2003 PLP 1226 (PTD)

NASIM SIKANDAR, J.--This is a case stated by the Lahore Bench of the Income Tax Appellate Tribunal. The following questions of law have been framed for our, consideration and opinion:

(1) Whether-under the facts and circumstances of the case the learned Income-tax Appellate Tribunal was justified to hold that the assessee was whole time employee of one company when he was also conducting business in his individual status? (2) Whether under the facts and circumstances of the case the learned Income-tax Appellate Tribunal was justified to hold that the assessee was to be taxed as salaried person and entitled to exemption in respect of house rent allowance and conveyance allowance notwithstanding the fact that the assessee had not fulfilled the requirement of employee as envisaged under rule 3(2)(c) of the income Tax Rules, 1982?

2. The facts in brief are that the assessee-respondent, at the relevant time derived income from commercial imports besides salary and from a Private Limited Company namely Public Plastic Industries (Pvt.) Ltd. Faisalabad. For the assessment year 1992-93 the return filed by him teas completed under section 62 of the Income Tax Ordinance, 1979 at the total income at Rs.6,62,480.

3. Subsequently, the concerned I.A.C. found the said assessment to be erroneous and prejudicial to the interest of the Revenue on the ground that since the assessee was not working whole time for one company because of his engagement as commercial importer he was not entitled to the concession as allowed under rule 3(2)(c) of the Income Tax Rules, 1982 which was successor to rule 49(b) of the old rules. Accordingly the assessment was cancelled under section 66A and the Assessing Officer was directed to proceed to frame a fresh assessment after disallowing the aforesaid concession.

4. On appeal however the learned Tribunal relied upon a judgment of the Karachi High Court reported as re: The Commissioner of Income-tax Central Zone 'A' v. S. Mazhar Hussain 1988 PTD

563. In that case their lordships were of the view that in order to get the benefit as an employee as contained in rule 3(2)(c) of tile aforesaid rules a director must fulfil the two conditions. Firstly that he should have worked for one Company and secondly that such a work should be whole time. The Tribunal also concluded that salary income derived by the assessee could not be treated as income from other sources. Accordingly it was held that the provisions of section 66A in the given situation were not attracted.

5. After hearing the learned counsel for the Revenue We are of the view that the issue in hand already stands decided in favour of the assessee and against the Revenue in a judgment of this Court cited as re: C.I.T. Wealth Tax Companies Zone v. Rana Asif Tauseef 2000 PTD 497.

6. For various reasons given in that judgment we will return an affirmative answer to the second question. The first question in the present situation is more of an argument rather titan a question of law. Therefore, we will decline 'to answer the same.

7. Disposed of accordingly. C.M.A./C-202/L Order accordingly.