1980 PLP (Trib (PTD)

I.T.As, Nos. 549/KB to 551/KB of 1976-77. S. A. Khan, D. R. for Appellant. Rustamjee, F. C. A. for Respondent. I. T. As. Nos. 405/K B to 407/KB of 1976‑77 Rustamjee, F. C. A. for Appellant. S. A. Khan, D. R. for Respondent. A. A. E.UBERI (MEMBER).‑These six Appeals, three at the instance Department and three at the instance of the Assessee, relate to the Assessment years 1972‑73, 1973‑74 and 1974‑75 decided by the learned Appellate Assistant Commissioner .. Range on 2‑8‑1974 vide Appeal No. 875 of 1974‑75 and 1139, 1140 of 1975‑

76. Excess Management Expenses.‑On scruntiny of accounts the Assessing Officer found that the Management Expenses, as claimed by the Assessee, ex-seeded the limit prescribed under rule 40 of the Insurance Act: He, therefore, worked out the excess over the maximum admissible of which Assessee's share came to Rs. 872 in 1972‑73, Rs. 56,493 in 1973‑74 and Rs. 91,595 in 1974‑

75. These were disallowed. On appeal the learned Appellate Assistant Commissioner deleted the add‑back in each year relying upon decisions from the Tribunal as also the Karachi High Court judgment dated 28‑3‑1969 on Civil Reference No. 31 of 1966 as also the reported case of Crescent Star Insurance Company ((1974) 29 Taxation 111). The Departmental Representative before us submitted that the decision of the Karachi High Court has been taken up to the Supreme Court for final adjudication and hence, the disallowance was not warranted. The learned Authorised Representative for the Assessee made the same submissions were advanced before the two authorities below and which have been repeated in past years assessments in all cases involving this issue. Having considered the arguments of the two Representatives, the facts of this case and the related law, as also the case‑law, we are of the view that the decisions of the superior Courts of Pakistan are binding on all subordinate Courts as per Article 201 of the Constitution of Islamic Republic of Pakistan 1973. Therefore, the Assessing Officer definitely exceeded his authority and committed a patent act nearing contempt by observing; ............However, the Department has respectfully differed with the decision of the High Court .respectfully differing with the opinion of the High Court I maintain " It is highly insolent on the part of the Assessing Officer to place reliance 'on the authorities from Indian jurisdiction, while at the same time ignoring (or undermining) the direct rulings of our own superior Courts. We cannot be a party to such a grave impertinence, of transgression of authority, nor can we imagine to take a view contrary to the verdict of the Superior Courts of Pakistan. In facts, on the present issue the Karachi High Court decisions confirmed Tribunal's own considered view which in its turn carries a binding force of law on the Assessing Officer by virtue of subsection (6) of section 33 of the Act. Therefore, the Assessing Officer had no authority in law to `differ' with the legal position as spelled out by the High Court; even if the matter had been taken in appeal to the Supreme Court. Evidently it is to meet such contingencies that clause (v) was introduced in section 3 (2) of the Act, vide Finance Act, 1976 so that corrective action is possible, without limit of time, in conformity with a decision of Supreme Court in such cases were the issue is finally decide in favour of the Department. As far as Tribunal's earlier decisions are concerned, there is no material before us to deviate from the view taken then, in this very Assessee's case, vide Appeals Nos. A. C. A, 472‑A/68‑69/ C. C. 1 etc. dated 5‑11‑1971 especially when that view stands confirmed by the superior Courts more than once. In their latest decision in C. I. T. v. New India Insurance Company (P L J 1978 Kar. 47) also, the learned Judges have held the Management expenses in excess and in contravention of the limits prescribed in this behalf under rule 40 of the Insurance Rules, to have been incurred wholly and exclusively for the purpose of business under section 10(2) (xvi) of the Income‑tax Act, and thus an allowable expense. In the face of the above cited chain of authoritative pronouncements, we have no hesitation in DISMISSING the Department's Appeal on this issue. Orders accordingly.