2003 PLP 1103 (PTD)

NASIM SIKANDAR, J.‑‑‑‑This further appeal under section 136(2) of the late Income Tax Ordinance, 1979 is directed against an order of the Income Tax Appellate Tribunal, dated 30‑8‑1999 whereby the finding recorded by the concerned IAC and the action taken by him under section 66‑A of the said Ordinance were found to be sustainable in law.

2. Part‑1 of the Second Schedule to the late Income Tax Ordinance, 1979 read with section 14(1) thereof provided for various exemptions from total income available to an assessee. One of the exemption clauses namely (118‑D) provided for exemption from tax for a period of five years from December, 1990 to 30th day of June, 1995 beginning with the month in which the undertaking was set up or commercial production commenced.

3. The appellant is a private limited company and at the relevant time derived income from running a flour mill. In the assessment year 1995‑96 on filing of nil income the Assessing Officer examined the case of the assessee and found it entitled to the said exemption clause of (118‑D) of Second Schedule to the Income Tax Ordinance. The claimed concession was accordingly allowed by way of an assessment order recorded under section 62 of the late Ordinance.

4. On 8‑10‑1998 the assessee was served with a notice under section 66‑A of that Ordinance for revision of the assessment order inter alia for the reason that the site plan of the building was got approved from the concerned Union Council on 21‑9‑1996, that per certificate of District Food Controller, Sheikhupura Wheat Supply permit was issued to the appellant/assessee from November, 1995 onwards and that mutation of ownership of land under the factory in the name of the company was entered on 15‑6‑1995, which made it highly improbable rather un‑believable that the factory had started production before 30th of June, 1995 to fulfil the basic requirement of the exemption clause. In reply the assessee raised some legal objections against initiation of action under section 66‑A of the said Ordinance. However, no direct answer to the above facts was offered. Accordingly IAC Range‑III Coys Zone‑I, Lahore Khawaja Shaukat Ali through his order recorded on 10‑11‑1998 proceeded to hold that the assessee‑company was not eligible for exemption under the aforesaid clause and accordingly the assessment order was modified.

5. On appeal a Division Bench of the Income Tax Appellate Tribunal maintained the order of the I.A.C.

6. After hearing the learned counsel for the parties we are of the view that no question of law requiring answer by this Court has arisen from the order of the Tribunal. The concerned I.A.C. while initiating action under section 66‑A solely relied upon documentary evidence which was directly or indirectly connected with the affairs of the assessee‑company while no explanation acceptable at law was offered. The I.A.C. noted Messrs Punjab Flour Mills earlier existing at the site made an application for extension of load to the concerned authorities on 1‑1‑1995. Also the assessee failed to offer any explanation as to‑ why the site plan for construction of factory was got approved on 21‑9‑1996 as against its claim of having started, production on 25‑6‑1995. The entering of mutation in the name of the new company on 15‑6‑1.995 was also not properly explained. The details of the machinery submitted by the petitioner‑company/assessee lacked complete addresses of the concerns which allegedly supplied the machinery: 6‑A. On the basis of that information the revising authority reached the conclusion that the assessee‑company did not 'qualify for exemption. Most important reason being its failure to establish that the undertaking was set‑up during the period provided in the exemption clause. The portion of the exemption clause which is subject‑matter of controversy between the assessee and the Revenue at the relevant time read as under:‑‑‑ Clause (118‑D) Omission (1) Profits and gains derived by an assessee from an industrial undertaking set up between the first day of December, 1990, and the thirtieth day of June, 1995 both days inclusive, for a period of five years beginning with the month in which the undertaking is set up or commercial production is commenced; whichever is the later."

7. From the facts emerging from the record we have concluded that the Assessing Officer while framing an assessment under section 62 of the Income Tax Ordinance, 1979 failed to make the requisite probe and to require the assessee to establish its claim for exemption. The revising authority accordingly with reference to the aforesaid facts and documents appears justified in holding that the assessee was in fact an existing undertaking and attempted to avail the concession merely by changing its name. The issue that in the given facts the assessee was entitled to exemption with reference to the said clause is pre-dominently a question of fact and therefore, cannot be allowed to be covered into one of law by mere use of usual phraseology which is peculiar to the framing of questions of law for a reference to this Court.

8. Dismissed in limine. Q.M.H./S‑560/L Appeal dismissed.