1980 PLP 329 (PTD)

Date of hearing: 27th February 1980. DORAB PATEL, J.‑The Thal Development Authority (hereinafter called the said Authority) was set up as a body corporate under the West Pakistan Thal Development Act XV of 1949 (hereinafter called the said Act). But, although the said authority was a body corporate, it had been conferred powers at least as wide as those of any local authority. It was empowered under sections 42 and 43 to levy taxes and to maintain an authority fund. It was empowered under section 21 to frame schemes for development by the acquisition of land under the Land Acquisition Act and the powers conferred by this section, expressly included powers to lay out towns, mandis, market places, villages, roads, break up land for cultivation, etc. Now, in the exercise of the very wide powers conferred on it, it had set upon sugar mill at Leiah, which was run by a public company known as the Thal Industrial Corporation Ltd. But the said Authority acted as the managing agent of this company and had received remuneration for its services. The terms of the remuneration are not relevant and it is sufficient to state that by a notification dated 31‑5‑4969, in the exercise of its powers under section 81 of lie said Act, the Provincial Government dissolved the said Authority and appointed its Chief Secretary as Administrator it place of the said authority. And all the founds, assets and liabilities of the said Authority vested in the administrator. The said Authority had never submitted any returns of income for the managing agency commission earned by it from the Thal Industrial Corporation Ltd., nor did the Administrator, who had succeeded to the said Authority submit any returns. Therefore, the Income‑tax Officer, Companies Circle II, Lahore, issued notices to the said Authority and/or the Administrator under section 34 of the Income‑tax Act for the assessment years 1954‑55 to 1970‑

71. Despite these notices, returns were not filed, so the Income‑tax Officer served fresh notice and learned counsel stated that some papers were produced before the Income‑tax Officer. As the Income‑tax Officer was thus not extended any co‑operation, he made ex parte assessments against the said Authority and/or the Administrator for the seventeen assessment years, for which he had issued notices. The Administrator, who is the Chief Secretary of the Punjab Government, therefore, Challenged the orders of the Income‑tax Officer in dire: appeals before the Income‑tax Appellate Tribunal, on the ground, inter alia, that the said Authority was a local authority within the meaning of section 4 of the said Act and was, therefore, not liable to Income‑tax. But the tribunal rejected this plea, because it had been set up as a body corporate, therefore, by its order dated 18‑4‑1973, it held that the said Authority as well as its successor, who had filed the appeals was a person within the meaning of section 2(9) of the Income‑tax Act, and, therefore, liable to pay Income‑tax under section 3 of the Income‑tax Act. Then after giving some relief in the assessments made by the Income‑tax Officer (which are not relevant to these petitions), the Tribunal dismissed the appeals by its order dated 18‑4‑1973. The respondent then referred the case under section 66(1) of the Income‑tax Act to the Lahore High Court and as the dispute related to seventeen assessment years, he filed seventeen separate references which were heard together by a Division Bench of the Lahore High Court on various dates between 26‑11‑1974 and 14‑10‑1975. The references were opposed by the petitioner, but after a careful perusal of the provisions of the said Act, the learned Judges of the Lahore High Court held on the basis of this Court's judgment in the Deputy Managing Director, National Bank of Pakistan and others v. Ataul Haq P L D 1965 S C 201, that the said Authority was a local authority within the meaning of the Income‑tax Act and was, therefore, not liable to Income‑tax. As this crucial question was decided in favour of the respondent, the learned Judges naturally did not consider it necessary to examine the, many other questions which had been referred to them. However, after the case had been reserved for judgment, the petitioner took a novel objection to the High Court's jurisdiction to entertain the respondent's references under section 66(1) of the Income‑tax Act. And, in order to understand this objection, we have to point out that when the said' Authority was dissolved in 1969, the Provincial Government hail appointed the Chief Secretary as the Administrator under section 81 of the said Act. Therefore, as the Administrator was the Chief Secretary of the Provincial Government, the petitioner's contention was that the attempt to levy Income‑tax on the Administrator amounted in the circum stances, to an attempt to tax the Punjab Government, and, therefore, only ibis Court could have seisin of this dispute in view of Article 184(1) of the. Constitution. The learned Judges rejected this plea and dismissed the 1‑Qtitioner's application. As all the seventeen references were thus allowed by this judgment, the petitioner has filed these seventeen petitions for leave and all the petitioner are time‑barred. The real. Point in all these petitions is whether the said Authority is a local authority within the meaning of Income‑tax Act. If the answer to This question is in the affirmative, as held by the Lahore High Court, it is clear that neither the said Authority nor the Administrator are liable for any Income‑tax whatever. And, as the judgment under appeal merely followed the law declared by this Court in the Deputy Managing Director, National Bank of Pakistan's case, learned counsel drew our attention to section 45 of the said Act, because this section states that "the authority shall be deemed to be a local authority under the Local authorities Loans Act, 1914 . . . ." Learned counsel submitted that the said Authority was not a local authority, otherwise the Legislature would not have inserted this deeming provision. We are unable to accept this submission, because as we observed the powers conferred on the said Authority were at least as wide as those conferred on any local authority and include the power to levy taxes. Therefore, as the said Authority was a local authority and was not liable for Income‑tax, it follows that the notices of demand issued to it and to the respondent were illegally issued and the question whether the dispute should have been examined by this Court under Article 184(1) of the Constitution, is of academic interest only, and no purpose would be served by granting leave to examine this question. Additionally, the petitions are also time‑barred, therefore, we would dismiss them on merits and on the ground that they are time‑barred. Petition dismissed.