1990 PLP (Trib (PTD)

6. The assessee filed appeals before the learned C.I.T.(A) who vide order dated 7‑6‑1982 modified the assessment for the charge year 1980‑81 holding that the assessee's status was not of an A.O.P. rather it happened to be an Artificial Juridical Person. Addition of trade rebate made by the I.T.O. was deleted holding that the rebate allowed by the assessee on sales made to its members was a bona fide arrangement not covered by mischief of Section 24 (d) of the Ordinance. For arriving at this conclusion the learned C.I.T.(A) was of the view that the assessee having no own sale organisation, trade rebate allowed to the members was at par with the rebate allowed by a manufacturer to its appointed dealers or whole‑sellers. The assessee's plea of allowance of rebate because of advance collection of capital from members was accepted. The learned C.I.T. (A) disallowed the assessee's claim of total exemption of income from Income‑tax holding that the objection was just on the pattern of the earlier years wherein the issue stood decided against the assessee. Without going into the merits of the assessee's plea of exemption and while following the past treatment it was concluded that the assessee's income did not qualify for exemption under Paragraph 103 of Part I of the Second Schedule to the Income‑tax Ordinance or on the basis of doctrine of mutuality. For the assessment years 1981‑82 through 1987‑88 the learned C.I.T. (A) while following the appellate order of the charge year of 1980‑81 modified the assessee's status to that of an Artificial Juridical Person. Additions made on account of trade rebate were deleted in the assessment years 1981‑82 and 1982‑

83. Add backs made in all the years were maintained in a stereotyped manner. The I.T.O.'s orders passed under Section 156 of the Ordinance on rectification applications seeking exclusion of tax credit under Section 107 of the Ordinance were maintained for the assessment years 1981‑82, 1982‑83, 1984‑85 and 1986‑87.

7. The assessee has filed eight further appeals challenging the orders of the learned C.I.T.(A) on the ground of exemption of total income from tax, change of its status from Artificial Juridical Person to a company and un-justifiability or the add backs made in the profit and loss account expenses. In the four appeals relating to assessment years 1981‑82, 1982‑83, 1984‑85 and 1986‑87 the assessee has separately assailed the orders of the learned C.I.T. (A) on the issue of refusal of rectification regarding exclusion of tax credit under Section 107 of the Ordinance 13th appeal has been filed by the assessee against the order of the learned I.A.C. of Income‑tax. Range‑II, Central Zone, Lahore regarding withdrawal of tax credit under B.M.R.

8. In the eight departmental appeals the common and solitary grievance of the Department is that the first appellate authority was not justified in directing the I.T.O. to treat the assessee as an Artificial Juridical Person.

9. Sh. Manzoor Ahmad, advocate appeared on behalf of the assessee and the Department was represented by Mr. Mujahid Akbar. Both the representatives of the parties have been heard at length. On an earlier date of hearing Malik Mohammad Nawaz, Legal Adviser of the Department had appeared. The assessee's AR of his own furnished written arguments and the Legal Adviser of the Department has filed his reply. Written arguments of both the parties have been placed on record. After going through the facts of the case and giving due consideration to the submissions of the representatives of the parties, we feel that the following propositions require our adjudication:‑‑ (i) Whether the assessee's income is exempt under Clause 103 of the Second Schedule to the Ordinance? (ii) What is the status of the assessee Cooperative Society under the Ordinance? (iii) Whether the departmental officers below were justified in making the add backs from the P&L expenses in the respective years without examining the details and without issuing any notice to the assessee for establishing the verifiability of the claim? (iv) Whether the provisions of Clause (d) of Section 24 of the Ordinance are applicable in the assessee's case? (v) Whether the assessee is entitled to tax rebate under Section 107 of the Ordinance. Issues Nos. i, ii and iii are common in all the appeals relating to the assessment years 1980‑81 through 1987‑88, whereas issue No. iv relates to appeals to the assessment years 1980‑81 to 1982‑83 and issue No. v is involved in the appeals relating to the charge years 1981‑82, 1982‑83, 1984‑85 and 1986‑87.

10. Issue No. i CLAIM OF TOTAL EXEMPTION FROM INCOME TAX In its returns the assessee has been making this claim since the assessment year 1974‑

75. For all the preceding years the Tribunal had maintained the orders of the departmental officers refusing the assessee's claimed exemption of income from tax under relevant provisions of the Repealed Income‑tax Act, 1922. The matter is sub-judice before the High Court in the Reference Applications filed by the assessee. The learned authorised representative of the assessee repeated his earlier submissions as made before the Tribunal in the appeals relating to the assessment years 1974‑75 to 1979‑

80. In nutshell the g1st of the submission was that the assessee being a Cooperative Society; its income was exempt from Income‑tax because its entire production was sold to the members for their personal use. The case of the assessee's AR was that the "personal use" is as good as "personal business" and as such claim is fully covered by the Explanation appended to Sub Clause (a) of Clause 103 of Second Schedule to the Ordinance. Relevant portion of Clause 103 of the Second Schedule to the Ordinance runs as under :‑‑ "103.In the case of a Cooperative Society (including a Cooperative Society carrying on the business of banking), (a) So much of its income, profits and gains as is derived by it as a result of its dealings with its members. Explanation: In this Clause dealings with a member means any dealing involving sale of goods, the lending of money or the lease of buildings or land which is for the personal use of such member." The argument submitted on behalf of the assessee that the sale of the goods by the assessee Society to its members is not in the nature of sale of goods for the personal use of the members has already been rejected by Tribunal in the earlier years. While adopting the reasons as given in the assessee's appeals of the preceding years, we feel no hesitation in following the Tribunal's conclusions holding that the income of the assessee from its dealings with the members is not exempt from levy of Income‑tax. Issue No. ii: Status of the assessee under the Ordinance

11. On behalf of the assessee it was vehemently argued that the assessee which is a Cooperative Society fully enjoyed the status of a company under the Ordinance or in the alternative of an Artificial Juridical Person and in no case it was an A.O.P. In support of this plea the learned counsel of the assessee submitted that a Cooperative Society having been formed and registered under the Cooperative Societies Act becomes a person in itself. Reliance in this behalf was placed on the provisions of Section 23 of the Cooperative Societies Act which is:‑‑ "Section 23: Societies to be Body Corporate The Registration of a society shall render it a Body Corporate by the name under which it is registered with perpetual succession and a common seal and with power to hold property, to enter into contract, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes of its constitution." It was further contended that since a Cooperative Society is a Body Corporate with all the attributes of a "person" at law, it is independent of its members who constitute it. In other words a Cooperative Society being a Juridical Person in itself there is no reason to call a Cooperative Society as an A.O.P. Reliance in this behalf was placed on the cases reported as A I R (1931) Patna 321; A I R. (1925) Calcutta 203, A I R (1934) Madras 181 and P L D 1976 Karachi 1022.

12. In A I R 1931 Patna 321 it was held that the effect of incorporating a number of persons into a body corporate is to make that body corporate a separate legal entity or person called Corporation which is a legal person just as much as an individual and if a man trusts such Corporation, he trusts with legal persona and must look to its assets for payments and he can only call upon individual member to contribute in case the Act or Charter so provides. The same view was expressed in A I R 1925 Calcutta 203 and A I R 1934 Madras

181. In P L D 1976 Karachi 1022, it was held that a Cooperative Society is body corporate and legal entity independent of its members and is not at all an association of persons. The relevant extract of this judgment runs as under:‑ "

3. The question before us is whether the aforesaid society could be treated as an "association of persons". The expression "person" is defined in section 2(9) of the Income‑tax Act to include an individual, a Hindu undivided family, a firm, an association of persons or a body of individuals, whether incorporated or not, a company, Government of a Province, a local authority and every other artificial juridical person. The expression, "association of persons" itself has not been defined; but obviously, an "association of persons" is a combination of two or more persons and a single person cannot be treated as an association of persons.

4. The question is whether the aforesaid Society, upon its Registration with the Reg1strar of Cooperative Societies, became a single legal person. To this question the answer lies in Section 23 of the Sind Cooperative Societies Act, 1925, which says that the Registration of a Society shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to hold property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes of its constitution. Thus as in the case of a Company incorporated under the Companies Act, 1913, a Cooperative Society registered with the Reg1strar of Cooperative Societies under the Sind Cooperative Societies Act, 1925, becomes a jur1stic person d1stinct from its members. As a limited Company is one and single person, likewise a cooperative society; if so registered, is one and single person. As it is not possible to treat a limited company as an association of persons, because it has two or more persons as members, likewise a cooperative society registered under the Sind Cooperative Societies Act, 1925, cannot be treated as an association of persons because two or more persons are its members. Section 23 of the Act makes the Society, upon its Registration, a separate jur1stic legal entity altogether d1stinct from its members. This being the legal position, section 44 of the Income‑tax Act, 1922 could not be invoked in the case of the aforesaid society, which already stood wound up as such society could not be treated as an association of persons. If the Society could not be treated as an association of persons, then the Income‑tax Department could not proceed to recover the Income‑tax due from the society from any of its members, including the petitioners (except to the extent they were liable as contributaries), and hence the notices issued by the respondent No. 2 to the Bank of Tokyo and the Bank of Bahawalpur Limited, Karachi, under section 46(5‑A) of the Income‑tax Act, for payment of money lying in the petitioner's account with these banks towards the income‑tax dues payable by the aforesaid society are not valid notices. In this connection, reference may be made to the new section 43‑B, inserted in 1973 in the Income‑tax Act, 1922, which provides that notwithstanding anything contained in the Companies Act, 1913, where any tax payable by private Company (including a private Company which is wound up or has gone into liquidation) in respect of any income of any previous year cannot be recovered every person who is, or was, at any time during that previous year a director of the Company or a shareholder thereof owning not less than ten per cent of its paid up capital shall be jointly and severally liable for the payment of such tax. No similar provision has been made in the Income‑tax Act with regard to the cooperative societies registered under the Cooperative Societies Act, 1925.

5. Thus our view is that the aforesaid Society could not be treated as an association of persons and therefore the Income‑tax due from it could not be recovered from the petitioner by virtue of the provisions of section 44 of the Income‑tax Act. Accordingly, the notices issued by the respondent No. 2 to the petitioner, impugned in these proceedings, were issued without lawful authority and are, therefore, quashed hereby."

13. The learned counsel for the assessee also relied upon judgment of the Tribunal as per I.T.A. No. 1864/1865/1866 of 1977‑78 given in the case of M/s Pakistan Sports Cooperative Industrial Society Ltd. Sialkot. In its decision the Tribunal held that a Cooperative Society is an independent legal entity and it is not an A.O.P. In the assessee's own case the order passed by the learned I.A.C. under section 66‑A of the Ordinance for the assessment year 1983‑84 was also relied wherein the finding that the assessee is an Artificial Juridical Person and not a company has been happily accepted by the Department. The assessee's AR laid a good deal of emphasis on the finding of the learned I.A.C. stating that it was a clear admission on the part of the Income‑tax Department that the assessee was not an A.O.P. but an Artificial Juridical Person. In the light of the reported cases (supra) and unreported decisions of the Tribunal as well as the finding of the learned I.A.C., the learned counsel of the assessee submitted that the assesses being a Cooperative Society formed and registered under the Cooperative Societies Act is a legal entity itself separate from the members constituting it and is at-least an Artificial Juridical Person and not an A.O.P. On the other hand on behalf of the Department it was urged that the assessee, a Cooperative Society, having been in the past assessed as an A.O.P. and the assigned status having not been challenged in the preceding years, it was estopped from claiming its status other than that of an A.O.P. As per learned D.R. scope of the Artificial Juridical Person was limited to a Dargah, an idol and a deity. It was further argued on behalf of the Department that though the Provincial law i.e. the Cooperative Societies Act does confer the status of a corporate body on a registered cooperative society but that status does not help the assessee while determining its liability because a Cooperative Society as defined in sub‑section (17) has been treated as a d1stinct entity from a company defined in sub‑section (16) of section 2 of the Ordinance. The provisions of the 1st Schedule regarding the rates of Income‑tax and super tax were relied on behalf of the department by contending that since an Artificial Juridical Person is as good as individuals, unregistered firms, association of persons, Hindu undivided family, therefore, the category of Artificial Juridical Person is not other than an A.O.P. particularly when all of them have been placed under one and the same clause (a) of Part‑1 of the first Schedule whereas the companies and local authorities have been independently dealt with in clauses (b) and (c) of the aforesaid Schedule. It was further submitted at the instance of the Department that a Cooperative Society being not a local authority or a company is only an Artificial Juridical Person by virtue of section 23 of the Cooperative Societies Act. This part of submission has been conceded on behalf of the Department in its reply to the written arguments filed by the assessee's AR.

14. We have given our anxious considerations to the arguments of the learned authorised representatives of both the parties. The Department has admitted in categorical terms that the Cooperative Society is an Artificial Juridical Person when the learned IA.C. held the assessee as such in her order dated 31‑5‑1986 passed under section 66(A) of the Ordinance in respect of assessment year 1983‑

84. This was also conceded in para 3 of the written arguments filed on behalf of the Department. The issue that a Cooperative Society cannot be assigned status of an A.O.P. already stands decided by the afore‑mentioned judgment of the Karachi High Court reported as P L D ‑ 1976 ‑Karachi 1022. The other authorities relied upon by the learned counsel of the assessee lend full support to this conclusion. Thus it is settled provision of law that a Cooperative Society is not an A.O.P. but a legal person in itself independent of the members constituting it. It being an A.J.P. is a separate entity entirely different from an A.O.P The learned CIT (A) while deciding the assessee's appeal relating to the assessment year 1980‑81 rightly held that the assessee was not an A.O.P. and it enjoyed the status of A.J.P. However, the' learned CIT (A) did not further dilate upon other aspect of the matter as to whether the assessee was a company or not. Though as per appellate order he seemed to be fully convinced with the assessee's claimed status of company as it was held that the assessee's plea was not without force. No categorical finding was given in this respect as the learned CIT (A) was of the view that the main dispute before him was as to whether or not the provisions of clause (d) of section 24 of the Ordinance were attracted in the case of the assessee and assigning of status of an A.J.P. to the assessee was enough for resolving that issue. As a consequence the add backs of the trade rebate given by the assessee to its members were deleted. In this view of the matter, the departmental grievance in all the years under consideration regarding change of status of the assessee from A.O.P. to A.J.P. is devoid of any merits.

15. This brings us to the issue of the assessee's claimed status of a company. The learned counsel for the assessee submitted that a Cooperative Society can successfully claim its status as that of a Company. In support of his contention he relied upon definition of the word "Company" as contained in sub‑section (16) of section 2 of the Ordinance which reads as under:‑‑ "Company means: (a) Company as defined in the Companies Act, 1913 (VII of 1913);or (b) A body corporate formed by or under any law for the time being in force; Relying on clause (b) of sub‑section (16) of section 2 of the Ordinance the assessee's learned counsel pleaded that the assessee being a body corporate formed under the law for the time being in force i.e. the Cooperative Societies Act is entitled to the status of Company. The plea of the assessee's learned A.R. was that a Cooperative Society formed and registered under the Cooperative Societies Act is clothed with the status of a body corporate as per section 23 of the Cooperative Societies Act. It was further pleaded that since a Cooperative Society is a body corporate formed under the Cooperative Societies Act it squarely falls under the definition of word "Company" as given in Clause (b) of sub‑section (16) of Section 2 of the Ordinance Reliance in this behalf was placed on decision reported as AIR 1931 Patna 321 wherein it was observed that a Cooperative Society is a body corporate and the principle relating to the body corporate is the same as regards a company under the Companies Act and the bodies incorporated under the Cooperative Societies Act. As per learned authorised representative the assessee enjoyed the status of a company under the Ordinance being a body corporate formed and registered under the Cooperative Societies Act. In his turn the learned D.R. opposed the assessee s pleas by relying on Para A of Part‑IV of First Schedule by contending that Schedule to an enactment is as good part of the statute as the other provisions of the main enactment. As per learned Departmental Representative Part‑A of Part‑IV of 1st Schedule has given a d1stinct treatment to a Cooperative Society and as such it cannot be equated with a Company. The other argument advanced on behalf of the Deptt. was that a special concession has been given to a Cooperative Society to ask for the application of the rates and taxes applicable to the Companies in case these are beneficial to it. It was further argued on behalf of the Department that Para A of Part‑VI of the 1st Schedule not only over‑rides the other part of the Schedule but also over‑rides the main provisions of the ordinance as well. As per learned D.R. sub‑para (1) of Para A of Part‑1V read with Para A, B & C of Part‑1 of the 1st Schedule unm1stakably brackets a Cooperative Society with an A.O.P. It was further argued on behalf of the Department that subsection (32) of section 2 of the Ordinance does not confer any particular status on a Cooperative Society but its status has to be determined by the treatment meted out to a Cooperative Society in the various provisions of the Ordinance regarding its rights and obligations. On these bases the case of the Department was that a Cooperative Society is not a Company but it has been clubed with A.O.P.s in Para‑A of Part‑1 of the 1st Schedule to the Ordinance.

16. To appreciate the arguments of the learned representatives of the parties in their proper perspective, we have to examine the definition of the word Company as given in sub clause (16) of section 2 of the Ordinance dealing with the subject. In clause (b) of sub section (16) of section 2 of the Ordinance it is clearly provided that a body corporate formed by or under any law for the time being in force could also be a Company. It is undeniable that Section 23 of the Cooperative Societies Act does confer upon a Cooperative Society the status of a body corporate when a Cooperative Society is formed and registered. The assessee, a Cooperative Society, formed and registered under the Cooperative Societies Act is, therefore, a body corporate. According to clause (b) of sub clause (16) of section 2 of the Ordinance it is thus a company. It is a cardinal principle of law that if one provision of enactment gives some right or status to a certain person, that cannot be taken away or withdrawn under another provision. Any Explanation added to a Section of an enactment or Schedule annexed thereto is only to facilitate proper interpretation of the enactment. The Schedule cannot per se create, withdraw or extinguish a right which is given by the main enactment. As per Maxwell on the interpretation of statutes 11th Edition Page 206 even if two interpretations are equally possible, one which says about substantive rights would be adopted in the interest of justice specially while dealing with a taxing statute. By application of these principles, 1st Schedule to the Ordinance can neither override nor take away the status or right accrued to the assessee under clause (b) of subsection (16) of Section 2 of the Ordinance. There is no dearth of case law on the proposition that the Schedule cannot override the provisions of the main enactment. It is also established by authorities that in the case of conflicting provisions the main enactment will override the schedule. In these circumstances right or status conferred by the Ordinance cannot be taken away by provisions of the Schedule. The 1st Schedule refers to the rates of taxes applicable to different classes of the persons i.e. individuals, Hindu undivided family, unregistered firms, AOP, AJP, registered firms and companies and various concessions have been given to different classes of persons. Part‑IV of the 1st Schedule provides a concession to a Cooperative Society in payment of tax of its income giving thereby an option to ask for the application of the rates of Income‑tax/super tax applicable to the company or those of the AOPs whichever rates are beneficial to the Cooperative Society. This option does not mean that if a Cooperative Society asks for the application of the rates of AOP, its status would stand affected and it would be thrown out of the scope of the status otherwise granted by the Ordinance.

17. Now we proceed to examine the issue involved from another legal angle. When two or more persons form themselves into certain association for the purposes of joint business or otherwise, their association assumes different forms; if all the necessary constituents of a firm are available with the association it will be known as a partnership firm; in case definite and specific terms and conditions are non‑existent it will be termed as an AOP and where the association fulfils all the requirements of law relating to companies, as per repealed Companies Act of 1913 or the Companies Ordinance, 1984, it will be treated as a Company. Some of them are recognised by law as legal entities or an AJPs in themselves whereas others are not. Examples of Cooperative Societies, Companies and Trade Unions working in industrial establishments, formed, incorporated or registered under their respective enactments can be quoted with advantage. Firms under the Partnership Act, Societies under the Registration of Societies Act, 1961 are a few examples of the associations which are not recognised by law and as such they are not treated as legal entities or juridical persons in themselves and their constituents or members are recognised for the rights and liabilities of the said associations.

18. When an association of persons is recognised by law, it becomes a juridical person as already stated hereinbefore. In recognition of the said status, the association in itself becomes a person independent of its constituents or members.

19. On a cursory glance at the h1story of development of the definition of the word "person" and the law relating to Income‑tax/super tax under the repealed Income‑tax Act, 1922 we find that prior to 1963 the said definition of the `person' was not so enlarged as was done by the Finance Act, 1963 which defined it in the following words: "Person" includes an individual, a Hindu undivided family, a firm, an association of persons or body of individuals whether w, incorporated or not, a company, Government of a Province, local ,authority and every other Artificial Juridical Person." In the Ordinance under section 2(32) person has been defined as under:‑‑ "Person" includes an individual, a firm, an association of persons, a Hindu undivided family, a company, a local authority and every other Artificial Juridical Person."

20. In the present definition of person the words "or body of individuals whether incorporated or not and also "Government of a Province" have been deleted as compared to definition given in the Repealed Act. This deletion has been intentionally done by the legislature to remove the inconsistency occurring in the words "or body of individuals whether incorporated or not" and "every other artificial Juridical Person" for the apparent reasons that a body of individuals when incorporated under certain law enforced acquires the status of a legal entity or a Juridical Person which is another category of person included in the said definition which can also be deemed another separate entity giving it a', status of "body of individuals". Definition of the person given in the Ordinance) has removed the inconsistency as ex1sting in the definition given under the Act.

21. Formulation of two or more persons does give rise to different associations. If the law recognises it as a legal entity, it firstly becomes an Artificial Juridical Person. An Artificial Juridical Person when fulfils some requirements of a certain enactment, its status is further improved or changed according to the said enactment. On the incorporation of a Juridical Person under the Companies Act, 1913 or Companies Ordinance, 1984, it becomes a company in the common parlance and if formed under the Cooperative Societies Act, it is named as Cooperative Society. So every Company or Cooperative Society is a Juridical Person but every juridical person is not necessarily a company or the Cooperative Society. In the instant case the assessee may be termed as a Juridical Person when considered in terms of Section 23 of the Cooperative Societies Act but when seen in the light of provisions of clause (b) of subsection (16) of Section 2 of the Ordinance it becomes a "Company" for all intents and purposes of the Ordinance.

22. As a result of the above discussion, we hold that the assessee being a body corporate formed and registered under the Cooperative Societies Act is a "Company for all intents and purposes of the Ordinance in accordance with clause (b) of subsection (16) of Section 2 of the Ordinance. The orders of the learned CIT (A) on the issue of assigned status of Artificial Juridical Person are modified accordingly changing the assessee's status to be of a company for all the years under review.

23. Issue No. (iii): P&L Add Backs The ITO made disallowances under various heads of profit and loss account expenses on the basis of general observations of unverifiability in all the years under review. The first appellate authority maintained the disallowances be a stereotyped observations. The assessee's AR contended that the disallowance were made without examining vouchers. The grievance of the assessee is well founded. The ITO had failed to examine the vouchers in detail and to issue any) notice on that score and the first appellate authority passed a stereotyped order. In this view of the matter we vacate the orders of the departmental officers and remit the matter to the ITO for de novo decision after perusal of the assessee's claim under each head.

24. Issue No.(iv): Application of section 24(d) of the Ordinance. The trade rebate allowed by the assessee to its members on purchases made by them from the Society was considered by the ITO as to be entirely inadmissible expenditure and it was added back to the declared income in the assessment years 1980‑81 to 1982‑

83. The disallowance was made mainly on the ground that the assessee being an AOP the trade rebate was m the nature of a commission paid by the Society to its members and as such was inadmissible under clause (d) Section 24 of the Ordinance. The assessee's plea before the learned CIT (A) was that neither it was an AOP nor the trade rebate allowed to the members was in the nature of a commission. As the first appellate authority held that the assessee was not an AOP rather it was an Artificial Juridical Person, therefore, the first condition as contained in clause (d) of Section 24 of the Ordinance was not applicable. In this behalf the assessee had relied on the case of Harihar Cotton Pressing Factory v. Commissioner of Income‑tax Bombay North reported as 39 (ITR)

594. In that case a similar dispute arose regarding rebate allowed by the assessee to its members. It was held that the rebate allowed was not in the nature of commission. Therefore, it was not an inadmissible expenditure. Nothing has been said by or on behalf of the Department against this proposition of law as laid before us by the learned counsel of the assessee. In fact this issue already stands concluded by change of status of the assessee from an AOP to an Artificial Juridical Person/Company. There is thus no doubt that in the instant case trade rebate was not a commission and as such clause (d) of Section 24 of the Ordinance was nether attracted nor applicable. Disallowances made by the ITO for the charge years 1980‑81 to 1982‑83 were rightly deleted by the first appellate authority.

25. Issue No. V: Tax rebate u/s 105 of the Ordinance: Since we have held the assessee to be a Company there remains no legal bar in allowing claim of rebate under section 107 of the Ordinance to the assessee. This tax rebate is admissible to a Pakistani Company and to no other person. The assessee being a Pakistani Company according to subsection (31) of Section 2 of the Ordinance as it is a body corporate, formed under the Cooperative Societies Act is entitled to the claim to tax rebate as made by it in the assessment years 1981‑82, 1982‑83, 1983‑84, 1984‑85 and 1986‑

87. Orders of the learned CIT (A) fated 12‑12‑1988 and that of, the learned IAC dated 31‑5‑1986 passed u/s 66/A of the Ordinance rejecting the assessee's claim of tax rebate are hereby modified directing the ITO to allow the tax rebate in the afore‑mentioned years.

26. The upshot of the above discussion is that all the departmental appeals being devoid of any merits are dismissed. The assessee's appeals for all the years under review are allowed to the extent of modification of its status from Artificial Juridical Person to that of a Company and allowance of tax rebate under section 107 of the Ordinance. M.B.A./691/T Order accordingly.