' FAKHRUDDIN G. EBRAHIM, J.--In these six connected petitions the petitioners challenged the vires of rule 50 of Income-tax Rules which rule was introduced on 30-3-1972. This rule enabled the respondent No, 3 in each case, to deduct an amount not exceeding 3% from the running bills of the petitioner-Company, towards advance payment of tax.
2. The aforesaid rule 50 made in pursuance of section 18-(3-BB) of the Income-tax Act came up for consideration before a Division Bench of the Lahore High Court in the case of Shaikh Abdul Ghani & Sons and others v. Central Board of Revenue and others (1), the High Court held that in framing rule 50 of the Central Board of Revenue was among other things requited to prescribe a manner for calculating the amount of advance tax and the Board was expected to evolve and devise a formula and lay down some method and principles necessary for estimating the amount of advance
(1) ( 1974) 30 Taxation 146 tax and that subsection 18(3-BB) does not authorise the Board to make an ad hoc deduction from the payments due to the assessee. The Court observed that: "The estimated amount of the deduction calculated in the prescribed manner must possibly approximate with and correspond to the amount of the tax due from the assessee in advance. The endeavour on the part of the Board in framing this rule under subsection (3-BB) must be to discover and lay down a reasonable and satisfactory test for arriving at the amount of advance payment of the tax due from the assessee. The method prescribed by the rule must be such as to lead to the desired result with a reasonable amount of certainty as is possible. The standard prescribed must not lead to a probe in the dark and leave us in the realm of conjectures and guess in ascertaining the true amount of the deduction on account of the advance tax."
3. The Court after pointing out the inadequacy of the said rule 50, found that the Central Board of Revenue had in making this rule not laid down any method or manner for calculating the amount of the advance payment of tax due from the assessee and therefore, the rule was not in consonance with the requirement of the subsection 18(3-BB). We are in respectfully agreement with the Lahore High Court and for the same reasons we hold that rule 50 is not valid.
4. The only argument urged by Mr. Haider Ali Pirzada for not following the above Lahore decision is that the result sought to be obtained by rule 50 was later brought about by replacement of section 18(3-BB) by Finance Act of 1975 which is to the same effect as Rule 50 but with this important proviso that assessee may apply to the Commissioner of Income-tax for a direction to the deducting authority not to do so. The Finance Act, 1975, is irrelevant for the present purpose inasmuch as deductions in question were sought to be made way back in 1972 when the only enabling provision to do so was rule 50.
5. We, therefore, declare that rule 50 to be not available to respondent No, 3 to make any deduction from the petitioner's running bills. The petitioners will also be entitled to costs.