1998 PLP (Trib (PTD)

1977Rs. 8,50,000 1978Rs. 12,09,000 1979Rs. 10,06,865 1980Rs. 2,38,500

Total Rs.34,84,565

Thus up to assessment year 1980-81 the total deposits received from prospective tenants were Rs.34,84,565 while deposit for the year itself amounted to Rs.4,88,500, for 12 months and Rs.5,12,500, for 15 months (April 1979 to June 1980). For the assessment year 1980-81 the assessing officer showed his intention to apply provisions of section 12(13) read with section 12(17) introduced in the Income Tax. Ordinance, 1979 by Finance Ordinance 1980. He wanted to apply the provisions retrospectively to divide the total deposits as on 30-6-1980 including the deposits of prior years which means 1976, 1977 and 1978 into 10 years and add 1 / 10th to the total income of the assessee. The contention of the applicant was that the provisions of sections 12(13) and 12(17) cannot be given retrospective effect beyond assessment year 1980-81 when these sections were introduced. It was further contended that the addition is permitted in the income year relevant to the assessment year 1980-81 for deposits of that year or of any earlier income year. In the case of the assessee, there was no earlier income years as assessment year 1980-81 was the first assessment year. The contention was not accepted and the assessing officer added 10% of total deposits of Rs.34,84,565 to the total income of the applicant. The learned CIT(A) vide order dated 18-5-1987 allowed appeals for the assessment year 1980-81, 1982-83, 1983-84, by placing reliance on the Single Bench judgment of this Tribunal reported as (1986) PTD

373. However, appeal for the assessment year 1981-82 was decided against the applicant/assessee vide order dated 22-5-1986. The assessee as well as department preferred appeals before this Tribunal, which were ultimately heard by Larger Bench of this Tribunal on 17-9-1995 and the appeals at the instance of department were allowed while the appeal at the instance of applicant/assessee was dismissed. The earlier Single Bench judgment of this Tribunal was overruled.

3. Mr. Sirajul Haq Memon, learned counsel for the applicant has submitted that the Larger Bench finding of this Tribunal is going to effect a large number of assessees and, therefore, it is a question of public importance. He has further argued that the provision contained in section 12(17) could not be applied to any income year prior to the promulgation of Income Tax Ordinance, 1979. According to Mr. Sirajul Haq Memon since the Income Tax Ordinance, 1979 has come into force on the first day of July, 1979, therefore, the provision contained in section 12(17) can take effect from the income year 1979-80 only and not from any earlier income year. However, Mr. Sirajul Haq Memon has clearly stated that he is not challenging the vires of the provision contained in section 12(17) and has further conceded that there is no bar or fetter on the legislature in enacting any law with retrospective effect and even from period prior to the enforcement of Income Tax Ordinance, 1979. He has canvassed the view that income year is a concept which has been introduced by the Income Tax Ordinance, 1979 and prior to that there was no concept of income year in the predecessor Act, to wit, Income-tax Act, 1922. In the Income-tax Act 1922 there was concept of previous year and, therefore, there is no question of extending any provision contained in the Income Tax Ordinance, 1979 to any income year prior to the income year 1979-80. Mr. Sirajul Haq Memon further argued that the interpretation placed by this Tribunal amounts to reopening of past and closed transaction and the presumption in law is that it is never intended by the law makers. Mr. Sirajul Haq Memon placed reliance in this behalf on the judgment of Honourable Supreme Court of Pakistan 1993 SCMR 222.

4. All the above contentions were raised by Mr. Sirajul Haq Memon during the course of arguments in the appeals out of which the present reference applications arise. The contentions were fully considered and were not accepted. The relevant findings of this Tribunal are contained in paras. 13 to 17 of the order dated 13-5-1996 and are reproduced below:

"

13. Keeping above discussion in view, if we scrutinise the impugned provisions i.e., sections 12(13) and 12(17), they emphasise on following:

(1)To charge to tax unadjustable advances, which an assessee receives on and after 10-7-1980, as is obtaining in section 12(13). (2)To extend this charge on the advance which such assessee has already 'received' in the income-year relevant to assessment year starting from 1-7-1980 meaning thereby on and after 1-7-1979 as is obtaining in section 12(17). (3) To charge to tax in the assessment year 1980-81 and onwards the advances received prior to 1-7-1979 which is intended by the use of words: - or in any earlier income-year so, These words are qualified with other words in the following manner:- The provisions of subsections (13) to (16) shall also apply to an assessee who has received and amount referred to in subsections (13)(15) and (16). ..or in any earlier income year (underlined for emphasis).

14. These words are again qualified with the sentence regarding charging tax on such earlier received advances in the income year relevant to assessment year 1980-81 or any assessment year thereafter'.

15. The effect of the use of this language is that the advances received prior to 1-7-1979 shall also be distributed into 10(ten) years and the years, which have passed till 30-6-1979 from the date of receipt shall be reduced from the 10(ten) years. In the remaining years the assessee shall include 1/10th of such amount as part of his income under section 19.

16. In view of above discussion we have no doubt in our mind that the legislature clearly intended to charge to tax in the assessment year 1980-81 and onwards the advance received by an assessee earlier, upto the balance of the 10(ten) years which have not expired by 30-6-1979.

17. We may further add here that if there was no intention of charging earlier advances then the provisions of section 12(13) alone was enough. The addition of section 12(17) is, therefore, for enlarging the scope of its application beyond section 12(13) otherwise it becomes redundant, and legislature never creates a redundant or superfluous provision".

5. The finding of Full Bench is again summarised in paras. 29 to 30 of the judgment which reads as follows:

"

29. In view thereof the summary of above discussion is that section 12(13) relates to those advances which are received after introduction of the provision while section 12(17) charges those unadjustable advances also which have been received earlier. However, only those earlier amounts shall be subjected to tax where 10(ten) years have not lapsed upto 30-6-1979, from the date of its receipts, in the assessment year 1980-81 and in such subsequent years. Our finding can be spelled out from the following example:

'An amount received as unadjustable advance on 30-4-1971 would be distributed into 10(ten) years, while first 8(eight) years upto 30-6-1979 shall become exempt and in the balance two years 1/10th sum shall be added separately in the each year and shall be charged to tax only for balance two years i.e., assessment year 1980-81 and 1991-92.' While giving our above finding we have yet another famous principle of interpretation of statutes in our mind, which is:

'Interpretation of law should always be avoided which would make any provision of law as ineffective. (1991) PTD (Trib.) 758 (773)."

6. For the sake of convenience it would be appropriate to introduce section 12(17) in this order as well which is as follows:

"The provisions of subsections (13) to (16) shall also apply to an assessee who has received the amount referred to in subsections (13), (15) or (16) in the income year relevant to the assessment year commencing on the first day of July, 1980, or in any earlier income year so, however, that income chargeable to tax in the manner laid down in the said subsections shall be charged to tax only in respect of the income year relevant to the assessment year commencing on the first day of July, 1980 or any assessment year thereafter."

7. We have pointed out to Mr. Sirajul Haq Memon that if intention of legislature was to charge 10% of the unadjustable amount received by a landlord on or after 1-7-1979 this purpose would be served with enactment of section 12(13) only or at the most with the expression of subsection (17) of section 12 that, "the provisions of subsections (13) to (16) shall also apply to an assessee who has received the amount referred to in subsections (13), (15) or (16) in the income year relevant to the assessment year commencing on the first day of July, 1980." The reason being that the income year relevant to the assessment year commencing on the first day of July, 1980 started from first day of July, 1979 when the Ordinance of 1979 was promulgated. Even in the absence of above expression in subsection (17) the provision contained in subsection (13) of section 12 was applicable to the income year 1979-80 for the reason that by now it. is established principle of the income-tax law that the law as prevailing in the assessment year shall be applicable. If the interpretation of Mr. Sirajul Haq is accepted then the expression or in any income year' shall become redundant and superfluous. It is one of the established principle of interpretation of the statutes that no law is to be interpreted in such manner as to render any other provision of law as redundant and superfluous. Mr. Sirajul Haq has conceded to this proposition. When confronted with this situation Mr. Sirajul Haq contended that the two provisions ought to be reconciled in such a way that none of them is rendered redundant. We asked him to give the reconciliation which according to him makes the two provisions operative at the same time without resetting in any redundancy. Mr. Sirajul Haq was not able to come out with any reconciliation and submitted that it is to be done by the Honourable High Court.

8. We have carefully considered the contentions raised by Mr. Sirajul Haq Memon. We are of the opinion that the provision of law is very clear and admits of no other interpretation except the one placed by this Tribunal and, therefore, there is no justification to invoke the advisory jurisdiction of Honourable High Court. We are fortified in our views with the judgment of erstwhile West Pakistan High Court, Karachi Bench in the case of Commissioner of Income-tax v. Pakistan Beverage Co. 1967 PTD 265 wherein it has been held that where the answer to a question raised is patently clear and free from any doubt it is not to be referred to the Hon'ble High Court though it may be a question of law. The same view has been taken by the Honourable Supreme Court of Pakistan in the case of Lungia Tea Co. v. Commissioner of Income Tax 1970 SCMR 872 wherein it has been held that, every question of law must not be referred to the High Court. There must be some substance in it." The reason for not referring every question of law to the Honourable High Court is very obvious. In .the Income-tax matters the Hon'ble High Court does not exercise appellate jurisdiction; The Honourable High Court exercises advisory jurisdiction only. While invoking advisory jurisdiction of the Hon'ble High Court opinion is sought on a point of law for guidance of Income-tax Appellate Tribunal. The opinion of Honourable High Court is to be sought where any difficulty arises or there is any ambiguity in law which may admit of two interpretations or two views are possible. However, if the provision of law is very obvious and clear and there is no ambiguity, confusion or room for taking two different views or arriving at any other interpretation than the one given by the Tribunal the opinion of Honourable High Court is not required and thus the advisory jurisdiction of the Honourable High Court is not become invoked. In the present case the provision contained in subsection (17) of section 12 is so clear and obvious that we do not feel that the invocation of advisory jurisdiction of Honourable High Court is required. We, therefore, refuse to refer the proposed questions to the Honourable High Court and reject the reference applications accordingly. C.M.S./396/Trib. Order accordingly.