' AQEEL AHMED ABBASI, J.---Through instant reference application, the applicant has proposed the following question, which according to learned counsel, is a question law arising from the impugned order dated 03.11.2015 passed by the learned Appellate Tribunal Inland Revenue (Pakistan), Karachi, in Income Tax Appeal No,974/KB of 2013 (tax year 2010):-- "Whether on the facts and circumstances of the case, the learned Tribunal was justified to annul disallowance of markup expenses made on account of interest free loans to the employees in terms of section 28(1)(a) of the Income Tax Ordinance, 2001?"
2. Learned counsel for the applicant has read out the impugned order passed by the Appellate Tribunal in the instant case as well as the orders of the two authorities below and submits that Appellate Tribunal was not justified to maintain order passed by the Commissioner (Appeals-I)
Inland Revenue, for the reasons that the interest free loans advanced to the employees for purchase of Motorbikes has negative effect on the profitability of the taxpayer's company, therefore, cannot be termed as profit on debt used for purpose of business, hence, such expenditure was rightly disallowed by the Taxation Officer.
3. We have heard learned counsel for the applicant, perused the impugned order passed by the Appellate Tribunal as well as the orders of two authorities below with his assistance. We have also examined provision of section 28(1)(a) of the Income Tax Ordinance, 2001, which reads as follows:-- "28. Profit on debt, financial costs and lease payments.---(1) Subject to this ordinance, a deduction shall be allowed for a tax year for--
(a) any profit on debt incurred by a person in the tax year to the extent that the proceeds or benefit of the debt have been used by the person [for the purposes of business];"
4. It would be equally relevant to reproduce hereunder the findings of the Commissioner Inland Revenue (Appeals-I) as well as the findings of the Income Tax Appellate Tribunal on the subject controversy, which read as follows:-- Order of Commissioner (Appeals) "Ground No,5.
' The AR of the appellant has agitated that interest @ 13% was charged on the advances given to employees amounting to Rs,95,33,549 in terms of section 28(1)(a) of the Ordinance. The perusal of the said section reveals that deduction on account of profit on debt would be available when the same debt was used for the purpose of business. The AR of the appellant states that the advances given to the employees were part of business and these advances were not given to third party for their personal use. He has further explained that these advances to employees were for the purchase of motorcycles so as these employees could reached the business premises well in time without hassle of public transport. In other words the advances on account of motorcycles were for the benefit of business as the arrival of these employees well in time could improve the business efficiency. The Assessing Officer, however, relied upon the unreported decision of Hong Kong Shingai Bank. The said decision is distinguishable as the bank was dealing in money lending whereby their stock in trade was cash and that was borrowed with cost and therefore the treatment given on interest from loan to the bank employees cannot be equated to the employees of the appellant who have purchased motorcycle for timely arrival at business premises. Appellant case is further distinguishable to the referred case law that employees of bank obtained interest free loan for personal use which included marriage loan, house purchaser loan, personal loan and vehicle purchase loan. But in the case of appellant loan to employees was used for the purchase of motorcycles so that employees should reach well in time to improve business efficiency and productivity. In view of the above facts the treatment of the officer is not approved and addition on this count is annulled."
Order of Appellate Tribunal "5. We have heard the arguments of the rival parties and our findings on the issue under consideration are as under:- i) The issue relates to the curtailment of the claim of interest expenses paid by the company to the extent of interest worked out by the Assessing Officer on bench mark rate on loans/ advances paid to their employees, as interest free loan. Ii) Consequently, the Assessing Officer, invoking section 28(1)(a) has observed that the claim of interest and debit be reduced to the extent of the amount of interest, which may have been paid by the employees/executives to the company on the basis of bench mark rate. Iii) CIR(A) has deleted the addition on the basis of observation that loan was paid to employees, so that they can reach well in time to improve business efficiency and productivity. Iv) During proceedings before this forum, AR further argued that the company had enough accumulated un-appropriated profit and reserves and the observation of the Assessing Officer that the interest free loan for purchase of motor cycles to the employees was made through borrowed capital and consequent restriction on claim of expenditure of debt/interest paid is based on surmises/presumptions as company has cost free funds available with it. As such, netting off the claim of interest by the company is not tenable on both the grounds at point Nos. (iii) and (iv) above. v) After hearing the arguments of the rival parties and perusal of record, we tend to agree with the AR and annulment of the addition by CIR(A) is maintained and Department's appeal fails accordingly."
5. From the perusal of section 28(1)(a) of the Income Tax Ordinance, 2001, and the finding of the Commissioner (Appeals-I) as well as the Appellate Tribunal Inland Revenue; as referred to hereinabove, it is clear that the amount of the advance/loan given to the employees by the taxpayers company was meant for the purposes of purchasing Motorcycle to ensure that employees will reach at office in time, which will improve their punctuality and will also increase their efficiency to benefit the purpose of business of the taxpayer's company.
' Therefore, it cannot be equated with advances/loan for personal use of the employees such as marriage loan, house purchase loan, personal loan etc. As rightly observed by the Commissioner Inland Revenue (Appeals-I). We are of the opinion that the concurrent findings as recorded by the two Appellate Forums on the peculiar facts of the instant case in the absence of any material contrary to such fact, do not suffer from any error or illegality nor learned counsel for the applicant has even argued that such findings on facts are either based on misreading or non-reading of the evidence.
6. We do not find any error or illegality in the impugned order passed by the Appellate Tribunal in this case, which does not require any interference by this Court, whereas, no question of law, as proposed through instant reference, arise from the impugned order passed by the Appellate Tribunal, which is based on findings on facts, which otherwise, depicts correct legal position.
Accordingly, instant reference application being devoid of any merits is hereby dismissed in limine along with listed application.