2000 PLP (Trib (PTD)

9. The learned CIT(A) has upheld the impugned finding holding: "The assessing authority was quite justified in rejecting the Molasses export trading account and making addition of Rs.6,888,689 because the same is based on the valuation made by the Department of Pakistan Custom which is an expert authority to determine the export rate on a particular date. The arguments of the learned counsel in this respect have no force hence discarded and the action of the assessing authority is hereby upheld."

10. We, therefore, shall consider the relevant provisions of the Customs Act as well as the Rules in this context, Section 25(1) of the Customs Act ibid provides: "

25. Value of imported and exported goods.

(1) The value of any imported goods shall be taken to be the normal price, that is to say, the price which they would fetch, (on the date referred to in section 30), on a sale in open market between a buyer and a seller independent of each other."

11. Subsection (4) of section 25 and the explanations provide: "(4) The value of any exported goods shall be taken to be the normal price, that is to say, the price which they would fetch, at the prescribed time, on a sale in open market for exportation to the country to which the goods are consigned between a seller and a buyer independent of each other. Explanation.

For the purposes of this subsection, the expression 'prescribed time' shall mean the time when the bill of export is delivered under section 131 or, when export of the goods is allowed without a bill of export or in anticipation of the delivery of a bill of export, time when export of the goods commences. Explanation I.

A sale in open market between a buyer and a seller independent of each other presupposes:

(a) that the price is the sole consideration;. and (b) that the price is not influenced by any commercial, financial or other relationship, whether by contract or otherwise between the seller or any person associated in business with him and the buyer or any person associated in business with him other than the relationship created by the sale itself; (c) that no part of the proceeds of any subsequent resale; other disposal or use of the goods will accrue, either directly or indirectly, to the seller or any person associated in business with him. Explanation II.

Two persons shall be deemed to be associated in business with one another if, whether directly or indirectly, either of them has any interest in the business or property of the other or both have a common interest in any business or property or some third person has an interest in the business or property or both of them. "

12. Before proceeding further we shall make an observation at this juncture that reference to the Rules, printed at pages 213 and 215 of the Customs General Order, 1971 and 1982, made before the learned assessing officer is not relevant in context of exports because the Rules ibid relate to valuation of imported goods.

13. We find on consideration of the provisions of the Customs Act supra that the criteria for application of provisions of subsection (4) of section 25 supra, inter alia, is that the seller and the buyer can be deemed to be associated in business with one another" and so is the criteria under section 79 of the Income Tax Ordinance, 1979 for determining the amount of profits which would have accrued to the resident but, by reasons of making or imposing conditions between them in their financial transactions which differ from those which would be made between independent persons, have not so accrued.

14. We further find that the admission of the appellant that Pakistan Customs have taken the value of exported goods at the rates supra because the transactions of its exports are hit by the criteria supra is implied in the fact that it has riot 'filed any appeal against such valuation by the Customs.

15. Accordingly, we find no substance in the submissions of the learned counsel of the appellant that the learned CIT(A) has failed to appreciate that the learned Assessing Officer has failed to establish that the nature of export transactions of the appellant attracts the provisions of section 79 of the Income Tax Ordinance to determine the proper amount of profits; hence impugned order confirmed and appeal dismissed.. C.M.A./90/Tax(Trib.) Appeal dismissed.