YAHYA AFRIDI, J.---Through this single judgment, this Court proposes to dispose of two Tax References, as common questions of law are involved therein. The particulars of which are as under:-
(1) Tax Reference No.35 of 2013 (Commissioner Inland Revenue, Zone-III, Regional Tax Office, Peshawar v. Messrs Aluminium Industries (Pvt.) Ltd., Peshawar).
(2) Tax Reference No.36-P/2013 (Commissioner Inland Revenue, Zone-III, Regional Tax Office, Peshawar v. Messrs Sana Aluminium Industries (Pvt.) Ltd., Peshawar).
2. The petitioners in both the References have sought through these References to answer the following questions of law:-- "Question of law No.1.
Whether on facts and circumstances of the case, the ATIR was justified in deleting the additions made through two independent sections i.e. 111 and 21(1) and treating them similar in nature when the former section deals with sources of creditors whereas the later section deals with the transactions through banking channel?
Question of law No.2.
Whether' ATIR was justified to delete the addition made under section 21(1) wherein it has clearly been mentioned in the relevant subsection (1) that any expenditure for a transaction, paid or payable under a single head which in aggregate exceeds fifty thousands rupees made other than by crossed cheque not admissible?
Question of law No.3.
Whether the ATIR was justified to reject the departmental appeal on the point of addition under section 111(1) at Rs.6,123,345 when the responsibility of the creditors claimed by the taxpayer could not be established."
3. Brief and essential facts leading to the present two References, are that the respondent is a private limited company and deriving its income from manufacturing and sale of aluminum products; that for the Tax Year 2009, return- of income was filed declaring net profit at Rs.1,856,315 and subsequently, the respondent company's case was selected for audit under section 177(4)(d) of the Income Tax Ordinance, 2001 ("Ordinance"), by the Commissioner (Audit), vide letter dated 20-4-2011; that after conducting audit of the respondent's affairs, the original assessment order was amended; that aggrieved from the same, an appeal was filed by the present respondent company before the learned Commissioner, Inland Revenue (Appeals), Peshawar, who vide order dated 5-4-2012, deleted the addition of Rs.6,123,345, made under the head "unexplained sundry creditors" on the ground that the amount has been taxed twice, once in the shape of 'sundry creditors' and then in the shape of 'purchases' not made through banking channel. However, the addition of Rs.7,329,073 made under the head purchases not through 'banking channel', was confirmed by the learned Commissioner Inland Revenue (Appeals), Peshawar; that aggrieved from the said order, the department filed appeal before the learned Appellate Tribunal, Inland Revenue, Peshawar Bench, Peshawar ("Appellate Tribunal"), challenging the deletion of Rs.6,123,345, while the respondent company also filed appeal before the learned Appellate Tribunal, challenging the addition of Rs.7,329,073 under section 21(1) of the Ordinance; and that learned Appellate Tribunal, vide order dated 25-10-2010 accepted the appeal of the respondent company and rejected that of the Revenue by holding that both additions made by the amended assessment order under section 122 of the Ordinance to be deleted. Hence, the present two Tax References, filed by the Revenue.
4. Learned counsel for the petitioners contended that the observation of the learned Appellate Tribunal is totally misconceived that the amount of 'Sundry creditors' and purchases made through non-banking channel are two different heads of account and the same amount has not been taxed twice; that the learned Tribunal was not justified in deleting the additions made through two independent sections i.e. 111 and 21(1) of the Ordinance and treating them similar in nature was not correct when the former section deals with sources of creditors, whereas the later section deals with the transactions through banking channel; that the learned Appellate Tribunal was not justified to reject the department appeal on the point of addition under section 111(1) of the Ordinance at Rs.6,123,345, when the responsibility of the creditors claimed, by the respondent could not be established.
5. The learned counsel for the respondent company vehemently contended that the additions made by the Commissioner in the amendment order were in fact the amount payable by the respondent company for the 'raw material' purchased on credit from its suppliers and hence the question of payments through banking channel did not arise; and that the 'raw material' was not an 'expenditure' falling within the mischief of section 2(1), but was in fact an 'asset' envisaged under section 2(n) of the Ordinance; that section 2(1) pertains is to profit and loss expenses, which does not include any purchases made for 'raw material'; that purchases for 'raw material' are of 'capital' nature arid thus are exempt from being paid through cross cheque or requiring payment through banking channels.
6. Valuable arguments of the learned counsel for the parties were heard and the record perused with their able assistance.
The theme envisaged under the Ordinance is that while computing the income of a person chargeable to tax under the head 'income from business' for a tax year, certain expenditures incurred by the said person during the said year have been expressly allowed to be deducted from the income thereof. Section 20 of the Ordinance expressly provides the said specific heads of expenditures, while section 21 'Supra' bars certain specified expenditures from the being deducted in computing the income of the taxpayer under the head 'income from business'. It is in this prospective that expenditures mentioned. in subsection (1) of section 21 of the Ordinance have to be considered, the said section reads:-- "Section 21. Deductions not allowed,---Except as otherwise provided in this Ordinance, no deduction shall be allowed in computing the income of a person under the head "Income from Business" for--
(1) Any expenditure for a transaction, paid or payable under a single account head which, in aggregate, exceeds fifty thousand rupees, made other than by a crossed cheque drawn on a bank or by crossed bank draft or crossed pay order of any other crossed banking instrument showing transfer of amount from the business bank account of the taxpayer: Provided that online transfer of payment from the business account of the payer to the business account of payee as well as payments through credit card shall be treated as transactions through the banking channel, subject to the condition that such transactions are verifiable from the bank statements of the respective payer and the payee: Provided further that this clause shall not apply in the case of-- (a)expenditures not exceeding ten thousand rupees (b)expenditurp on account of-- (1)utility bills; (ii)freight charges; (iii)travel fare; (iv)postage; and (v)payment of taxes, duties, fee, fines or any other statutory obligation;"
(Emphasis provided)
In understanding fiscal statutes, superior Courts of our jurisdiction, have followed with approval the century old rule of interpretation laid down by Mr.J.Rowlet in Cape Brandy Syndicate v. Inland Revenue Commissioner (1921 KB 69) that, "it simply means that in a taxing Act one has to look merely as what has clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax.
Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."
The above mentioned principle of literal interpretation has been consistently followed with approval in Messrs Idrees Cloth's case (2008 PTD 1420) and Messrs All Brics Company's (2009 PTD 1).
Now, on bare reading of subsection (1) of section 21 of the Ordinance, it is noted that there are three conditions precedents for 'any expenditure' to be disallowed from deduction in computing the income of the person under the head 'income from business'. The same are as follows:-
(i) Any expenditure for a transaction, The ordinary meaning of the word "any", provided under Oxford Dictionary is that:-- "one, no matter which, of several, how much, or many or of what sort, whichever is chosen"
According to Black's Law Dictionary, the word 'any' means:-- "Any. Some; one out of many; an indefinite number. One indiscriminately of whatever kind or quantity Word "any" has a diversity of meaning and may be employed to indicate "all" or "every" as well as "some" or "one" and its meaning in a given status depends upon the context and the subject matter of the statute."
The word "Any" has also been discussed by the apex Court in its judgment rendered in Inamur Rehman's case (1992 SCM R 563), which reads:-- "In the first place subsection (2) uses the word "any" with reference to person or authority to whom any amount of money is payable by the person repatriating the foreign exchange. The other expression used is "any claim" which can be represented in terms of money. These expressions are of very wide amplitude. The term "any" according to the Black's Law Dictionary (Fifth Edition) page 86 means: one out of many; an indefinite number; one indiscriminately of whatever kind or quantity. With reference to case-law it has been stated: Word "any" has a diversity of meaning. and may be employed to indicate "all" or "every" as well as "some" or "one" and its meaning in a given statute depends upon the context and the subject matter of the state."
Likewise, in Ch.Tanvir Khan's case (1999 M LD 721), the word 'any' has been explained:-- "The word "any" is ordinarily used extending the amplitude of the term which it is attached excluding all limitations or qualifications."
Similarly, in Mst.Niaz Parwarah's case (PLD 1995 Supreme Court 282), it says:- The word 'any' is ordinarily used to enlarge the amplitude of the term to which it is attached and there seems to be no reason why the expression 'any law' as occurring in Article 9=8(1) be so narrowly construed as to exclude from its purview a Regulation which possesses the efficacy of law in a part of Pakistan, particularly when its effect has been extended to all customs and usages which have the force of law.
Keeping in view the ordinary meaning of the word "any" and the judicial explanation thereof, discussed hereinabove, the word "any" used before `expenditure' in subsection (1) of section 21 expands the nature and scope of 'expenditure' incurred by the taxpayer. Thus, when the legislature has not rendered any restriction on the nature of the transaction to be included in the said subsection, it would not appropriate for this Court to impose any such clog thereon.
As far as the contention of the Worthy counsel for the respondent that expenditure incurred by the company on 'raw material' is in fact to be accounted for as an 'asset' and thus fall within subsection (n) of section 21 of the Ordinance, this Court is not in accord with the said line of arguments. For any 'expenditure' to fall within the category enhancing the 'asset' of taxpayer, the same has to be made on an item, which should have a useful life of more than one year and is also depreciable with time, as is provided under subsection (2) of section 20 of the Ordinance. This is not the case with the 'raw material' used by the taxpayer for its production. Hence, the expenditure incurred by the taxpayer on 'raw material' could not be excluded from the income, while computing the income tax of the taxpayer, if it does not fulfill the condition provided in the subsection under review.
(ii)Paid or payable under a 'single account head', The word "payable" provided in the subsection clearly indicates that transactions, which are yet to be paid in the future or obtained through credit would also come within the purview of the said subsection. Hence, the expenditure incurred even on credit could not be excluded from the purview of the subsection under review.
(iii)The aggregate exceeds Rs.50,000 As far as this condition is concerned, not only is the payment to be made through 'banking channels', but there is to be a nexus of the transaction emanating originating from the business account of the taxpayer.
8. The accumulative effect of the conditions precedent stated in subsection (1) of section 21 of the Ordinance, clearly reflects the intention of the legislature to encourage taxpayers to document their transactions by utilizing 'banking channels' and avoid payments through cash transactions, when the same exceeds Rs.10,000 and are not relatable to other specified expenses mentioned in the second proviso to the subsection under review.
9. After reviewing the relevant provisions of the Ordinance and the submissions made by the Worthy counsel for the parties, this Court is of the following opinion on the questions of law raised in the present Reference.
Questions of law Nos.1 and 3, As these questions of law are inter connected, the same are taken together. The issue raised in the said questions of law are based on certain jurisdictional facts, which have been decided in consonance by the two appellate forums; the two appellate forums have concurred that Rs.6.123 million in the `Sundry Credit Account' were taken twice by the Assessing Officer; firstly, for being outside the 'banking channel' and secondly, that they were unexplained under section 111 of the Ordinance. Hence, this Court would not disturb the conclusion reached by the two appellate forums, as it is based on a factual determination, which is surely beyond the pale of the jurisdiction of this Court, while entertaining a Reference under section 133(1) of the Ordinance. The Tribunal was correct in deletion of Rs.6.123 million on account of Sundry credits, having been accounted for twice, as was decided by the Worthy Commissioner (Appeals) and the Tribunal."
Question of law No.2.
That subsection (1) of section 21 of the Ordinance was duly applicable to the purchases made by the respondent company for its expenditures on raw materials on payments made to Messrs Kamran Enterprises and Messrs T.Z. International of Rs.4.898 million and Rs.2.431 million, respectively and the said payments being made outside the 'banking channels', as was the requirement under subsection (1) of section 21 of the Ordinance, were correctly refused deductions.
11. In view of the above, Tax Reference No.35/2013 is answered in Positive, while T.R. No.36/2013 is answered in Negative.
The office is directed to send the copy of this judgment under seal of the Court to the Appellate Tribunal, Inland Revenue, Peshawar Bench, Peshawar.