2010 PLP (Trib (PTD)

This order is intended to dispose of three titled appeals; out of which two are departmental appeals while the third one is the assessee's appeal. For the assessment year 2000-2001, the department has assailed the order passed by the learned CIT(Appeal) Gujranwala Camp at Faisalabad dated 11-6-2008 and the remaining two appeals pertaining to assessment years 2002-2003 (departmental appeal) and assessment year 2001-02 (assessee's appeal) were filed against the combined order passed by the learned CIT(Appeals) Gujranwala Camp at Faisalabad dated 16-10-2008.

2. Both the learned representatives appearing at the bar have been heard and record perused. DEPARTMENTAL APPEAL FOR A/Y 2000-01

3. Facts in short are that the assessee is a Public Limited Company which derives income from manufacturing and sale of Sugar. Original assessment for the year 2000-01 was completed at total income at Rs.7,42,52,608 against declared loss of Rs.59,730,786 on 2-5-2002 by the Taxation Officer. Thereafter, the Taxation Officer amended the assessment under section 122 of the Income Tax Ordinance by determining total income at Rs.89,998,827 on 5-1-2.004. Exports amounting to Rs.148,660,972 were also assessed under section 8000 by charging tax @ 1% as a final discharge of liability. Feeling dis satisfaction with the treatment of the Taxation Officer, the assessee filed appeal before the learned CIT(A), who by virtue of his order vide A.O. No.621 dated 8-6-2005 set aside the order which was upheld in second appeal by the learned ITAT bearing I.T.A. No. 5471/LB/2005 dated 16-11-2006.

4. The learned D.R. appearing on behalf of Revenue contended that the learned CIT(A) Gujranwala Camp at Faisalabad is not justified to annul the amended assessment order under section 122 of the Income Tax Ordinance, 2001 dated 3-3-2008 on the ground that section 122 of the Income Tax Ordinance, 2001 is not applicable if the original assessment order for assessment year 2002-2003 or before is passed on or before 30-6-2003. Further contended that the learned CIT(A) is not justified to hold the order under section 122 of the Income Tax Ordinance, 2001 is legally infirm and defective as show cause notice was issued indicating only section 122 of the Income Tax Ordinance, 2001 without referring the specific provisions of section 122(5)/122(5A) of the Income Tax Ordinance, 2001.

5. We have heard the arguments advanced by the rival parties in appeal and perused the available record. We have also gone through the orders of the authorities below and came to the conclusion that the learned CIT(A) has rightly decided the matter after taking into consideration the facts as well as the reported judgments specially 2005 PTD 1316 submitted before him. Keeping in view of the foregoing discussion/submission and perusal of the reported judgment of the honourable High Court, at that time this being a settled issue, we need not to be explained further. Consequently, following the judgment of the honourable High Court cited supra, we feel no ambiguity in our mind to dismiss the departmental appeal for the assessment year 2000-01. DEPARTMENTAL APPEAL FOR A/Y 2002-03

6. Main thrust of the revenue for the year under consideration is that the learned CIT(A) Gujranwala Camp at Faisalabad is not justified to delete the addition at Rs.898,

874. On the other hand, the learned counsel appearing on the behalf of the assessee-respondent supported the order of the learned CIT(A) with the findings recorded therein.

7. We have heard the arguments advanced by the rival parties and pressed the relevant record available before us. We have noted that the learned CIT(A) after taking into appreciation the grounds narrated before him deleted the addition of Rs.898,874 with the findings that this is an invalid addition and is in violation of spirit of section 23(vi)(a) of the repealed Income Tax Ordinance, 1979. Consequently, we do not warrant any interference in the order of the learned CIT(A) being that of a higher authority naturally deserves more credence. This would result into dismissal of the departmental appeal for the assessment year 2002-2003. ASSESSEE'S APPEAL A/Y 2001-02

8. In the instant year, the learned counsel appearing on behalf of the assessee vehemently contended that the learned CIT(A) was not justified in alleging that the appellant has not made deductions as required under section 24(c) of the repealed Income Tax Ordinance, 1979. Further contended that the learned CIT(A) was also not justified in making a wrong inference regarding application of section 24(c) of the repealed Ordinance, 1974. Amount outstanding at Rs.578,400 which has since been confirmed by the learned Appellate Tribunal is covered under section 25(c) of the repealed Income Tax Ordnance, 1979. Further contended that the learned CIT(A) was not justified in confirming the order of the assessing officer below in respect of independent calculation of tax under sections 80CC and 80CC and 80D of the repealed Income Tax Ordinance, 1979 on the alleged findings of Karachi High Court cited 2005 PTD 1102 which is an incorrect interpretation of the honourable Karachi High Court.

9. Facts in short are that the assessee is a limited company, which derives income from manufacturing of sugar. Assessment for the year stated supra was completed at net income of Rs.58,70,

397. Feeling aggrieved, the assessee filed appeal before the learned CIT (A) and then to the learned ITAT, Lahore, who by virtue of its order dated 16-11-2006 bearing ITA No.1376/LB/2005 set aside the addition amounting to Rs.11,85,724 made under section 24(c) of the Ordinance, 1979 to the assessing officer to appraise the facts and apply the correct law without being biased that in the earlier round there has been an addition. In this regard, the Taxation Officer starting re-finalizing the set aside assessment, issued show-cause notice vide letter No.236 dated 13-11-2007 requiring the assessee to furnish documentary evidence with regard to verify tax deductions under sections 50(1) and 50(4) of the Ordinance, 1979. As the assessee could not substantiate his version with any documentary evidence, the assessing officer proceeded to make addition under section 24(c) of the Ordinance at Rs.11,85,724 on account of failure to deduct tax under section 50 while making payment under the head, salaries and services rendered was made. Tax under sections 80CC and 80D was also charged. This has forced the assessee to file appeal before the learned CIT(A), who by virtue of his order bearing Nos.3029 and 3030 dated 16-10-2008 upheld the order of the assessing officer on these grounds and rejected the assessee's plea. This dispensation has compelled the assessee to come up in appeal before the Appellate Tribunal Inland Revenue, Lahore.

10. We have gone through the orders of the authorities below as well as the facts available on record. We have noted that the addition made under section 24(c) of the Ordinance, 1979 amounting to Rs.578,400 had already been deleted by the learned ITAT vide order dated 29-9-2007 bearing M.A. No.190/LB of 2007 (assessment year 2001-2002) after scrutinizing the record that the name, address and the amount is matching, hence obviously was not to be disallowed twice. Keeping in view of the foregoing facts and circumstances of the case, we are of the considered opinion that the addition amounting to Rs.578,400 once again made by the authorities below does not sustain in the eye of law and also merits deletion.

11. Coming to the addition under sections 80CC and 80D, to strengthen his contention, the assessee has relied upon a latest judgment of the honourable Lahore High Court, Lahore cited as 2009 PTD 1707 whereby it was held that 80D cannot be applied on each and every source of income of taxpayer separately and its has to be on the aggregate of the turnover of the taxpayer from all sources Since, we have observed that the addition made under section 24(c) of the repealed Income Tax Ordinance, 1979 had already been deleted in respect of assessment year 2001-2002 by the learned ITAT vide order dated supra, so the impugned addition made by the department under sections 80CC and 80D of the Repealed Income Tax Ordinance, 1979 for the year under consideration has no legs to stand upon which is hereby deleted accordingly.

12. As a result, the assessee's appeal is succeeded to the extent and in the manner as indicated above.

13. Accordingly, all the three appeals are disposed of. C. M.A./76/Tax(Trib.) Order accordingly.