2005 PLP (Trib (PTD)

Date of hearing: 16th September, 2004. These appeals by Revenue arise out of order passed by the CIT(A), Sialkot dated 5-12-2003.

2. It is the departmental contention that the CIT(A) has unjustifiably directed that share income of assessee (an individual) from AOP in which he is member not be, clubbed with the assessee's share income from property for rate purposes on the ground that income of the AOP in question is covered by the provisions of section 80-CC [presumptive regime] and tax withheld under section 50 (5A) of the I.T. Ordinance, 1979 (since repealed) constitutes its final discharge of income-tax liability.

3. According to the D.R. the CIT(A) view regarding assessee's share from AOP is misconceived for the reason that the assessee besides enjoying share income from the said AOP, also is in receipt of rental income from property which income is admittedly taxable under section 19 of the I. T. Ordinance, 1979. That being so assessee's share income from AOP has rightly been included in the assessee's total income for rate purposes, as provided in proviso to clause (110), Part I of the Second Schedule to the I.T. Ordinance, 1979. Furthermore, the D.R. has pointed out that per the provisions of clause (111A), Part I of the Second Schedule, only assessee's share income from a registered firm placed in the presump tive tax regime within the purview of section 9-C or section 80-CC, qualifies for exemption and is not to be included in the assessee's total income even for rate purposes when the assessee has other income besides such share income. In the case of the present assessee, it is emphasized that not only does the assessee receive rental income from property but also derives share income from an AOP placed in the presumptive tax regime and not from a registered firm. It is argued that if it was the intention of the legislature to also exempt such share income from AOP even for rate purposes then the law would have so provided as it has done in the case of share income from registered firm covered by the provisions of section 80-C/80-CC [vide clause (111 A)] .

4. A.R. of assessee/respondent strongly contests the submissions as made by the D.R. and argues that all entities placed in the presumptive tax regime [such as the assessee who is an exporter and enjoys exclusive income from this source only/section 80-CC] are immune from any additional taxation in any guise whatsoever when they are subject to tax withholding under section 80-C/80-CC. The learned A.R. emphasis that section 80-C starts with a non obstante clause ["notwithstanding" any thing contained in this Ordinance .] that highlights the fact that the provisions i.e. [sections 80-C/80-CC] has primacy over all other provisions of the Ordinance and will hence override all other provisions of the Ordinance. Thus, according to the A.R. there can be no levy of additional taxation on the AOP, directly or indirectly, even by including share income from AOP in the assessee's total income for rate purposes as the assessee is a member of the AOP and such inclusion of share income from AOP in the assessee's total income would lead to an additional tax burden on the AOP albeit in an indirect manner. The A.R. submits that clauses (110) & (111A), Part I of the Second Schedule only clarify the limits to exemption from levy of income-tax but he reiterates that these provisions cannot be interpreted in a manner as to justify, including share income from AOP in the total income of the assessee. Finally, the A. R. argues that C. B. R. through circular instructions issued to its field officers has directed that even share income from RF whose income falls within the purview of section 80-CC, [being a exporter]. Is not to be included in the total income of an assessee [individual] who is a partner in such registered firm. Case-law has also been cited in this context viz. 2000 PTD 2173; (1992) 66 Tax page 70 (statutes).

5. In the view of the A.R. therefore, the relief as accorded by the CIT(A) is consistent with statutory stipulation.

6. I have heard both sides and have examined the available record and in my considered judgment, no exception can be taken to the relief as accorded by the CIT(A) as it is indeed consistent with express statutory stipulation. The AOP in question enjoying income exclusively as exporter is placed in .the presumptive tax regime within the purview of the provisions of section 80-CC of the Income Tax Ordinance, 1979 Tax and income tax withheld under section 50(5A) amounts to final discharge of the AOP's tax liability and the AOP cannot be burdened, directly or indirectly with any additional taxation in any guise or manner such as it would be burdened if part of its income were included in the total income of one of its members even for rate purposes. The one exception however would be when such assessee has income in excess of the imputed presumptive income [arrived at on work back basis] and is not able to satisfactorily explain the same then the excess income over presumptive income is indeed liable to levy of income tax as held in 2003 PTD (Trib.) 1228 and 2004 PTD Trib.) 2400.

7. The departmental appeals are rejected. H.B.T./323/Tax(Trib.) Appeals rejected.