1989 PLP 1137 (PTD)

SAEEDUZZAMAN SIDDIQUI, J.--The above-noted income-tax reference under section 66 (2) of the Income Tax Act, 1922, is filed by the applicant directly in this Court with the following questions:-- "(1) In the facts and circumstances of the case whether Government impositions, levies and taxes which are statutory liabilities are within the preview of 'trading `liabilities' under section 10 (2A) of the Income Tax Act. (2) In the facts and circumstances of the case, whether the Tribunal was justified in treating unpaid excise duty of Rs.12,09,002 as a trading liability liable to be added under section 10 (2-A) of the Income Tax Act. (3) In the facts and circumstances of the case whether the Tribunal was justified in holding that the discretion exercised by the Income-tax Officer under section 10 (2-A) was not improper and arbitrary when the Supreme Court had granted stay to the assessee." The admitted facts of the reference may be stated as follows:-- For the year 1973-74, the applicant submitted its return of income under the Income-tax Act, 1922, disclosing a loss of Rs.2,57,

676. The Income-tax Officer however determined the income of applicant for the above year at Rs.28,89,

242. Among other additions, the I.T.O. added a sum of Rs.25,57,676 in the income of applicant for the year 1973-"74, which represented the outstanding liabilities of Excise duty, Sales Tax, Rehabilitation Tax, Defence Surcharge and Refugee Tax against the applicant for over 3 years. On appeal by the applicant against addition of the sum of Rs.25,57,676 by the I.T.O. in its income for the assessment year 1973-74, the Appellate Assistant Commissioner, maintained the addition of the sum of Rs.15, 75, 532 in the income of the applicant, which represented the outstanding liability of Excise duty against the applicant for over three years, but deleted the additions of Sales Tax, Rehabilitation Tax, and Defence Surcharge in the income' of applicant for the above year. On further appeal before income Tax Appellate Tribunal the above order of Appellate Assistant Commissioner was maintained. Mr. Sirajul Haq the learned counsel for the applicant contended before us that the addition of the sum of Rs.15,75,532 in the income of applicant for the assessment year 1973-74 under section 10 (2-A) of the Income-tax was illegal and uncalled for as the above amount represented the unpaid liability of Excise duty on goods produced which did not fall within the scope of `Trading liability'. According to learned counsel the expression "trading liability" used in Section 10 (2-A) of the Act is restricted in its application to the liabilities arising from any transactions of sale and purchase only and it did not include in its scope a statutory liability like that of an excise duty. The learned counsel in support of his above contention relied on the dictionary meaning of the word `trading' as given in Black's Law Dictionary and Oxford Dictionary. The learned counsel for the Department on the other hand contended that there is no justification m interpreting the expression `trading liability' in a restricted sense as suggested by the counsel for the applicant. It is urged on behalf of the Department that the outstanding dues of Excise duty, which remained unpaid for over 3 years were rightly added under section 10 (2-A) (iii) of the Act. After hearing the counsel for the parties our conclusions are as follows: It is not disputed before us that the liability of Excise duty amounting to Rs.15,75,532 related to assessment year 1968-69 and was outstanding against the applicant for over 3 years. The Appellate Assistant Commissioner found that the above amount of Excise duty was deducted from the Sales and debited to the manufacturing account in the relevant year. Before the Income Tax Appellate Tribunal also the applicant's counsel admitted that the above amount of excise duty was duly credited in the applicant's books of accounts and debited to Sale account in the year 1969. In the light of the above-admitted facts we will now examine whether the outstanding liability of Excise duty could fall within the scope of 'trading liability' or not. The words `trading', `trade', and `liability' are defined in Webster's New World Dictionary of the American Language College Edition as follows:- "Trading:--That trades, engaged in trade, commercial, the action of a person who trades, buying & selling, commerce." "Trade:

(1)(a) a trade, path, (b) a course, regular procedure. (2) a means of earning one's living, occupation, work, especially, skilled work as distinguished from unskilled work or from a profession or business, craft. (3). Buying and selling, barter, commerce. All the persons in a particular line of business (5) Customers clientele (6) a purchase or sale deal bargain (7) an exchange; 'barter'. "Liability:-1 The state of being liable. 2. anything for which a person is liable, 3 usually in pl. a debt; as accounts payable, surplus, losses and capital stock are liabilities of a corporation, opposed to asset. 4. something that works to one's- disadvantage." . The learned counsel for the applicant relying on the definition of word `Trade' as given in Black's Law Dictionary contended that the expression `Trading liability' used in section 10 (2-A) of the Act means only such liability of an assessee which arises in connection with the buying and selling of merchandise and no other. The definition of the Word `Trade' relied on by the learned counsel for the applicant is as follows:

"Trade. The act or the business of buying and selling for money; traffic; barter. May v. Solan, 101 U.S. 231, 25 L. Ed. 797, trade is not a technical word and is ordinarily used in three senses: (1) in that of exchanging commodities by barter or by buying and selling for money; (2) in that of an occupation generally; (3) in that of a mechanical employment, in contradistinction to the learned professions, agriculture, or the liberal arts. People v. Polar Vent of America, Inc., 10 Misc. 2d 378, 174 N.Y.S. 2d 789,

793. The business which a person has learned and which .he carries on for procuring subsistence, or for profit; occupation or employment; distinguished from the liberal arts and learned professions, and from agriculture. A line of work or a form of occupation pursued as a business or calling as for a livelihood or for profit; anything practised as a means of getting a living money, booty, etc., mercantile or commercial business in general or the buying and selling or exchanging of commodities, either by wholesale or retail within a country or between countries. Helvering Wilmington Trust Co., C.C:A.3. 124 F.2d 156,158." We are unable to agree with the learned counsel for the applicant. There is nothing in the language of section 10 (2-A) of the Act to show that the Legislature had used the word `trading liability' in a limited or particular sense, No doubt one of meanings given in the dictionaries to the word `trade' is the act of buying and selling for money and therefore, the expression `trading liability' will also include a liability arising in connection with the buying and selling of merchandise for money. There is, however, no justification for concluding on the language of statute that the Legislature used the expression that trading liability" only in this restricted meaning. In our view the legislature used the expression 'trading liability', in section 10 (2-A) of the Act in its ordinary grammatical sense, which connotes a, liability arising in connection with the trade, business or occupation followed by a person. This meaning is comprehensive enough to include liability of `Excise duty, which was shown as debited to the sale account in the account books of the applicant. For the aforesaid reasons we answer the questions referred to above in the affirmative. There will be no order as to the costs. M.B.A./Zs.T.62/K Questions answered in affirmative.