1989 PLP 826 (PTD)

(1) Whether the Income Tax Appellate Tribunal acted in accordance with law in confirming computation of export rebate as made by the Income Tax Officer? (2) Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was justified iii holding that loss in respect of fixed assets in the former East Pakistan was not covered by section 10 (2) (vii) of the repealed Act? (3) Whether on the facts and in the circumstances of the case the Tribunal was justified in upholding the levy of additional tax under section 45 (A) of the repealed Income Tax Act? The applicant assessee exported tobacco, which entitled him to get the benefit of export rebate in the charge years 1975-76, 1976-77 and 1977-78. The Income Tax Officer calculated the export rebate according to formula by dividing the export sale by the total sale and then allowed 15% rebate on the entire tax payable The applicant not satisfied with this method of calculation appealed, but the Appellate Assistant Commissioner maintained the order of the Income Tax Officer. In appeal filed before the Tribunal the same treatment was maintained. The question No.l arises from the afore-stated facts. So far question No.2 is concerned in the charge year 1975-76 the applicant made a claim under section 10 (2) (vii) of the Income Tax Act at Rs.1,91,53,218 representing loss of fixed assets in Bangladesh. The Income Tax Officer rejected the claim as .no particulars were furnished and further that it was not admissible under section 10 (2) or the Central Board of Revenue Circular 11of 1972. In appeal the applicant failed and the second appeal was filed before the Tribunal. The Tribunal maintained the order of the Appellate Commissioner. The applicant then filed application under Section 136 (1) and question No-2 was referred on these facts. So far the third question is concerned it arises from the facts that in the assessment year 1975-76 the applicant- noted that the payment made by the applicant under section 22 (A) (3) was short and hence additional tax under section 45 A of the Income Tax Act was charged. The applicant had explained that the shortfall in payment occurred due to the fact that the applicant had claimed deduction of the value of fixed assets left in the then East Pakistan which was refused by the assessing officer and hence the income increased to the extent Rupees two crores. The applicant did not succeed in appeal either before the Appellant Asstt. Income Tax Commissioner or the Tribunal. At the instance of the applicant all the, three afore-stated questions have been referred by the Tribunal for our consideration and reply. We have heard Mr Iqbal Naeem Pasha the applicant and Mr. Shaikh Haider for the Department. Both' the learned counsel agree that the reply to question No.2 shall determine the answer of remaining two questions. We therefore proceed to consider question No.2 frit. As stated earlier this is a claim by the applicant under section 10 (2) (vii) of the Income Tax Act claiming a loss in respect of its fixed assets. Both the learned counsel have brought to our notice the case of M/s united Liner Agencies of Pakistan Ltd. v. Commissioner of Income Tax (Central Zone) Karachi, 1988 P T D

277. In this case the assessee had made similar claim under section 10 (2) (vii) in respect of fixed assets, which were left in the then East Pakistan and had been taken over by the Government of Bangladesh. It was, observed as follows:-- "Coming to the question, section 10 (2) (vii) of the Act which is already reproduced in the earlier part of this judgment. The properties were acquired by Bangladesh Government under the Bangladesh Banks (Nationalization) Order, 1972 and the Bangladesh Abandoned Property Control, Management and Disposal) Order, 1972 by the competent authority. In these circumstances, we think it appropriate to hold that Section 10 (2) (vii) of the Act applies to all cases where the properties were acquired by the Bangladesh Government." In the present case, similar situation operates. The applicant had left the fixed assets in Bangladesh. Such a situation is completely covered by Bangladesh. Abandoned Property (Control. Management and Disposal) Order, 1972. Therefore, as held in United Liners Agencies of Pakistan Ltd. Co.s. case. section in 10 (2)(vii) of the Act will be attracted and the loss in respect of fixed assets in former East Pakistan was covered by this provision. Our answer to Question No.2 is in the negative. In the light of this reply to Question No.2 now we will answer the remaining two questions. Question. No.l. The question of rebate would arise if there was any income earned by the applicant. In view of the fact that question No.2 has been answered in the negative both the learned counsel state that there will be no income and the applicant will go in loss. In these circumstances according to Mr. Iqbal Naeem Pasha if losses are allowed the question of rebate will not arise. In view of the finding on question No.2 this question has become redundant. Question No

3. This question is also dependent upon the fact that the applicant has not suffered any loss. According to Mr. Iqbal Naeem Pasha if the losses are allowed this question will not arise because in these circumstances the question of additional tax under Section 45-A will not arise. In these circumstances this question has also become redundant. M.B.A./P-102/K Reference answered.