2010 PLP (Trib (PTD)

This appeal have been filed by the taxpayer against the order of learned CIT(A) dated 24-9-2009 on the following grounds of appeal: "(1) That the learned CIT(A) was not justified in confirming the additional assessment made under section 122(5A) of Income Tax Ordinance, 2001, which is without jurisdiction of the Additional Commissioner. (2) That the learned CIT(A) was not justified to confirm the order when the provisions of section 153(6A) on all corners are applicable to the case of the appellant being manufacturer of auto parts and that the provisions of section 153(6B) are not applicable. (3) Without prejudice to above the learned CIT(A) has erred in holding that the income of the appellant falls under FTR by following the Sindh High Courts decision which is not on the subject."

2. The brief facts leading to the appeal are that the taxpayer-appellant is a manufacturer and an AOP. The Federal Board of Revenue through an explanation under clause 46-A of Part-IV of the Second Schedule to the Income Tax Ordinance, 2001 explained the provision of subsection (6B) of section

153. The revenue-department applying the same considered the assessee AOP to be covered within the Final Tax Regime being a manufacturer. In this regard a judgment of Hon'ble High Court of Sindh in terms of 2009 PTD 809 has been referred.

3. Before us the learned counsel of the taxpayer has claimed that the judgment referred above does not decide the issue pertaining to the assessment under consideration. It has only explained the implication of section 153(4)(6A) read with Clause (46-A) Part-IV of the Second Schedule to the Income Tax Ordinance, 2001.

4. The issues as to whether Clause (46-A) of Part-IV is legally and validly inserted or is in consonance of section 153(4A)(6A) or both are in conflict with each other, were not before the Hon'ble court. The same, therefore, is not applicable on the facts of the case. Earlier the Hon'ble Lahore High Court, Lahore; in a judgment decided in Writ Petition has held the said explanation of clause (46A) in Part-IV of the Second Schedule to the Income Tax Ordinance, 2001 to be as ultra vires to the powers of Federal Board of Revenue (FBR). The application of provision of section 153(4)(6A), therefore, becomes independent. The same thus is to be read and applied ignoring Clause (46-A) of Part-IV to the Schedule to the Income Tax Ordinance, 2001. Since issue now raised was not before the Hon'ble High Court of Sindh, the same is not the ratio decidendi and the same does not apply on the facts and circumstances of the case. The finding of the Hon'ble Lahore High Court, therefore, is direct and all on fours of the present case. The appellant is an AOP and the law as on the date applicable as interpreted by the Hon'ble Lahore High Court, does not make this transaction to be as covered within the purview of FTR. Reliance can be placed on 2008 PTD 1563. The claim of the appellant therefore, is considered as valid and by strict application of the provision of law as was obtaining on the day and keeping in view the famous principle, "when the law requires a thing to be done in a particular manner it would be legal and valid only if it was done in that manner and not otherwise". re: 2005 MLD 1239, it is held that the present case is not covered by (Final Tax Regime).

5. The upshot of the above discussion is obvious. The appeal filed by the taxpayer is allowed and the action of the officers below is held to be as unlawful. The appellant being manufacturer for the year is not covered by the FTR. The deemed assessment, therefore, is restored and the two orders of the officer below are hereby cancelled. C.M.A./42/Tax (Trib.) Appeal accepted.