MR. JUSTICE TARIQ JAVAID.-(l). This judgment shall dispose of the instant Tax Reference as well as T.R. No. 99 of 2008 (Commissioner Income Tax, Legal Division, Regional Tax Office, Multan v. Messrs Cress Gas Carriers, Kacha Noor Shah Road, Sahiwal), T.R. No. I0O of 2008 (Commissioner Income Tax, Legal Division, Regional Tax Office, Multan v. Messrs Cress Gas Carriers, Kacha Noor, Shah Road, Sahiwal), T.R.No. 101 of 2008 (Commissioner Income Tax, Legal Division, Regional Tax Office, Multan v.
Messrs Crescent Services, Arifwala Road, Sahiwal), T.R.No. 102 of 2008 (Commissioner Income Tax, Legal Division, Regional Tax Office, Multan v. Messrs Crescent Services, Arifwala Road, Sahiwal) and T.R. No. 103 of 2008 (Commissioner Income Tax, Legal Division, Regional Tax Office, Multan v. Messrs Crescent Services, Arifwala Road, Sahiwal), as common questions of law have been framed therein.
The Commissioner Income Tax assailed two orders, dated 24-5-2008 whereby Income Tax Appeal No. 1149/LB/2007 to I.T.A No. 1154/LB/2007 were dismissed. The two questions of law admitted for hearing by this Court vide order dated 13-5-2009 were as follows:- "(1) Whether on the facts and in the circumstances of the case, ITAT was justified in upholding the CIT(Appeals) order ignoring the statutory provisions as laid down in section 234(5) read with section 153(l)(b)(9) of the Income Tax Ordinance, 2001?
(2) Whether under the facts and in the circumstances of the case the Learned ITAT was justified in ignoring the Circular No. 11 of 1991 wherein a carriage contractor is clearly included in the definition of contract?".
In all of the above cases the respondents are carriers of goods plying vehicles and providing transportation facilities under the contract.
2. According to the Learned counsel the respondents filed statements under section 115(4) of the Income Tax Ordinance, 2001, hereinafter to be referred as the Ordinance of 2001, under presumptive tax regimes for the years, 2003 to 2005. Subsequently regular income tax returns were filed under normal law by writing on the surface of the return "Revised under section 153 of the Ordinance".
Allegedly the claims of income tax refund were rejected on the ground that providing of services fell under section 153(l)(c) of the Ordinance of 2001 and the tax deducted was full and final discharge of liability.
3. The respondents assailed the orders by filing appeals before the CIT(Appeals) who accepted the returns and allowed the refunds. The appellants assailed the orders of CIT(Appeals) before the ITAT and the appeals were dismissed vide order dated 24-5-2008 impugned herein.
4. According to the Learned counsel for the appellants the above said questions of law have already been decided by the High Court of Sindh in case of Premier Mercantile Services (Pvt.) Ltd., v.
Commissioner of Income Tax Karachi (2008) 97 Tax 89. According to the Learned counsel for the appellants the services rendered by the stevedores have already been held to be taxable under section 153(6) of the Ordinance, 2001 and on the same analogy the services rendered by the transporters being similar in nature are also liable to the same treatment under the law and the order passed by the Learned ITAT is illegal.
5. On the other hand, Learned counsel for the respondents have raised various preliminary objections including that the filing of the tax references is not in accordance with rules, no statement of case has been made and T.R. Nos. 99, 100, 102 and 103 are not supported with certified copies of the impugned orders. Reliance was placed on 1991 PTD 871.
6. On merits, it has been argued that according to the judgment passed in Premier Mercantile's case supra. The questions raised therein were answered in negative, that is in favour of the assesses. Judgment passed in CTT Multan v. Rehman Enterprises (2008) 98 Tax 114 was also relied upon in support of above contention. Apart from the above judgments reliance was also placed on a clarificatory letter dated 7-6-2007 wherein the F.B.R, has already held that the services rendered by the transporters for the years, 2003 to 2006 did not fall in presumptive tax regime.
7. Before going into the merits of the case we consider it necessary to decide the preliminary objections first. Tax Reference 98 of 2008 has been filed against order passed in the case of Messrs Cress Gas Carriers for the assessm ent year 2003 and T.R. No. 101 of 2008 has been filed against order passed in the case of Messrs Crescent Services for the assessment year 2003. Both of the references are supported by the certified copies. Whereas T.R. Nos. 99 and 100 of 2008 filed against Messrs Cress Gas Carriers for the assessment years 2004 and 2005 and T.R. Nos. 102 and 103 of 2008 filed against Crescent Services for the assessment years 2004 and 2005 are not supported by the certified copies. The contention of the Learned counsel that certified copies have been filed with the reference for the year, 2003 would suffice as the references regarding assessment years 2004 and 2005 have been decided by the same order has no force. Under the law each and every reference has to be supported with the certified copies of the impugned order. In Naseer Mughis Ltd. v. CTT Lahore, 1991 PTD 871 it was held that it was mandatory to file certified copy of the order of ITAT alongwith the reference. It was held that Order XL1 Rule 1, C.P.C, also requires the filing of certified copy of the impugned order and all documents alongwith every appeal notwithstanding the position that the appeals have been preferred against the same judgment unless the Appellate Court dispenses with the filing of certified copy in any one of such appeals.
8. The Learned counsel for the assessee has heavily relied upon the dictum laid down in Khalid Saeed v. Shamim Rizwan (2003 SC MR 1606) and Director, Directorate-General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Limited and others (PTCL 2008 CL. 337) and argued that since the references were not filed in accordance with rule 78 of the Income Tax Rules, 2002, the references merits to be dismissed on this score alone. According to the Learned counsel the same was not in the prescribed form alongwith a statement of the case. The preliminary objections appear to be of a hypertechnical nature. The judgments cited at the bar lend a little support to the contentions of the Learned counsel for the assessee.
9. We have examined the questions in the light of the arguments advanced by both the parties.
Sections 153(l)(b) and (9) are relevant, which are reproduced below:- "153. Payment for goods and services-
(1) Every prescribed person making a payment in full or part including a payment by way of advance to a resident person or permanent establishment in Pakistan of non-resident person:-
(a) for the sale of goods;
(b) for the rendering of services;
(c) on the execution of a contract, other than a contract for the sale of goods or the rendering of services.
Shall, at the time of making the payment, deduct tax from the gross amount payable at the rate specified in Division III of Part III of the first Schedule.
(2)
(3)
(4)
(5)
(6) The tax deducted under this section shall be a final tax on the income of a resident person arising from transactions referred to in clause (a) or (c) of subsection (1),
(7) ......
(8)
(9) In this section, "prescribed person" means-
(a) the Federal Government;
(b) a company;
(c) an association of persons;
(d) a foreign contractor or consultant;
(e) a consortium or joint venture;
(f) an exporter or an export house for the purpose of subsection (1A).
Services include the services of accountants, architects, dentists, doctors, engineers, interior decorators and lawyers, otherwise than as an employee; and" "sale of goods" includes a sale of goods for cash or on credit, whether under written contract or not."
10.This Court has earlier observed in the case of CIT v. Rehman Enterprises as follows:- "The provisions of section 153(l)(b) of the Income Tax Ordinance relate to "rendering or providing" of services. Deletion/omission of the word "professional" through Finance Ordinance, 2002 enlarges the scope of the enactment. The tax deducted under section 153(l)(b) by virtue of proviso to subsection (6) is not final to discharge of tax liability. It does not, therefore, fall within the presumptive tax regime. Section 153(l)(b) has to be read in conjunctions with sub-section (9) where the enactment has itself defined by the term "services". Term "includes" has consciously been used to enlarge the scope of services to other services, i.e. Which have not specifically mentioned. The provisions of section 153(9) read with clause 2(a) of Division III of Part (iv) of the First Schedule to the Income Tax Ordinance, 2001, convey the intention of the legislature that the services of carriage contractor _ fall within the ambit and scope of section 153(l)(b)."
11. Learned counsel for the respondents has produced a letter, which is re-produced as follows:- "LETTERS TO THE EDITOR [(Letter No.7(41)S. Asstt./2006 dated 7-6-2007, from Aftab Ahmad, Secretary (Assessment), C.B.R., Islamabad, addressed to the Director General, Intelligence and Investigation, Islamabad.)] SUBJECT: FILING OF REVISED RETURNS IN MTU KARACHI I am directed to refer to your subject letter No.1(22)/DGCl/ Vig/2006/34 dated 15-5-2006.
And to say that since the matter of revision/substitution on the statements filed under section 115(4) by the transport/carriage contractors (being services) needed to be examined under the provision of section 153(l)(b) of the Income Tax Ordinance, 2001 to ascertain whether such statements could have been substituted with the returns, the matter was discussed. In a series of meeting chaired by Member (DT) and attended by M(Legal), M(Fate), DG Inspection and Audit (DT) and other relevant Officers. After a thorough consideration of the issue. In the light of existing legal position and various verdicts of the courts/appellate authorities, it has been concluded that:-
(1) Rendering or providing of transport services is covered under section 153(1 )(b) of the Income Tax Ordinance, 2001 and the. Tax deducted at source is adjustable, hence filing of statement under section 115(4) was not required under the law. Thus, subsequent filing of returns in such cases is in accordance with law.
(ii) Since the transport services were outside the ambit of Presumptive Tax Regime for Tax years, 2003, 2004, 2005 and 2006, therefore, tax deducted wherever found in excess of the tax liability was required to be refunded accordingly.
(2) There being a complete unanimity of the views on the existing position of law, the action in filing of returns in the cases of transport services is found to be in order. Hence no further action in the matter is warranted on the part of the C.B.R."
12. On the other hand, in Premier Mercantile's case the Sindh High Court came to the conclusion that:- "From a combined reading of these subsections it emerges that initially professional services and then services have been defined to include the services of accountants, dentists, doctors, engineers, interior decorators and lawyers only and does not include other services. We cannot subscribe to the arguments of the Learned counsel for the respondent that all services will fall under clause (b) of subsection (1) of section 153 as the services which have been defined in subsection (9) are services of those persons who require professional qualification to provide these services and, therefore, according to the rule of ejusdem generic which is one of the principles of interpretation, only such type of professional services which require the person to have a professional degree may be included in this definition and in our opinion stevedoring does not require a professional degree and will, therefore, not fall in the definition of services which have been excluded from the provisions of clause (c)."
13. It appears that their lordships were not shown the letter dated 7-6-2007 reproduced above.
Admittedly the interpretation given in above letter is not binding on this Court. However, since the revenue authorities themselves have given an interpretation which appears to be in consonance with section 153(l)(c) reproduced above in as much as that the contracts for rendering services have specifically been excluded from the presumptive tax regime, we feel that judgment passed in CIT v. Rehman Enterprises reflects the actual position of law.
14. Regarding provision of section 234(5) of the Ordinance of 2001, suffice it to say that it is not a charging provision, section 234 of the Ordinance of 2001 simply provides for the machinery for the recovery/deduction of advance income tax.
15. For the foregoing reasons we do not find any illegality in the orders passed by the CIT(Appeals) and ITAT impugned herein. The questions asked in this reference are answered in the affirmative. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.