2011 PLP (Trib (PTD)

Department is in appeal against Commissioner (Appeals) Orders Nos. 21 and 22 dated 31-12-2009 relating to tax years 2004 and 2005. Department has challenged the order on three grounds.

2. First ground relates to chargeability of minimum tax under section 113 of the Income Tax Ordinance, 2001. The Appellate Commissioner has relied on the judgment by Lahore High Court, Lahore in PTR No. 218 of 2005 dated 28-5-2009 and allowed the appeal. Second ground relates to addition made at Rs. 5,50,000 on account of reversal of provisions for bad debts. And the third ground relates to the chargeability of tax on rebate given to the taxpayer on export.

3. Before DR could make his submissions on the grounds, learned AR appearing for the taxpayer has pointed out that first two grounds out of three have already been decided by this Tribunal in favour of the taxpayer. He has produced copy of the order in I.T.A. No.619/LB/2009 dated 5-1-2010 relating the tax year 2003. DR could not controvert the submission and had to concede that these issues have already been decided in appeal relating to tax year 2003. Relevant excerpt from the earlier order on the above noted two grounds are reproduced hereunder:-- "We have given due consideration to the arguments of both the sides. On the basis of judgment of the High Court relied upon by the learned AR of the appellant company we have already held in the case of another taxpayer in I.T.A. No.124/LB/2007 dated 4-8-2009 that the minimum tax payable under section 113 of the Income Tax Ordinance, 2001 is to be calculated with reference to the aggregate turn over from all sources including the sales/receipts assessable under the PTR. We, therefore, following earlier judgment of the Tribunal vacate the orders of the authorities below and direct that the minimum tax under section 113 be calculated on the aggregate turnover from all sources whether assessable under normal law of Presumptive Tax Regime. As regards the addition of Rs.20,00,000 we accept the appeal of the appellant company because the said addition could be made to the income of the appellant company only if it had been claimed as a deduction in an earlier year. Since the said amount was neither claimed nor allowed as a deduction in any earlier year/s because of assessment of appellant under the PTR, we, hold that the recourse to section 70 of the Income Tax Ordinance, 2001 by the Taxation Officer was not justified. Accordingly, we order the deletion of the said addition". Appeal of the department on first two grounds fails for the reasons given in earlier order by this Tribunal.

4. So far the third ground, raised by department, is concerned, learned DR submits that the rebate received by the taxpayer, in a relevant tax year, was an income, therefore, was liable to be taxed independent of appellant's discharge of liability in FTR (Final Tax Regime).

5. AR after reading provisions of subsection (4) of section 154 contends that language of this subsection is very clear that all income(s) arising from a transaction covered under section 154 shall fall in final discharge. He further argues that F.B.R. is treating such rebate under the final discharge since 1993 when a Circular No.14 of 1993 dated 19-8-1993 was issued. In para 4 of this Circular F.B.R. has included the rebate in final discharge.

6. We have carefully examined the relevant provision of sub-section (4) of section 154 of the Income Tax Ordinance, 2001, which is reproduced hereunder:-- "(4) The tax deducted under [this section] shall be a final tax on the income arising from the [transaction referred to in this section]." The circular referred by AR is also examined. Para 4 of Circular No.14 of 1993 dated 19-8-1993 is also reproduced hereunder:-- "Duty drawbacks (i.e. customs rebates, compensatory rebate, export exchange difference, etc.) in respect of exports already subjected to withholding tax under section 50(5-A) shall not be considered as additional receipts. The amount of such duty drawbacks shall bee deemed to have been covered, for tax purposes, under presumptive tax regime under section 80-CC." There is no dispute on facts that the rebate in question had arisen from the export by the taxpayer. Under these facts if provisions of subsection (4) to section 154 are examined, the words: "Income arising from the transactions referred to in this section" very vividly speak in support of the arguments made by the AR. DR could not dispute that rebate arises from a transaction of export which is covered under section 154, therefore, the income of rebate shall fall within Final Tax Regime and has already been taxed.

7. So far the Circular No.14 of 1993 is concerned, we shall desist from giving any finding on the same as it was issued under repealed Ordinance of 1979. Moreover, in presence of very clear language of law there is no need to take any support from a Circular or S.R.O. Appeals by the department on this ground also fail. Appeals are dismissed. H.B.T./170/Tax(Trib.) Appeals dismissed.