MRS. AMBREEN ASLAM, (JUDICIAL MEMBER).---In the titled appeal, main grounds of appeal had already been decided by the learned bench of this Tribunal vide Order dated: 03-02-2016. Now the instant matter is came up before this bench for re-hearing in compliance of the order passed by the learned Bench of this Tribunal in M.A. (Rect) No.94/KB/2016 dated 28-05.2016, to decide the revised grounds which were allowed by the learned bench of this Tribunal vide Order dated 09-12- 2015 passed in M.A.(R.G) No.247/KB of 2015 filed by the department. The revised grounds filed by the department are reproduced herein below:--
1. That the order passed by the learned CIR (Appeals-III), Karachi is bad in law and on facts of the case.
2. That the learned CIR (Appeals-III), Karachi was not justified in directing to charge workers welfare fund on declared income instead of amended income under section 122(1) of Income Tax Ordinance, 2001.
3. That the learned CIR (Appeals-Ill), Karachi was not justified to hold that Workers Welfare Fund is chargeable on declared income as per return and not on (amended) income without appreciating the fact that the Taxation Officer (Now Officer Inland Revenue) can, by order in writing, determine the amount of Workers Welfare Fund due from an industrial establishment in view of the provisions of subsection (4) of Section 4 of the Workers' Welfare Ordinance, 1971.
4. That the appellant craves leave to add, amend or alter any of the grounds on or before the final hearing of appeal.
2. On the date of hearing Mr. Zafar Rafique DR attended the proceedings on behalf of the appellant/department while Mr, Qadeer Ahmed FCA attended on behalf of the respondent/taxpayer.
3. The learned DR argued that the learned CIR(A) was not justifies in directing to charge workers welfare fund on declared income instead of amended income under section 122(1) of the Income Tax Ordinance, 2001.
4. He further argued that the learned CIR(A) was not justified to hold that Workers Welfare Fund is chargeable on declared income as per return and not on (amended) income without appreciating the fact that the Taxation Officer (Now Officer Inland Revenue) can, by order in writing, determine the amount of Workers Welfare Fund due from an industrial establishment in view of the provisions of subsection (4) of Section 4 of the Workers' Welfare Ordinance, 1971.
5. The learned AR vehemently opposed the arguments advanced by the DR. He argued that the order passed by the learned CIR(A) is well within the framework of law and carried no illegality, irregularity and infirmity in it.
6. The learned AR in support of his arguments also referred the definition of total income and provisions of Section 4 of the WWF Ordinance, 1971 and changing the definition of total income through Finance Act, 2006 in the WWF Ordinance, 1971. So for the sake of convenience it would be just and proper to reproduce the definition of total income and provisions of Section 4 of the WWF Ordinance, 1971 and changing of definition of total income in Finance Act, 2006 as here under:- 'Section 2(1) " 'total income' has the same meaning as in the Ordinance."
Section 4 "4. Mode of payment by and recovery from, industrial establishment.
(1) Every industrial establishment, the total income of which in any year of account commencing on or after the date specified by the Federal Government in the Official Gazette in this behalf is not less than one lakh of rupees shall pay to the Fund in respect of that year a sum equal to two per cent of so much of its total income as is as is assessable under the Ordinance or would have been so assessable but for the exemption made by section 48 thereof
(2) Every industrial establishment which is liable under sub-section (1) shall pay the amount due from it to the Income-Tax Officer having jurisdiction over the industrial establishment for purposes of the Ordinance.
(3) The industrial establishment shall, on or before the date on which it is required to furnish a return of Income under section 55 of the Ordinance, pay the amount due from it under subsection
(1) calculated with reference to the total Income reported in the said return.
(4) At the time of making an assessment under the Ordinance, or as soon thereafter as may be, the Income-Tax Officer shall, by order in writing, determine the amount due from industrial establishment under subsection (1) if any, on the basis of income so assessed after taking into account the amount paid by the industrial establishment under subsection (3) in respect of the year and the industrial establishment shall pay the amount so determined on or before the date specified in the order.
(5) Any change by way of enhancement or reduction in the assessed income subsequent to the assessment made under the Ordinance shall be given effect to by adjustment of the amount due under subsection (1).
(6) Any amount paid by an industrial establishment under subsection (3) which is found, on the basis of an order-in-appeal or revision under the Ordinance, to have been paid in excess shall be refunded to it by the Income - Tax Officer.
(7) The payment made by an industrial establishment to the Fund under subsection (1) shall be treated as an expenditure for purposes of assessment of income-tax.
(8) Where any industrial establishment fails to pay the amount due from it as required under this section, it shall, without prejudice to any other liability to which it may be subject under this Ordinance or any other law, be liable to pay an additional amount equal to eight percent per annum of the amount due from it from the date on which it was originally payable to the date on which it is paid.
(9) The provisions of [the Ordinance], relating to the mode and time of recovery of the income-tax leviable under the Act shall, so far as may be, apply to the recovery of the amount due under. subsection (1). (emphasis is ours)
The Finance Act, 2006 changed the definition of total income which is as under:-- Section 2(i) "total incom e" means
(i) where Return of Income is required to be filed under this Ordinance, the profit (before taxation or provision for taxation) as per accounts or the declared income as per the return of income, whichever is higher; and
(ii) where Return of Income is not required to be filed, the profit (before taxation or provision for taxation) as per accounts or four per cent of the receipt as per the statement filed under section 115 of the Ordinance, whichever his higher."
7. We have considered the arguments advanced by the learned representatives of both parties, perused the record including impugned order and the grounds containing in the appeal. To decide the instant appeal the question before us whether the impugned order require interference?
8. So far the issue regarding Workers Welfare Fund (WWF) is concerned the department contended that the learned CIR(A) was not justified to delete the amount of WWF as the same was rightly charged by the Taxation Officer in view of the amendments brought about in Section 2 and Section 4 of the WWF Ordinance, 1971 vide Finance Act, 2006 and 2008.
9. To understand the instant issue it would be just and proper to reproduce here the position of law prior to amendments in the WWF Ordinance, 1971 through Finance Act, 2006, the definition of total income and provisions of Section 4 were as under: Section 2(i) "total incom e" has the same meaning as in the Ordinance."
Section 4 "4. Mode of payment by, and recovery from, industrial establishment.--
(1) Every industrial establishment, the total income of which in any year of account commencing on or after the date specified by the Federal Government in the Official Gazette in this behalf is not less than one lakh of rupees shall pay to the Fund in respect of that year a sum equal to two per cent of so much of its total income as is assessable under the Ordinance or would have been so assessable but for the exemption made by section 48 thereof.
(2) Every industrial establishment which is liable under subsection (1) shall pay the amount due from it to the Income-Tax Officer having jurisdiction over the industrial establishment for purposes of the Ordinance.
(3) The industrial establishment shall, on or before the date on which it is required to furnish a return of income under section 55 of the Ordinance, pay the amount due from it under subsection
(1) calculated with reference to the total income reported in the said return.
(4) At the time of making an assessment under the Ordinance, or as soon thereafter as may be, the Income Tax Officer shall, by order in writing, determine the amount due from industrial establishment under subsection (1), if any, on the basis of income so assessed after taking into account the amount paid by the industrial establishment under subsection (3) in respect of the year and the industrial establishment shall pay the amount so determined on or before the date specified in the order.
10. The Finance Act, 2006 changed the definition of total income which is now as under:-- Section 2(i) "total incom e" means
(i) Where Return of income is required to be filed under this Ordinance, the profit (before taxation or provision for taxation) as per accounts or the declared income as per the return of income, whichever is higher; and
(ii) Where Return of Income is not required to be filed, the profit (before taxation or provision for taxation) as per accounts or four per cent of the receipt as per the statement filed under section 115 of the Ordinance, whichever is higher."
11. Keeping in view above quoted Sections in juxta position we reverted to the facts of the case in hand it is observed that the taxpayer has no FTR income. The taxpayer filed return under section 114 of Income Tax Ordinance, 2001 while the Taxation Officer charged Workers Welfare Fund on the amended income through amended order instead of declared income whereas subsection (i) of section 2 of Workers Welfare Fund Ordinance, 1971 as amended in 2006 emphasize that the WWF is chargeable on declared income as per return. So considering those aspects in mind we are of the view that the CIR(A) has rightly passed the impugned order and the same does not require any interference, the same is upheld and the appeal of the department is dismissed.
12. The appeal stands disposed of in the manner as indicated above.