2002 PLP 2732 (PTD)
COMMISSIONER OF INCOME-TAX, COMPANIES, LAHORE Versus Messrs CH. TEXTILE MILLS LTD., LAHORE
| Citation | 2002 PLP 2732 (PTD) |
| Forum / Court | Lahore High Court |
| Bench Members | Naseem Sikandar and Jawwad S. Khawaja, JJ |
| Parties | COMMISSIONER OF INCOME-TAX, COMPANIES, LAHORE Versus Messrs CH. TEXTILE MILLS LTD., LAHORE |
| Primary Law | Income Tax Ordinance (XXXI of 1979) |
Q1: What are the key laws and sections cited in 2002 PLP 2732 (PTD)?
This judgment primarily cites: Income Tax Ordinance (XXXI of 1979) as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2002 PLP 2732 (PTD)?
The case was heard and decided by the Lahore High Court bench comprising: Naseem Sikandar and Jawwad S. Khawaja, JJ.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2002 PLP 2732 (PTD) (COMMISSIONER OF INCOME-TAX, COMPANIES, LAHORE Versus Messrs CH. TEXTILE MILLS LTD., LAHORE). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- Shafqat Mehmood Chohan for Petitioner.
- Date of hearing: 16th January, 2001.
Headnotes / Summary
Ss. 12(7) & 136(1)
Income deemed to accrue and arise in Pakistan- Transfer of stock and store to a sister concerned by the assessee-- Addition of notional interest on such transfer treating as loan or advance
Appellate Tribunal deleted such addition made under S.12(7) of the Income Tax Ordinance, 1979
Reference to High Court-- Validity
Provision of S.12(7) of the Income Tax Ordinance, 1979 clearly refers to "any loan or advance" on which no interest had been charged
Tribunal rightly found that it was only notional interest and not being real it had to be restricted to only loans and advances
Neither any loan nor any advance was made by the assessee to its sister concern- Tribunal; while stating the case attempted to raise a new issue which it fact was never mooted before it
Assessee tried to introduce another mixed question of law and fact to the effect whether the amount debited in the manner as in the case of the assessee could be treated as loans and advances as referred to in the provision of S.12(7) of the Income Tax Ordinance, 1979
Such aspect having never been considered by' the Tribunal could not be said to have arisen out of its order
Even the Assessing Officer did not raise said issue. and till the stage of the Tribunal, the factual findings remained consistent that it was a transfer of stock and stores and was not a loan or advance as such
High Court answers a Reference only on the facts as found by the Tribunal-- Controversy raised subsequently on Reference application could not be taken up for consideration
Transfer of stock and stores was neither loan nor advance, therefore, the answer to the question as to whether Tribunal was justified in deleting the addition made by the Assessing, Officer under 5.12(7), of the Income Tax Ordinance, 1979 had to be in the affirmative.
Judgment & Decree
NASEEM SIKANDAR, J.
This is a case stated by the Lahore Bench of the Income Tax Appellate. Tribunal, at the instance of the Commissioner of Income Tax, Companies, Lahore. The following question has been framed for our consideration and answer:
Whether on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs.5,53,091 made by the Income Tax Officer under section 12(7) of the Income Tax Ordinance, 1979?
2. The respondent is a public limited Company and at the relevant time derived income from manufacturing and sale of yarn. While framing assessment for the year 1983-84, the Assessing Officer noted transfer of stock and stores by the assessee-company to its sister concern namely Messrs Zubaida Interprises worth Rs.94,44,
463. By resorting to the aforesaid provisions of section 12(7) of the Ordinance, he charged notional interest at the rate of 12% which amounted to Rs. 5,53,
091. The assessee/respondent failed in the first appeal while the learned Tribunal found for the assessee on the ground that the aforesaid provisions of the Ordinance were not attracted to the facts in hand. It was noted that transfer of stock and store did not amount to advancing of a loan which attract the provisions of section 12(7) of the Income Tax Ordinance 1979.
3. After hearing the learned counsel for the Revenue, we find no possible exception to the order of the Tribunal. The provisions of section 12(7) clearly refer to any loan or advance on which no interest had been charged. The Tribunal rightly observed that it was only notional interest and not being real had to be restricted to only loans and advances. In the facts in hand admittedly neither any loan nor any advance was made by the assessee to its sister concern. The Tribunal while stating the case attempted to raise a new issue which in fact was never mooted before them. They tried to introduce another mixed question of law and fact if the amounts debited in the manner as in the case of the assessee could be treated as loans and advances as referred to in the provision of section 12(7) of the Ordinance. That aspect having never been considered by the Tribunal could not be said to have arisen out of its order. Even the Assessing Officer did not raise this issue and till the stage of Tribunal, the factual findings remained consistent that it was a transfer of stock and stores and was not a loan or advance as such. Since this Court answers a reference only on the facts as found by the Tribunal, the said controversy raised subsequently on reference application cannot be taken up for consideration.
4. As said earlier, there has been a consistent finding by the Revenue and so maintained by the Tribunal that the transfer of stock and stores was not either loan or advance, therefore, the answer to the aforesaid question has to be in the affirmative. Answered accordingly C.M.A./M.A.K./C-183/L Reference answered.