P L D 1967 Karachi 184 (PLP)

ABDUL QADIR SHEIKH, J.--The Income-tax Appellate Tribunal has referred the following question to this Court under section 66(1) of the Income-tax Act:- "Whether in the facts and circumstances of the case the Business Profits Tax Officer would make an order of assessment on 29th March 1958, i.e. after the expiry of four years from the last date of the chargeable accounting period ending on 31st December 1953."

2. The facts briefly stated are that on the 27th of July 1957, the business Profits Tax Officer issued a notice under section 11 of the Business Profits Tax Act, 1947 to Messrs Adamji Sons, Karachi to furnish a return in respect of the chargeable account ing period ending on the 31st of December 1953 and ultimately assessed the tax on the 29th of March 1958. The assessee appealed to the Appellate Assistant Commissioner contending that the levy of tax was barred by time, as the notice was served on him more than four years after the end of chargeable accounting period. This contention was rejected by the learned Appellate Assistant Commissioner on the ground that according to section 34 of the Income-tax Act, which was made applicable to the provisions of the Business Profits Tax Act by virtue of section 19 of the latter Act, assessments made up to the 31st of December 1958, would be valid in law. The assessee then took up the matter, further, before the Appellate Income -tax Tribunal, but without any success. The Tribunal, however, took a different view on this legal issue. According to them, section 14 of the Business Profits Tax Act which prescribed the limitation of four years period for taking action under section 11 of the Act, was deleted on the 1st of April 1957, by section 12 of the Finance Act I of 1957, and there was no other limitation imposed under the Act in this regard, except the provisions of section 19 as amended on the 1st of April 1957. The subsection (1) of section 19 of the Act provided for the application of the provisions of section 34 of Income-tax Act, with such modifications as may be prescribed, and in exercise of this power, the Central Board of Revenue adopted section 34 of the Income-tax Act with retrospective effect from the 1st of April 1957 under a. notification dated the 4th of July 1958. The Tribunal held that the Central Board of Revenue, in the exercise of a Subordinate delegated authority was not competent to give a retrospective; effect to the notification as from the 1st of April 1957, and this notification could have effect only from the date on which it was issued, i.e. from the 4th of July 1959. On this reasoning, it was held that section 11 of the Business Profits Tax Act of 1947 operated freely up to the 4th of July 1958, without any limitation as to the time by which the power conferred on the Business Profits Tax Officer could be exercised. The assessment made on the 29th of March 1958 for the chargeable accounting period ending on the 3Ist of December 1953, was, therefore, held to be valid.

3. We have no hesitation in agreeing with the interpretation placed by the Income-tax Appellate Tribunal on the provisions of section 19 of the Business Profits Tax Act of 1947 and the rules made thereunder. It is a settled principle in law that a subordinate delegate authority cannot make rules or issue notifications under a statute, so as to give a retrospective effect to them, unless the statute itself grants such power. The view taken by the Income-tax Appellate Tribunal that the provisions of section 34 of the Income-Tax Act as adopted for the purposes of the Business Profits Tax Act came into effect on the 4th of July 1.958 when rule 5 (va) was added to the Business Profits Tax Act of 1947, is based on correct principle and foundation in law.

4. Since rule 5 (va) of the Business Profits Tax Rules can have effect only from the date it was notified in the official Gazette, i.e., the 4th of July 1958, section 11 of the Business Profits Tax Act, 1947 operated freely up to that date, without any res triction as to the time by which the Business Profits Tax Officer could take action under it. The order dated the 29th of March 1958, passed by the said officer is therefore, not hit by the pro visions of section 19 (1) of the Business Profits Tax Act and the rule mentioned above. The result, therefore, is that the assess ment made by the Business Profits Tax Officer in this case is valid and the reference is, accordingly, answered in the affirmative. S. Q. Reference answered in the affirmative.