1997 PLP (Trib (PTD)

Grounds of appeal of I. T. A. No. 1173 of 1983-84, (Assessment year 1980-81) (1) For that the order of the AJCT is bad in law and unwarranted by the facts and circumstances of the case. (2) For that the AJCT erred in not considering the contentions of the appellant that the appellant is a Corporation and is exempt from tax under section 4(3)(iii) of the Income-tax Act. (3) For that the AJCT is not justified in reducing the expenses in the maintenance of vehicles to Taka 35,000 only and that the add-back made by the DCT should have been deleted altogether. (4) For that the AJCT is not justified in reducing the advertisement expenses to Taka 15,000 only and that the add-back made by the DCT should have been deleted altogether. (5) For that the AJCT is not justified in maintaining the disallowances of donation and subscription. (6) For that the AJCT is not justified in maintaining the Disallowance under section 10(4(d). (7) For that the AJCT is not justified in maintaining the disallowance on account of bonus. (8) For that the AJCT is not justified in reducing the disallowance on account of leave, pay and gratuity to Taka 4,50,000 only and that the entire claim on account of leave, pay and gratuity should have been allowed. (9) For that the EAST is not justified in maintaining the order in respect of depreciation. (10) For that the AJCT is not justified in stating that the charge under section 18-A was made correctly and was perfectly according to law. (11) For that other grounds shall be urged at the hearing of the appeal Both the appeals having the same facts and grounds are heard analogously. The appeals are resisted by the Taxation Department through D.R (a) The learned A.R. for the appellant argues that the appeal is time-barred as the DCT failed to re-assess the cases within the statutory period of 2 years but we do not agree with the learned A.R., it is admitted that the appeals at the time of their filing were not time barred. When the appellant preferred the appeals before this Tribunal against the order of the AJCT the DCT had not undertaken recourse to re-assessment. If there was no appeal the case would have been treated as time-barred. So, in the face of these appeals it cannot be said that the appeals are time-barred. (b) The appellant has taken several grounds in these appeals but at the time of their hearing the learned A.R. claimed the status of the assessee to be treated as local authority. But the Deputy Commissioner of Taxes treated the status of the assessee as a company. The AJCT also affirmed the order of the DCT. The learned A.R. submits that if the assessee is treated as local authority, it does not require to pay tax. So, the moot point is whether the status of the assessee could be held as local authority or a company. (c) The learned A.R. submits that the assessee has no doubt been established as a corporation under the Bangladesh Industrial Enterprises (Nationalisation) Order, 1972 (President Order No.27 of 1972). Section 2(9) of the Income-tax Act gives an interpretation of a person as follows; "Person includes an individual, a Hindu undivided family, a firm, an association of persons, or a body of individuals whether incorporated or not, a company, a local authority and every artificial juridical person". (d) Section 3 of the Income-tax Act provides, inter alia that income-tax shall be charged for any year in respect of the total income of the previous year or the previous years, as the case may be, of every person. So, a local authority being included in the definition of "person" is liable to be charged to income-tax. But in the meantime the definition of local authority was amended in the General Clauses Acts which includes 1972. Local authority, under section 3(28) of the General Clauses Act, as amended includes the appellant also. Therefore, the learned A.R. argues that the assessee could be treated as a company under section 2(5-A) of the Income-tax Act as well as a local authority under the amended section 3(28) of the General Clauses Act by President's Order No. 147 of 1972. Therefore, the learned A.R. argues that he wants to take tile advantage of the meaning of the status of the assessee as a local authority which would be favourable to him in view of the decisions arrived at in: CIT v. Kulu Valley Transport Co. (1970) 77 ITR 518 (SC); CIT v. Naga Hills Tea Co. Ltd. (1973) 89 ITR 236 (SC); CIT v. Satoop Krishan (1985) 153 ITR 153; Arvind Boards & Paper Products Ltd. v. CIT (1982) 137 ITR 635 and CIT v. JK Hosiery Factory (1986) 159 ITR 85 (SC). (e) The learned D.R. argued in opposition that the assessee is a company under section 2(5-A) of the Income-tax Act but he has adverse opinion about section 3(28) as amended by President's Order 147 of 1972 for treating the corporation as a local authority. (f) Actually the assessee initially submitted return duly audited by authorised auditor showing nil income. According to A.R., it is the function of the assessee to coordinate, supervise and control the units under it and it does not itself carry on any business. According to learned A.R., there is no scope for it to earn profit or sustain loss. Therefore, we hold the view that the DCT as well as the AJCT were not justified in the case of assessment treatment its status as a company. We rather consider its status as a local authority as discussed above. Therefore, relying on the case laws mentioned above we hold the view that the assessee should be exempted from taxation as it does not carry on any business. (g) Therefore, we find merits of this appeal and we do not deem it necessary to discuss the other grounds touching their merit. (h) In the result the appeal is allowed, that the impugned order passed by the AJCT as well as the DCT be vacated and the assessee be treated as a local authority and exempted from taxation as it does not carry on any business. Thus the appeal is disposed of in the manner - indicated above. This order governs both the appeals. C.M.S./4/Dhaka Appeal disposed of.