2005 PLP (Trib (PTD)

Appeal has been filed at the instant of the Department. At the very outset learned counsel for the assessee-respondent has challenged the jurisdiction of the Single Bench. Learned counsel for the assessee raised objection in writing which reads as under:-- (1) The aforesaid appeal by the tax department is against the order of the CIT, Companies v. Karachi whereby the CIT has deleted the disallowance of Head Office expenses and Islamabad Office cost of Rs.13.573 million Rs. 38.183 million respectively. (2) The aforesaid appeal has been fixed before the Single Bench of this Hon'ble Tribunal. As per the Office of the Income Tax Appellate Tribunal in compliance to the provisions of S.R.O. 63(KE)/95, dated 6-2-1995 this appeal may be fixed before the Single Bench for the reason that income computed by the Deputy Commissioner of Income Tax does not exceed three hundred thousand rupees. (3) For the reasons explained in the following paragraphs, based on legal provisions and facts of the case, we are of the view that the contention of the office of the Tribunal is not correct. (4) The aforesaid provisions relate to the cases whereby appellate jurisdiction was exercised by the Appellate Assistant Commissioner. By virtue of amendments introduced by the Finance Act, 1980, such powers are exercised by the CIT(A). In view of the same, the aforesaid notification, is restricted to orders, if any, passed by the Assistant Commissioner, only. In this case, the order has been passed by the CIT(A). (5) In this particular case, there was declared total loss of Rs.176,371,436 which included Rs.51,636,712 representing current year loss whereas Rs.125,577,032 is the loss brought forward from the earlier years. The Deputy Commissioner of Income Tax in the order framed under section 62 of the Ordinance has made the following adjustments:

(a) Disallowed the Islamabad Office expenses and Head Office expenses of Rs.38,183,682 and Rs.13,573,516 million respectively. (b) Allowed depreciation to the extent of Rs.2,378,170 (c) Assessed Rs.98,518 as taxable interest income for the year. Even if the Deputy Commissioner of Income Tax's contention is accepted there will be a `Loss' for the year. It is for the reason that Rs.98,518 would be set off against statutory depreciation, already allowed in the order. In this situation, there will be `Loss' for year which will place the case outside the ambit of aforesaid notification. (6) The aforesaid notification is also not applicable inter alia for the reason that the CIT(A) has decided the matter against the order of the Deputy Commissioner of Income Tax. After giving effect to the order of CIT(A) whereby the disallowance has been deleted, there will be an assessed `Loss' for the year as discussed above. This would place the aforesaid appeal outside the ambit of the aforesaid notification. In this connection, it is important to note that Deputy Commissioner of Income Tax is legally required to give effect to order of CIT(A) as the disallowances have been deleted. (7) With regard to the substance of the matter, we state that underlying objective of the said notification is that appeals relating to cases where the sum involved is `low' as identified in the said notification, be heard by the Single Bench. Thus, notwithstanding the text, where the amount involved in appeal gives effect to sum exceeding the said amount then such appeals should be heard by the Division Bench otherwise the underlying objective of the notification will be defeated. The said noti fication has been issued under the `provision' to section 133(6) of the Income Tax Ordinance, 1979. It is important to note that under the substantive provisions as contained in section 133(6) all appeals are to be heard by the Division Bench. (8) In these circumstances, we consider that it would be appropriate that the appeal be fixed before a Division Bench. In this regard, we also state that the aforesaid prayer relates to a technical matter only with full regard to Honourable Member of the Single Bench.

2. On the other side the learned D.R. contested assessee's contention and filed written submissions which are reproduced being relevant as under:-- "It is respectfully prayed as under:-- (1) That the aforesaid appeal by the Tax Department is against the order of the CIT(Appeals-V), Karachi whereby the CIT has deleted the disallowance of Head Office expenses and Islamabad Office cost of Rs.13,573 million and Rs.38,183 million respectively. (2) That the learned respondent has objected to the jurisdiction of the Hon'ble Single Bench as in his opinion since the respondent has declared loss of Rs.17,637,436 therefore the jurisdiction of the appeal does not lie with this Honourable Court. Another objection of the learned respondent is that as per the provision of A S.R.O. 63(KE)/95, dated 6-2-1995 the appeal before the Single Bench can only be fixed if the income computed by the Deputy Commissioner of Income Tax does not exceed three hundred thousand rupees only, further only appeals passed by the Appellate Assistant Commissioner and not by the CIT(A) could be heard by the Single Bench. (3) That your honour's kind attention is drawn to the order of the Deputy Commissioner of Income Tax wherein the income of the respondent has been assessed at Nil, therefore, the objection of the respondent that cases where loss has been declared does not lie within the jurisdiction of this august Court is not sustainable. As regard to another objection of the learned respondent is only those appeals which have been heard by the Appellate Assistant Commissioner can be fixed before the Single Bench. In this connection your kind attention is drawn to section 2(2) of the repealed Ordinance, 1979 wherein the word "Additional Commissioner" was inserted vide Finance Act, 1993 instead of the word "Assistant". The provision of section 134(1) relating to appeal to the Appellate Tribunal states that an assessee objecting to an order passed by an Appellate (Additional Commissioner) hence the word "Assistant" has been replaced by the word "Additional", therefore, the contention of the respondent that as per the circular quoted supra only those appeals which have been decided by Appellate Assistant Commissioner can be heard by the Single Bench is devoid of merit. (4) That your kind attention is drawn towards Circular No.9 of 2002, dated 21-6-2002 issued by the Honourable Income Tax Appellate Tribunal in pursuance of the authority vested under section 133(6) of the repealed Income Tax Ordinance, 1979. By virtue of this Circular assessment finalized under normal law and under Self-Assessment Scheme where assessed income is not more than three hundred thousand falls under the Single Bench jurisdiction. In view of the above facts the objection raised by the learned respondent is unjustified and against the law."

3. The contention of the learned counsel for the assessee and the learned D.R. ruminates around the following two directives i.e.:-- (i) S. 130(7)-Appellate Tribunal, exercise of powers

Notification No. S.R.O. 63(KE)/95, dated 6-2-1995, explaining the corresponding provisions of Income Tax Ordinance, 1979:- "In exercise of the powers conferred by subsection (6) of section 133 of the Income Tax Ordinance, 1979 (XXXI of 1979), the Federal Government is pleased to direct that all the powers and functions of the Appellate Tribunal shall be exercised, severally and singly, by the Chairman-cum-Member, Accountant Members and Judicial Members of the said Tribunal in respect of appeals against orders passed by the Appellate Additional Commissioner under section 111, section 132, subsection (2) of section 148 or section 156 of the said Ordinance, where such appeals pertain to assessees whose total income as computed by the Deputy Commissioner of Income Tax does not exceed three hundred thousand rupees." (ii) I.T.A.T. Office Circular No.9 of 2002- "The Assistant Registrars (Registration and Roster) are directed to ensure that only the appeals wherein regular or Self-Assessment Scheme assessment have been made assessed income is not more than Rs.300,000 are of Single Bench jurisdiction. All other appeals arising from the assessed income of more than Rs.300,000 or appeals against the orders passed under sections 66-A, 80-B, 80-C, 80-CC, 1987-88 etc. of the Income Tax Ordinance, 1979 are of Division Bench jurisdiction. They are directed to be careful in working out and fixing the appeals before the Single Bench as well as Division Bench jurisdiction."

4. The emphasis has been laid upon `income as computed' by the Deputy Commissioner. The dictionary meaning of word `computed' (Webster's Third New International Dictionary) is as under:-- "Compute (computare - more at Count) vt. 1: to determine or ascertain esp. by mathematical means: arrive at an answer to or sum, for <-a bank balance> <-the area of a field> <-the diameter of the sun> 2 obs: to make up (as a period of time) - vi: to make calculation; RECKON syn see CALCULATE"

5. Circular No.9 of 2002 precisely stipulates "The Assistant Registrars (Registration and Roster) are directed to ensure that only the appeals wherein regular or Self-Assessment Scheme assessment have been made and assessed income is not more than Rs.300,000 are of Single Bench jurisdiction". Learned counsel's attention was invited to the above unambiguous ruling which could not be rebutted with regard to adjudicatory authority of this Tribunal.

7. Income as computed by the Deputy Commissioner of Income Tax means income formally evolved by the Assessing Officer at the original assessment level. In such background the plea of the learned counsel for the assessee is not tenable on Technical domain. Yet mode of appellant's plea is attracted by the proximity to the `Doctrine of Ephesis'. Authorised Representatives' contention in this peculiar situation requires consideration on minimal floor of fundamental fairness in broader sense despite of above referred appraisal of facts. Deriving analogical guidance from common law principle of `Forum Non Conveniens' subject to observance of procedural requirements, office is directed to refix the appeal on the issues taken up by the Department before the Division Bench. The issue is disposed of as indicated above. C.M.A./427/Tax (Trib.) Order accordingly.