2014 PLP (Trib (PTD)

ZARINA N. ZAIDI (ACCOUNTANT MEMBER).

These two miscellaneous applications (Rectification) have been filed by the taxpayer Messrs Bayer Crop Science Pvt. Ltd., Karachi in respect of the order passed by the Bench in I.T.A. No.94/JB/2004 for the Assessment Year 2002-03 under section 62 and I.T.A. No.1332/KB of 2005 Tax Year 2003 under sections 121 and 221 of the Income Tax Ordinance, 2001 and further corrected vide M.As. (Rect.) Nos.107 and 108/KB of 2010 dated 30-10-2010, these are taken up yearwise as under:-- I.T.A. No. 94-KB of 2004 - Assessment Year 2002-03 While most of the objections taken by the applicant before the Tribunal for the year have been addressed in favour of the tax-payer, the only objection still pending relates to the claim of bad debts of Rs.497,000 left over in Tribunal's Order contained in M.A (Rect) No. 107/KB/2010 passed by the Division Bench, dated 30-7-2010.

1. Assessment stage In this year the Assessing Officer had disallowed the claim of Bad Debts of Rs.497,000 vide Serial No. 10 of the P and L account at page 11 of the assessment order, which reads as under:- "

10. Bad Debts written off directly; Since the assesses has not furnished proof of legal measures adopted to collect the recovery as such the claim is disallowed in full."

2. Appeal proceedings before the CIT Appeals. The matter was taken up in Appeal before the CIT (Appeals) by the Appellant Company and on pages 16 and 17 the Appellate Order No.281/1 dated 12-8-2003. The detailed discussion is recorded which is produced as under:-- (a) "Out of unrecoverable outstanding of Rs.706,105.14 for the year 2001, the appellant had written off Rs.497,150.14 during the year 2002-2003 The individual written off amounts ranged from Rs.30 to Rs.287,803.18. The Taxation Officer added back Rs.497,000 for the year 2002-2003." (b) "This action was taken without giving any basis for the add backs notwithstanding that against several billion turnover for the respective years, the appellant had written off only a negligible percentage of trading credits." (c) "And that also only when it had exhausted all possible measures for collection." (d) "Litigation was not considered practicable in view of high cost as compared to the amount of bad debts." (e) "While recording the arguments of the appellant assessee representative, the learned C.I.T. appeals further stated:-- "He has stressed that there nothing in the law (section 29 of the Income Tax Ordinance, 2001) that legal measures are to be taken before a bad debt is allowable for the obvious reason that the debts written off were negligible, considering the turnover of the appellant company." (f) "And it is not a prudent measure to spend good money towards legal cash for bad debts which are considered to be irrecoverable." (g) "The Taxation officer in his rejection of the claim has not rebutted the objection." The conclusion drawn by the CIT Appeals reads as under:

(h) "There is force in the appellant's arguments regarding the reasons for not taking legal proceedings." (i) "The factual position has also not been doubted by the TO, therefore it is obvious that the disallowance is unjustified and is therefore ordered to be deleted."

3. Departmental Appeal before the Tribunal (1) Against the above order the Department filed an Appeal No. I.T.A. No. 1332 KB of 2005 before the Tribunal and in that the Ground No.3 reads as under:-- "That the learned CIT (Appeals) has erred in deleting the disallowance of Rs.497,000 made in respect of bad debts." (2) This ground which is a mixed question of law and fact was not accompanied with any affidavit which was incumbent as per Rule 13 of the SR 92 KE/2005 dated 18th July. 2005 and further by the present Rule contained in S.R.O. 9110(I)/2010. The appeal was argued before the bench of the Tribunal by Mr. Muhammad Naseem Advocate on 18-6-2010 and he while elaborating all the facts and arguments as above furnished before the Bench a copy of the judgment of the President's Bench of the Tribunal (1979) 39 Taxation 51 Trib. (Para 7) and a full bench reported judgment 1987 PTD (Trib.) 527, it was argued that this decision of a Division Bench was binding on the instant DB. Dealing with the same question and non-acceptance of the binding ratio was an exercise without jurisdiction. Mr. Naseem touched upon the principle governing the age-long settled issue of the "ray of hope" to recover the amounts having been diminished. 1979 120 -- ITR 792, 819 (Bombay) 1983 143 -- ITR 166, (Gujrat) 1981 129 -- 1TR 467 (Allahabad) (3) It was very strange that the learned DR did not assail any of the arguments of the learned CIT (Appeals) reproduced as above before the bench, nor any of those as further stated by the counsel as above. However vide Para 16 of the order dated 19-10-2009 the learned Tribunal allowed the appeal in an arbitrary manner reinstating the addition as under:

"As regard disallowing of Rs.4,97,000 out of bad debts relating to assessment year 2002-2003, we are of the view that the learned CIT(A) was not justified in deleting the same. No legal efforts have been made by the assessee respondent to recover the amount so that bad debts could not be held to be bad and irrecoverable. In the absence of proper efforts to recover the same the disallowance made by the TO for the year 2002-2003 is restored and the order of the learned CITR is vacated" (4) The above order, not touching upon the actual facts and the arguments addressed was found by the Applicant Company as sadly mistake and hence vide Miscellaneous Application (Rectification) No.107/KB/2010 dated 30-7-2010 the learned Tribunal was requested to rectify crucial mistakes. However, in the order passed on 30-7-2011 there is no finding or order as such on the issue. The question was left out without any discussion. This has accordingly been brought by the applicant again before the Tribunal in the present Miscellaneous Application No.422/KB/2010 under consideration. (5) We hence examined the contentions and the facts of the Appellant raised before the Taxation Officer before the CIT (Appeals) as well as those before earlier benches as discussed above. It seems that the omission to decide the issue on the part of the earlier Belches was not correct and proper as per facts and in law, while in the order of the first appeal before the C.I.T. Appeals it has been held that the litigation was not considered to be proper and germane in view of the high cost of litigation and non cooperation of the debtors and for other objections which have not been repelled as paras (2) to (4) as above. The citation of the two judgments of DB of Superior Courts of India could also not be ignored. The Order of the Tribunal dated 19-10-2000 is therefore recalled and rectified and that of the CIT (Appeals) is approved and restored. Accordingly the addition of Rs.4,97,000 as bad debts for the year stands corrected, revised and allowed.

2. This brings up to the issues relating to the Charge Year 2003:-Voluntary contribution of Rs.49,647,000 treated as Income A. Assessment stage (1) In respect of the Return for the charge year 2003 vide his letter No. TO VII/Audit/LTD/04-05 the Taxation Officer required the appellant to provide documents information for the purposes of tax audit under section 177 and in that demanded an explanation of voluntary contribution of Rs.49,674,000. (2) Explaining the voluntary contribution the appellant's counsel urged vide his letter No. CT.959 dated 18-12-2004 that the voluntary contribution was not "Income" for the purposes of I.T. Ordinance, 2001. Paragraphs 2.2 of his reply on page 1 thereof which reads as under "2.2 Bayer Cropscience Pakistan for the tax yare ended Dec. 2002 suffered a net loss of Rs.76.149 million (prior to taxation). This loss was primarily due to a substantial drop in sales of over Rs.590 million as compared to the sales in the immediate preceding accounting year, the drop in the volume of sales and a loss of Rs.76 million for the year adversely affected the financial position of Bayer Cropscience Pakistan. The voluntary contribution received by the company was for the purpose of improving the said financial position. Such a receipt representing a voluntary contribution is not "income" for the purpose of the Ordinance."

3. In paras. 2.3 to 2.8 of the above letter the appellant's counsel further explained and highlighted as under:-- (a) The definition of term "income" as given in section 3 (29) of the Income Tax Ordinance. (b) The ratio of 14 ITR 561; (Allahabad) in the case of Rani Armit Kunwar v. CIT UP & CP. (c) Dictionary meaning of the term "income" taken from Webster's Dictionary, Oxford Dictionary and Oxford Concise Dictionary: (d) Privy Council's decision in CIT v. Shah Wallace & Co. (9 ITR 78), (AIR 1932 PC 138); (e) Decision in CIT v. Smith Kline and 2 others 1991 SCMR 2347 = 1991 PTD 999 as also in the case of Sandoz Pakistan Ltd and Ciba Geigy Ltd.; (f) Explained that the voluntary contribution in Euro currency was brought in Pakistan through banking channels and was received directly in Citi Bank and photo copy of the receipt from the Citi Bank was furnished before the Taxation Officer along with the intimation report of the Bank sent to the State Bank of Pakistan, form Bayer Crop Science in foreign currency Euro 812,994.00; (g) The Assessing Officer questioned the receipt that the audited accounts of foreign donor company were not furnished in support which were never demanded or could have been demanded; (h) The Taxation Officer relied upon the ratio of Supreme Court judgment in the case of (i) Mrs. Samina Shaukat Ayub Khan v. CIT Rawalpindi (ii) (1958) 33 ITR 644 Ratna Sugar Mills Ltd. (iii) (1975) 32 Taxation 225 in the case of PIAC v. CIT.

4. The Taxation Officer issued yet another notice under section 122(9) of the I.T. Ordinance and vide his letter dated 19-3-2005 invited "objection and explanation, if any":-- (i) "Addition on account of voluntary contribution from associated undertaking amounting to Rs.49,647,000 the said receipt being revenue in nature. The word income as it is used in the Income Tax Ordinance, 2001 is wide in its scope. (ii) Add back out of travelling and Conveyance amounting to Rs.20,00,000 and out of Entertainment expenses amounting to Rs.69,000 basis being self made vouchers, as already discussed during audit proceedings etc."

5. The appellant's counsel at then sent a reply as contained in his letter CT 1808 dated, 25-3-2005 where in para 2.5, the voluntary contribution was explained again:-- "2.5. Bayer Crop Science Pakistan received a voluntary contribution from Bayer Crop Science SA. The amount was not received under any statute of contractual obligation which entitled Bayer Crop Science Pakistan to claim and receive the said amount. There was no demand or claim made by Bayer Crop Science Pakistan. There was also no obligation either contractual or statutory on the foreign company to make the contribution. The payment was benevolent and constituted a gesture of goodwill on the part of the foreign company to help Bayer Crop Science Pakistan to improve its financial position and the receipt was in the nature of a mere windfall. It this cannot be said that the voluntary contribution has a character of a revenue receipt." No further notice to the taxpayer with an intention to add as Income was furnished and this was all an exercise opposed to natural justice. The assessment order dated 31-3-2005 was framed and the arguments of the appellant were rejected and the voluntary contribution added as Income. B. Taxpayer's Appeal before the CIT Appeals. (1) The dispute was taken in Appeal No.306 dated 11-5-2006 when the said Appellate Authority rejected the plea of the Taxation Officer by detailed discussion of facts and the case-law. (2) The CIT Appeal dismissed the contention of the department that the receipt could be taxed since merely shown in the Accounts as receipt while relying upon (i) Supreme Court of India's judgment in the case of CIT Bombay v. Messrs Shoorji Vallabldas & Co. 46 ITR 144 of Bombay High Court and (ii) CIT Bombay v. Moghul Lines Limited 46 ITR 590. (3) The CIT Appeals upheld the contentions of the appellant's counsel rejecting the pleas of the Department and held that the receipt of voluntary contribution of Rs.49,647,000 in foreign currency converted from Euro received was not income and not liable to be included in income while further relying upon the case-law discussed in Para 3 in this context at the Assessment stage as above. C. Departmental Appeal No. 1332/KB of 2005 filed with the Income Tax Appellate Tribunal. (1) Against the order of CIT Appeals dated 25-7-2005 the departmental filed an appeal before the Tribunal and the grounds Nos.2 and 3 raised therein read as under:-- Ground No.2 "That the learned CIT appeals has erred in allowing claim of deduction of Rs.49,874,000 in respect of voluntary contribution from associated undertaking." Ground No.3 "Without prejudice to Ground No.2 above the CIT Appeals has erred in holding that the amount of Rs.49,647,000 received from the Associated undertaking is not income of the assessee." (2) The departmental appeal was heard by a bench of the Tribunal on 18-6-2009 when the order of CIT Appeals was defended on behalf of the taxpayer by Mr. Muhammad Naseem, Advocate who addressed the bench. The Bench of the Tribunal has discussed the four arguments of the departmental representatives Mr. Farrukh Ansari and Mr. Rahmatullah Wazir in para 11 of the order which are reproduced as under:-- (a) "That the taxpayer acted in "collusion" with the associated concern and had made the arrangements to lessen the legitimate tax liability." (b) "The term "income" not only includes those things which are included in section 29 but covers all such things which the term signifies according to its general and natural meaning." (c) "voluntary contribution from foreign associated undertaking was declared as income as per the Audited Accounts whereas it was excluded from the income in the computation of income." (d) "That the claim of voluntary contribution was only supported by a photo copy of credit advice of Citi Bank. It was not supported by the Audited Accounts of foreign donor company." (3) The arguments as above were neither borne out from the facts and evidence on record, nor evidence listed and were incorrect and contested by the Taxpayer's counsel Mr. Muhammad Naseem as under:-- (i) It was submitted firstly that the above being questions of law and fact had not been supported by any affidavit as requited under Rule 13 of Appellate Tribunal Rules, contained in S.R.O. 92 (KE)/2005 and also S.R.O. 998(I)/2010 dated 18th July, 2005 and 8th October, 2010 rendering the appeal to be statutorily dismissed in limine. The Rule couched in one and the same language reads as under:

"

13. Filling of Affidavit. Where a fact which cannot be borne out by, or is contrary to the record is alleged, it shall be stated clearly and concisely by a duly sworn affidavit." (ii) The allegation of "collection" was newly concocted before the Tribunal and in the absence of any evidence in this behalf could not have been raised and was incorrectly adopted by the Tribunal. (iii) The voluntary contribution, having been in foreign currency (Euro) brought though normal banking channels, as per admitted photo copy from Citi Bank, was not taxable in Pakistan as per sections 111(1) to 111(4) of the Income Tax Ordinance which crucial fact totally escaped consideration; (iv) That the taxation officer was not entitled to make any observation in respect of the Audited Accounts of the foreign donor company which were not maintained and held by the assessee company and could not be expected to be furnished in law. The certificate of the Bank which is based on the monitoring of State Bank of Pakistan constitutes authentic and complete proof of foreign remittance, not taxable for which a further statement of Bank to the State Bank of Pakistan was furnished; (v) However, the fact of receipt in Euro is admitted and accepted by the State Bank of Pakistan and the foreign exchange remittance held unless parted for accepted for long by Government and the CBR as a matter of course by the Economic Reforms Act, 1992, as now further acknowledged by section 111 if the Income Tax Ordinance, 2001. As a measure of appreciation such remittances are a big source of income of Pakistan acknowledged in the Federal Budget from year to year; (vi) That no prior show-cause notice to add such receipt as income was given by the Tax Officer and the addition was opposed to natural justice; (vii) The overlooking of a mandatory provision of law which leaves no option or discretion to the authority would amount to rectification of mistake apparent on the face of record. (4) Ignoring for no justification the above crucial objection the learned Tribunal briefly stated some of the arguments of assessee's Advocate and the case-law in para 20, leaving out the detailed discussion as above. The arguments addressed in paras. 21, 22, 23, 24, 25 and 26 while the conclusion drawn holding the bringing of foreign exchange as a "collusive act" which the learned bench of the Tribunal "wished to control and curb visited by penal action under section 108", as contained in para 27 of their order was an exercise which was totally illegal, without lawful authority and jurisdiction and based on incorrect, concocted engineered allegations and surmised imagination. (D) Rectification Application No.108(KB) of 2010 dated 20-3-2010 In order to rectify the above state incurred and unlawful assertions and without jurisdiction conclusion and findings the appellant filed the Rectification Application which was heard on 32(sic)-6-2010 by a bench which was different from the one which had passed the order in Appeal. Surprisingly this bench of the Tribunal refused to certify the order which does not deal with any of the very obvious and crucial facts and mistakes highlighted in Paras (3) and (4) above. Further in para 13 thereof is only a sketchy, non speaking and arbitrary finding again not dealing with the facts and arguments highlighted in the Misc. Application and in the sworn affidavits furnished. (E) Rectification Application No.423 (KB) of 2010 dated 13-12-2010 Unable to seek rectification according to the facts on record as argued the taxpayer filed the above Misc. Application which came up for hearing before this bench on 14th September, 2011 when nobody from the department appeared. It was therefore fixed again on 15th September, from 2011 when Mr. Muhammad Naseem, Advocate appeared for the applicant and the respondent department by Mr. M.A. Jafri, D.R. The parties have been heard. The learned D.R. argued that the Misc. Rectification was not competent and valid since there was no mistake either in the submissions of the Drs. Mr. Farrukh Ansari and Mr. Rahmtullah Wazir nor any error in the orders of the earlier Benches of the Tribunal. We have examined the record of the case and considered the arguments of Mr. Muhammad Naseem, Advocate as contained in the earlier discussions as above and we are unable to agree with the learned DRs. Accordingly our findings are recorded as under:-- (i) The appellant's advocate has supported his arguments by filing repeated statements and sworn affidavits which have not been repelled or controverted by counter affidavits. When the departments filed an appeal I.T.A. No. 1332/KB of 2005 and the questions were mixed questions of law and fact, Rule No. 13 of Appeal Rules of the Tribunal made it uncrualent that an affidavit was to be necessarily filed. It is admitted that no affidavit was filed nor any statement of facts was filed. Later on while filing the two Misc. Applications, sworn statements of facts filed by the applicant were not controverted by any statement on oath. In the circumstance we have to believe the taxpayer necessarily. The facts of the appellant are therefore to be construed true and correct while the plea of the Department has to be dismissed which otherwise on facts and in law appear to be true. (ii) The CIT Appeals had rejected the contention of the department that the receipt of Rs.49,673,933.40 since already taken in the accounts as receipts could not be removed from income in the computation of income for tax. The CIT Appeals has disagreed with the Taxation Officer on the basis of judgments in 46 ITR 144 (SC of India) and CIT Bombay v. Mughul Lines Ltd. 46 ITR

590. That the arguments of the learned Bench of the Tribunal that in refusing to offer the above amount to be taxed as income there was "collusion between the taxpayer and the associated concern" and the taxpayer had made collusive arguments to lessen and avoid the tax liability is not correct and not established on facts. (iii) The arguments of the taxpayer in regard to the voluntary contribution is supported by advent of actual foreign exchange of Euro 812,994,000 of the country by Citi Bank. The objection of filing audited accounts of foreign Donor company does not appear to be correct and lawful. We have perused the Citi Bank's advice No.10031 dated 31st December 2002 authenticating the payment credited to the account of the applicant. The receipt is a typed copy with the following note:-- "This is a computer generated advice, and is issued without any alteration, does not require a signature. Receipt is further accompanied with Form-R under Foreign Exchange Regulation Act, 1947 in which again it is stated that "I/we advise having received foreign exchange form Name Bayer Crop Science SA, Address 55, Avenue Rene Cassin, BP 9163 69266 Lyon Cedex 09 Country of remiter FRANCE For the purpose viz Voluntary Contribution. Amounting to Euro 182,994 (Words Euro Eight Hundred Twelve Thousand Nine Hundred Ninety Four only) Name of beneficiary: Aventis CropScience Pakistan (Pvt.) Ltd. Principal Business (where applicable) Manufacture and Trading of Agro Chemicals Address Plot No. 23, Sector No.22, Korangi Industrial Area Karachi, Pakistan Signature of beneficiary or his banker: Signed/stamped Banker's signature is put on this Form-F." We have examined this certificate and do not find anything therein from which any suspicion or doubt could have been legitimately raised. In case department held any doubt it should have made enquires from the bank or the State Bank of Pakistan by themselves which has not been done.

4. We have examined the contention in depth also and we find that the Taxation Officer was not entitled to make any requisition in respect of the audited accounts of the foreign donors which were not maintained and kept by the assessee/applicant and could not have been demanded. The certificate of the bank which is based on the monitoring of State Bank of Pakistan which we find of offers authentic and complete proof of the foreign remittance.

5. We also find that the remittance of foreign exchange from abroad is encouraged for long by the Economic Reforms Act, 1992 and later specific instructions of the Central Board of Revenue. The receipts in foreign exchange were exempted from the Income Tax Ordinance and is now further acknowledged, well guarded and specifically provided in section 111 of the Income Tax Ordinance which seems to have escaped consideration by the assessing officer and the either benches of the Tribunal altogether. The omission in not considering a specific provision of the Statute appears to us a fatal mistake.

6. We otherwise agree that this was on the basis of case-law elaborating discussed in the order of CIT Appeals that this receipt was not income liable to be taxed and it was not a revenue receipt and not income liable to be taxed. We therefore rectify the earlier orders, restore the treatment meted out by the Commissioner Appeals.

7. Ground No. 4, Second Issue. (i) Miscellaneous expenses Rs.20,00,000 in Conveyance and Travelling (ii) Entrainment expenses claimed Rs.69,000 Tax Year 2003 Addition on A/c of expenses Travelling and Conveyance A. Assessment Stage (i) It may be recalled that the Taxation Officer vide his letter dated 19-3-2005 wrote to the taxpayer that he proposed addition of Rs.20,00,000 in the Travelling and Conveyance and Rs.69,000 in the Entertainment Expenses since made on self-made vouchers were liable to be disallowed. He however did not give any facts or datas how we arrived at the figures of Rs.20,00,000 and Rs.70,000. (ii) The contention of the T.O. was vigorously disputed vide Para 3 of taxpayer letter CT. 1808 dated March 25, 2005. It was submitted that the expenses related to local travelling of employees and other miscellaneous small labour, small entertainment and other expenses as per details furnished to the audit and based on the claims of the employees and labour engaged though employees for which it is an accepted principle that the taxi drivers and labour do not issue a printed receipt. This fact was not disputed by the T.O. besides the expenses were in accordance with the past history. (iii) The assessment order renders some incomplete instances of expenses on page 4 of the assessment order:- (a) 1st Part Sl. Nos. 4 to 5 Vouchers Sl. Nos. 1 to 6 There is no date mentioned. These relate vouchers Nos. 43-42 to 43-46 and 45-93 and constitute many vouchers and no amounts are mentioned. For all the items the nature of expense is not highlighted. (b) 2nd Part In respect of all the vouchers on Pages 4 and 5 of the order the nature of expense is not mentioned while in respect of the following, vouchers are also not mentioned e.g. Sl. No.13 Instead of vouchers No. "Nil" is shown although the amount of Rs.209,000 is mentioned of SI. No. 12 also, the nature of the expense is not identified. Sl. No.14 Rs.4,03,132 only date is mentioned. The nature of expense is not shown. Sl. No.15 Rs.6,280 only date is mentioned. The nature of expense is not shown. Sl. No.16 Rs. 11,195 The nature of expense not mentioned. The number of voucher is not shown. Sl. No.17 Rs.15,000 The number of voucher is not mentioned. The nature of expense is not shown. Sl. No.53 Rs.60,104 Only a date of 21-11-2000 is mentioned. Sl. No. 60 Rs.67.041 is mentioned. Only a date is 14-11-2002 is mentioned. (iv) the assessing officer has not mentioned as to from where he picked up these details. It is not mentioned as to where from these expenses have been taken since as per details of conveyance, labour and other expenses prepared on the basis of employees, labours, tax expenses the details submitted by taxpayer as per copy furnished amount only to Rs.6,995 and did not reach even Rs.20,000 (v) In respect of Entertainment Expenses there is no explanation in the assessment order how the Taxation Officer arrived at the figure of Rs.67,000 (vi) And strangely a show-cause notice highlighting these unmerited objections was not filed. B. Appeal before the Commissioner of Income Tax vide Appeal No.306 dated 11-5-2005 It was submitted by the taxpayer's counsel that the above disallowances were arbitrary and ad-hoc and all these expenses were for the purpose of business and only verifiable were reasonable. Also according to circumstance. And of course there was no prior show cause notice. Reliance was placed on the following judgments:-- (i) 1996 PTD (Trib.) 890 (ii) 1974 PTD 45 (iii) I.T.As. Nos.715/KB and 716/KB of 1982-83 October 15, 1986 (iv) 2005 PTD (Trib) 814 The additions on account of travelling and conveyance and Entertainment were thus ordered by the Appellate Authority to be retrenched. B. Appeal before the Tribunal (a) The department filed Appeal No. 1332/KB of 2005 and raised thereon the following grounds:

4. That the Commissioner Appeals has erred in deleting the disallowance of Rs.20,69,000 made and of travelling, conveyance and entertainment expenses? (b) The appeal was fixed for hearing on 18-6-2009 and therein on behalf of the appellant Mr. Muhammad Naseem, Advocate, appeared and argued the case. (c) The question before the Tribunal was a mixed question of law and fact and for that also an affidavit under Rule 13 of the Tribunal's Rule was to be filed which was not filed. The arguments of the CIT Appeals were not controverted nor the case-law was distinguished. Further case-law relied upon by Mr. Muhammad Naseem was also neither discussed in the order of the Tribunal nor distinguished. The learned bench of the Tribunal passed only a perfunctory and arbitrary order ignoring the facts and the case-law. D. Misc. Application Rectification No.108 (KB) of 2010 Thereafter a Miscellaneous Application (Rectification No.108 (KB) of 2010) was filed which was heard on 23-6-2010 which was also dismissed most arbitrarily vide order dated 19-10-2009, without discussing the facts or the case-law on which the order in First Appeal was constituted. E Misc. Application No.423/KB of 2010 filed on 13-12-2010 (1) In the circumstances explained in respect of Grounds Nos.2 and 3 on page 13 above Mr. Muhammad Naseem argued the above ground also and Mr. M.A. Jafri, D.R. opposed rectification while the facts are the same as discussed already in Part III , para 1 above. (2) The expenses were disallowed on stock phrases, without properly identifying any defect in the maintenance of accounts and against past history. In the year 2000-2001 similar addition made was retrenched by the Tribunal vide para 5 of the order dated 11-6-2003, copy whereof is furnished. (3) In support of the disallowance on account of expenses, the following case-law have been furnished:-- (i) (1966) 14 Taxation 161 (ii) 1987 PTD (Trib.) 427 (ii) 1989 PTD (Trib) 39 (iv) 1990 PTD (Trib) 925 (v) (2004) 90 Tax 1 (Trib.) (4) Mr. Muhammad Naseem, the learned counsel of the applicant taxpayer has furnished to us Research Books on some Legal issues containing a large number of decided cases e.g.: (a) Booklet No. 1 on Expenses retrenched without any legal basis; (b) Booklet No.2 expenses disallowed on stock phrases; (c) Booklet No.3 on the retrenchment of claims without a specific show-cause notice. (d) Booklet No.4 on treatment of claims contrary to past history of practice. (e) Booklet No.8 on binding judgments of D.B. and full Bench. (f) Booklet No.9 on affidavits not contradicted, counter affidavits not filed. We have seen these Booklets but since the case-law therein is too well known we do wish to further over burdenour order with a discussion on these cases.

7. The learned D.R., appearing for the department, has not been able to controvert the above facts and the legal position and has not been able to distinguish the case-law cited. Accordingly we find that the addition of expenses retrenched and disallowed on account of Travelling Conveyance and Entertainment has not been justifiably established. The order of the Bench not attending to the correct facts and the legal apposition deserves richly to be rectified, amended and withdrawn and we order accordingly. The treatment of CIT (Appeals), therefore, stands restored on this issue as well.

8. While we have retrenched the additions as above we cannot resist mentioning some authoritative case-law on which we have recalled the three additions in these above two years by rectifying the jurisdictional mistakes, glaringly apparent on record:- (i) PLD 2007 SC 308 = 2007 PTD 967 (CIT v. Abdul Ghani) (ii) (1969) 73 ITR 283 (Bombay HC) Blue Star Engg. Co v. CIT Bombay City (iii) (1979) 119 ITR 142 (Allahabad) Addl. CIT v. Distt. Coop. Bank Ltd. (iv) (1986) 158 ITR 755 (Madhya Pradesh) CIT v. Misho Lal. CMA/29/Tax(Trib.) Order according.