JUDGMENT NASIM SIKANDAR, J.- in this Tax Reference under Section 136 of the Income Tax Ordinance, 1979 the Revenue claims that following question of law has arisen out of the impugned order of the Income Tax Appellate Tribunal, Lahore Bench, Lahore:-- "(1) Whether in the facts and circumstances of the case the learned ITAT was justified to hold the treatment and the addition under Section 12(18) to be illegal and to delete the same, merely on the basis of a judgment, which is inapplicable to the matter being distinguishable?
(2) Whether the sum advanced to the assessee company by the directors/share-holders, in access to its authorized capital, to meet the creditors is loan?
(3) If the answer to the above is affirmative, then whether the provisions of Section 12(18) of the Income Tax Ordinance, is applicable in the matter and has been rightly invoked?"
2. After hearing the learned counsel for the Revenue we will hold that the issue raised in the question of law as framed already stands resolved against the Revenue in our judgment recorded on 6.2.2001 in ITA No. 491/2000 in re: M/s. Mr. Fabrics (Pvt.) Limited v. Income Tax Appellate Tribunal, Lahore. The facts in hand are strikingly similar to those which were considered by us in the aforesaid judgment.
Our reasons to hold against the Revenue as contained in paras 4 to 13 read as under:-- "4. in ITR No. 321/2000 the assessee is again a private limited company. For the assessment year 1994-95 no income was returned on the ground that no business activity had been undertaken.
However, the ICA after issuance of show-cause notice and on rejecting defence taken up before him proceeded to treat the share deposit money at Rs. 18798138/- as its income under the said deeming provisions of the Ordinance. The reason assigned again being that the aforesaid sum shown as share deposit money was in excess of the authorized capital of the company which had already been fully subscribed. According to the IAC the company was not competent to call for deposit of money in excess of the authorized capital. Accordingly, as in the other two cases, it was taken to be a loan under the garb of share deposit money and added towards income.
5. It is the case of the appellants that neither the original assessments were prejudicial to the interest of the revenue nor the amounts received as advances could be treated as deemed income, in this regard it is pointed out that in all the assessment years involved these provisions were attracted only to sums "claimed or shown to have been received" as "loan" while neither these sums were "claimed" nor shown to be "loan". By relying upon Dictionary meaning of the word "loan" as giver.
In 6th Edition of Black's Law Dictionary page 936, the Shorter Oxford English Dictionary page 1227 A/colum-1 and Chambers 20th Century Dictionary page 739 it is asserted that share deposit money could never be taken to mean a "loan". To explain the term, reliance has further been placed on a reported judgment cited as Gurcharan Das and another v. Ram Rakha Mai (AIR 1937 Lah. 81). Reference is also made to re: Venkatakrishna Rice Company v. CIT (1987) 163 ITR 129, re: CIT v. Nathimal Gayalal (1973) 89 ITR 190, re: C.W.T. Southern Region, Karachi v. Abid Hussain (1999 PTD 2895), re: C.I.T. Patiala v. Piara Singh (1972) 83 ITR 678, re: Chairman Evacuee Trust Property West Pakistan, Lahore v. Muhammad Din and another (PLD 1971 Lah. 217), re: Abdul Hameed Sahib and others v. Rehmat Bi (AIR 1965 Madras 427 (V 52 C 151) and re: Mian Abdul Hameed Puri and 5 others v. Federation of Pakistan (PLD 1979 Lah. 252) to claim that the share deposit money did not answer the requirement of law to be added as deemed income. Reference is also made to Circular No. 6 of 1987, dated July 5, 1987 wherein these provisions were explained by CBR on their introduction in the statute book through Finance Act, 1987. Reference is also made to re: C.I.T. North Zone (W.P.) Lahore v. Crescent Textile Mills Ltd. (1974) 29 Tax 242.
7. The revenue on the other hand justifies the action of the IAC inc canceling the assessment and treating the aforesaid sums as deemed Income. The revising of the assessments is supported by placing reliance upon re: Duggal and Co. v. CIT (1996) 220 ITR 456, re: K.A.
8. Before proceedings to consider the submissions made from both sides it appears relevant to reproduce the provision of Section 12(18) as inserted by Finance Act, 1987:- "Where any sum, or the aggregate of sums, claimed or shown to have been received as loan by an assessee during any income year commencing on or after the first day of July, 1987, from any person not being a banking company, or a financial institution notified by the Central Board of Revenue for this purpose, otherwise than by a crossed cheque drawn on a bank, exceeds (fifty) thousand rupees, the said sum or the aggregate of sums shall be deemed to be the income of the assessee for the said income year chargeable to tax under this Ordinance: Provided that, where the said loan is claimed or shown by way of the explanation, referred to in sub-section (1) of Section 13, in a case to which the first proviso to the applies the income under this sub-section shall relate to the assessment year referred to in the said proviso."
It was by Finance Act, 1998 effective on 1.7.1998 that the word 'advance' or 'gift' were also added to expand the operation of the provision. Admittedly that amendment in law is not attracted to any of the assessee inasmuch as their case pertained to earlier assessment year's and finalized before the aforesaid amendment in 1998 bringing in the words 'advance' and 'gift' to attract the mischief the provision was made, it is, therefore, clear that at the relevant time in these cases no addition of the kind could be made before the amount received by the company was held to be a 'loan', in our view the share advance money indicated in the books of accounts/balance sheet of the companies could by no imagination be treated as a loan. The concerned ICAs cancelling the assessm ents and deeming these amounts as incomes did not elaborate as to how they treated the share advance money as 'loan', it was their personal view that the aforesaid sums had been introduced in the books of accounts as share deposit money but factually they were loans.
However, nothing was brought on record to support that in the given facts the share deposit money was in fact loan, in one of the orders under Section 66-A the concerned ICA relied upon a judgment of the Income Tax Appellate Tribunal to drive home that these amounts were loan simpliciter and therefore, could be deemed as income under the said provisions of the Ordinance, in that judgment the Tribunal expressed the view that similar sums shown as share deposit money were only to defeat the purpose of the legislation. However, we do not subscribe the view of the Tribunal which was based upon the so-called purposive approach in interpreting the provisions.
Even if that approach was justified, it was only fictitious loans which were intended to be curbed and that too which had so been 'claimed' or 'shown'.
8. Irrespective of the factual position as to the extent of the authorized capitals of the assessee/companies the revenue had no business to pick up faults with the intention and motive of a company to increase its capital and the reasons therefore. A joint stock company is at liberty to increase and subject to certain conditions prescribed by law, to decrease its paid up capital. As far the increase in the authorized capital is concerned, for a private limited company, as all the assessee before us are, there is hardly any difficulty and in fact it is almost a declaration made to the Registrar of Companies subject to payment of certain fees, it is correct that an Assessing Officer can always probe, look into and judge the exact nature of a receipt or an entry in the books of accounts. The reliance of the learned counsel in this regard on the aforesaid judgment of Delhi High Court in re: Duggal and Co. (supra) and K.A. Ramswamy Chettiar (supra) is certainly pertinent and relevant. The ratio settled in re: Chairman Evacuee Trust Property (supra) decided by the Bombay High Court also support the contention of the revenue that entries made by an assessee in books of accounts are not determinative of the question whether the amount was paid as capital asset or a stock in trade. However, it is equally correct that letter of law in taxing statute has to be interpreted in the sense it had been used and expressed. The provisions of Section 12(18) at the relevant time did not attract unless two conditions were answered. First that there was a "loan" received' by an assessee and secondly that it was so claimed are shown by him. Where any of the two requirements were not answered, the provisions were not attracted. Subsequent amendment in the year 1998 rather supports the case of the assessee/appellants that at the relevant time an advance irrespective of its nature could not be deemed as income of the assessee. Mr. Ibrar Hussain Naqvi, Advocate, learned counsel for one of the assessee has relied upon a Full Bench judgment of the Allahabad High Court in re: C.I.T. Kanpur v. Nathimal Gaya Lai (1973) 89 ITR 190. in that case it was inter alia held that the provisions creating a legal fiction had to be interpreted in such a manner as it did not cause injustice to a party. According to the learned Judges even when the Court steps into the world of legal fantasy the principle of equity and justice cannot be lost sight of. For a strict and narrow interpretation of the word "loan" learned counsel has also relied upon as re: Commissioner of Wealth Tax v. Abid Hussain (1999 PTD 2895). The meaning of the word "loan" in the aforesaid three dictionaries as also the view of this Court in re: Gurcharan Das (supra) makes it absolutely certain that share deposit money can never be or amount to a "loan" which is necessarily a sum to be returned after a certain or uncertain period with or without interest.
7. it will be seen that in all the cases before us ultimately not only the authorized capital of the appellants were increased but also share were issued against the deposits to the respective applicants. The findings of the Court in re: CIT v. Crescent Textile Mills Ltd. (supra) support the claim of the applicants that the amounts deposited by Share-holders were proper share capital and that issuance of share certificates to existing share -holders was not necessary.
8. We are also in agreement with the contentions of the appellants that at the relevant time the express mention of the word 'loan' excluded all other similar or equivalent terms, transactions, or nature of the receipts. According to the findings of this Court in re: Chairman Evacuee Trust Property v. Muhammad Din and another (supra) no maxim of law was of more general and uniform application than "expressio unius est exclusive alterius". According to their Lordships whenever a statute limits a thing to be done in a particular form, it necessarily includes in itself a negative, viz. That the thing shall not be done otherwise. Therefore, in our view both the I AC's stretched their powers under Section 66-A unnecessarily to hook the appellants before us. They even acted in disregard of the Circular No. 6/87, dated July 5, 1987 which explained the provisions of Section 12(18) when these were introduced. That being the first reaction of the revenue and its interpretation of the provisions, it had to be given serious thought at least by the revenue officers.
9. Learned counsel for the appellants also appear correct in suggesting that the purpose of introduction of the provisions of Section 12(18) at the relevant time was to check fictious loans and it was after quite some time that it was realized that the scope of the provisions needed to be expanded, it is also our opinion that no addition of the kind could possibly be made nor the defence taken by the appellants rejected without recording a finding of fact that these sums were injected in the business and were used as capital, circulating or otherwise. in other words the defence of the appellants/assessee could have been demolished only by recording a finding of fact of both these witnesses is that appellant was arrested from the village by the Ranger Authorities.
6. Trial Court after appraisal of evidence available on record, vide judgment dated 18.2.2003 convicted and sentenced the appellant as narrated earlier.
7. Learned counsel at the very outset did not challenge the conviction of the appellant and had prayed for reduction in sentence. Counsel for the State vehemently opposed the appeal.
8. Heard. File perused.
9. Appellant was apprehended by the Ranger Authorities on 6.4.1997 during the night hours near the Indo Pak Border and 69 bottles of Indian liquor were recovered from him. Both the recovery witnesses namely Ghulam Fareed PW.I and Muhammad Ilyas PW.2 while deposing before the Trial Court and supporting the prosecution case, unanimously narrated the circumstances under which the appellant was apprehended and bottles of Indian liquor were recovered from him. They were subjected to lengthy and searching cross-examination. I have observed that there is nothing in their statement to doubt their credibility or to say that these witnesses had any malice or grouse against the appellant to involve him in this case falsely. The evidence of the witnesses rings true and in the circumstances I am persuaded to rely upon the same.
10. As far quantum of sentence of the appellant is concerned, record of this case reveals that appellant has already undergone more than half of his sentence and he is facing the agony of this case for the last more than seven years. Even otherwise, the possibility that appellant was a carrier and not the owner of the bottles of Indian liquor (case property) also cannot be ruled out in the circumstances of this case. Similarly, during the investigation out of 69 bottles of liquor only one bottle was sent to the office of Chemical Examiner for the report.
11. in this view of the matter, I am persuaded to take a lenient view qua the quantum of sentence.
Accordingly, while dismissing the appeal, sentence of the appellant is reduced to the period already undergone by him. However, the appellant shall pay the amount of fine on the same terms and conditions as fixed by the Trial Court.