Through this order was intend to dispose of appeals filed by the Department against decision of the learned CIR (Appeals-1) (hereinafter to be referred as CIT(A) vide Orders Nos. 76 to 80, dated 14-11-2009 for Tax years, 2003-2004, 2005, 2006 and 2007. The grounds of appeal filed by the Department for all the Tax Years being identical are reproduced as below:-- "(1) That the order of the learned CIT (Appeals) is bad in law and on facts of the case.
(2) That the learned Commissioner (Appeals-I) Inland Revenue was not justified in deleting the tax charged under section 156 read with sections 161 and 205 of the Income Tax Ordinance, 2001.
(3) That the appeal craves leave to add, alter or amend the grounds of appeal any time on or before at the time of hearing of the appeal."
2. Brief facts of the case as transpired from the record are that the taxpayer is a private limited company and is engaged in manufacturing of pharmaceutical products. The Taxation Officer of Enforcement and Collection Division LTU Karachi while conducting monitoring of withholding taxes, observed that the taxpayer has claimed expenditure in all the above Tax Years on account of sales incentives and sales promotion but according to the Taxation Officer did not deduct withholding tax @ 20% under provision of section 156 of the Income Tax Ordinance, 2001 (hereinafter after to be referred as the Ordinance) on the expenditure so incurred. The Taxation Officer accordingly through show-cause notice confronted the taxpayer as under:-- "as per statement of audited accounts it was observed that your company had claimed heavy deduction of expense from the income on account of sales incentives and sales promotion for enlarging its business activities. These payments attract the provision of section 156 of withhold the tax @ 20% which was the final tax liability of the recipients. But on scrutiny the record produced to audit no such evidences was available to ascertain that the tax as per law has accordingly been deducted. Since no tax was deducted under section 156 of Income Tax Ordinance, 2001 by you hence the provision of section 161(1) was to be invoked in the following tax years:-- Tax Year Sales IncentivesSales PromotionTotal Tax @ 20 % 2003 11,866,323 45,158,552 57,024,875 11,404,975 2004 18,785,453 54,643,710 73,429,163 14,658,833 2005 20,250,286 95,727,012 115,977,298 23,195,460 2006 18,893,403 93,823,482 112,716,885 22,543,377 2007 19,190,327 109,190,457 128,380,784 25,676,157 97,505,802 On failure of above, action under sections 161/162 of Income Tax Ordinance, 2001 is warranted. This resulted in loss of Rs,97,505,802. Please explain as to why not the recovery of short deduction and Additional Tax at Rs,97,505.802 may be levied upon you under sections 161/205."
4. The taxpayer through their tax adviser Messrs A. Ferguson and Co. C.A. Furnished explanation on sale promotion and sale incentives. Nature of expenses on sale promotion were explained as under:-- S. No. Item Nature of Payment
1. Quarterly cycle meeting Incurred on account of organizing and conducting meeting and conferences
2. Annual sales conference Incurred on account of organizing and conducting meeting and conferences
3. Training expenses Incurred on training of scientific promotion officers and field force S. No. Item Nature of Payment
4. Institution service chargesPaid to persons for collecting dues from hospitals and institutions
5. Promotional literature Brochures and pads given to Doctors
6. Gimmicks Pens, watches, clocks, tissue boxes, pen holders, head lamps, table planners, medical literature, given to doctors for promotion of sales
7. Advertisement Advertisement in medical journal and magazines
8. Other promotional Nil
9. Trade incentives Extra discount in the form of extra units given to retailers for making bulk purchase
10. Customers club Incurred by clients on doctors, including cost of stalls, accommodation and travel of doctors
4. The AR of the taxpayer contended before the Taxation Officer that the sales promotion expenses were incurred under the above heads which are not covered under the definition "prizes and winning". Regarding sales incentives, it was contended that the sales incentives are paid to the employees of the company for their motivation and tax is deducted under section 149 of the Ordinance and therefore, this expenditure also does not come under the ambit of provisions of section 156 of the Ordinance. The Taxation Officer did not accept the contention of the Taxpayer on the ground that the explanation offered by the taxpayer are not supported with documentary evidence despite of affording ample opportunities to the Taxpayer and also on the ground as discussed in his assessm ent order as under:-- "Findings on sales promotion and sales incentives: Before parting with the order it is reiterated that the word "Prizes and Winnings" is not defined in Income Tax Ordinance, 2001, however it has a very wider connotation, which encompasses any expenditure on account of sales promotion Black Law Dictionary defines prize as "something of value awarded in recognition of a person's achievement." As the taxpayer has contended that expenses are incurred for promotion of sales and as sales incentives accordingly the same are hit under section 156 of Income Tax Ordinance, 2001."
5. The Taxation Officer accordingly charged withholding tax under section 161 and also charged additional Tax under section 205 of the Ordinance.
6. Being aggrieved the taxpayer preferred appeal before the Learned CIT(A) and the learned CIT(A) adjudicated upon the issues in his impugned order as under:-- "In order to thrash out the issue in hand it would be pertinent to go through section 156 of the Income Tax Ordinance, 2001 for better perception and immediate reference as follows:--
156. Prizes and winnings.--
(1) Every person paying prize on a prize bond or winnings from a raffle, lottery, prize on winning a quiz, prize offered by companies for promotion of sale, or cross-word puzzle shall deduct tax from the gross amount paid at the rate specified in Division VI of Part-III of the First Schedule.
(2) Where a prize, referred to in subsection (1) is not in cash the person while giving the prize shall collect tax on the fair market value of the prize.
(3) The tax deducted under subsection (1) or collected under subsection (2) shall he final tax on the income from prizes of winnings referred to in the said subsections.
From examination of the above provision of law it transpires that the legislature has inserted the words "prize on winning a quiz, prize offered by companies for promotion of sales" in the statute by Finance, Act, 2003 with the intention to tax such transactions falling under the above heads which have so far escaped taxation. The action of Taxation Officer applying the said provision to the target performance awards, promotional literature, gimmicks other promotional trade incentive and customer club expenses incurred in order to see whether the Taxation Officer has travelled beyond the intendment of the legislature because stretching of a charging section beyond its jurisdiction is not permissible. Is the action of the Taxation Officer attributable to presumption which is not explicit from the words of the legislature? It is a cardinal principle of interpretation of statute that while interpreting fiscal statute it is not required to see only form of law under examination but also the substance by looking to its real nature and to determine the category in which it would fall. Therefore, in order to see whether the above transactions of the appellant are caught in the mischief of section 156 of the income Tax Ordinance, 2001 the meanings of two important words mentioned in the statute i,e, "prize" and "promotion of sales" have to be extracted and then to decide that which meaning could be attributable to the subject issue under adjudication in the instance case.
The word prize has not been defined in the statute so its literal meaning is to be taken. Black's Law Dictionary defines the word prize as under:- "Anything offered as a reward of contest. A reward offered to the person who among several persons or among the public at large shall first (or best) perform a certain undertaking or accomplish certain conditions."
Considering the above definition in light of section 156 of the Ordinance it is revealed that the essence of words used in the section with context to prize i,e, prize on prize bonds, lottery raffles, quiz, offered by companies for promotion of sales and cross words prize, which are all consumer public at large oriented, but in the appellants case the sales incentive are paid to employees of the company, brochures and pads given to Doctors. Gimmicks i,e, pens, watches, clocks, tissue boxes, pen holders, head lamps, table planners, medical literature etc., given to Doctors, other promotional and trade incentive in shape of extra discount in the form of extra units given to retailers and customer clubs which are expenses incurred on Doctors including cost of stalls, accommodation and travel expenses are confined to its distributors retailers, Doctors and employees of the appellant which seems to be trade oriented. Thus by its nature these schemes of the appellant will not, qualify for inclusion in the definition of the word prize" as envisaged in section 156 of the Ordinance.
The arguments put forth are considered and found valid. Since the words "prize offered by companies for promotion of sale" were inserted through Finance Act, 2003 w,e,f, July, 2003 whereas companies accounting period ends on 31, December, 2002 and 2003 respectively for corresponding tax year 2003 and 2004 thus the provision of section 156 is inapplicable for tax year, 2003 and half of tax year, 2004. The action of Taxation Officer to invoke said provision for these year is erroneous and cannot be sustainable in the eyes of law, therefore, the impugned order passed under sections 161/205 for the tax year 2003 and 2004 are hereby annulled.
The above arguments of the appellant carry force. The Taxation Officer was not justified in imposing/charging of tax @20% on the expenses which he itself excluded from the provisions of section 156 and admitted the fact that the rate of withholding is less than 20% on these expenses, but proceeded to charge tax on the pretext that due to non-filing of details, the tax is being charged @ 20%. The Taxation Officer has also remarked in the impugned orders that the orders would be rectified for these expenses tantamounts to misdirecting, himself for the reason that he himself has mentioned in the impugned orders that the monitoring proceedings are only related tax under section 156 of the Ordinance. In the tight of above factual position it is held that the action of the Taxation Officer charging tax @ 20% on the items/expenses where withholding tax is less than 20% as accepted by him is unjustified and uncalled for, therefore no recovery of tax on these expenses is to be made @ 20%. The charged tax on the same is deleted for all the impugned years."
7. The learned CIT(A) this observed that as the word "prize" has not been defined in the statute, so its literal meaning is to be taken and therefore, referred to the meaning of word as defined in the 'Black Law Dictionary'. After lengthy academic discussion and placing, reliance on case-laws of an Indian jurisprudence reported as (2004) 141 Taxman 615 (Kar.) and case-law reported as 78 ITR 210 of Calcutta High Court. CIT Santosh Agencies the learned CIT(A) came to the conclusion that the expenses incurred on sales promotion and incentives are not covered under definition of "prize on sales promotion" as mentioned under provisions of section 156 of the Ordinance and therefore the tax charged under sections 161/205 of the Ordinance was deleted for all the impugned years.
8. Now being dissatisfied, the Department has come in appeal before this forum. During proceeding before this court the learned DR contended that the learned CIT(A) has travelled beyond the intendment of the legislature by entering into a lengthy irrelevant academic discussion leading him to misdirected interpretation of the/provisions of section 156 of the Ordinance. The learned D.R. Contended that the Taxpayer has offered, a scheme for giving extra units to retailers and has incurred expenditure on customer clubs. The retailers who purchase the quantity fixed under the scheme receive free units. Similarly various items are given and other expenses are incurred on Doctors, Distributors and Retailers including cost of travel and accommodation. The learned D.R. Further contended that these expenses are nothing else but sale promotion and sale incentives given as prize in reorganization of their services for sale promotion. The learned D.R. Also contended that the concessional or tree goods provided to the distributors retailers cannot be termed discount because these were not allowed to them in original transactions with them but were given later on. The learned D.R therefore, supported the order of the Taxation Officer on the issue.
9. The learned counsel for the Taxpayer however, supported the order of the learned CIT(A) and contended that since the words "prize offered by companies for promotion of sale" were inserted through Finance Act, 2003 w,e,f, 1st July, 2003 whereas companies accounting period ends on 31st December, 2002 and 2003 respectively for corresponding tax years 2003 and 2004, thus the provision of section 156 is inapplicable for tax year 2003 and half of tax year 2004. It was further argued that the above expenses incurred by the company are not covered in the definition of "prize" as envisaged in provisions of section 156 of the Income Tax Ordinance, 2001. The learned Counsel for the Taxpayer contended that concessional or free goods given to the retailers and distributors and other expenses incurred on Doctor. Distributor and Retailer cannot be termed prize as prize can be won by chance and not by achieving of any targets or on some performance. The learned Counsel for the Taxpayer further contended that above expense incurred by the company on Doctor Distributor and Retailer is not advantage in the nature of prize as any expenditure or facility given was not a matter of chance in the nature of prize. Regarding sales incentives, the learned counsel contended that sales incentive is a business tool used to motivate and compensate the sales force (employees) to meet sales targets set on a quarterly basis. The amounts paid are proportionate to the sales target achievement. The above incentive is given on performance of duty of employment and as such is a part of remuneration paid to the employee.
Accordingly these are chargeable to tax under the head "salary" and tax deduction under section 149 has been made.
10. We have heard to the rival arguments of both the parties have perused the case record including order of the Taxation Officer and impugned order of the leaned CIR (Appeals-1). Our findings are as under:
11. We agree with the contention of learned D.R. That the learned has CIT(A) has entered into a lengthy academic discussion which has eclipsed his approach to correctly interpret provisions of section 156 of the Income Tax Ordinance, 2001. While interpretation fiscal statue no undue advantage can be taken on the basis of far-fetched or scholarly interpretation of the statue. The Honourable Supreme Court of Pakistan in a reported case cited as 2002 SCM R 738 accordingly observed as under:-- "We are of the considered opinion that while interpreting Fiscal Notifications the only guiding principle should be that no undue advantage could be taken on the basis of far-fetched or scholarly unterpretation which the plain language does not imply nor intended to mean."
12. Through his lengthy academic discussion the learned CIT(A) has tried to restrict the scope of provisions of law by giving a very narrow and restricted meaning to the word "prize" used in section 156 of the Income Tax Ordinance, 2001. Such an approach to interpretation of statues is not approved by honourable Superior Courts. Reliance can be placed on the judgment of the Honourable Supreme Court of Pakistan reported as PLD 2000 SC 111 wherein their Lordships observed as under:-- "It is duty of the Court to find out the true meaning of a statute while interpreting the same. The general rule is that the Courts adopt as uniform an approach as possible to the reading of ambiguous Acts of Parliament which are sometimes imperfect, obscure and vague. The primary rule of interpretation of statutes is that the meaning of the Legislature is to be sought in the actual words used by him which are to be interpreted in their ordinary and natural meanings. The cardinal rule for the construction of Acts of Parliament is that they should be construed according to the intention expressed in the Acts themselves. Where the language of the statute is plain and unambiguous, and conveys a clear and definite meaning, there is no occasion for resorting to the rules of statutory interpretation and the Court has not right to impose another meaning or to read into its limitations which are not there based on a prior reasoning as to the probable intention of the Legislature. Court can resort to the proceedings of the Legislature when the language employed is ambiguous."
13. Since the issue involved in the case revolves around the provisions of section 156 of the Income Tax Ordinance, 2001 therefore it would be expedient to reproduce provisions of said section even at the cost of repetition as under:-- "156. Prizes and winnings.
(1) Every person paying prize on a prize bond, or winnings from a raffle, lottery prize on winning a quiz, prize offered by companies for promotion of sale, or cross-word puzzle shall deduct tax from the gross amount paid at the rate specified in Division VI of Part-III of the First Schedule.
(2) Where a prize referred to subsection (1), is not in cash the person while giving the prize shall collect tax on the fair market value of the prize.
(3) The tax deducted under subsection (1) or collected under subsection (2) shall be final tax on the income from prizes or winnings referred to in the said subsections."
14. The legislature through Finance Act, 2003 inserted in section 156 the words "prize on winning a quiz, prize offered by companies for promotion of sale" with intention to tax those transactions falling under the above heads which have so far escaped taxation. Since the word "prize" has not been defined in the Income Tax Ordinance, 2001 therefore, according to the principle of interpretation of statues its literal meaning is to be taken. Therefore, it would be appropriate to refer to the meaning of the word prize in the black's Law Dictionary whereby the word prize has been defined as under: BLACK'S LAW DICTIONARY "Prize. Anything offered as a reward of contest. A reward offered to the person who among several persons or among the public at large shall first (or best) perform of a certain undertaking or accomplish certain conditions. An award or recompense for some act done: some valuable thing offered by a person for something done by others. It is distinguished from a "bet" or "wager" in that it is known before the event that is to give either the premium or the prize and there is but one operation until the accomplishment of the act, thing or purpose for which it is offered.
The fair market value of prize or award is generally includible in gross income. Certain exception are provided where the prize or award is made in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement providing certain other requirements are met.
I.R.C. 74."
15. Again a reference is made to meaning of word 'prizein the Chamber Dictionary given as under:- - CHAMBERS DICTIONARY (NEW EDITION)
"Prizes (Spenser, Shakes prize) prize an a reward or symbol of success offered or won in competition by contest or change or granted in recognition of excellence: anything well worth- striving for a highly valued acquisition: privilege or advantage (Shaksp) esteem (Spenser); valuation appraisal (Shakesp) adj awarded worthy of or constituting a prize: treasured; (ironically) perfect great (as in a prize fool). Vt to pryse) to value: to value highly: to set a prize on (obs): (Spenser pryse) to pay for adj prizable valuable----adj prized valued highly; treasured.An prizer
(rare) an appraiser prize list a list of winners: prize man or prizewoman a winner of a prize, esp an academic prize; prize winner [A differentiated form of price and praise, from OFr pris (n) and priser
(vb) from L pretium price] Prize 2 (Spenser, Shakes prize) prize n that which is taken by force, or in war, esp a ship: seizure
(obs) vt to make a prize of. Prize court a court for judging regarding prizes made on the high seas: prize crew a crew put abroad a prize to bring her to part: prize money share of the money or proceeds from any prizes taken from an enemy. (Fr prise capture, thing captured, from L.
Praehensa, feminine pa p of paraehendere to seize]
16. Perusal of the meaning of word prize" in both the dictionaries mentioned above is a reward offered to the person or won by person in competition through contest or by chance. It is a reward or compensation granted in the recognition of excellence. The meaning given to the word "prize" in both these dictionaries therefore covers a reward won by chance or offered for some achievement in normal course of some good performance. The meaning of the word "prize" in Black's Law Dictionary negates the contention of learned CIT(A) that "prize can only be won by chance when it describes prize is distinguished from a "bet" or "wager" in that it is known before the event. The Chamber Dictionary even goes to the extent that things even taken by force or seizure are included in definition of "prize". These meaning of the word "prize" totally discards the impression that "prize" can only be won by chance. Therefore, the interpretation by the learned CIT(A) that the prize can be won by chance is totally misplaced keeping in view the meaning of the word "prize" given in the above two dictionaries. This is however surprising that the learned CIT(A) refers to the dictionary meaning of the word "prize" but subsequently does not follow the meaning given by the F dictionary to the word 'prize".
17. The learned CIT(A) in his impugned order has relied upon an Indian case reported as (2004) 141 Taxman 615 (Kar). In this case their Lordships observed as under:- "The essential elements that go to constitute a lottery are: (1) a prize or some advantage in the nature of a prize, (2) distribution thereof by chance, and (3) consideration paid or promised for purchasing the chance. Thus unless all the three elements are satisfied the prize scheme cannot be considered as a lottery. A price must be charged for participating in the draw. The chance of a person getting the prize could not be treated as part of the bargain unless independent consideration was there with respect to the prize awarded."
18. Perusal of the above observation would reveal that the findings in the above cited case essentially pertain to the scope of "lottery" whereas the issue in the case under consideration relates to the definition of "prize". In their literal meaning "lottery" and "prize" in our opinion are altogether two different things. Essentially lottery is by chance and as discussed in the preceding paragraph "prize" is both by chance or offered for some achievement in the normal course of some good performance. Therefore reliance of the learned CIT(A) on above case-law is out of context in the instant case. The learned CIT(A) after placing reliance on above case has also observed that no person from the public at large is a party to the schemes as the sale promotion schemes are extended only to the retailers, distributors, doctors and employees of the company. We also do not agree to the contention that since the H schemes of the sale promotion do not involve public at large therefore, these schemes do not cover "prize". The provisions of section 156 of the Ordinance, do not impose any restrictions on prize on sale promotion whether to the public at large or to the retailers, distributors, doctors or employees of the company. The learned CIT(A) while interpreting the provision of 156 of the Ordinance in respect of "prize offered by companies for promotion of sales" has relied upon Indian case-law reported as 78 ITR 210 of Calcutta High Court CIT v. Santosh Agencies which is reproduced below:-- "Sales promotion expenses connote activity akin to advertisement or publicity. Rewarding the selling agents with special discount or pleasure trips on the basis of performance cannot be said to be sales promotion pertaining to the same genus as advertisement and publicity. By these rewards given to the selling agents the assessee cannot be said to have taken steps to draw attention of the consumers. The entire effect of the expenditure is consumer-neutral, it may have an indirect effect on the market in the sense this will instill in the selling agents a greater favour in pushing up sales. But any activity cannot be distinguished as sales promotion by the mere effect of the activity on the salability. It is only such expenditure in the nature of advertisement and publicity which creates stir amongst the consumers directly by means of exhibitions shows and other methods of popularizing the assessee's commodity that can be said to be activity similar to a or of like nature as advertisement and publicity. By giving rewards to the selling agents to motivate them for performance is not anything that publicies the assessee's commodity. Therefore, both the special discount allowed to the dealers as well as the foreign tour expenses of the dealers incurred by the assessee were nothing but selling expenses incurred in the ordinary course of business and were not covered by the expression 'sales promotion expenses'. As mentioned in section 37(3A) read with section 37(3B) of the Act and could not be disallowed. (Emphases is our)."
19. The case-law quoted by the learned CIT(A) is distinguishable in the instant case because the provisions of Indian Income Tax Act and the Income Tax Ordinance of Pakistan are not identical. In this regard it may be mentioned that in an identical situation the Learned Tribunal vide its order I.T.A. No,73/KB/2010 dated 28-5-2010 in the case of the Commissioner LTU v. Epla Laboratories (Pvt.)
Limited Karachi have distinguished the above quoted Indian case-law as under: "The learned CIR(A) has referred to decision reported as 78 ITR 2010 of Calcutta High Court CIT v.
Santosh Agencies. This case-law relates to allowability of sales promotion expenses in the context of Indian law. We are afraid that to assign meaning of sales promotion expenses under the Income Tax Law of India would be out of context for the purpose of Income Tax Law of Pakistan and that too under different heading whereas the Indian law refers to sales promotion expenses the word used in Pakistan Law is for promotion of sales. It is without additional word "expenses". To us this changes the entire complexion of the case under consideration. Perusal of the learned CIR(A) order shows that he has referred to a concept of consumer neutrality scheme. We find that this situation is absolutely irrelevant for the purposes of section 156 of the Income Tax Ordinance, 2001. Our contention is supported by the fact that since the words used in the law is for "sales promotion" and if this event of "sales promotion" is established then any further interpretation would render the whole exercise in futility."
20.(sic) Besides above, the superior courts have cautioned against borrowing the meaning attached to terms and phrases used in one statute, while interpreting another statute. Reliance is placed on the Judgment of the honourable High Court Lahore in a reported case as (1975) 32 Tax 273 (H.C. Lah) wherein their Lordships observed as under:-- "It is not always safe to borrow the meanings attached to terms and phrases used in one statute as aid in support of the interpretation of a different statute meant for a different purpose and dealing with a wholly different subject matter. It is of course permissible to have recourse to the ordinary dictionary meanings in interpreting a statute."
20(sic) Therefore, findings of the learned CIT(A) by placing reliance on above quoted cases are repelled as the cited cases are not relevant in the case of the taxpayer.
22. The contention of the learned D.R. Is of significant importance to which we agree that these free extra units were given to the retailers not at the time of supply/sales that could have possible been termed as sales discount, but these free extra units were given when certain targets were achieved by the retailers. Similarly it is admitted fact that sales incentives to employees is also based on achieving certain targets and therefore, they clearly fall in the definition of "prize" offered for promotion of sales.
23. The above discussion boils down to the fact that interpretation of provisions of section 156 of the Income Tax Ordinance, 2001 given by the learned CIT(A) in his impugned order is against the intention of the Legislature which by amendment through Finance Act, 2003 wanted to bring within the ambit of withholding tax certain items at certain rate of tax deduction as final tax liability, but if the misdirected interpretation of statute as given by the learned CIT(A) is accepted as correct, it will frustrate the required intention of the Legislature. Such interpretation has not found favours with the Superior Courts of Pakistan. In this regard we may refer to the judgment of the Honourable Supreme Court of Pakistan in a reported case cited as 2002 PTD 1 (S.C. Pak) wherein their Lordships observed as under:-- "It may be noted that according to the settled principle of law that a fiscal statue has to be construed in its true perspective and in respect of payment of income tax if it is found due against a party, then such statute cannot be interpreted liberally in order to make out a case in favour of an assessee who has failed to pay the tax."
24. For our interpretation of the words "prize offered by companies for promotion of sale", we are also supported by the following decisions of the Honourable Appellate Tribunal Inland Revenue Karachi.
(a) ITA No,73/KB/2010 dated 28-5-2010 in the case of Commissioner LTU v. Messrs Epla Laboratories (Pvt.) Ltd. Karachi.
(b) ITA No,273/KB/2010, dated 15-6-2010 in the case of Commissioner LTU v. Messrs Wazir Ali Industries Ltd.
25. We are not impressed by the arguments of the learned counsel for the Taxpayer that sales incentive is a business tool used to motivate employees for sale promotions and therefore, these are chargeable under the head salary and tax is deductible under section 149. It is a well-settled principle of law that when specific provision for any issue is obtaining in the statute, then that issue cannot be dealt with under the general provisions of the statute. In this regard reliance is placed on a reported case-law citied as 2001 PTD 19 wherein their Lordships observed as under:-- "In presence of a specific provision of law applicable to the situation the Assessing Officer could not have resorted to any other provision of law"
26. For our above view further reliance can be made on the following case-laws.
(a) 1991 PTD (Trib) 2004, (b) 2003 PTD 1309(H.C) and (c) 2005 PTD 1047 (H.C)
27. We are therefore of the firm opinion that sale incentives are also covered under definition of "prize for promotion of sales" therefore they M will be dealt with under provisions of section 156 of the Ordinance for withholding tax.
28. However, we agree with the arguments of the learned counsel for the taxpayer and findings of the learned CIT(A) that the words "prize offered by the companies for promotion of sale" were inserted in the Ordinance through Finance Act, 2003 w,e,f, 1st July, 2003 whereas the company's accounting period ended on 31st December, 2002 and 2003 respectively for corresponding tax years 2003 and 2004, thus the N provisions of section 156 being not retrospective in nature will not be applicable for tax year 2003 and half of the tax year 2004. Therefore, the cases is remanded back on this specific issue to the Taxation Officer to re-calculate the withholding tax under provisions of section 156 of the Ordinance for the above period which is covered by the law discussed above after affording reasonable opportunity of being heard to the N taxpayer.
29. Now coming to the issue that the Taxation Officer has charged tax @ 20% on items/expenses where withholding tax is less than 20% as accepted by him. The learned CIT(A) in his impugned order has observed that the Taxation Officer was not justified in imposing/charging of tax @ 20% on the expenses which he itself excluded from the provisions of section 156 and admitted the fact that the rate of withholding is less than 20% on these expenses but proceeded to charge tax on the pretext that due to non-filing of details, the tax is being charged @ 20%. The learned CIT(A) accordingly directed that no recovery of tax on these expenses is to be made @ 20% and the charged tax on the same is deleted for all the impugned years. We do not approve of such approach by the learned CIT(A) to uphold any action of the Taxation Officer merely on the ground that Taxation Officer himself has agreed to such action ever if the action of the Taxation Officer is not in accordance with law.
30. We are of the considered opinion that Taxation Officer action in contravention of mandatory provision of law would be illegal because orders in contravention of mandatory provisions of law are a nullity. Reliance is placed on reported case cited as 2000 PTD 2407.
31. We are also of the considered opinion that/appellate authorities seized of the matter are supposed to apply correct law to meet ends of justice. For our above opinion we are fortified by the judgment of the Hon'ble Supreme Court of Pakistan in a reported case-law cited as, 2005 PTD 480 wherein their Lordships observed as under:-- Head Note: "Whether Court seized of the matter was supposed to apply correct law to meet ends of justice-Held Yes"
32. Perusal of the order of the Taxation Officer would reveal that he could not determine exact nature of certain expenses as allegedly details/evidence in support of such expenses were not provided to him. We are therefore of the opinion that while applying the law certain expenditures like quarterly cycle meeting, annual sales conference, training expenses, advertisement in medical journal needs. R reconsideration to find out from details and natures of these expenses whether they come within the meanings of prize as discussed in the judgment.
33. Accordingly, impugned order of the learned CIR(Appeals-1) is annulled and case is remanded back to the, Taxation Officer for de novo proceedings on above cited issues as per law keeping in view findings of the Tribunal after affording reasonable opportunity of being heard to the Taxpayer.
34. The appeal filed by the department is disposed of as indicated above.