' JAWAID MASOOD TAHIR BHATTI (JUDICIAL MEMBER).--The appellant through this appeal has objected against the impugned order of learned CIR(A) dated 17-2-2011 on the following grounds:- "(2). That the Commissioner Inland Revenue (Appeals) has erred in confirming the application of provision of section 122(5A) of Income Tax Ordinance, 2001 to the case of the appellant although prior to delegation, the Commissioner Inland Revenue has to consider and prove that the order passed was erroneous in so far it is prejudice to the interest of revenue. The order passed under section 122(5A) being illegal and without jurisdiction is liable to be annulled.
(3) That the Commissioner Inland Revenue (Appeals) has erred in not directing the Assessing Officer to re-compute the ration of export sales after deducting sales of wastage and other export related expenses from export sales in order to re-compute the correct the income.
(4) That the Commissioner Inland Revenue (Appeals) has misdirected himself by not directing the Assessing Officer to allow depreciation as per Third Schedule to Income Tax Ordinance, 2001.
(5) That the Commissioner Inland Revenue (Appeals) has erred in confirming the treatment accorded whereby profit on gas deposit at Rs,80,381 was assessed under normal law to the Income of the appellant. The said amount was received from Sui Southern Gas Company as profit on Security deposit and not from any Bank or on any deposit Scheme of National Savings etc. The Addition of Rs, 80,381 is not sustainable in law and is liable to be deleted.
(6) That the learned Commissioner Inland Revenue (Appeals) has not only erred but also misdirected himself in law and on facts by confirming the levy of W. W. F. Amounting to Rs, 68,044 to the case of appellant. Since, the provision of section W. W.F. Is not applicable to the case of the appellant held by the Appellate Tribunal Inland Revenue, Karachi reported as 2007 PTD 2860 (Trib)."
2. Regarding the above referred Ground No, 2, I do not find any force in the arguments of the learned counsel for the appellant that the order passed under section 122(5A) of the Income Ordinance, 2001 amending the assessments deemed to have taken place under section 120 of the Ordinance is illegal ab initio and bad in law, as the same has been passed without jurisdiction the jurisdiction in this regard rested with the Commissioner and the Taxation Officer in this case was not legally competent to amend the deemed order passed under section 120 of the Ordinance invoking the provisions of section 122(5A) of the Ordinance. I am of the view that the Taxation Officer is empowered under the delegated powers by Commissioner under section 210 of the Ordinance to amend the order deemed to have taken place under section 120 being erroneous and prejudicial to the interest of revenue by invoking provisions of section 122(5A) of the Ordinance.
The action taken by the Taxation Officer is well within the ambit of law as the provision of section 210 empowers the Commissioner to delegate powers and functions to any officer Inland Revenue subordinate to him except the power of delegation as expressly mentioned in section 210(1A) of the Income Ordinance, 2001. Section 211 of the Ordinance treats the powers exercised or the functions performed by officer under a delegated authority as powers or functions exercised or performed by the Commissioner. I am of the view that as by fiction of law, the taxpayer itself is assessing authority of its income tax because the return filed under section 114(4) of the Ordinance shall be taken for all purposes of the Ordinance to be an assessment order issued by the Commissioner on the day the said return was furnished. The above provision of law under the Income Tax Ordinance, 2001 and the repealed Income Tax Ordinance, 1979 had inter alia different schemes regarding assessm ent of income and the tax payable thereon and the principle that governed remedial action under section 66A of the repealed Income Tax Ordinance, 1979 cannot be applied to actions under section 122(5A) of the Income Tax Ordinance, 2001. The assessment has been deemed to have taken place by fiction of law and not finalized by Commissioner with conscious mind unlike it was done in the repealed Income Tax Ordinance, 1979 under sections 59(1), 62, 63 ,and 65 on which provisions of section 66A were invoked. None of the officers Inland Revenue is empowered to make an assessm ent under Section 120 of the Income Tax Ordinance, 2001. Therefore, the assertion that to pass an amended order under section 122(5A) of the Ordinance to be framed by a superior authority hardly remains applicable. The factual position is that the taxpayer itself is making its own assessm ent and the authority under the Ordinance who has been delegated powers under section 122(5A) can pass an order under the section. It is only because of the restriction placed under subsection (1A) of section 210 that the powers under section 122(5A) cannot be delegated to an officer below the rank of Additional Commissioner. In this context, section 211(1) of the Income Tax Ordinance, 2001 provides that any order passed by an officer under delegated powers from the Commissioner shall be treated to be an order by the Commissioner. In view of this provision, the order under section 122(5A) issued by the Additional Commissioner is to be treated as an order issued by the Commissioner himself and not by the Additional Commissioner. In other words, the Additional Commissioner is not amending the Order of the Commissioner, but the Commissioner himself is passing the order under section 122(5A) of the Ordinance by virtue of section 211(1) of the Income Tax Ordinance, 2001. If the contention of the appellant that only a superior authority should modify or revise the order of the Commissioner is accepted, then appeal against the order of the Commissioner and those treated to have been issued by virtue of section 211(1) of the Ordinance should not lie with the Commissioner (Appeals) which obviously being against the scheme of law and intention of the legislature is unacceptable. In this respect, the decision of the Hon'ble Islamabad High Court in Writ Petition No, 653 of 2009 dated 2-3-2001 has been referred to by the learned DR wherein it has been held that the Additional Commissioner under the delegated authority can perform the functions and exercise the powers of the Commissioner with specific reference to section 122(5A) of the Income Tax Ordinance, 2001. This Tribunal in the case of Messrs Karachi Port Trust reported as 2010 PTD (Trib.) 2306 has also followed the above referred decision of the Hon'ble High Court, Islamabad. In view of the above legal position, I am of the view that the learned CIR(A) has rightly discarded the plea of the learned counsel for the appellant.
3. Regarding the next issue of incorrect computation of income assessable under normal law, it is contended that the appellant had directly declared export sales which were subjected to withholding tax at Rs, 521,983 on receipt of export proceeds, the declared sales and deduction of tax are in accordance with the provisions of section 169(1)(b) of the Income Tax Ordinance, 2001.
The learned CIR(A) has observed that the appellant has very rightly declared export sales as well as the proportionate income. The actual export sales as per Note 11 on page 4 of the audited accounts is at Rs,59,922,804. However, up to 30-6-2007 export proceed of Rs,42,053,869 were received and were subjected to tax 1.25% in terms of section 154(1) of the Income Tax Ordinance, 2001. This deduction of tax under section 154(1) constitutes the final tax liability. The balance export proceeds amounting to Rs,11,245,396 have been received in the Tax Year 2009, which are also subjected to tax under section 154(1) of the Income Tax Ordinance, 2001, and have been declared in the Balance Sheet and subjected to tax in the Tax Year 2008.
' Therefore in the circumstances of the instant case, the Additional Commissioner Income Tax was not justified to adopt the figure of proportionate G.P. At Rs,3,227,922 as against Rs,493,065 after deducting the operating expenses of Rs,229,426 relating to the N.T.R., the revised income works out to Rs,263,369 and not at Rs,2,998,496 which has been wrongly computed in the impugned amended order under section 122(5A) of the Income Tax Ordinance, 2001.
' Further, the impugned amended order has been passed on 27-10-2009, i,e, by the time the return of income for the tax year 2008 stood filed. If the Additional Commissioner Inland Revenue was of the view that the export proceeds were wrongly declared, he was under legal obligation to verify the appellant's explanation filed on 15-1-2009. This explanation of the appellant has duly been reproduced at pages 2 and 3 of the impugned order. The explanation offered was considered to be unsatisfactory to the extent of proration of expenses vis-a-vis income/ receipts from FTR and NTR in view of section 67 read with section 67 read with Rule 231 of the Income Tax Rules, 2002.
' Since the treatment accorded by the Additional Commissioner Inland Revenue is based on the difference of figure of export proceeds, which otherwise was duly declared/assessed/realized in the following tax year i,e, tax year 2008. Hence the proration of expenses made OR the above basis is not sustainable as the same tantamounts to tax the same twice. Once by adding the same in the amended order and secondly these proceeds were declared/assessed in the tax year 2008.
4. The learned CIR(A) has directed to adopt the declared figure of export proceeds on which tax was duly deducted under section 154(1) of the Income Tax Ordinance, 2001 and constituted final discharge of the tax liability, hence the proration of expenses under section 67 read with Rule 231 of the Income Rules, 2002 shall also be modified accordingly. The learned counsel has contended that the learned CIR(A) in this respect has not directed the Taxation Officer to recomputed the ratio of export sales after deducting sales of wastage and other export related expenses from export sales in order to recomputed correct income. The Taxation Officer is, therefore, directed to also consider the above said contention of the learned counsel while re-computing the correct income.
5. The next issue contested by the appellant is regarding claim of deprecation as per Third Schedule to the Income Tax Ordinance, 2001. I have found that the learned CIR(A) has. Already directed the officer Inland Revenue to allow the same after necessary verification of financial statements.
6. The next issue is regarding treatment accorded in respect of profit on gas deposits. In this respect, the learned counsel for the appellant has contended that there was no justification in confirming the treatment accorded whereby profit on gas deposits was assessed under normal law to the income of the appellant. It is contended that the said amount was received from Sui Southern Gas Company as profit on security deposits and not from any bank or on any deposit scheme of National Savings etc. According to him, the addition made in this respect is not sustainable in law and is liable to be deleted.
7. On the other hand, the learned DR is supporting the impugned order of the officers below in this respect. He has contended that the income from cash deposits (interest) does not fall within the ambit of PTR being private limited company and the Taxation Officer has rightly taxed the same under normal law. I am of the view that the treatment meted out in this respect by the officers below are in accordance with law and requires no interference. The appeal on this issue is, therefore, dismissed.
7A. The next and the last issue is regarding Workers Welfare Fund. I am of the view that the Tribunal has already held that WWF due to the amendments in the respective laws is not applicable up to the tax year 2008 and the F.B.R. In this respect has also issued a circular. The learned counsel for the appellant in this respect has placed reliance on the decision of this Tribunal reported as 2007 PTD (Trib.) 1860. Keeping in view the above referred decision, the levy of WWF charged for the year under review i,e, tax year 2007 is deleted. The appeal on this ground is allowed.
8. The appeal filed by the assessee is decided in the manner referred to above: