2014 PLP (Trib (PTD)

CH. ANWAAR UL HAQ, JUDICIAL MEMBER.

These three appeals are directed on the instance of the taxpayer, against the consolidated order dated 20th December, 2012 passed by the Commissioner of Inland Revenue, (Appeals-I), Lahore in Appeals Nos.28, 29 and 30 of 2012 respectively for the tax years 2006, 2010 and 2011.

2. The appellant, a public limited company is listed on the Stock Exchanges in Pakistan. The principal business of the company is purchase, transmission, distribution and supply of natural gas. Returns for the tax years 2006, 2010 and 2011 were filed declaring income of Rs.4,292,534,021, Rs.1,724,406,023 and Rs.1,040,563,082 respectively. In all the three years, the original assessments were deemed to have been made under section 120 of the Ordinance, 2001 and subsequently amended under section 122(5A) of the Ordinance through order impugned in present appeals.

3. A perusal of grounds of appeals filed by appellant reveals that following issues, emanating from respective amendment orders and decided by first appellate authority in department's favour are being agitated and appellant, through subject appeals, seek remedy in respect thereof before this tribunal:-- (i) legality of order dated amendment order dated June 25, 2012 on the point of applicable limitation of time tax year 2006; (ii) admissibility of "Gas Development Surcharge (GDS)" paid by appellant to Federal Government tax years 2006 and 2010; (iii) arbitrary enhancement of taxable Income Tax year 2006; (iv) admissibility of "provision for obsolete stores and spares" tax year 2011; and (v) eligibility of the appellant to tax credit provided for in section 65B of the Ordinance admissible to "industrial undertakings" - tax year 2011

4. At the very outset of appeal proceedings, learned A.Rs. informed that legal issue with respect to limitation of time relating to tax year 2006 was not desired to be pressed/contested and hence, prayed that same may not be adjudicated. Accordingly, the appeal proceedings were contained to the extent of remaining issues, each of which is discussed and disposed of separately hereunder: Admissibility of 'gas development surcharge' ('GDS') - Tax Year 2006 and Tax Year 2010.

5. The facts, framework and basis underlying the amount/claim of the appellant are described in the audited financial statements of appellant company as follows:-- "Under the provisions of license for transmission and distribution of natural gas granted to the company by OGRA, the Company is required to earn an annual return of not less than 17.50% per annum on the value of its average fixed assets in operation (net of deferred credit), before corporate income taxes, interest and other charges on debt and after excluding interest, dividends and other non operating income. Any deficit or surplus on account of this is recoverable from or payable to the Government of Pakistan as differential margin or gas development surcharge."

6. It has been explained by A.Rs. that while receipt of differential margin is reflected as income in the financial statements, GDS is recognized as an expense therein. The appellant company, for the purposes of computing its "taxable income", takes into account both the GDS and differential margin in a manner that while GDS is claimed as a "deduction", the differential margin is offered as an article of income. For the tax years 2006 and 2010, the appellant company earned profit in excess of above explained threshold and thus respectively GDS of Rs.2,046.177 million and Rs.11,364.817 million was paid to Federal Government and claimed as deduction against taxable income. Likewise, in the year 2011, an amount of Rs.2,776.818 million was offered as income being the differential margin received in respect of such year.

7. It is for the first time in the history of the taxpayer, the respondent department disputed the admissibility of GDS on the grounds that "GDS is not admissible as a deduction under any provision of the Income Tax Ordinance, 2001". Although the appellant disputed the contents of the show-cause notice and argued that the amount was an expenditure incurred, "wholly and exclusively for the purpose of business" and had to be allowed in terms of provisions of section 8(5) of Oil and Gas Regulatory Authority Ordinance, 2002 (`OGRA Ordinance'), still the respondent disallowed the amounts on following basis:-- "(a) Section 3 of the Income Tax Ordinance, 2001 provides that "The provisions of this Ordinance shall notwithstanding anything to the contrary contained in any other law for the time being in force." (b) Section 54 of the Income Tax Ordinance, 2001 provides that any exemption or concession from income tax provided by any other law would be of no consequence unless such exemption or concession also finds its place in the Income Tax Ordinance, 2001. (c) It was in this backdrop that sections 60 and 60B were specifically inserted in the Income Tax Ordinance, 2001 despite the fact that Zakat and WPPF were admissible deductions for income tax under the respective statutes dealing with Zakat and WPPF. (d) As is evident from the very preamble of the Income Tax Ordinance, 2001, it is a consolidatory law, which aimed at putting all legal provisions dealing with income taxation at one place. After promulgation of the consolidatory law having overriding effect over other laws, there is no legal justification for pressing into service the provisions of other laws for claiming any amount as tax deductible. (e) Income Tax Ordinance, 2001 is a special law for income taxation and it has to override the general provisions of the OGRA Ordinance, 2002. (f) Income Tax Ordinance, 2001 on a later date than the OGRA Ordinance, 2002 did."

8. Before the first appellate authority, the action of the respondent was impugned by the appellant, however, he endorsed the impugned action in following words:-- "Actually, it is a return/profit that has been passed on to the Government and not the expenditure. The OGRA Ordinance, therefore, through fiction of law, as contained in section 8(5) has converted the profit/return into expenditure and desired that it should be allowed under the Income Tax Law. However, there is a caveat in this. Section 3 of the Income Tax Ordinance stipulates as under:-- "

3. Ordinance to override other laws.

The provisions of this Ordinance shall apply notwithstanding anything to the contrary contained in any other law for the time being in force." Now, the provisions of this Ordinance do not support the contention of the appellant nor conform to section 8(5) of the OGRA Ordinance. Under the Income Tax Ordinance, section 20 deduction for expenditure is allowable, that is wholly and exclusively for business purposes. As mentioned earlier, the return/profit paid to the government out of income by the appellant may be an expenditure under the OGRA Ordinance but the Income Tax Ordinance, 2001, unless it was so provided in the Income Tax Ordinance as in case of WWF and WPPF, it remains profit of the company and not deduction. Needless to say, the deduction for profit is not allowable under section 20 of the Income Tax Ordinance, 2001."

9. The appellant's alternate plea/defense i.e. non taxability of the amount in the hands of the appellant under the doctrine of `diversion of income through overriding title' was also not entertained by first appellate authority by placing reliance on judgment earlier given by this Tribunal in case of Messrs Attock Refinery Limited in I.T.As. Nos. 39 and 40/IB/1992-93 dated October 31, 1995. The action of the respondent officer was thus confirmed by the first appellate authority in totality.

10. In the course of arguments before us, the learned A.Rs. explained that in the orders framed under section 122(5A) of the Ordinance, though the reliance was inter alia placed upon the contents of section 3 of the Ordinance, however, no reason whatsoever, was given as to what contrary to the provisions of 2001 Ordinance was prescribed elsewhere and how the amount did not qualify as an 'expenditure' incurred 'wholly and exclusively' for the purpose of business. It was only in the impugned order, the A.Rs. clarified, that this alleged contradiction or conflict was surfaced by the first appellate authority when he observed that amount was in the nature of 'profit' and not an 'expenditure', thus attracting the applicability of section 3 of the 2001 Ordinance to the issue.

11. Before us, the learned A.Rs., in the context of aforesaid background, defended the deductions on account of GDS on following basis:-- (i) GDS duly meets the admissibility criteria laid down in section 20(1) of the Ordinance; this is an expenditure, by nature, and not profit, however, its applicability depends upon profitability; this is a statutory obligation, leviable under section 8(5) of the OGRA Ordinance, and without settling/paying it, appellant would have not been able to continue with its business; thus for all purposes, this is an expenditure incurred wholly and exclusively for the purpose of the business; further submitted that since the differential margin is undisputedly accepted by the revenue as income chargeable to tax, therefore, under same principle, negative differential margin, which is described as GDS, is nothing but an expenditure for which a deduction has to be allowed in computing income chargeable to tax; (ii) If the amount is regarded as not allowable under section 20(1) of the Ordinance, the same is still admissible to the appellant in terms of provisions of section 8(5) of the OGRA Ordinance which is a later statute and would prevail over an earlier statute in case of conflict/ inconsistency; section 3 of the Ordinance does not effect the deduction as it only overrides the laws 'for the time being in force' i.e. the laws in operation at the time of promulgation of Ordinance; likewise, the reliance of the taxation officer on section 54 of the Ordinance is irrelevant as the matter involves allowability of a deduction and does not relate to exemption or for that matter any concession; (iii) Even if 2001 Ordinance is regarded as a later statute (by reference to the date it came into force), OGRA Ordinance, being a special statute would prevail; in this respect, the A.Rs. relied upon ratio contained in 1997 PTD 1555 (Elahi Cotton case), PLD 1968 Lah. 344, PLD 1972 Lah 41 and the opinion of the Attorney General of Pakistan dated March 12, 2011 expressed in the case of Messrs Zarai Tarriqiati Bank Limited expressed under Rule 14 of the Rules of Business of Government of Pakistan, 1973 which carry constitutional backing/support; (iv) the amount remains admissible to appellant under the doctrine of 'diversion of income through overriding title' as originally enshrined in case-laws reported as 165 ITR 437, 174 ITR 475, 198 ITR 690, 1973 PTD 44 etc. and followed later in various judgments and thus could be treated as taxable amount in the hands of the appellant; and (v) Since, subject deduction is duly allowed, without any dispute by the revenue, to the other gas distribution company of country i.e. Messrs Sui Southern Gas Company Limited (`SSGCL'), therefore, the appellant could not be accorded any discriminatory treatment in terms of ratio decided in judgment reported as 2002 PTD 976.

12. The learned counsel for the respondent, on his turn, forcefully supported the order of the first appellate authority, rebutted the submissions of the appellant and argued as under:-- (i) the subject amount could have only been allowed to the appellant if the same was provided in 2001 Ordinance as is the case in respect of WWF and WPPF, allowability in respect whereof is prescribed under sections 60A and 60B of the 2001 Ordinance; (ii) any exemption or concession could only take effect if the same was provided for in the Ordinance and in this respect relied upon the text of the section 54 of the Ordinance; further submitted that any exemption could only be allowed by Federal Board of Revenue exclusively as empowered in this behalf by provisions of Ordinance; in this respect reliance was placed on case-laws reported as (1993) 69 Tax 192 (Trib.) [directive regarding Qarze-Hasna case], W.P.No. 3412 of 2009 (IHC) dated April 27, 2012 [SGS Cotecna case] and 2006 PTD 1 [IPPs case]; (iii) an amount cannot be generally allowed under section 20(1) of the Ordinance unless it contributes towards increasing the profits of a taxpayer; (iv) in Zarai Tariqiatti Bank case, since the learned Attorney General followed the decision of the Supreme Court of Pakistan, therefore, what needs to be followed is the Supreme Court's order and not the opinion of Attorney General on a stand alone basis; (v) after insertion of Article 165A in the Constitution and sub-section (4) in section 49 of the 2001 Ordinance, the status of Federal Government is different and distinguishable from other body corporate owned by Federal Government thus directives and instructions by Federal Government to companies owned by it have no legal backing; (vi) income tax law is a special law as it applies to around two million people whereas OGRA Ordinance, being applicable to 10s of millions of gas consumers, is evidently is a general law; further submitted that decision in Elahi Cotton case, relied upon by A.Rs., is not relevant as it relates to timing of amendments introduced in income tax law through various Finance Acts; (vii) the reliance of the A.Rs. on admissibility of the amount by reference to section 8(5) of the OGRA Ordinance is misplaced as the correct interpretation of these provisions is such that after the enforcement of Income Tax Ordinance, 2001, these provisions of OGRA Ordinance became ineffective, inoperative and inapplicable; (viii) Unless provided for in the Income Tax Ordinance, 2001, neither any tax could be levied nor could it be exempted/waived.

13. We have heard the rival parties, perused the available record, given earnest consideration to the material relied upon by the parties and have minutely gone through the decisions of the Courts cited before us. In our view, the fundamental and only issue to be resolved is that whether the provisions of section 8(5) of the OGRA Ordinance stand overridden by those contained in section 3 of the 2001 Ordinance or otherwise. In order to resolve such controversy, one must decide upon that which of these two legislations is "special" in nature as same would then prevail over the other. It is the resolution of this controversy that remains the focal point of the issue being adjudicated upon. All other issues, including whether or not the expenditure is generally allowable under section 20(1) of the Ordinance or for that matter it qualified to be an expenditure incurred wholly and exclusively for the purposes of business, are secondary as, in any case, under section 8(5) of the OGRA Ordinance, legislature has itself termed the amount as an 'expenditure'.

14. The reliance of learned A.Rs. on landmark decision of apex Court in Elahi Cotton Mills Limited (1997 PTD 1555) is most relevant and on all fours and following findings recorded therein, in our view, leaves no room for any debate or doubt that Income Tax Law would be reckoned as a general law when read in the context of matters relating to taxation generally. The honourable Supreme Court has hold in the said judgment that:-- "

54. In our view, since the provisions of Act XII of 1992 are subsequent in time and as they are contained in a special statute, they shall prevail over the provisions of section 80-D of the Ordinance, which was enacted through Finance Act, 1991, which was an earlier statute and which was part of a general statute. In view of the matter, assessees how fulfil the conditions of the notifications referred to in the Schedule to section 6 of Act XII of 1992, are entitled to the protection. The question, as to whether a particular assessee fulfils the conditions of the above notifications, is a question of fact, which will have to be determined by the hierarchy provided under the Ordinance and not by this court. However, in order to eliminate multiplicity of litigation and to avert element of harassment of assessees, we have dealt with the legal aspect of the above contention though apparently it was not urged before the High Court as we do not find any mention in any of the judgments under appeal."

15. Further, the following preamble contained in the OGRA Ordinance, 2002, explaining the purpose behind promulgation of the law and reason for the establishment and operations of the Oil and Gas Regulatory Authority only clearly substantiates that this is a special law vis-a-vis income tax law:-- "WHEREAS it is expedient to foster competition, increase private investment and ownership in the midstream and downstream petroleum industry, protect the public interest while respecting individual rights and provide effective and efficient regulations and for matters connected therewith or incidental thereto; AND WHEREAS the President is satisfied that circumstances exist which render it necessary to take immediate action; NOW, THEREFORE, in pursuance of the Proclamation of Emergency of the fourteenth day of October, 1999, and the Provisional Constitution Order No. 1 of 1999, read with the Provisional Constitution (Amendment) Order No.9 of 1999, and in exercise of all powers enabling him in that behalf the President of the Islamic Republic of Pakistan is pleased to make and promulgate the OGRA Ordinance."

16. It is clear from the Preamble, set out above, that OGRA Ordinance is a Special Legislative device for increasing private investment and ownership in the midstream and downstream petroleum industry, protect the public interest while respecting individual rights and provide effective and efficient regulations and for matters connected therewith or incidental thereto. We may add that the maxim "Generaila Specialibus Non Derogant" sets out the general and accepted principle of interpretation where there is a general and a special statute in the field i.e. general provisions will not abrogate special provisions. This maxim and its effect have been adopted in numerous Pakistan cases. PLD 1989 Supreme Court 384 (Mst. Imam Bibi v. Allah Ditta and others) (at page 390) cited the following three passages with approval with respect to the maxim generalia specialibus non derogant:-- "The principle of interpretation stems from the legal maxim generalia specialibus non derogant. Maxwell in his book on the interpretation of statutes, Eleventh Edition, at page 168, says: "It is but a particular application of the general presumption against an intention to alter the law beyond the immediate scope of the statute (Supra, p.78) to say that the general Act is to be constructed as not repealing a particular one, that is, one directed towards a special object or a special class of objects. A general later law does not abrogate an earlier special one by mere implication. Generalia specialibus non derogant, or, in other words, where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely, by force of such general words, without any indication of a particular intention to do so. In such cases it is presumed to have only general cases in view, and not particular cases which have been already otherwise provided for by the special Act."

17. Similarly Crawford, in treatise on Statutory Construction, 1940 Ed. At page 429, observes the principle regarding special statutes in the following unambiguous words:-- "It is not uncommon to find one statute treating a subject in general terms and another treating only a part of the same subject-matter in a more minute manner. Where this situation exists, the two statutes should be read together and harmonized. This is especially true where statutes are in pari materia. In the event of repugnancy, the special statute should prevail, in the absence of a contrary legislative intent, since the specific statute more clearly evidences the legislative intent than the general statute does. And this rule-that a statute relating to a specific subject controls a general statute which includes the specific subject-is not necessarily dependent on the time of the enactment of such statutes, although it may be a vital and important consideration." Craies also in his book "On Statute Law", Sixth Ed., p.376, states: "The general rule, that prior statutes are held to be repealed by implication by subsequent statutes if the two are repugnant, is said not to apply if the prior enactment is a special and the subsequent enactment is general law, the rule of law being, as stated by Lord Salborne in Seward v. Wera Cruz, that where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely by force of such general words, without any indication of a particular intention to do so. 'There is a well known rule which has application to this case, which is that a subsequent general Act does not effect a prior special Act by implication. That this is the law cannot be doubted and the cases on the subject will be found collected in the third edition of Maxwell on the Interpretation of Statutes. The general maxim is, generalia specialibus non derogant i.e. general provisions will not abrogate special provisions. When the legislature has given its attention to a separate subject and made provision for it, the presumption is that a subsequent general enactment is not intended to interfere with a special provision unless it manifests that intention very clearly. Each enactment must be constructed in that respect according to its own subject-matter and its own terms."

18. In this view of the matter, the principles laid down in these treatises as to the application of the special law is in no doubt, that is, as all of them are unanimous to state that there is no implied repeal of the earlier special Act by the later general Act without particular intention of implied repeal merely by the use of general words. It follows, therefore, that of the Income Tax Ordinance, 2001 does not override section 8(5) of the OGRA Ordinance, rather section 8(5) overrides section 3.

19. We are not dilating upon appellant's contention that which of the two legislations i.e. OGRA Ordinance of 2001 Ordinance is later in time as this is again a secondary issue when examined in the light of ratio decided in 2004 PTD (Trib.)

204. In this decision, the dispute was that whether the exemption provided for under the Protection of Economic Reforms Act, 1992 would be available to qualifying companies in respect of minimum tax on ghee mills etc. as was introduced in the repealed Income Tax Ordinance, 1979 vide Finance Act, 1999. This Tribunal in paragraph 31, reproduced hereunder, observed that the special law would prevail over general law regardless of timing until and unless the effect of a special law is nullified in the general law expressly, categorically and with clear words:-- "

31. So in the light of above discussions and reasons, we are of the view that department has failed to make out any case for acceptance of their appeals on merit, whereas the arguments advanced and case-law referred on behalf of the respondents support the contentions of assessee wherein it has been held that when the legislature has given its attention to a separate subject and made a provision for it, the presumption is that a subsequent general enactment is not intended to interfere with special provision unless it manifests the intention very clearly, whereas in the present situation in the absence of any specific provision that section 80DD will prevail over the Economic Reforms Act, XII of 1992 latter statute i.e. Economic Reforms Act, XII of 1992, though earlier in time, consequence will prevail over section 80DD of the general statute."

20. In the case reported as 2012 PTD 969, issue regarding interpretation of Protection of Economic Reforms Act, 1992 came under consideration before Honourable Supreme Court. Relevant para 8 reads as under:-- "Subsequently, by means of Finance Act, 1999 section 80DD was inserted into ITO, 1979 effected from 1-7-1999, which provided that notwithstanding anything contained in the ITO, 1979, or any other law for the time being in force, the tax collected under subsection (5) of section 50 on imports of edible oils shall be deemed to be the minimum amount of tax payable under the Ordinance would exceed the amount collected under the said subsection, the said amount shall be adjustable against such tax liability. Thus, the question which arises for consideration is whether the exemption from tax liability under the S.R.O. noted above later protected by the Act, 1992 would continue to be available to the respondents for a period of 8 years even if a new tax was imposed subsequently as was purportedly done by means of section 80DD, as asserted by the learned counsel for the appellant qua section 3 of the Act, 1992 wherein expression has been used 'for the time being' section 3 of the Act, 1992 has already been reproduced hereinabove." As is evident from above para honorable Supreme Court was of the view that words "for the time being" in force cannot cover further legislature. But in the present case future legislation of Income Tax Ordinance, 2001 has also been kept in mind by the OGRA Ordinance, 2002 and it has been specifically provided under proviso to subsection (5) of section 8 of the said Ordinance that when Income Tax Ordinance, 2001 would come into force, this expense will be allowed under that Ordinance. Section 8(5) of OGRA Ordinance, 2002 reads as under:-- "(5) Each licensee for natural gas shall pay to the Federal Government the development surcharge in respect of each unit of natural gas sold during the calendar month within two months of the close of that month and any amount paid by a licensee under this subsection shall be an expenditure for which allowance shall be made in computing profits or gains under section 23 of the Income Tax Ordinance, 1979 (XXXI of 1979): Provided that when the Income Tax Ordinance, 2001 (XL1X of 2001) comes into force the provisions of the said Ordinance shall apply for the purposes of this subsection." (Emphasis supplied) As the legislature has taken care of further enforcement of Income Tax Ordinance, 2001 and there is no doubt that payment to government has to be allowed as expense under the Income Tax Ordinance, 2001.

21. The principles emanating from above decisions, as well as the decisions referred to in these reported judgments, when applied on controversy on hand, drives us to the conclusion that (i) OGRA Ordinance would be reckoned as a special law; and (ii) 2001 Ordinance, even if considered as being later in time, would not disturb or interfere with OGRA Ordinance unless expressed provisions are embodied therein to this effect.

22. The above reproduced provisions of section 8(5) of the OGRA Ordinance unambiguously and without any caveat or qualification treat the amount as 'expenditure' for the purpose of tax law, which in the context of subject appeals is the Income Tax Ordinance, 2001. These provisions, when read in the light of ratio discussed above, leave no room for further argument that GDS qualifies to be a deduction under section 20(1) of the Income Tax Ordinance, 2001. Thus, it is irrelevant and immaterial whether or not deduction of GDS is prescribed in 2001 Ordinance or for that matter 2001 Ordinance is later in time than OGRA Ordinance or not. It would not be out of place to refer here to the provisions of section 54 of the 2001 Ordinance that categorically nullify the effect of the 'exemptions' (from income tax) extended by legislature in other statutes. This, in our view, is an expressed intention of legislature vis- -vis curtailing the benefit embodied in a special law through a general legislation, as has been explained thoroughly in above referred judgments relied upon by the A.Rs.

23. Accordingly, had section 8(5) of the OGRA Ordinance been extending any 'exemption' from income tax, on the basis of section 54 of the 2001 Ordinance, department could have made a valid case for denial of any such exemption to appellant and that too if it is held, that 2001 Ordinance was subsequent in time to OGRA Ordinance. Since, this is not a case of exemption, clearly the provisions of section 3 of the Ordinance assume the character of 'general provisions' whereas those contained in section 8(5) of the OGRA Ordinance are to be considered as 'special provisions' and have to be complied with and given precedence over general provisions of section 3 of the 2001 Ordinance. The denial of deduction of GDS by the revenue could have again sustained if the provisions of the 2001 Ordinance had categorically disallowed the same by referring to section 8(5) of the OGRA Ordinance. This is clearly not the case. Here, in fact, section 8(5) of the OGRA Ordinance cautiously, expressly and knowingly treat the amount as an allowable deduction under section 20(1) of the 2001 Ordinance which had already been promulgated by the time OGRA Ordinance was legislated. Therefore, by reference to principle that special law shall prevail over the general law this amount has to be allowed to the appellant.

24. Further, since OGRA Ordinance makes a reference to 2001. Ordinance vis- -vis the allowability of the amount, therefore, the intention is manifestly clear. The legislature, while drafting the OGRA Ordinance, had in its mind the provisions of 2001 Ordinance so by prescribing the allowability the confusion regarding allowability, if any, had been removed. In arriving at this conclusion, we are fortified by the provisions of section 43 of the OGRA Ordinance which assign overriding status to the provisions of the OGRA Ordinance in totality vis- -vis any other statute. We may also observe that in this case the revenue is blowing hot and cold together. While the receipt i.e. negative GDS/differential margin is treated as income, the denial of deduction of GDS to the appellant defeats the principles of consistency and all norms of justice and fair play.

25. We are not impressed by the interpretation advanced by learned LA as regards the proviso contained in section 8(5) of OGRA Ordinance. A plain reading of these provisions suggests that these have three components viz. (i) creation of very charge of GDS on licensees; (ii) treatment of this amount as 'expenditure' under the late Income Tax Ordinance, 1979; and (iii) then comes the proviso which stipulates that upon coming into force of Income Tax Ordinance, 2001, amount would also be considered as an `expenditure' under the provisions thereof. It is a well settled law that provisions in a statute have to be construed harmoniously and in a manner that effect could be given to these rather than attributing redundancy and superfluousness. If the interpretation of the learned counsel of the respondent that upon enforcement of 2001 Ordinance, this entire subsection would cease to have effect is accepted then there would not have been any levy of GDS ab initio, what to talk of its admissibility or disallowance. Thus, the scope of proviso, in our view, is restricted only to the extent of allowability of amount against taxable income which prior to proviso was with reference to 1979 Ordinance and upon enforcement of 2001 Ordinance thereunder.

26. We do not subscribe to the contention of the learned counsel for the respondent that GDS could have only become an allowable deduction if, in line with provisions of sections 60A and 60B of the Ordinance (providing for allowance of deduction regarding WWF and WPPF), a specific provision has been provided in 2001 Ordinance. By reference to principles for identifying a 'special law' explained above, we consider that provisions of sections 60A and 60B of the Ordinance actually restrict the admissibility of expense (in loss cases) as argued before the first appellate authority by appellant company.

27. We have not been able to find any weight or relevance of the decisions, relied upon by the learned counsel for the respondent, in 1994 PTD (Trib.) 1051 [`Qarz-e-Hasna case], W.P.No. 3412 of 2009 (IHC) dated April 27, 2012 [SGS Cotecna case] and 2006 PTD 1 (IPPs case) to the issue on hand as none of these decisions relates to admissibility of a 'statutory' deduction. In all three decisions, departmental adverse inference was upheld by Courts on the grounds that directive/ instruction/policy guideline etc. cannot be given effect to unless prescribed in a law. In the case before us, the deduction of GDS has been provided for in a statute i.e. OGRA Ordinance. Similarly, the argument of the learned counsel for the respondent that neither any tax could be levied nor it could be exempted except through 2001 Ordinance is completely out of place. This case neither involves levy of tax nor granting of exemption. Rather this is a case of admissibility of expenditure under a special law and in this context the decisions are not relevant.

28. The reference to Article 165A of the constitution and section 49(4) of the Ordinance by learned counsel for the respondent, we observe, is equally misplaced. We reiterate, in this case, this deduction remains allowable to the appellant regardless of its ownership by the Federal Government. The circumstances canvassed in these legal provisions are not at all relevant vis- -vis the issue being adjudicated.

29. The upshot of above discussion is that GDS qualifies to be an admissible deduction to the appellant as allowability thereof is provided for in a special law which prevails over a general law. The authorities below clearly erred in denying the deduction to the appellant. Resultantly, we order that deduction on account of GDS is allowed to the appellant as claimed. The orders of the authorities below are thus vacated being nullity in the eyes of law. In the circumstances that we have accepted the taxpayer's appeals on the matter on above basis, there is no need to separately take up and adjudicate the alternate pleas of the learned A.Rs. with regard to applicability of doctrine of diversion of income through overriding title as well as the treatment accorded by the revenue to the amount in the other gas distribution company i.e. Sui Southern Gas Company Limited which operates under similar facts and circumstances. Arbitrary enhancement of taxable income tax year 2006

30. The grievance of appellant is that while carrying out further amendment for tax year 2006, the respondent arbitrarily enhanced the taxable income earlier assessed through order dated February 9, 2011 by an amount of Rs.562.917 million. In response to the arguments put forth by learned A.Rs., both the learned Counsel and concerned Commissioner Inland Revenue conceded before us on the issue and it was undertaken that appellant's grievance would be redressed through necessary rectification. We order accordingly. Admissibility of provision for obsolete stores and spares tax year 2011

31. The facts relevant to this issue are that in the financial statements and also in the computation of income the appellant claimed a deduction of Rs.1.772 million on account of 'provision for obsolete stores and spares' which was disallowed by then respondent while carrying out the amendment. The first appellate authority confirmed the disallowance. After arguing the matter at some length, both the parties agreed that they would be satisfied if the matter is remanded back to concerned taxation officer for adjudication afresh in line with the decision of this Tribunal contained in paragraphs 9 and 10 of order dated January 30, 2013 in I.T.As. Nos. 674 and 653/LB of 2011 earlier passed in case of appellant for tax year 2008. We order accordingly. Admissibility of tax credit under section 65B of the Ordinance - tax year 2011

32. Brief facts underlying the issue are that for tax year 2011, appellant company claimed a tax credit of Rs.574,354 million under section 65B of the Ordinance by claiming it to be an "industrial undertaking" as defined under section 2(29C) of the Ordinance. It is with regard to the following processes, performed by the appellant on the raw gas purchased from suppliers, that it claimed itself to be an industrial undertaking:-- (i) Addition of a harmless odorant is to the gas so that any leakage could be easily detected before an unsafe situation occurs. This process is undertaken through a state of the art equipment and such 'blending' 'mixing', converts the same into a distinguishable product from what was initially procured by the appellant; (ii) Depending upon the type and requirement of customers i.e. 'residential', 'commercial' or 'industrial', the chlorophic value of gas purchased from suppliers is altered so that varying requirements of burning capacity of customers is met; (iii) For the purposes of maintaining the consumer's, desired level of pressure and quality, the company undertakes compression of gas through various sophisticated and modern plants/stations. Compression plays a vital role in the transmission of gas to the consumption centers at adequate pressures. As the gas is transmitted through pipelines, its pressure drops due to frictional losses and to boost this pressure upto desired value, compressor stations are installed along the transmission pipelines. Again, the quality and pressure level vis- -vis the gas purchased and that supplied to consumers is significantly changed; and (iv) Each compressor station is equipped with allied equipment such as Gas filter separators, Discharge gas cooling system. Through use of this equipment, the company maintains the desired temperature of gas supplied to consumers.

33. The respondent, however, disallowed the claim by holding that aforesaid activities do not substantially change the original condition of gas and thus the condition set out in section 2(29C) is not met and in this regard relied upon 1966 PTD 408 (Dacca High Court). Further, it was noted in the amendment order that the taxpayer itself claimed that it was not an industrial undertaking, when, in the past, the revenue intended to levy Workers Welfare Fund. The first appellate authority upheld the action of the respondent officer.

34. Before us the learned ARs submitted as follows:-- (i) the reference of the taxation officer to the stance of the appellant with regard to proceedings under Workers Welfare Fund Ordinance, 1971 is flawed as under such statute a different definition (of 'industrial establishment') was applicable and it is a settled law that proceedings under any one statute have to be undertaken with reference to its own framework consisting of definitions, machinery provisions, charging provisions etc.; and (ii) the reliance of taxation officer on the decision of Dacca High Court, while concluding that since natural gas supplied by appellant remains natural gas and no substantial change has occurred in the product, is misplaced because said such decision categorically negates such principle.

35. The learned counsel for the respondent, while frankly conceding to appellant's stance as to applicability of provisions of WWF Ordinance, reiterated the argument of authorities below that since natural gas purchased by appellant and supplied to customers did not substantially change in form, therefore, it does not qualify as 'industrial undertaking'. In this regard, further reliance was placed by learned counsel of the respondent on 1999 PTD 793 (Trib.) in which this Tribunal examined the matter relating to filling of LPG cylinders by a liquid petroleum gas supplier.

36. We have given earnest considerations to the rival submissions and ratio of the decisions relied upon by the parties. We readily agree with the learned A.Rs. that the stance taken with regard to Workers' Welfare Fund remains absolutely irrelevant with regard to proceedings conducted under 2001 Ordinance. Meanings of words given in one statute cannot be imported or read into any other statute unless so expressly authorized by the legislature. For the purposes of 2001 Ordinance, whether an entity qualifies to be an 'industrial undertaking' needs to be determined exclusively with reference to the provisions of section 2(29C) of the Ordinance.

37. In the aforesaid background, while dealing with the matter, we first take up the majority view taken, by this Tribunal on the same subject matter in the case reported as 1999 PTD 793 (Trib.), relied upon by the learned counsel for the respondent. The cited judgment of this Tribunal was upheld by Hon'ble Lahore High Court; Lahore vide judgment dated 30-3-2010 passed in ITA No. 27 of 1999 and against this judgment Civil Petition No. 969-L of 2010 for leave to appeal filed by the taxpayer/appellant was also refused by the Apex Court of Pakistan vide judgment dated 18-6--2013. The relevant portion of the cited judgment of this Tribunal is reproduced hereunder:-- "The process undertaken by it, in no manner, can be held to be either manufacturing or a manufacturing process. The raw material or gas purchased remains the same when sold to customers except for the sub-division by filling in cylinders. The principle or the ratio settled in the aforesaid judgment of the Calcutta High Court can very well be referred to refuse the claimed concession/exemption by the assessee. Learned Judicial Member rightly found that no process was involved which could be termed as subjection of goods into manufacturing process or could itself be called as manufacturing. I am also in agreement with him that no new product was brought into existence which was distinct or different from the feed in material. The case-law relied upon by the assessee, as observed earlier, is not only distinguishable but also runs counter to the proposition in being put forth by the assessee. All the reported judgments relied upon explain the terms "manufacturing" and "manufacturing process" in the perspective of Sales Tax Acts. The only case on the income tax side on which I could lay my hands upon appears to High Court."

38. We are of the considered view that the aforesaid case squarely covers the proposition under consideration, therefore, we follow the judgment of this Tribunal and accordingly observe that the case of the appellant is not covered under the definition of "industrial undertaking" and therefore, the appellant is not entitled to take tax credit under section 65B of the Income Tax Ordinance, 2001. The findings given by the respondent assessing Officer and confirmed by the appellate authority are in consonance with provisions of the Ordinance. Thus, on this score the appeal of the appellant is rejected.

39. The appeals of the appellant/taxpayer stand decided in the manner and to the extent discussed above. CMA/173/Tax(Trib.) Order accordingly.