1988 PLP rib (PTD)

3. Mr. Muktada Karim, the learned counsel for the appellants firstly argued that if the law permitted double advantage to an assessee, it should be allowed. For this proposition he put his reliance on (1947) 14 ITR 471, 6 ITR 636 and 1974 P T D 20.

4. Secondly, he submitted that if two interpretations were possible that one should be adopted which was favourable to an assessee. Thirdly, he referred to section 49 of the Income-Tax Ordinance and argued that the word "may" as used in it should be read as "shall" and straight deduction should be allowed. In this connection he put his reliance on Supreme Court of Pakistan's case reported as (1965) 11 Tax

368. The learned counsel concluded that both the officers below erred in refusing straight deduction and giving rebate to the appellants. He, therefore, prayed that straight deduction be allowed. Mr. Muhammad Farid, the learned Departmental Representative, on the other hand, contended that section 49 was to be head with clause (d) of Part-I of the First Schedule further submitted that all the submissions of Mr. Muktada Karim had already been considered by a Division Bench of this Tribunal in a Lahore Bench case bearing ITA. No.6366 of 1979-80, dates 1st February, 1988 P T D 345, He concluded that the Income-Tar Officer and for that matter the learned Commissioner of Income-Tax have rightly allowed rebate.

5. We have heard both the learned counsel for the appellants as well as learned Departmental Representative. AS far as the first and second submissions of Mr. Muktada Karim are concerned, they are based on settled principles of law and there cannot be two opinions on them., But, as far as the third submission is concerned, we do not think that it has any force. Let us therefore deal with it in some details. However, before we dilate on it let us reproduce here section 49 of Income-Tax Ordinance for easy reference: "

49. Allowances to be treated as deduction from income: Save as otherwise provided in this Ordinance, any allowance admissible or any sum exempt from tax under any provision contained in this Ordinance shall be included in the total income, but may be deducted from such income for the purposes of computing the tax payable by an assessee." Now, if we compare this section with the provisions of repealed Income-Tax Act, we find that section 16 (1) (a) and proviso to paragraph (a) of Part-1 of the First Schedule dealt with the allowances and their straight deduction from total income. It appears that the word "shall" was used at all relevant places in the repealed Income-Tax Act. However, when we revert to section 49 of the Income-Tax Ordinance, firstly we notice that in the opening part of it the legislature has used the words "Save as otherwise provided in this Ordinance". Secondly, it is also found that in the latter part the word "may" has been used. To us this departure appears to be deliberate. If we go through various provisions of the Income Tax Ordinance, we find that sections 43 and 48 of the Ordinance allow straight deductions but firstly income falling within those sections is to be included in the total income. On the other hand, sections 39, 40, 41, 42, 43, 44, 44-A, 46 and 47 deal with such type of allowances on which rebate computed at the average rate of tax is allowable. Here, these allowances though included in the total income are not allowed as straight deductions. Moreover, under item No.110 of Second Schedule any sum which the assessee is entitled to receive out of the income of association of person (other than a Hindu undivided family, a company or firm) on which tax has already been paid by the association of persons is to be firstly excluded from the total income. However, by virtue of proviso appended to Item

110. Such sum is again to tae included in the total income of the assessee for computing the average rate of the tax applicable to the total income excluding such sum. It is, therefore, obvious that the legislature used the word "may" in latter part of section 49 of the income-Tax Ordinance, so that it could meet different type of situations. Thus, it is clear that there is no conflict at all between different provision of the Income Tax Ordinance. The submission of Mr Muktada Karim, the learned counsel for the appellants that the word "may" be recalls "shall" is untenable in law. We, therefore, find no force in it and it stands rejected accordingly.

6. Now, if we refer to opening words of section 49, it appears to us that its provisions are subject to other provisions of the income-Tax Ordinance which may be to the contrary. If we, therefore, refer to the proviso (d) of para A of Part-I of the First Schedule of the Income-Tax Ordinance, we find an example of such a provision. It reads as follows: "(d) Provided: Notwithstanding anything contained in this Ordinance, the rebate for any allowance under sections 39, 40, 41, 42, 43, 44, 44-A, 46 or 47 shall be computed at the average rate of tax and allowed accordingly." Since this proviso is mentioning rebate for any allowance admissible under section 39 to 44-A, 46 and 47, and since it is also made applicable notwithstanding anything contained in the Income Tax Ordinance, it is, therefore, obvious that both the proviso and section 49 are to be read together and the cumulative effect which obviously emerges out appears to be that only rebate has become admissible and it is to be computed at the average rate of tax as against the provisions of straight deductions which were laid down in the repealed Income-Tax Act as dismissed above. Let us also mention at this juncture that the First Schedule is not a piece of subordinate legislation but constitutes part and parcel of income-Tax Ordinance as mentioned in section 9 thereof. Moreover, there is nothing in it, which may indicate that the provisions of First Schedule are, in any way, in conflict with any provision of Income-Tax Ordinance. It is also to be noted that section 14 of the Income-Tax Ordinance indicates that whereas changes in the Second Schedule could be made by the Federal Government but not in the First Schedule where notifications, if any, are to be issued by the legislature. It is thus clear that First Schedule is as much part of the Income-Tax Ordinance as section

49. Since section 49 is subject to the provisions of the Income-Tax Ordinance and since First Schedule is part of the Income-Tax Ordinance itself, the argument that First Schedule has travelled beyond provisions of section 49 does not appear to be sound at all. In our judgment, there is no conflict between the two provisions mentioned above. We are, therefore, also of the view that no two interpretations are emerging out, hence the argument that the interpretation, which is favourable to the tax-payer should be adopted is not sustainable in law. Let us also mention here that this Tribunal have already dealt with all these points in I.T.A. No.6366 of 1979-80 (1988 P T D 345 of Lahore Bench, which was decided on 1-2-1986.

7. Thus, in view of discussion made above, we find no force in these appeals and they stand rejected accordingly. M.B.A./480/T Appeal rejected.