2004 PLP (Trib (PTD)

(1990) 61 Tax 9 rel. Latif Ahmed Qureshi for Appellant. Ahmad Kamal, D.R. for Respondent. Date of hearing: 20th August, 1998. INAM ELLAHI SHEIKH (ACCOUNTANT MEMBER)‑‑‑A public company deriving income from sugar milling business has filed this appeal directed against the order, dated 27‑4‑1998 recorded by the learned CIT(Appeals) Zone‑1, Lahore to challenge the levy of Worker's Welfare Fund.

2. The relevant facts in brief are that the assessee's income from sugar milling business was exempt from tax under the provision of clause 118D of the Second Schedule to the Income Tax Ordinance (hereinafter called the Ordinance). The Assessing Officer, vide an order, dated 30‑8‑1997, levied the Worker's Welfare Fund on the profits as per P&L account after holding that income `was assessable but for exemption'. The learned CIT(Appeals), vide the impugned order, upheld this treatment while deciding the assessee's seven appeals including those under section 52 and section 86 of the Ordinance.

3. The main thrust of the learned counsel of the assessee is that the Assessing Officer, levied Worker's Welfare Fund before the completion of the assessment which is said to be a violation of Worker's Welfare Fund Ordinance. The learned counsel of the assessee has pointed out and also it is recorded in the grounds of appeal that the assessment was completed on 30‑4‑1998 whereas the Worker's Welfare Fund had been levied on 30‑8‑1997, before the finalization of the assessment. The learned counsel of the assessee has also drawn our attention to the provisions of section 4 of the Worker's Welfare Fund which lays down that the Assessing Officer shall determine the amount of Worker's Welfare Fund at the time of making of an assessment under the Ordinance of soon thereafter. A perusal of the order of the learned CIT (Appeals), however, shows that the assessment who made on 30‑4‑1997 (and not on 30‑4‑1998 as stated in the grounds of appeal). Before the learned CIT. (Appeals), the assessee had taken a plea that Worker's Welfare Fund could not be levied ,after the expiry of 90 days. Before us also cited a decision of the Tribunal reported as (1997) 75 Tax 12 wherein a Division Bench held that a period of 90 days was a reasonable time for levy of Worker's Welfare Fund after the assessment. In the present case, Worker's A Welfare Fund was said to have been levied on 91st day. However, this reasonable time cannot be applied so strictly as this is not a provision of law. The levy of Worker's Welfare Fund cannot be annulled for that reason.

4. The learned counsel of the assessee has also taken ri a ground to agitate the levy of Worker's Welfare Fund in view of the exemption of income under clause 118‑D of the Ordinance. This issue has already been resolved by Income Tax Appellate Tribunal In favour of the assessee vide an order reported as (1990) 61 Tax wherein it was held that exempt income could not be deemed to be assessable to levy any tax and thus the cancellation by the first appellate authority of Worker's Welfare Fund was upheld. Following that order we accept this appeal and cancel the levy of Worker's Welfare Fund.

5. The appeal is allowed. C.M.A./145/Tax (Trib.) Appeal allowed.