2002 PLP (Trib (PTD)

(1) Contracts Total Receipts of Contract Rs.22,16,53,865 fax 6% on the above Rs. 132,99,231 Tax already deducted 5% Rs. 1,10,82,693 Difference/Balance Payable Rs. 22,16,538 (2) Supplies (i) Total receipts Rs.16,000,000 (ii) Tax payable-% 3.5% 5,60,000 Less Tax paid under section 50(4) 4,97,042 Tax paid under section 80-C 56.733 5,53,775 Balance Payable 6.225

4. The learned CIT(A), however, gave a finding that the tax at 6% could only be levied on the three contracts which exceeded Rs.30 millions each and thus he directed the reduction in the tax chargL to the extent of Rs.679,926.

5. The plea of the learned counsel of the assessee before us is that the entire amount of the receipts on account of contracts should be charged at 5 % . excluding the supplies. It was again submitted by the learned counsel that the contracts made by the assessee did not specify the total value to be executed. The learned D.R. on the other hand supported the order of the Assessing Officer.

6. We have, considered the submissions of both the parties. It appears that various basic issues have been over-looked while making the assessment order while passing the order made by the first appellate authority. The assessee was providing stevedoring services which have been. equated with the ordinary contract such as construction contract. The provisions of section 80-C of the Ordinance were not applicable to service in. the charge year under consideration as pointed out by the C.B.R. itself in its Circular No.8 of 1999, dated 27-7-1999. An amendment was made in the provisions of section 80-C of the Ordinance by the Finance Act, 1999 whereby only the services rendered by Doctors, Lawyers, Accountants, Auditors, Architects, Surveyors, Engineers, Advisors and Consultants were excluded from the purview of section 80-C of the Ordinance. The C.B.R., however, in the above mentioned Circular No.8 of 1999 clarified that in case of services rendered other than those specified and mentioned above, the amount representing payment would be final discharge of liability from assessment year 2000-2001. Even this amendment was repealed in the next financial year. Prior to such amendment, the applicability of section 80-C of the Ordinance did not extend to payments on account of services rendered. It may also be mentioned here that the C.B.R itself has already clarified that the services rendered under a contract would remain services within the meaning of subsection (4) of section 50 of the Ordinance. Thus in our view the payments on account of services should not have been taxed under section 80-C of the Ordinance in the year under consideration. Another mistake appears to be that the Assessing Officer has passed an order under section 59A of the Ordinance which could only be passed if the assessee has filed a return and Assessing Officer is satisfied, without requiring the presence of the assessee or the production of any evidence, that the return furnished under section 55 is correct and complete. Admittedly no return was filed in this case in the year under consideration. .The plea of the learned D.R. is that under the provisions of subsection (7) of section 80-C of the Ordinance, an order under section 59A is deemed to have been made in respect of income referred to in the subsection (1) of section 80-C of the Ordinance. ' Another plea of the learned D.R. is that the assessee itself has filed statement' under section 143-B of the Ordinance indicating the acceptance of chargeabihty of tax under section 80-C of the Ordinance. We are not convinced by this reasoning of the learned D.R. An order passed under section 59A of the Ordinance after making inquiries anti confronting the assessee could not be equated with an order deemed to have been passed under subsection (7) of section 80-C of the Ordinance. Even if the assessee has filed statement under section 143-B of the Ordinance and the- income is not properly chargeable under section 80-C A of the Ordinance, a proper course for the Assessing Officer was to summon the return under section 56 of the Ordinance and then to make the assessment under the normal law.

7. In these circumstances we are inclined to annul the orders of the departmental officials after holding that these have been passed without proper jurisdiction. The appeal of the assessee succeeds accordingly. ' C.M.A./M.A:K./155/Tax(Trib.) Appeal accepted.