Messrs Kohinoor Fiber Ltd, manufacturer imported machinery and later entered into a lease transaction. In view of the leasing transaction, the Assessing Officer terming the import as the "commercial import" served a notice of rectification, upon the assessee. The tax deducted under section 50(5) of the late Income Tax Ordinance at the import stage was treated as the final discharge of liability by the assessee under section 80C ibid by the Assessing Officer in purported exercise of the powers under section 156 ibid. The assessee's appeal before CIT(A), Faisalabad was dismissed. The second appeal before the ITAT succeeded. The learned Tribunal vide order, dated 21-11-2001 cancelled the Assessing Officer's order passed under section 156 ibid and restored the original assessm ent order holding that "the machinery had been imported by the assessee for its on use and its sale through lease back arrangement is not a commercial transaction."
2. The department's reference application was also dismissed by the learned Tribunal on 9-7-2002.
Hence, the present reference application.
3. The department seeks opinion of this Court on the following question:-- "Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified to hold that provisions of section 80C were not applicable to the sale of imported machinery to a leasing company?"
4. Having considered the submissions of the learned counsel for the Revenue we believe that the question as proposed does not arise in the context of above recounted facts. It is not denied that the machinery was imported by the assessee for its on use but the assessee proceeded to enter into a leasing arrangement to obtain finance thereupon. The Assessing Officer and the CIT termed the leasing transaction as involving commercial sale of the machinery by the Assessee and thus the import was termed as the commercial import to attract section 80C of the late Income Tax Ordinance, 1979. The learned Tribunal rejecting the above ground held that the machinery having been imported by the assessee for installation at its on business premises and for its on use, was exempt in terms of the applicable notification. And that the arrangement of lease finance did not change the fact that the import as made by the assessee was not commercial import. The question of fact determined by the Tribunal was that the machinery was imported for non- commercial purpose by the assessee for its on use. The question as proposed by the Revenue thus does not arise for an opinion by this Court. In our opinion the subsequent lease transaction neither changed the nature of the import nor did it change the fact of its installation by the Assessee at its on business premises. This PTR is thus declined.