2005 PLP (Trib (PTD)

The request contained therein has been considered, in the light of the circumstances explained by the company. In exercise of the powers conferred under Insurance Ordinance, 2000 and SEAP Act, 1997 (XLII of 1997), further amended under clause 5 of SECP (Amendment) Ordinance, 2001 it has been decided, to condone the management expenses exceeding the prescribed limits of the company, for the year, 2000".

6. The learned counsel for appellant argued that in the light of above condonation the addition under Rule 5(c) of Fourth Schedule to the Ordinance could not be made. However, he argued that in the relevant year i.e. assessment year, 2000‑2001, there was change in law as the Insurance Act, .1938 was repealed and new Insurance Ordinance, 2000 was promulgated and it is a cardinal principle of interpretation of law as explained in section 8 of the General Clauses Act, 1897 that "if an enactment is repealed and re‑enacted, any reference to the repealed Act would be construed as reference to new Act". This principle is explained in 1985 PTD (Trib.)

255. The relevant portion reads as under:‑‑ "Section 8 of the General Clauses Act lays down that if an enactment is repealed and re‑enacted any reference made to the repealed Act would be construed as reference to the new Act."

7. This principle, AR argued, has also been elaborated in detail by ITAT vide order, dated 30‑3‑2002 passed in I.T.A. No. 2172/KB of 2001 (assessment year, 2000‑2001) as under:‑‑ "We are, however, afraid of the gravity of the situation, that Insurance Act, 1938 has been repealed vide Insurance Ordinance, 2000 promulgated on August 19, 2000 and relevant in the year, 2000‑2001. The amendments have not been brought in the Income Tax Ordinance, 1979 in follow up of the Insurance Ordinance, 2000 which has repealed the Insurance Act, vide section 168 of the Ordinance in the present situation decision made by the Assessing Officer referring the provision of the Repealed Act when new law has been promulgated in place of Repealed Act will be of no effect. Its is wroth mentioning that Insurance Ordinance, 2000 shows no savings in context with section 26A and Clause (c) of Rule 5 of the Fourth Schedule to the Income Tax Ordinance, 1979, as the assessment order has been passed after promulgation of insurance Ordinance, 2000."

8. The learned counsel for appellant highlighted the fact that both the Assessing Officer and learned CIT(A) relied on I.T.As. Nos.1320/KB of 2000‑2001, dated 29‑11‑2001 but did not take into account subsequent judgment by the same learned Member in I.T.A. No.2172/KB of 2001, dated 30‑3‑2002 wherein the fact of repeal of law was duly considered and it was categorically held that:‑‑ "In the present situation, decision made by the Assessing Officer referring the provision of the Repealed Act when new law has been promulgated in place of Repealed Act will be of no effect. " The learned counsel for appellant pointed out that the respected Member Judicial is the author of both the judgments cited above and after the repeal of Insurance Act, of 1938 and its re‑enactment relevant for assessment year 2000‑2001, the Honourable Judicial Member categorically held that reference to old law i.e. Insurance Act, 1938 will be construed to be reference to new law i.e. Insurance Ordinance, 2000.

9. The learned counsel for appellant said that since the new Insurance law of 2000 imposes no bar on management expenses as was the case under Insurance Act, 1938, the Assessing Officer and the learned CIT(A) have adjudicated the issue in violation of this Tribunal s conclusion in I.T.A. No.2172/KB of 2001, dated 30‑3‑2002. He pointed out that reliance by Assessing Officer and learned CIT(A) on I.T.A. No.1320/KB of 2000‑2001, dated 29‑11‑2001 was misplaced after change in law that is repeal of Insurance Act of 1938 and its re enactment through Insurance Ordinance, 2000.

10. The learned I.A, while defending the orders of the authorities below stressed that reference of repealed. Insurance Act of 1938 would remain intact in Rule 5(c) of Fourth Schedule to Income Tax Ordinance, 1979 notwithstanding its re‑enactment in the form of Insurance Ordinance, 2000. The learned counsel for appellant rebutted this contention by arguing that this principle is applicable if the law is only repealed and not re‑enacted. However, where a law is re‑enacted after repeal, then reference to repealed Act would be construed as reference to new Act. He pointed out that section 8 of General Clause Act is explicit on the subject as it says that if an Act is repealed and re‑enacted, any reference to repealed Act would be reference to new Act. This principle has been discussed and applied in 1985 PTD 255.

11. He further contended that learned I.A has not taken into account the fact that Insurance Act, 1938 was not merely repealed but also re enacted and in such a case reference to old law in any other statute will be construed as reference to new law as per section 8(2) of General Clauses Act. The learned AR relied on the case of Mocsa Kazimi v K.M. Sheriff AIR 1959 Mad. 542 wherein it has been clearly held that if the earlier statute is not merely repealed but repealed and re‑enacted, it is the re‑enacted provision that will take the place of the corresponding provision in the repealed enactment in so far as the incorporation in the second statute is concerned. This is subject of course to a contrary intention being statutorily expressed. In the Income Tax Ordinance, 1979 no such intention was incorporated after the repeal of Insurance Act of 1938 or on re‑enactment of the said law in the form of Insurance Ordinance, 2000.

12. We have considered the arguments of both the parties, perused the record and order of the authorities below. The learned AR rightly pointed out that Insurance Act, 1938 which imposed the restriction of incurring management expenses to a limit was repealed vide Insurance Ordinance, 2000 and the new Insurance Ordinance did not impose arty such restriction and therefore, as per section 8(2) of General, Clauses Act the reference in Rule 5(c) of Fourth Schedule to the Income Tax Ordinance, 1979 with effect from assessment year, 2000‑2001 will be construed to be Insurance Ordinance, 2000.

13. The learned CIT(A) erred in relying on judgment ITAT No.1320/KB of 2001, dated 29‑11‑2001 which related to assessment year, 1999‑2000 whereas the assessment under appeal relates to assessment year, 2001‑2002 i.e. after promulgation of new Insurance Ordinance. Although in Rule 5(c) of the Fourth Schedule to the Income Tax Ordinance, 1979 words Insurance Act, 1938 have not been replaced by Insurance Ordinance, 2000 yet according to section 8(2) of General Clauses Act, 1897 when an enactment is repealed and re‑enacted, any reference to repealed Act would be construed as reference to new Act. This principle has been explained in I.T.A. No.2172/KB of 2001 which reads as under:‑‑ "We are, however, afraid of the gravity of the situation that Insurance Act, 1938 has been repealed vide Insurance Ordinance, 2000 promulgated on August 19, 2000 and relevant in the year, 2000‑2001. The amendments have not been brought in the Income Tax Ordinance; 1979 in follow up of the Insurance Ordinance, 2000 which has repealed the Insurance Act, vide section 168 of the Ordinance. In the present situation, decision made by the Assessing Officer referring the provision of the Repealed Act when new law has been promulgated in place of Repealed Act will be of no effect. It is worth mentioning, that Insurance Ordinance, 2000 shows no savings in context with section 26‑A and Clause (c) of Rule of the Fourth Schedule to the Income Tax Ordinance, 1979, as the assessment order has been passed after promulgation of Insurance Ordinance, 2000." (Underlined by us for emphasis)

14. It is worth‑mentioning that the author of above judgment was the same learned member who earlier authored the judgment in I.T.A. No.1320/KB of 2000‑01‑‑‑Assessment year, 1999‑2000 on which the learned CIT(A) placed reliance.

15. It is our considered view that the principle enunciated in I. T. A No.2172/KB of 2001 that after promulgation of Insurance Ordinance, 2000, which has repealed the Insurance Act, 1938, addition confirmed by CIT(A), referring to the provisions of repealed Act is of no legal effect. We reaffirm the view already given by this Tribunal in the above referred judgment that since Insurance Ordinance, 2000 contains no saving vis‑a‑vis section 26(a) of the repealed Act, therefore, Rule 5(c) of Fourth Schedule to the Income Tax Ordinance, 1979 is not applicable for the assessment year under review. Resultantly, the addition made under Rule 5(c) of Fourth Schedule to Income Tax Ordinance, 1979 is not maintainable, hence ordered to be deleted.

16. No other issue was pressed.

17. The appeal filed by the assessee is decided in the above stated manner. H.B.T./262/Tax (Trib.) Order accordingly.