tr{
IN THE supnpthE couRT oF pAKrsrAN
(aPPELTATE JURTSDTCTTONI
PRESENT:
MR. .IUSTICE NAZIM HUSSAIN SIDDIQUI
MR. JUSTICE HAMID ALI MIRZA
crvlL pEtmroNs uo.ees-K o ooz-t or zooo
(On appeal from the judgments dated
30.3.2000 and 25.5.2000 passed by the High
Court of Sindh, Karabhi in ITAs No.9g/9g &
542/99 respectively)
The Commissioner of Income Tar
Karachi ..... Petitioner
Versus
c,P, 265-K ^noo
M/u. Sir E,H. Ja-ffer & Sons (Rrt.) LTd.
c,P. 362-Kl2000
Mandvi Textile Mills (pvt) Ltd. .. . ;.Respondents
For the petitioner Mr. A.S'K. Ghauri, AOR
in C.P.265-Kl2oOO
For the respondent Mr. Rehan Hasan Naqvi, ASC
in C.P. 26s-Kl2oao Qau,tEatz Issa, ASC
Mr. M.S. Ghaury, AOR
For the Petitioner Mr. Nasrullatr Awan, ASC
in C.P.362-K/ZOOO
Respondent N.R.
in C.P.362-K/2OOO
Date of hearins ?_(_onn 1
ORI'TR
Ir4m ALI,uFza. J- These civil petitions for
leave to appeal are direeted against the judgments dated
30.3.2000 passed in I.T.A. No. 98 of 199g (commissioner of
Income Tax v. M/s. sir E.H. Jaffer & sons) and dated
25.5.2oa0 passed in trTA No. 5a2/99 (The commissioner of
Income Tax, special zoxte, Karachi v. M/s. Mand.via Textile
(Pvt) Ltd.), whereby said appeals were dismissed. involving
common question of 1aw by th.e learned. Division Bench of ,the
sindh High court, hence these petitions are being disposed
of by this cornmon Judgment.
2. Brief facts in 'c.P. No. 26s-Kl2ooo are that the
respondent M/s. sir E.H. Jaffer & sons :filed. €rn appeal
No.1960 /KB of L:gg4-gs against an order dated. Ls.g.199s
passed by the commissioner Income Tax (A) zone II, Karachi
':.
in ITA No. 59 of 1995 relating to assessment yetr Lgg4-gs
before the Income Tax Appellate Tribuna1, Karachi which
appeal was allowed as per ju{gment dated L.L.LggT. The
petitioner assaiied the said judgment before the sindh High
court gndersection Ls6(2) of t.Le Income Tax ordinance
which appeal was. heard by 1earned Division Bench.and was
dismissed on 30.3.2000 aS per detailed reasons d.ated
rT v.4.2o'oo. so far the facts of c.p.No. 362-K/2ooo are t.Lat
during the assessment year Lggs-gl the respondent
_-Y
lr!_lport,;rton
cHJ, -1
imported machinery a::d obtained lease finance from Leasing
company and then an ord.er under section 62 was passed by
the Assessing Officer ri'ho did. not tax the income taxable tq
tax under Presumptive Tax Regime, therefore tJ:e learned IAC
found that the Order passed by the Assessing Officer was
erroneous, consequently it was modified.. The respondent
preferred. an appeal before I.T.A.T., which appeal was allowed'
deleting the ad.d.ition of sum of Rs. 1,56,6L2l- representing
the deduction of tar< under section 50(4) on the supply of
said. machinery. The petitioner preferred Income Tar Appeal
No. 542 of L9t99 before the Sindh High Court at .Karachi
which was heard by learned Division Bench and was
lpneat
disposed of as per impugned judgment on 25.3.2000 on the
basis of earlier judgment challenged in C.P. No"265-Kl2OAO
(Commissioner of Income Ta>r v. M/s. Sir E.H. Jaffer & Sons).
3. We heard tlle leanred counsel for the parties and
perused the record. Contention of the learned counsel for
the petitioner is that the learned Division Bench has erred in
relying upon the case of M/ s. Elalti Cotton Mitts qnLotltgrs v.
Federatia& af lakisiar\ (PLD L997 SC 582) which in fact was
--b
L*J.
inapt to the facts of the inStant case and further that learned
Tribunal and learned Division Bench of High Court erred in
hold.ing that respondents yere not liable to be taxed. We do
rT lot find any substance and merit in the contention. The
trncome Ta< Appellate Tri.bunal and the learned
ffi*u"lrivisiorr Bench of the High Court have d.eait with contention
of the petitioner elaborately in their respective judgments.
The learned Division Bench has observed:
tlat the Supreme
At may also be pointed out
Court of Pakistan in the case of Messrs.
Elatri Cotton Mills and others v. Federation
of Pakistan throueh Secretary M /o Finance.
Islamabad and 6 others reported rn L997
PLD 582, has taken into consideration in
detail the issues and provisions which are
embodied in question No.l" referred to herein
above and t}e Supreme Court was pleased to
obserVe that when an assessee whose
income was covered by the section 80-C(2)
(a) (ii) of the Income Tax Ordin€rnce had been
subjected to income tax liability in view of
the provisions of Section 80-C(4) of the
Income Tax Ordinance at the time of
clearance of the goods imported by the
assessee then he cannot be made liable or
subjected to payment of advance ta>< under
Section 5O(4) of the Income Ta>r Ordinance.
The Supreme Court further observed that in
such a case the payer/deemed assessee in
defauit would' not be required to make
deduction or collection of advance tax from
the payments to be made by him to the
recipients on account of supply of goods or
rendition of senvices. In view of the above
observations of the Supreme Court of
Pakistan tJte respondents was not liable to'
make deductions/collections of advance ta:r
from the payment rnade by it tp its sister
concern M/". Jaffer tsrothers Liirnited for
purchase of rnachirery imported by M/s.
Jaffer,Brothers Limited.
With regard to . the question of
proceedings under Section 62 of the Income
/-*-"-*'g Tax Ordinance on the basis of a statement
filed by the respond.ent und.er Section t4g-B
of the Income Tax Ordinance for Alleged
failure of the respondent to make tfr"
deductions/collections from the payments
made by it by way of sale price to-its sister
concern M/s. Jaffer Brothers Limited it is to
be observed that a statement filed. und.er
Section L43 of the Income Ta>c Ord.inance
cannot by any stretch of imagination be
treated or considered. as a return of total
income which could. be subjected to
assessment for determiru+g income tax
liability und.er Section 62 of ifr" ir"r*" io
Ordinance. In case a perusal of the
statement filed under Section 149-8 of the
Income Ta>r Ordinance discloses a short fall
in revenue on the qround th;i- it,;
payer/dee,med assessee in default etvisaged
under Section 50(4) of the Income Tar
Ordinance had not made deductions or
collections of advance tax from the
payments made by it to the contractor for
supply of'goods or rendition of services etc.
as required by the said Section 50(4) of the
Income Tax Ordinance then recourse could
be liad under Section 52 of the Income Tax
Ordinance against the palrer on Whom the
obligation or liability ts dedr.lct or cqllect the
advance tax has'been placed ,blz Section
50(4) of the Income Ta>r Ordinance by
chareing additional tax under Section 86 of
the Income Tax Ordinance. In the
circumstances and facts of the case the
Assessing Officer could not issue a notice to
tJ:e respondent for furnishing return of total
income as it was not required to do so in
view of the provision of Section L43-B of the
Income Tax Ordinance. Similarly no action
under Section 65 of the Income Ta:r
Ord.inance csuld be taken against the
respond^ent for its alleged failure to deduct
and collect t]'e advance tax from the
payments made by it to its sister concern by
way of purchase price for the machinery
imported by its sister concerrl Mls. Jaffer
Brothers Limited in as much as the nbtice
envisaged for initiating ,tl:e proceedings
under Section 65 of the Income Tax
drd,inance is similar and analogous to a
rr-otice to be issued under Section 56 of the
Incorne Ta:r Ordinance as it has to contain
all or arry of ttre requiiements of a notice
under Section 56 of the Income Tax
Ordineince. In the circumst€utces, the
Tribunal had rightl5, come to the conclusion
ttrat if on perusai of tire Statement under
Section 143-8 an Assessing Officer finds
that arry default has taken place then he
can ha,ve recqurse to the. provisions
contain,ed in Section 52 oljhe Income Ta:c
Ordinance but wouid have no authority tq
{TTHSTED embafk to ol call upon the respondent to
,
file a return of total income under Sections
or 65 of the Income Tax Ordinance and
rt af pg,hittgt$ to proeeed for making regular assessment
under Section 62 of the Income Tax
Ordinance."
4. The observations made by the learned Tribunal
andbythelearnedDivisipnBenchofSindhHighCourtare
by the cor'rrsel for
complete ansrtrer to the contentions raised
to
' - :no exceptron t:suld be taken hence no
which
itioner
and valid
ce is called. for, considering that cogent
we do not
have been given. In the circumstances
and substance in these petitions'
i
y *"tit
are
ently leave to appeal is refused and petitions
Ircl/Yu'7
issed. 4.4 5 Nryrr{) t-l'.wa.tu
C
g,dl. ftunrtol Aq Nto3.t
0FrTIm rs $€ Tslt rffi
/'ol irlarr
KARACHI
03.05.2001
Not approved' for rePorting'
