2006 PLP 526 (SCMR)

FAQIR MUHAMMAD KHOKHAR J.

The petitioner-Company seeks leave to appeal, under Article 185(3) of the Constitution of Islamic Republic of Pakistan, from judgment, dated 2-10-2000, passed by the Lahore High Court, Lahore in C.T.R. No.24 of 1989.

2. The Income Tax Officer disallowed the total claim of the petitioner-Company in respect of expenses on account of gratuity which making assessment for the years 1977-78 to 86-87 under the provisions of Income Tax Ordinance, 1979 (hereinafter referred to as the Ordinance). In addition we also disallowed a part of expenses claimed by the petitioner in various sub-heads under the main head "Administration of General Expenses" on the ground of their being unverified. The assessee failed to get relief from the first appellate authority i.e. the Income Tax Appellate Tribunal. Therefore, the Company filed C.T.R. No.24 of 1989 before the High Court under the provisions of section 136 of the Ordinance which was disposed of by the impugned judgment, dated 2-10-2000.

3. The learned counsel for the petitioner-Company argued that the High Court was- not justified in refusing to answer question No.3 as referred by the Tribunal on the ground that the same did not arise out of order of the Tribunal. It was further submitted that question No.3 had actually arisen as to whether the assessee being limited company was a person incapable of incurring expenses on its travelling, telephone and the like and disallowance as such was liable to be deleted in computing the taxable income of the assessee.

4. On the other hand, the learned counsel for the respondent-Income Tax Department submitted that neither any arguments were addressed by the petitioner before the Tribunal in respect of question No.3 nor any decision was rendered thereon. At no stage of proceedings, the petitioner had pressed into service the plea which could be made the basis for framing question No.3.

5. We have heard the learned counsel for the parties at some length. We find that at no stage of proceedings any question had arisen whether the assessee being a limited company was a person incapable of incurring expenses on travelling, telephone and the like which was liable to be deleted and disallowed for the purpose of computing taxable income of the assessee. The other two questions Nos.1 and 2 were, however, answered by the High Court in affirmative in view of the Judgment of this Court in the case of Commissioner of Income Tax v. Oriental Dyes and Chemical Co. Ltd. (1992) 65 Tax

254. It was held that the amount of gratuities payable to employees was a proper charge on the income of the petitioner and was, therefore, admissible as an expense. The High Court was justified in taking the view that question No.3 was never raised before the Tribunal for the purposes of section 136 of the Ordinance. Even otherwise question No.3 was irrelevant to the real dispute between the parties.

6. A similar question was examined in a number of cases. In the case of Muhammad Ashiq Haji Dost Muhammad v. Abdul Ghani PLD 1960 Kar. 155, while interpreting the provisions of section 34 of Punjab Administration of Evacuee Property Ordinance No.XV of 1949, it was held by the erstwhile High Court of West Pakistan that the question could not be said to arise in a proceeding merely because a plea containing the question was taken by the defendant. Such plea might be irrelevant, inadmissible or without any substance. A somewhat similar view was also taken in the case of Master Chiragh Din v. Abdul Hakim and another PLD 1974 Lah.

370. In the case of Messrs Ahmad Karachi Halva Merchants and Ahmad Food Products v. The Commissioner of Income Tax, South Zone, Karachi 1982 SCMR 489 the provisions of section 66 of the Income Tax Act No.11 of 1922 were examined. It was laid down that the question of law if not raised, argued or decided by the Tribunal could not be said to have arisen out of the said order.

7. In our view, the impugned judgment of the High Court is plainly correct to which no exception can be taken. For the foregoing reasons, we do not find any merit in this petition which is dismissed and leave to appeal is refused accordingly. M.H./N-3/SC????????????????????????????????????????????????????????????????????????????????????? Petition dismissed.