1983 PLP 1202 (SCMR)

NASIM HASAN SHAH, J.‑This petition for leave by the Institute Geographique National, Paris (France), calls in question the judgment of a Division Bench of the, Lahore High Court, Lahore passed on 17‑2‑1979, whereby the Intro‑Court Appeal (No. 173 of 1978) filed by the petitioner against the judgment of a learned Single Judge passed on 5‑7‑1978 in Writ petition (No. 971 of 1978) was dismissed as not maintainable under the provisions of subsection (2) of section 3 of the Law Reforms Ordinance (Act XII of 1972). The brief facts of the case are that the petitioner, which claims to be a public establishment of the Government of France and specialises in the work of serial survey and photography, etc., entered into a contract with respondent No. 4, namely, Water & Power Development Authority, Lahore [Pakistan], shortly called WAPDA, on 19‑2‑1976 for carrying out aerial photography of 68,000 square miles of Indus Basin, and to supply ‑the resulting material for a value of Rs. 84,54,712.82. According to the terms of the contract, the payment for the said work was to be made out of an IBRO Loan signed on 24‑6‑1976 while the major amount was to be paid in French Francs in France. It is stated that the work in question was completed by the petitioner within the stipulated period of 90 days and a completion certificate in this regard was duly issued by the respondent No. 4 on 27‑7‑1976. The total staff comprising five foreigners [of European origin] and. the equipment for processing including aeroplanes, etc., were brought to Pakistan from France and the same were taken back to France upon completion of the work. The staff for rendering the service and performance of the contract staved in Pakistan in rented hotel rooms and the laboratory work of the photographs was also done in a converted hotel room. On 5‑5‑1977, respondent No, 3, namely, the Income‑tax Officer, Contractors Circle 1, Lahore, issued a letter to the Director, Soil Salinity & Water Table Surveys, Master Planning & Review Division, WAPDA, Lahore, staying therein a sum of Rs. 12,39,827, according to the calculations shown in the assessment‑sheet [Schedule] appended therewith, was due from the petitioner as an assessee for the work executed by it under the contract i 3 Pakistan and that the said amount be deducted and a cheque sent to him for crediting the payment into the Government account. The institute challenged the above direction of the Income‑tax Officer by moving: (i) an application dated 12‑12‑1977 made to .the Income‑tax Officer, Contractors Circle I, Lahore, under section 35 (1) & (3) of the Income‑tax Act denying the Institute's liability to any tax in Pakistan and for rectification of the mistake; (ii) a revision petition dated 12‑12‑1977 under section 33‑A of tire Income‑tax Act, before Commissioner, Income‑tax (Revision) Rawalpindi, for setting aside tie assessment order dated 5‑5‑1977; and (iii) an application dated 13‑121917 addressed to the Chairman, Central Board of Revenue, Islamabad, under section 5(8) of the Income‑tax Act, for a direction to the authorities below to forthwith withdraw and cancel the assessment dated 5‑5‑1977. The Chairman, Central Board of Revenue, Islamabad [Respondent No. 1] however, in its reply dated 14‑2-1978 informed the petitioner that it was of the opinion that as the petitioner "maintained a permanent establish ment in Pakistan within the meaning of Art. 11 (1) (k) of the Convention for the Avoidance of Double Taxation of income between Pakistan and France", and derived commercial profits in Pakistan, it was liable to Income‑tax on such profits in view of the provisions of Article III (C) of the said Convention. Aggrieved by this decision, the petitioner invoked the Constitutional jurisdiction of the Lahore High Court by way of filing Writ Petition (No. 971 of 1978). The said petition came up for hearing before a learned Single Judge of the Lahore High Court, who by his judgment dated 5‑7‑1978 dismissed the same holding that the petitioner, maintained a) permanent establishment and was therefore liable to tax. Dissatisfied with the above order of the learned Single Judge of the Lahore High Court, the petitioner preferred an Intra‑Court Appeal [No. 173 of 1978] which was heard by a Division Bench of the said High Court. Before it an objection was raised with, regard to the maintainability of the appeal on the ground that it was bit by the proviso to subsection (2) of section 3 of the law Reforms Ordinance (XII of 1972), which provides that an appeal: "shall not be available or competent if the application brought before the High Court under Article 199 arises out of any proceedings in which the law applicable provided for at least one appeal or one revision or one review to any Court, Tribunal or authority against the original order." The learned Judges, after considering the contentions of both the parties on this aspect of the matter, came to the conclusion that the Income‑tax ‑Act provided an appeal against the impugned order passed by the Income‑tax Officer, hence the Intra‑Court Appeal was not maintain able. In support of this petition for leave to appeal, Mr. Raza Kazim, has mainly contended that the impugned order of the Income‑tax Officer was referable to the provisions of section 49‑AA of the Income‑tax Act, 1922, which deals with agreements for avoidance of double taxation in Pakistan and other countries and that such an order is not appealable under the Income‑tax Act. Mr. Falak Sher, appearing on behalf of respondents 1 to 3, however, has drawn our attention to subsection (3) of section 49‑AA which provides: "(3) The provisions of the (Fourth Schedule) to this Act shall have effect where an agreement which has effect by virtue of this section provides that tax payable under the laws of the territory concerned shall be allowed as a credit against tax payable in Pakistan." A reference to the Fourth Schedule shows that an appeal is permissible against order falling within the purview of section 49‑AA, as is evident from rule 8 thereof,‑which is in the following terms :-- "

8. A person _ claiming an allowance by way of credit for foreign tax may appeal to the Appellate Assistant Commissioner of Income‑tax from any order of the Income‑tax Officer disallowing the claim either wholly or in part, within thirty days of the date on which the order of the Income‑tax officer was communicated to the claimant, and the provisions of sections 30, 31, 33 and 66 of the Act shall, with the necessary modifications, apply accordingly." It is clear, therefore, that even if the order of the Income‑tax Officer was deemed to bean order. under section 49‑AA, on which point we are not pronouncing any final opinion, it would ‑be an appealable order and an Intra‑Court Appeal against the order of a Single judge to a Division bench would be barred. Even otherwise the petitioner himself filed a revision petition under section 33‑A of the Income‑tax Act, before the Commissioner, income‑tax (Revision) Rawalpindi for setting aside the assessment order dated 5‑5‑1977. This shows that the petitioner himself considered that a revision could be filed against the impugned order of the income‑tax officer and under the provisions of the proviso to subsection (2) of section 3 of the Law Reforms Ordinance, an appeal is not available in the High Court in which the law applicable , provides for an appeal or revision against the original order. The learned Judges were, therefore, clearly right in holding that the Intra‑Court Appeal was not competent. This petition must, therefore, fails and is dismissed hereby. S.Q. Leave refused.