2002 PLP (Trib (PTD)

KHALID WAHEED AHMAD (JUDICIAL MEMBER).

The above appeal pertaining to assessment year 1992-93 has been filed by the assessee/appellant to assail the order, dated 14-2-1993 passed by CIT (Appeals-II) Karachi.

2. Learned representatives of both the parties are present and have been heard.

3. The asses see /appellant through the instant appeal contests the order, dated 14-2-1993 of first appellate authority Karachi whereby the penalty imposed under section 108 of the Income Tax Ordinance, 1979 (hereinafter called the Ordinance) was upheld to the extent of 50% of the amount of penalty levied by the ITO. The assessee/appellant in this case is a Private Limited Company. No return was filed on due date, i.e. 1-8-1992. However, the return was filed on 29-10-1992. The Assessing Officer imposed penalty under section 108 of the Ordinance amounting to Rs.8,900 0 Rs.100 per day w.e.f. 2nd August, 1992 to 29th October, 1992. It was :he contention of the assessee, before the authorities below that the return for the assessment year 1992-93 was filed for the first time as a new. assessee and since the return figure was in loss the assessee was not required to file return under the provisions of section 55 of the Ordinance, therefore, no penalty could be imposed under section 108 for non-submissiph of return which was not due under section 55 of the Ordinance. The CIT(Appeals) upheld the imposition of the penalty. However, the quantum was reduced to Rs.50 per day as against Rs.100 per day adopted by the Assessing Officer. The CIT(Appeals) has relied on the case-law reported as (1987) 169 ITR 221 (SC India) wherein it was held that interest is by way of companies and not by way of penalty. Another, decision cited by the CIT(Appeals) is also from the Indian case-law reported as (1989) 177 ITR 445 (S.C. India) whereby it was held that in imposing penalty for late filing of return element of mens rea was not required to be proved. Both the cases cited have no relevancy with the issue involved in the instant case where the contention of the assessee is that he was not required to file return under section 55 of the Ordinance.

4. Learned A.R. reiterated the same arguments as taken before the authorities below and contended that no default of section 55 is committed by non-filing of return on due date in the instant case. According to learned A.R. under the provisions of section 55 a person whose income exceeds the maximum amoLnt which is not chargeable to tax under this Ordinance is required to file a return whereas the assessee has filed return declaring loss. Learned A.R. further submitted that the income of the assessee was exempt from tax and the appeal of the assessee was accepted by the CIT(Appeals) Zone-IV Karachi vide order, dated 12-2-1996. Learned D.R. supported the contention of the revenue for the reasons mentioned by the authorities below in their orders.

6. Arguments of learned representatives of both the parties have been heard. CIT(A) in his order has observed that if the result of assessment was still loss it was to be carried forward for set-off against future income. In our view the finding of CIT(Appeals) that the total income would include negative/positive results and thus are covered in the definition of income under section 2(24)(b) of the Ordinance, is not in accordance with law. The relevant provision of section 55 are as followings:

"Section 55 Return of Total Income.

Every person (a) whose total income or the total income of any other person, in respect of which he is assessable under this Ordinance, for any income year (hereinafter referred to as the `said income year') exceeds the maximum amount which is not chargeable to tax under this Ordinance."

7. According to the,above quoted provision of section 55 only the person whose income exceeds the maximum amount which is not chargeable to tax under this Ordinance is required to file the return. There is no ambiguity in the above quoted provisions of section

55. Tile provisions of section 55 are clearly expressed leaving no room for any interpretation through which the meanings of word income used in the section could be stretched to include loss on the basis of speculation. It is ; A therefore, held that in the event of loss declared by the assessee the income declared did not exceed the maximum amount which was not chargeable to tax under the Income Ordinance, 1979 in terms of section 55 of the Ordinance.

8. As a result we accept the appeal of the assessee and the penalty imposed under section 108 of the Ordinance stands delete . C.M.A./M.A.K./153/Tax (Trib.) Appeal accepted.