1981 PLP 72 (PTD)

Civil Petitions for Special Leave to Appeal Nos. 372 and 375 of 1976, decided on 12th March, 1980. (On appeal from the judgment and order of the Lahore High Court dated 16-1-1976 in W. Ps. 101-102 of 1974 and in W. P. 568-569 of 1974, respectively). -- Ss. 2(14), 18-A & 45-A read with Constitution of Pakistan (1962) and Federal Legislative List, Items 43 & 49-Additional tax-Question whether additional tax a levy on income as defined in S.2(14) and a compensation for assessee's delay in payment of tax and ultra vires powers of Federal Government under cls. 43 (c) & 49 of Legislative List in Constitution of Pakistan (1962)-Leave to appeal granted to consider Constitution of Pakistan (1973), Arts. 185 &

199. M. Shakeel Saigol v. Income-tax Officer (Companies), etc. P L D 1976 Lah. 616 and Zeenat Textile Mills (Last Pakistan) Ltd. v. Commissioner of Income-tax, Dacca P L D 1969 Dacca 673 ref. Muhammad Ali Khan, Advocate and Syed Inayat Hussain Shah, Advocate -on-Record for Petitioner. Nemo for Respondent. Dates of hearing: 11th and 12th March, 1980. DORAB PATEL, J--The question in these petitions is of the vires of section 18-A. of the Income-tax Act, 1922 (hereinafter called the said Act). The dispute in all these petitions relates to assessment years prior to the promulgation of the Finance Act, 1974, by which the definition of tax was amended and the petitioners in C.P.S.L.A. Nos. 372 and 375 of 1976 were; aggrieved by orders of the Income-tax Officer imposing additional tax on them under section 18-A of the said Act, whilst the petitioners in the other two petitions were aggrieved by orders of the Income-tax Officer imposing additional tax on them under section 45-A of the said Act. Therefore they bad filed writ petitions in the Lahore High Court to challenge these orders, and it would appear that many similar petitions had teen filled which bad been heard by different Benches of the Lahore High Court. In the events that happened, the writ petitions under appeal were heard and dismissed by a Division Bench of Salam, J., and Zullah, J., had no hesitation in dismissing the writ petitions. But Zullah, observed that be was inclined to allow the petitions, but he felt bound to dismiss them in view of the judgment of another Division Bench of the High Court reported in M. Shakeel Saigol v. I-T.O. Companies P L D 1976 Lah.

616. Accordingly, as their writ petitions were dismissed, the petitioners have filed these petitions for leave. Mr. Muhammad Ali Khan's first submission was that the word "tax" as defined in section 2(14) of the said Act, as it stood before its amendment by the Finance Act of 1974, was not wide enough to cover the levy of additional tax under sections IS-A and 45-A and in support of this proposition he relied on a judgment of the Dacca High Court reported in Zeenat Textile Mills, East Pakistan Limited, C.LT. Dacca and another P L D 1969 Dacca 673 but which had appealed to Zullah, J. However, it was this judgment which was dissented from by the Lahore High Court in M. Shakeel Saigol's case. But whatever be the position, if the matter had stood here, Mr. Muhammad Ali Khan advanced a very ingenious submission on the basis of the definition of income in the said Act that the additional tax was not a levy on income, but on an entity, other than income. Now, Salam, J., had rejected this argument, because he was of the view that the additional tax was only compensation to the Government for the assessee's delay in the payment of the tax due to him. Learned counsel submitted that this view was not correct, because the said Act contains express provisions for penalty, fines etc. He therefore took us through the relevant provisions of the 1962-Constitution and of the Government of India Act, 1935 and of the Indian Constitution and submitted that the additional tax recovered from the petitioners was ultra wires of the powers of the Federal Government under clause (r) of Item 43 of the Federal Legislative List in the Constitution of 1962 which was in force at the relevant time) and that additional tax would not also fall under the residual Item

49. This submission turns on the proper interpretation not only of the said Act but of the Constitution and raises a question of law of public importance. Accordingly, we would grant leave as prayed, the moreso, as the judgments under appeal are one of first impression. The appeals will be heard together and made ready on the present record with liberty to the parties to file additional documents. Security in the sum of Rs. 2,000 in each appeal. Leave granted.