RANA BHAGWANDAS, J-- Leave to appeal is sought against the judgment of a Division Bench of the Sindh High Court dated 3.1.2000 allowing Income Tax Appeal No. 158 of 1998 and setting aside the order passed by Income Tax Appellate Tribunal (hereinafter referred to as the ITAT) on an application under Section 156 of the Income Tax Ordinance, 1979 (hereinafter referred to as the Ordinance).
2. Respondent is a private limited company incorporated in 1963 with, an authorized capital of. Rs.
10 million (Rs. 1,00,00,000/-) with the main object of manufacturing electric fittings. For raising the factory the company acquired four adjoining industrial plots in Korangi Industrial Area in the sum of Rs. 2,42,069.27. Expenditure, on construction work in the assessment year 1966-67 was Rs.
30,495/-, in the assessm ent year 1966-67 was Rs. 30,495/- in the assessment year 1967-68 it was Rs. 36,698/-, in the assessm ent year 1969-70 it was Rs. 90,366/- and in the assessment year 1970-71 it was Rs. ,37,877/-. Boundary wall was constructed by appending a sum of Rs. 59,911/- while water connection was acquired by spending a sum of Rs. 950/-. in 1997-98, respondentb proposed to transfer the plots and construction raised thereon , to Hyesons Concrete Products Limited and agreement was signed between the parties transferring the plots to the latter company against the shares. The transaction was approved by the Controller of Capital Issues in June, 1977 but the same was withdrawn in July, 1979. The plots and construction were thus restored to the respondent - company who by its sale on 25.2.1987 acquired a capital gain of Rs. 98,74,360/-. This income was declared in the annual return for the assessment year 1988- 89 on which income tax in the sum of Rs. 48,87,808/- was levied as income from business by way of adventure in the nature of trade in terms of Section 2(11) of the Ordinance.
3. After unsuccessful appeal before the Commissioner of Income Tax (Appeals), a second appeal bearing No. 641/KB of 1988-89 was filed before the If AT which was dismissed on 5.5.1996. Petitioner did not impugn, this order by way of Income Tax Reference in terms of Section 136 of the Ordinance as it then stood. However, respondent made an application under Rule 20 of the Income Tax Appellate Rules, 1981, which was dismissed by ITA vide order dated 20.5.1997. Respondent instead of seeking remedy against this order before proper forum moved another application for rectification of the order dated 5.5.1996 in terms of Section 156 of the Ordinance which was rejected on 14.3.1998.
4. Finding no redress before the tax authorities as well as the ITAT respondent preferred Income Tax Appeal No. 158 of 1998 before the learned High Court of Sindh in which serious preliminary objections were raise as to the maintainability of the appeal and the bar of limitation but the learned members of the Division Bench proceeded to repeal the same and allowed the appeal by the impugned judgment, hence this petition.
5. After hearing Mr. Shaikh Haider, learned counsel for the petitioner we are inclined to grant leave to appeal to consider, inter alia, the following questions:--
(1) Whether the Income Tax Appeal filed on 16.6.1998 against the original order dated 5.5.1996 was time-barred and could be lawfully maintained?
(2) Whether the learned High Court failed to take into consideration various provisions of the statute and the judgments rendered by this Court on the questions of law involved? And
(3) Whether the impugned judgment can be sustained in law in the peculiar facts and circumstances of the case?
6. Order accordingly.