact the department has accepted the version of the assessee for the tax years 2004-2005 and the refunds have been allowed for these two years. The consolidated impugned order of the learned CIT(A) for the assessment years 2000-2001 to 2002- 2003 and tax years 2003 keeping in view these facts and circumstances is vacated and all the assessm ent orders passed for these four years are cancelled. The Assessing Officer is directed to follow the directions made by the learned CIT(A) in accordance with the previous history of the case in accordance with the decisions of this Tribunal for the previous assessment years. Regarding appeal for the Tax Year 2006 we have found that the deemed assessment under section 120(1) in the case of the appellant was based on the Tribunal's order in his on case relating to previous assessm ent years and the refund was created and the appellant as per history moved an application for issuance of refund. The Taxation Officer rejected the refund application against which the assessee filed appeal before the learned CIT(A) which has also been rejected. It has
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been contended by the learned counsel for the assessee that the order of the Taxation Officer under section 170(4) is void ab-initio, having no lawful jurisdiction and against the history of the case. He has in this regard referred the decisions of this Tribunal in the case of the assessee and have also submitted that the department has already issued refund for the Tax Years. 2004 and 2005 but for the year under review the application has been rejected without any justification. The learned counsel in this regard has also contested the orders of the officers below, on the basis of the decision of this Tribunal reported as 2007 PTD (Trib.) 1780 wherein it has been held that the duty of the Refund Authority was restricted to the extent of the cross check of the documents for calculation of the amount of refund and to satisfy that no other tax was outstanding against him before issuance of the refund, validity and legality of the various claims of the assessee in his return which practically was the deemed assessment order was not his responsibility and he was not supposed to check the vires thereof. It has further been held that the process of issuance of refund was only a consequential action and the assessment and refund proceedings were two separate independent matters. Proceedings with an application filed by the assessee for refund, scrutiny of the return would amount entering into the purview of section 120 of the Income Tax Ordinance, 2001. Learned counsel on the basis of this decision has contended that the Refund Assessing Authority in this case has entered into the jurisdiction which was available to the Assessing Authority and therefore the rejection of the refund application under section 170(4) is without jurisdiction and liable to be annulled on this score also. On the other hand the learned D.R. Is supporting the impugned orders but he is unable to rebut the above said contentions made by the learned counsel of the appellant. After considering the relevant provisions of law and in view of the principle laid down by this Tribunal in the above referred decision reported as 2007 PTD (Trib.) 1780 we find no justification for rejecting the refund application filed by the assessee under section 170(4) of the Ordinance, 2001 for the tax year 2006. The impugned order of the learned CIT(A) in this respect is therefore vacated and the order passed by the Taxation officer for the year under review is cancelled and the Taxation Officer is directed to issue refund in accordance with law if no other liability is outstanding against the taxpayer. All the five appeals filed by the assessee are allowed in the manner referred above. (JAWAID MASOOD TAHIR BHATTI) Judicial Member DISSENTING NOTE. AMJAD IKRAM ALI (ACCOUNTANT MEMBER).---I have given anxious consideration to all the case-law relied upon by learned brother. The judgment of Lahore High Court 1994 PTD 848 was delivered as the counsel of government conceded. The Lahore High Court therefore did not discuss the law on the subject and gave verdict without dilating on law the subject. The Supreme Court vide its judgment 2005 PTD 194 refused to grant leave to appeal on the ground that Collector of Customs who was the collecting authority did not contest the claim of taxpayer. The Supreme Court also noted that Income Tax Department has not filed any petition against the Lahore High Court order 1994 PTD 848. The Supreme Court refusal was on the ground that there was no issue in fact as neither the Collector of Customs contested the matter nor the Income Tax Department has filed any petition against said judgment of High Court. For clarity para-5 of Supreme Court judgment is reproduced hereunder:- "Para-5 of the order:-- "In the instant case the Authorities of Customs Department are merely collectors of tax on behalf of the Income Tax Department. The Income Tax Department has not filed any petition against the impugned judgment despite the Act that it was a party in the writ petition and was represented by the same learned counsel Mr. Muhammad Ilyas Khan, Advocate. The Collector of Customs though a party in the writ petition and never contested the matter, had never appeared and had never filed any comments."
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The matter has neither been thrashed either at the Lahore High Court level nor at the Supreme Court level. This factum has been taken cognizance of in subsequent judgment of Sindh High Court 2005 PTD 1328. 2. The case reported as 2005 PTD 280 is also based on the Lahore High Court judgment which has been discussed above. Similarly Tribunal's order 2003 PTD (Trib.) 735 is also based on case-law discussed above. 3. CIT(Appeals) has relied on the following case-law in order to uphold addition of sales tax for determining value for income tax. (i) Karachi High Court decision in Writ Petition No.598 of 2001. (ii) 2005 PTD 1328. (i.e) 2006 PTD (Trib.) 2859. These judgments are briefly discussed hereunder. 4. In case reported as 2005 PTD 1328 Writ Petition 598- (Karachi High Court) the issue was that of inclusion of value of sales tax for the purpose of collecting income tax under section 50(5) on edible oil as has been given in explanation II of said subsection. The High Court observed as under:-- "The tax under sub-clause (5) of section 50 of the Ordinance is collected on the value determined under section 25 of the Customs Act, 1969 (hereinafter referred to as the "Act"), which provide that for the purpose of determining the value, the normal price, of an imported goods shall be determined by including in the price, duties and taxes applicable in Pakistan. Sub-clause (5) of section 50 of the Ordinance provides that the Collector of the Customs shall, in the case of every import of goods, collect advance tax computed on the basis of the value of such goods as increased by the customs duty and sales tax, if any, levied thereon at the rate specified in the First Schedule and credit for the tax so collected in any financial year. As regards the case of Ramna Pipe and General Mills Ltd., (supra), we have gone through it, but failed to conceive how the proposition laid down in the said matter is applicable to the instant case. Having gone through section 25 of the. Act and sub-clause (5) of. Section 50 of the Ordinance, at the time of collecting the income-tax on the import of the goods, value of the goods is to be taken as value of the goods determined under section 25 of the Act along with customs duties and sales tax, if any, to be 'paid on it." 5. It would be observed that while on the one hand the honourable High Court has not agreed with the proposition of non including sales tax. for the purpose of determining income tax liability under section 80DD despite Ramna Pipe and General Mills uncontested refusal to grant appeal and on the other hand given specific finding. The ratio of this judgment applies to the instant case. The matter of calculation on commercial imports is para meteria the same as that of calculation of income, tax on import of edible oil. 6. In the case reported as 2006 PTD (Trib.) 2859 the Karachi Bench has discussed the case-law on the subject including cases referred by my learned brother and held that sales tax is liable to be added for the purpose of section 148 of the Income Tax Ordinance, 2001 on the basis of earlier finding of Sindh High Court in the matter of section 50(5) of the repealed Ordinance. The Tribunal observed as under:-- "Section 148(7) read with definition of value of goods under section 148(9) and further read with section 109 of the Income Tax Ordinance, 2001 are very much clear and leave no doubt so as to form different opinion that customs duty and sales tax shall be included in the value of the imported goods. We are therefore, the considered opinion that admission on the part of the Departmental representative contrary to the statutory law has no legal significance, as such the order of the
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Lahore High Court which is purely based on admission cannot be relied upon as an authoritative judgment on this issue. This Sindh High Court has passed a specific order on relevant issue taking into consideration subsection (5) of section 50 and section 80C of the Income Tax Ordinance, 1979 (repealed). In this context we would like to refer the order recorded in Constitutional Petition No.598 of 2001 in case of Messrs Madina Enterprises Ltd. v. Federation of Pakistan and others wherein, the Hon'ble High court held as under:-- "The tax under sub-clause (5) of section 50 of the Ordinance is collected on the value determined under section 25 of the Customs Act, 1969 (hereinafter referred to the "Act"), which provides that for the purpose of determining the value, the normal price of an imported goods shall be determined by including in the prices, duties and taxes applicable in Pakistan. Sub-clause (5) of section 50 of the Ordinance provides that the Collector of 'the Customs shall in the case of every import of goods, collect advance tax computed on the basis of the value of such goods as increased by the customs duty and sales tax, if any, levied thereon at the rate specified in the First Schedule and credit for the tax so collected in any financial year." "Having gone through section 25 of the Act and sub-clause (5) of section 50 of the Ordinance, at the time of collecting the income tax on the import of the goods, value of the goods is to be taken as value of the goods determined under section 25 of the Act along with customs duties and sales tax, if any, to be paid on it." 7. Since authoritative explanation of law has been made by Karachi High Court and followed by ITAT Karachi Bench I find no reason to differ with them. Finding of third member is required in the light of discussion above. The question is reproduced here under:- "Whether for the purpose of collection of tax under section 50(5)(b) read with explanation 1 of section 50(5) of repealed Ordinance and sections 148(1) and 148(9) of new legislation, the value of the goods imported shall be the value as increased by the customs duty and sales tax if any levied thereon?" (Tax Year 2006) The issue involved is the same as discussed above but has assumed a new dimension as refund has been rejected under section 170(4). 2. The CIT(Appeals) has relied upon the discussion regarding method of calculation of income tax referred in earlier part and has upheld rejection of refund despite ITAT Order No.382/LB of 2007. I have perused the order of ITAT Order No.382/LB of 2007, Wherein it was held that enforcement wing has no right to determine the status of assessee or whether taxpayer was liable to assessment under PTR or normal law. This case is of a different nature. The issue involved here was determining overpaid tax in terms of section 170(3). The contents of return revealed the value on which income tax was liable to be deducted and taxpayer had worked out lesser tax liability and claimed refund. The Taxation Officer held that refund in fact was not due as the tax liability had been incorrectly worked out. The case here is that there has no excess payment in terms of section 170(3) as apparent from the declaration of taxpayer. 3. If for argument sake income tax was not payable on the quantum of sales tax then the .Proper course for taxpayer was to go for the legal remedy by approaching for a lower rate deduction certificate or go in writ petition against the Collector. The taxpayer cannot be allowed to voluntarily admit liability to pay income tax on sales tax before the Collector of Customs and take a somersault and claim refund thereof in Income Tax Department. The question to the resolved is as under:-- "Whether Taxation Officer justifiably refused to refund as there was no excess payment in terms of section 170(3) in the light of case-law discussed earlier." (AMJAD IKRAM ALI) Accountant Member (JAVAID MASOOD TAHIR BHATTI) Judicial Member
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ORDER NAZIR AHMAD (JUDICIAL MEMBER).---The matter has been referred to me by Honourable Chairperson, arising out of the decision recorded in above titled appeal. I have heard the arguments of the representatives of both the parties and have also perused the above referred views of my both learned brothers, impugned order of learned CIT(A), assessment order, case-laws and other relevant record of the case. The following questions are referred for decision:-- (i) "Whether for the purpose of collection of tax under secsection 50(5)(b) read with explanation 1 of section 50(5) of repealed Ordinance and sections 148(1) and 148(9) of new legislation, the value of the goods imported shall be the value as increased by the customs duty and sales tax if any levied thereon?" (ii) "Whether Taxation Officer justifiably refused to refund as there was no excess payment in terms of section 170(3) in the light of case-law discussed earlier." At the first instance I intend to answer the above question No.(i), which pertains to assessment years 2000-2001, 2001-2002, 2002-2003 and tax year 2003. On the issue contained therein while passing the ATIR order dated 29-10-2009 my learned brother Judicial Member by placing reliance on the following decisions:-- (i) 2003 PTD (Trib.) 735 which is for the assessee's on case. (ii) 2005 PTD (Trib.) 280 in this case the difference of opinion was arisen but ultimately it was decided that the import value should be adopted excluding the sales tax. (i.e) 1994 PTD 848 (Lahore High Court). (iv) 2005 PTD 194 (Supreme Court of Pakistan). ----Accepted the appeal of the taxpayer by way of drawing the following conclusion:-- "Considering all these cases referred by the learned counsel for the assessee and due to the fact that in the case of the assessee himself version of the assessee has been accepted by the department in the subsequent tax years, therefore, there was no justification for deviating from the previous history and the subsequent treatment. Specifically due to the fact the department has accepted the version of the assessee for the tax year 2004-2005 and the refunds have been allowed for these two years. The consolidated impugned order of the learned CIT(A) for the assessm ent years 2000-2001 to 2002-2003 and the tax year 2003 keeping in view these facts and circumstances is vacated and all the assessment orders passed for these four years are cancelled. The assessing officer is directed to follow the directions made by the learned CIT(A) in accordance with the previous history of the case in accordance with the decisions of this Tribunal for the previous assessm ent years." With the above-mentioned finding, the case was sent to my learned brother Accountant Member for counter signatures, who in his turn instead of endorsing the view point taken by my learned brother Judicial Member, affixed the dissenting note on it. While passing his divergent views on the issue under consideration, he termed the case-laws relied by my learned brother Judicial Member to be not applicable with the remarks given against each case-law given below:-- Case-Law Remarks 1994 PTD 848 (Lahore High Court)This Judgment was delivered as the counsel of Government conceded. The honourable Lahore High Court, did not discuss the law on the subject and gave verdict without dilating on law on the subject. 2005 PTD 194 (Supreme Court of Pakistan)Vide this judgment the honourable Supreme Court of Pakistan refused to grant leave to appeal on the ground that
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Collector Customs who was the collectiong authority did not contest the claim of taxpayer. Therefore, the matter was not thrashed out at the level of Apex Court of Pakistan. 2005 PTD (Trib.) 280 in this case the difference of opinion was arisen but ultimately it wasThis reported case is also based on the honourable Lahore High Court judgment reported as 1994 Decided that the import value should be adopted excluding the sales.PTD 848, which has been discussed above. 2003 PTD (Trib.) 735 which is for the assessee's own caseThis Tribunal's order is also based on the case-law discussed above. After rejecting the reliance placed by my learned brother Judicial Member, my learned brother Accountant Member by placing reliance on a reported judgment cited as 2005 PTD 1328 (Karachi High Court) and specifically on the following ratio settled in another reported judgment of this Tribunal cited as 2006 PTD 2859 (Trib.):-- "Section 148(7) read with definition of value of goods under section 148(9) and further read with section 109 of the Income Tax Ordinance, 2001 are very much clear and leave no doubt so as to form different opinion that customs duty and sales tax shall be included in the value of the imported goods. We are, therefore, the considered opinion that admission on the part of the Departmental representative contrary to the statutory law has no legal significance, as such the order of the Lahore High Court which is purely based on admission cannot be relied upon as an authoritative judgment on this issue. This Sindh High Court has passed a specific order on relevant issue taking into consideration subsection (5) of section 50 and section 80C of the Income Tax Ordinance 1979 (repealed). In this context we would like to refer the order recorded in Constitutional Petition No.598 of 2001 in case of Messrs Madina Enterprises Ltd. v. Federation of Pakistan and others wherein the honourable High Court held as under:-- "The tax under sub-clause (5) of section 50 of the Ordinance is collected on the value determined under section 25 of the Customs Act, 1969 (hereinafter referred to the "Act"), which provided that for the purpose of determining the value, the normal price of an imported goods shall be determined by including in the prices, duties and taxes applicable in Pakistan. Subsection (5) of section 50 of the Ordinance provides that the Collector of the Customs shall in the case of every import of goods, collect advance tax computed on the basis of the value of such goods as increased by the customs duty and sales tax, if any, levied thereon at the rate specified in the First Schedule and credit for the tax so collected in any financial year." "Having gone through section 25 of the Act and sub-clause (5) of section 50 of the Ordinance, at the time of collecting the income tax on the import of the pods, value of the goods is to be taken as value of the, goods determined under section 25 of the Act along with…
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