2002 PLP 1993 (PTD)

(vi) The complainant Company had already applied to the Tax Department for issuance of refund vide its letter, dated 25‑8‑1997 and a reminder was sent on 3‑5‑2001 but no action has statedly been taken by the Tax Department. (vii) Tax under section 80D has been levied in the complainant's case for the assessment years 1991‑92 to 1996‑97 but the present claim is restricted to the assessment years 1992‑93 to 1994‑95 as the assessments for the remaining three years are in appeal before various appellate forums. The refund claim pertaining to tax paid under section 80D for the assessment years 1992‑93 to 1994‑95 is Rs.385,626, Rs.603,928 and Rs.188,486 respectively. After calculating compensation under section 102 of the Income Tax Ordinance, the complainant's total claim is Rs.2,610,

274. It has been prayed that the amount of refund and compensation under section 102 be ordered to be paid to the complainant.

2. The respondent's reply has been received and the representatives of the complainant and the respondent have attended and have been heard. In the respondent's reply it is denied that any refund application, dated 25‑8‑1997 was filed with the tax department but it has been admitted that an application dated 3‑5‑2001 has been received. The main point in the respondent's reply is that the ratio of the judgment of the Hon'ble Supreme Court is not applicable in the complainant's case because exemption under clause (118A) is not covered by the Protection of Economic Reforms Act, 1992. It is stated by the respondent that since the judgment of the Supreme Court pertains only to those exemptions which were covered by the said Act, it was not applicable in the case of the complainant.

3. During the hearing, the complainant's representative referred to section 6 of the Protection of Economic Reforms Act, 1992 which together with the Schedule reads as under: "

6. Protection of fiscal incentives for setting up of industries.‑‑‑ The fiscal incentives for investment provided by the Government through the statutory orders listed in the Schedule or otherwise notified shall continue in force for the term specified therein and shall not be altered to the disadvantage of the investors." "THE SCHEDULE (See section 6)

1. Notification No. S.R.O. 1283(1)/90 dated the 13th December, 1990 issued under subsection (2) of section 14 of the Income Tax Ordinance, 1979 (XXXI of 1979).

2. Notification No. S.R.O. 1284(1)/90, dated 13th December, 1990 under section 19 of the Customs Act, 1969 (IV of 1969)."

4. It was argued on behalf of the complainant that protection had been given in the Protection of Economic Reforms Act not only to the statutory orders listed in the Schedule but also to those which had been "otherwise notified". It was contended that clause (118A) was inserted through the Finance Act, 1988 and the words "otherwise notified" in section 6 of the Act were applicable to it. It was thus argued that the Act did not give protection only to clauses (118C), (118D) and (118E) which were inserted through S. R.O. 1283(1)/90, dated 13th December, 1990 mentioned in the Schedule to the Act but also to clause (118) of the Second Schedule, Part I to the Income Tax Ordinance. It was thus argued that the ratio of the Supreme Court judgment was applicable in the complainant's case also and therefore tax under section 80D was not leviable in the case during the relevant years.

5. The contentions of the two sides have been considered. It has already been noted that clause (118A) was inserted in the Second Schedule, Part I to the Income Tax Ordinance through Finance Act, 1988. It allowed an eight‑year tax exemption for certain industrial undertakings set up between 1st July, 1988 and 30th June, 1993 (later substituted by 30th November, 1990). It is thus an accepted fact that clause (118A) was inserted much before the insertion of section 80D in the Income Tax Ordinance in 1991. Now the Hon'ble Supreme Court gave particular importance to the fact that the Protection of Economic Reforms Act, 1992 (Act XXII of 1992) was subsequent in time to section 80D of the .Income Tax Ordinance, which was inserted through Finance Act, 1991, and would, therefore, prevail over the latter. The Hon'ble Supreme Court also specifically held that assessees who fulfilled the conditions in the notifications referred to in the Schedule to section 6 of the Protection of Economic Reforms Act (in the present context clauses (118C), (118D) and (118E) of the Second Schedule to the Income Tax Ordinance) are entitled to the protection and section 80D is not applicable in their cases. The relevant portion of the judgment of the Hon'ble Supreme Court is reproduced as under: "

53. It may further be observed that section 6 thereof lays down that fiscal incentives for investment provided by the Government to the statutory orders listed in the Schedule or otherwise notified shall continue in force for the terms specified therein and shall not be altered to the disadvantage of the investor. The above Schedule referred to in section 6 reads as follows: THE SCHEDULE (See section‑6)

1. Notification No. SRO 1283(I)/90, dated the 13th December, 1990 issued under subsection (2) of section 14 of the Income Tax Ordinance (XXXI of 1979).

2. Notification No. SRO 1284(1)/90, dated 13th December, 1990 under section 19 of the Customs Act, 1969 (IV of 1969).

54. In our view, since the provisions of Act XII of 1992 are subsequent in time and as they are contained in a special statute, they shall prevail over the provisions of section 80D of the Ordinance, which was enacted through Finance Act, 1991, which was an earlier statute and which was part of a general statute. In this view of the matter, assessees who fulfil the conditions of the notifications referred to in the Schedule to section 6 of the Act XII of 1992, are entitled to the protection'."

6. Since clause (118A) was inserted much before the insertion of section 80D and since it is not included in the notifications referred to in the Schedule to section 6 of Act XII of 1992, the ratio of the Supreme) Court judgment cannot be considered as applicable in the complainant's case. The complaint is accordingly dismissed. C.M.A./M.A.K/301/FTO Complaint dismissed.