1. This appeal has been filed by the Department against the order No. 1051/2010 passed by the learned CIR(A-I), Islamabad, dated 30.11.2010 for the assessment year 2005 on the following grounds;- 1.That the subsequent order u/s 221 dated 1.9.2008 was passed for the second time which was annulled.
2. 2.Since the order u/s 221 dated 1.9.2008 was annulled, hence previous order dated 4.2.2008 remained intact that is why fresh order u/s 221 was passed u/s 221 on 1.9.2008 within the time limitation.
3. 3.In presence of the order of the CIT(A) order dated ? 15.4.2009 & order dated 22.10.2009 on miscellaneous application this concept that assessing officer does not have jurisdiction to pass any order is totally wrong as the order u/s 221 was passed in the light of judgement of ATIR Islamabad bench vide its order in ITA's No. 432-433/1B/2009 dated 17.10.2009.
2. Brief facts of the case are that a Taxpayer, a private limited company is engaged in the business of execution of contracts. For the tax year 2005, return was filed by declaring gross receipts, as under:- Amount of Receipts Rates Tax due Tax Paid Rs. 28,909,523/- 5% Rs. 1,445,476/- Rs.
4. 1,445,476/- Rs. 28,406,632/- 6% Rs. 1,704,398/- Rs.
5. 1,698,096/- Total Rs. 57,316,155/- Rs. 3,149,874/- Rs.
6. 3,143,572/- The assessm ent for the Tax year 2005 was rectified u/s 221 on 1.09.2008 by creating demand of Rs.
7. 264,736/-. The taxpayer being aggrieved filed appeal before CIT(A), who vide Order No. 46 dated 26.2.2009 annulled the assessm ent. The Inland Revenue .Officer, Rawalpindi vide letter No. 174 dated 12.12.2009 had been conveyed the directions of CIT(Legal) regarding initiation of fresh assessm ent proceedings u/s 221 for the Tax year 2005 as department had still limitation "to rectify the deemed assessm ent and deemed assessment was rectified vide order dated 24.5.2010. Being dissatisfied with the treatment given by the IRO, Islamabad the Taxpayer preferred appeal before learned CIR(A-I) who annulled the order passed by the Inland Revenue Officer with the following remarks;- "The arguments put forth by the appellant have been carefully examined and the reported case laws probed. The assumption of jurisdiction by the assessing officer after annulment of the original proceedings in CIT(A) order No. 373/2009 dated 15.4.2009 is totally uncalled for being exercised in clear violation of the settled legal principles and thereafter is not sustainable in law and as such order u/s 221 dated 24.5.2010 is annulled." In first appeal this order has been annulled by learned CIR(A). The department has come in 2nd appeal before us on the grounds mentioned supra.
8. 3.We have heard the arguments and scrutinized the record. As per record available on file detail finding is as under;-
(A) TAX CREDITS First of all we take credit of tax under section 235 & 236. Leamed AR has argued that Assessing officer vide original order u/s 115(4) dated 4.2.2008 has allowed adjustment of tax u/s 235 & 236 which still holds field. It is settled principle of law that rights once accrued cannot be taken away.
9. Reliance is placed PLD 1969 SC 407 at page 412 (Pakistan 'through the secretary,. Ministry of Finance vs. Muhammad Himayatullah Farukhi) & 1997 SCM R 15 (Chairman, Selection Committee/Principal, King Edward Medical College Lahore vs. Wasif Zamir Ahmed and another). Denial of adjustment of tax recovered u/s 235 & 236 does not arise from any part of the section 115(4) of the ITO 2001.
10. Section 115(4), relates to the extent of final taxation orders or percentage/ratio. It is not relevant to the source of tax paid/charged. Any tax paid under the provision of the Ordinance 2001, can be adjusted against that liability. Section 153(6) read as under:-- "The tax adjustment under this section shall be final tax on the income of a resident person arising from transactions referred to in subsection (1) or (1A)." We also think it proper to refer section 234-A vis-a-vis specific non adjustment of withholding tax collected or deducted from CNG. Section 235 Sub-section (2) The person preparing electricity consumption bill shall charge Advance Tax under sub-section (1) in the manner electricity consumption charges are charged.
11. Section 236 Sub-section (2)
12. The person preparing the telephone bill shall charge Advance Tax under sub-section (1) in the manner telephone charges is ,charged. Reference is invited to the definition of world advance.
13. 1.Black's Law Dictionary 7th Edition-page 53 The furnishing of money and goods before any consideration is received in return.
14. 2.21st Century Dictionary page 18 A payment made before it is due.
15. 3.Webster ' s New World Dictionary page To pay money before due.
16. So advance is synonymous in both the sections.
17. The income of the assessee has already been taxed at source. The denial to give credit of deduction u/s 235 & 236 leads to double taxation. Demand created after the denial of aforesaid adjustment, cash payment of tax, which to is also adjustable is not sustainable. Section 170 of 1TO 2001 entitles the Taxpayer for refund of excess tax unconditionally. Reference is made to FBR income tax refund general order dated 24.4.2007 on the issue of adjustment of tax against any pending demand. Reliance is placed on 95 Taxation (Statue at page 314). Taxing act is fiscal law, one has to look merely what is clearly said, nothing to be read in imagination, nothing is to imply.
18. Reliance has been placed on PTCL 2009 CL. 140, (1921)1 KB 64 at page 71 & (1965) 551TR 741 at page
747. Undoubtedly, tax deduction is adjustable under PTR unless it is specifically prohibited under law as in case of CNG referred in section 234-A vis-a-vis specific non adjustment of withholding tax collected or deducted from CNG. So the DCIR has wrongly disallowed the tax credit. These are allowable credits and liable to adjustment.
19. FRESH PROCEEDINGS AFTER ANNULMENT.
20. We do not endorse the argument of learned AR that after annulment, fresh proceeding cannot be initiated. The Tribunal has held vide its order ITA No. 432 & 433/IB/2009 dated 17.10.2009 as under:- "Annulment of assessm ent on legal grounds such as invalid service of notice, non providing of opportunity of being heard, violation of any statutory requirement etc. Does not debar the revenue, subject to limitation, to do the needful denovo after meeting the legal requirements strictly in accordance with law." This verdict is based on wisdom that if department cannot fulfill the legal requirement in the manner as prescribed under the law or basis of assessment is without authority, then the entire superstructure built thereon would fall on the ground automatically. Needless to mention it that by annulling the rectified/amended assessment order passed by the tax authorities are removed from the way and in result, deemed assessment remains in the field. The department is well within its functioning by opting proper legal course and procedure if the limitation is not beyond the clock. In this case controversy is that if value of contract exceeds 30 million then the rate of tax will be 6% on gross payment and in any other case 5% of gross payments-under clause
(c) of sub section 1 of section 153. The relevant extract of order No 51/2010 dated 22.10.2009 is reproduced as under:- "I have considered the contents of misc. Application perused the order and relevant provision of law and found that the Taxation Officer has taken the Total receipts declared as per statements u/s 115(4) for the purpose of taxation @ 6% whereas contract wise detail mentioned in the order of Taxation officer is very much clear that none of the contracts is more than 30 million to which a rate could be applied @ 6%. Clause 3 of Div-III of the First Schedule to the Income Tax Ordinance, 2001 is reproduced hereunder.
21. The rate of tax to be deducted from a payment referred to in clause (c) of sub section (1) of section 153 shall be:~ (a)In the case of contract with a value exceeding 30 M, 6% of gross amount payable; or (b)In any other case 5% of the gross amount payable; In view of the above miscellaneous application filed by the department is rejected being without merit." During arguments of this case learned AR has not laid stress on this factual side and even not disputed the table worked out by DC1R in 24.5.2010 which is reproduced as under:- Contract Receipts Tax Deducted Tax Payable Diff Contract Receipts (More than 30m)52,666,155/- 2,888,934/- 3,159,969 271,035/- Contract Receipts (Below than 30m)4,650,000/- 232,500/- 232,500/- - Tax Deducted on utility 22,138/- 22,198/- Tax Paid with return 6,302/- (-6,302)
22. Total 3,149,874/- 3,392,874/- 242,595/- 4.Hence it appears that factual sides of the contractual receipts concluded by the DCIR, are correct one. The taxpayer is liable to pay the difference of tax amounting to Rs. 271,035/-. However he will be given tax credit under section 235,236 and even of the cash payment of tax with the return. So departmental appeal is partially accepted and taxpayer has to deposit the tax as per figure mentioned in the above said table amounting to Rs. 271,035/-.