MUHAMMAD JAWED ZAKARIA, JUDICIAL MEMBER.---By this order, we intend to dispose of above titled appeals filed by the appellant/Taxpayer against the consolidated order of CIR(A) No.I.T./133- 2016 dated 19-1-2017 for the tax years 2007, 2008, 2010, 2012 and 2013 (Appeals against appeal effect order under section 124) and the order of CIR(A) No. IT/132/2016 dated 19-01-2016 for the tax year 2011 [(against order under section 122 (5A)] on the grounds as set-forth in the memo. of appeals. First we would like to take up the appeals filed against the order passed under section 124 of the Income Tax Ordinance, 2001.
I.T.AS. NOS. 261 TO 265/KB/2017 (Appeal effect order under section 124)
(Tax Years 2007, 2008, 2010, 2012 and 2013)
2. At the very outset the learned counsel for the taxpayer pointed out that the taxpayer i.e. SML a 100% government owned entity and SML is under the administrative control of Ministry of Petroleum and Natural Resources.
The learned counsel ,vehemently agitated only grounds Nos. 4 and 5 of appeals for the tax years 2007, 2008, 2010, 2012 and 2013 in respect of Appeals against order under section 124. As the issue agitated in these appeals pertain to restriction of depreciation allowance which is common except figures and percentage of restriction of depreciation allowance/expenditure, therefore, we deem it fit only to reproduce the Grounds Nos. 4 and 5 for the tax year 2007 which reads as undert "4. That the learned CIRA erred in not appreciating that while passing the above order under section 124 the Additional Commissioner IR (ACIR) clearly erred in not following the explicit directions given by the ATIR in its decision reference I.T.As. Nos.434,435,436,437/KB/2016 of October 14, 2016 mentioned in supra.
5. That the learned CIRA erred in holding that the order passed under section 124 "has allowed tax depreciation" when the same has been allowed at Rs.18,198,520 being 1.80 percent of the claim instead of full amount of claim of Rs.1,011,028,904. The CIRA erred in not appreciating that the ACIR has erroneously apportioned and restricted the claim of tax depreciation without confronting to your appellant in this regard."
3. The learned counsel submitted that these appeals are against the appeal effect order under section 124 passed by the ACIR. The Tribunal had decided the issue bearing I.T.As. Nos. 434, 435, 436 and 437/KB/ 2016 read with order of this Tribunal 432, 433/KB/2017. The Tribunal has decided the issue against the taxpayer and in favour of the department in so far as heads of income is concerned i.e. whether the income of the taxpayer falls under the head income from business under section 18 or income from other source under section 39. Finally it was concluded that income of the taxpayer falls under section 39 i.e. income from other source. He emphasized that the Tribunal had categorically recorded its findings in paragraph No. 19 at page 20 that the "Depreciation is legally allowable to the title holders i.e. Saindak Metals Limited (SML)". He read out the same and cited from the extract of the judgment which is reproduced hereunder: "All sort of expenses sustained in the business operation are claimable and allowable to the lessee (MRDS) except depreciation which is legally allowable to title holders (SML) (Saindak Metals Ltd)."
The above were further re-affirmed and fortified by the Tribunal in the aforesaid judgment in para 21 page 22 which is reproduced in extenso hereunder:-- "21 In the light of this analogy, the lease income of SML (fixed + variable) squarely fit in section 39 and more specifically subsections (f), (fa) & (i) of section 39 of the Income Tax Ordinance, 2001.
Accordingly, the taxpayer would be entitled to expenses allowable to him under section 40 of the Income Tax Ordinance, 2001."
4. The learned counsel further gracefully pointed out that the taxpayer dissatisfied from the order of the Tribunal had also gone before the Hon'ble High Court of Balochistan and their Lordships were pleased to approve the Order of the Tribunal. Thereafter for implementing the order of the Tribunal the taxpayer applied for appeal effect order and claimed in that application full amount of depreciation therein. The learned counsel submitted that while giving appeal effect under section 124 the ACIR had allowed depreciation but restricted tax depreciation at 1.8%, 1.2%, 1.78%, 0.92% and 1.57% respectively in the tax years 2007, 2008, 2010, 2012 and 2013 against full (100%) claim of depreciation. He contended that he ought to have allowed the full claim of depreciation as claimed in appeal effect application and also mentioned in grounds of appeal before this ATIR. He submitted that being dissatisfied with the appeal effect order, the taxpayer filed appeal before the learned CIR(A). The learned CIR(A) passed the order in a slipshod manner and specifically confirmed the treatment of the ACIR regarding allowance of depreciation, hence, appeals were filed before this Tribunal.
5. The learned counsel for the taxpayer assailed the following observations of the learned CIR(A):-- ".........The Hon'ble ATIR had upheld the department's contention that the appellant's income falls under clauses (f), (fa) and (1) of subsection (1) of section 39 of the Income Tax Ordinance, 2001, and that the appellant was entitled to expenses in terms of section 40 of the Ordinance. The impugned orders do allow depreciation to the appellant in terms of section 40(3) (a) on income received under section 39(1)(f). WWF has also been deleted. Therefore, prima facie it appears that appeal effect order has properly been issued."
(Underlined by us)
6. The learned counsel vehemently contended that the taxpayer admittedly being an absolute and bona fide owner of the assets (building and infrastructure, plant and machinery) is entitled for the benefit of allowance of depreciation as held by the Tribunal in the supra judgment wherein it has clearly been held that depreciation is legally allowable to Saindak Metals Limited and that it will be entitled to claim all the expenses mentioned in section 40 of the Income Tax Ordinance, 2001.
Therefore, clear directions of Appellate Tribunal Inland Revenue had been violated and by-passed while giving the appeal effect which tantamounts to a complete and blatant disregard of the ATIR decision. The judgment of the ATIR is binding on the learned CIR (A). In support he placed reliance on the judgment reported as 2017 PTD (Trib.) 1044.
7. It was averred by the learned counsel that it is trite principle that appeal is a continuous process of assessm ent. This was held by the Supreme Court of Pakistan in the case of Central Board of Revenue and others v. Chanda Motors and the same is reported as 1992 PTD 1681 and Taxation 1993 SCMR 39 = 1992 PTD 1681. The above principle was again reaffirmed by the Hon'ble Islamabad High Court in the case reported as 2015 PTD 550 and in a number of other cases. The appeal effect order falls under the category of assessment, therefore, if the case is remanded back, the taxpayer will not achieve any favourable decision from the Department as the CIR (A) who authored the supra CIR (A) appellate order is now the Chief Commissioner, RTO., Quetta and would be futile exercise resulting in wastage of precious time of this Court and of taxpayer as well as of the department.
8. The learned D.R., who is also author of appeal effect order under section 124, on the other hand, strongly supported the order of the learned CIR (A). He contended that the findings of the learned CIR(A) are perfectly legal and justified and within the para meters set by the law. He read out the findings of the Tribunal as contained in paragraph 21 page 22 where the Tribunal has observed that:-- "...........the lease income of SML (fixed + variable) squarely fit in section 39 and more specifically subsections (f), (fa) & (i) of section 39 of the Income Tax Ordinance, 2001. Accordingly, the taxpayer would be entitled to expenses allowable to him under section 40 of the Income Tax Ordinance, 2001.
9. The learned D.R., showing good gesture, submitted that the appellant is, no doubt, the owner of building, plant and machinery and same having been used for deriving income, thus, depreciation to the extent of income which will be restricted and bifurcated the income under subsections (f),
(fa) and (i) of section 39 of the Income Tax Ordinance, 2001, hence, the ACIR had rightly restricted the depreciation allowance/expenditure, under Clause (f) of Section 39 as the taxpayer is not entitled for full depreciation as claimed in the appeal effect application.
10. We have heard both the learned representatives and have gone through the records of the case. For the sake of clarity we deem it fit to reproduce sections 39 and 40 of the Income Tax Ordinance, 2001.
SECTION 39 "Income from other source.---(1) Income of every kind received by a person in a tax year, [if it is not included in any other head], other than income exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head "Income from Other Sources", including the following namely:
(a) Dividend
(b) Royalty
(c) Profit on debt
(cc) Additional payment on delayed refund under any tax law
(d) Ground rent
(e) Rent from the sub-lease of land or a building
(f) income from the lease of any building together with plant or machinery
(fa) Income from provision of amenities, utilities or any other service connected with renting of building
(g) Any annuity or pension
(h) Any prize bond, or winnings from a raffle, lottery, prize on winning a quiz, prize offered by companies for promotion of sale or cross word puzzle SECTION 40 Deductions in computing income chargeable under the head "income from other sources: Subject to this Ordinance, in computing the income of a person chargeable to tax under the head 'Income from Other Sources' for a tax year, a deduction shall be allowed for any expenditure is paid in deriving income chargeable to tax under that head, other than expenditure of a capital nature.
(2) A person receiving any profit on debt chargeable to tax under the head Income from Other Sources shall be allowed a deduction for any Zakat paid by the person under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), at the time the profit is paid to the person.
(3) A person receiving income referred to in clause (f) of sub-section (1) of section 39 chargeable to tax under the head "Income from Other Sources" shall be allowed a) a deduction for the depreciation of any plant, machinery or building used to derive that income in accordance with section 22; and b) an initial allowance for any plant or machinery used to derive that income in accordance with section 23"
A cumulative reading of the above sections clearly shows that if a taxpayer enjoys income from leasing out building with plant and machinery shall be allowed deduction on Plant and machinery.
The word "shall" used in section 39 has great importance which is used for doing something mandatory. This is a mandatory requirement for allowing statutory depreciation allowance as deduction of depreciation on Building, Plant and Machinery.
11. We have also minutely examined the order of the learned CIR(A) and from perusal of the same we have noted that the learned CIR(A) recorded contradictory findings. At the one hand he observed that no appeal lies against the order passed under section 124, however, strangely enough he maintained the order under section 124 and recorded categorical findings on allowability of depreciation in view of section 40(3)(a) on income received under section 39(i)(f) levy of WWF and filing of rectification under section 221. It is not comprehensible as to how he resorted to give his verdict on the issues more particularly when the appeal under section 124 is (if) not maintainable and the appeal must have been dismissed in limine without recording any findings. Before further proceeding we hold that order under section 124 is appealable order under section 127 of the Income Tax Ordinance, 2001.
11.1 DR while admitting the principle that SML deserves the right to claim tax depreciation in terms of section 40 (1) (3) of the Ordinance, but argued that the same is to be allowed on prorated basis according to income receipt ratio/formula, that is, annual rent and production rent ratios out of total receipts from these two sources. That is why deprecation has been allowed at 1.8%, 1.2%, 1.78%, 0.92% and 1.57% respectively in the tax years 2007, 2008, 2010, 2012 and 2013 against 100% of the claim treating the same as attributable toward rental income. However in respect of our repetitive questions to provide reference of the provisions of the Income Tax Ordinance, 2001 where the guidance of such proration is provided or from the ATIR Combined Order for which appeal effect has been given under section 124, the DR was unable to refer the same.
11.2The AR also referred amended order passed for the tax year 2006 when the classification of income head was first time disputed and all income of SML was treated as other source income but tax depreciation was allowed at full amount.
12. It was pointed out by the learned counsel that the taxpayer is an absolute and bona fide owner of the building, plant and machinery, which were duly declared in the Balance Sheet and Depreciation Schedule of the taxpayer i.e. M/s. Saindak Metals Limited.. There is no provision in section 40 of the Income Tax Ordinance, 2001 which restrict or reduce the depreciation allowance.
The depreciation is allowable even if loss is declared or in case of exempt income it is to be treated to have been allowed. There is no doubt that depreciation is fully allowable if any income is charged as derived and falls under clause (f) without ascertainment or quantification of income under section 39(1)(f). The depreciation is fully allowable under section 40 as per rates provided under the Third Schedule even in case if income is less and depreciation (normal and / or initial) is high e.g. if income is Rs.100 and depreciation is Rs.500/= even then the entire / full claim of depreciation is legally allowable under section 40 ibid.
13. We are of the considered opinion that the concept of depreciation allowance / expenditure is of wider import and elongate scope may be summarized as under: Depreciation refers to the fall in the quality or value of an asset. It is decrease in value due to wear and tear, decay, decline in price. All asset used are subject to depreciation. These assets, at some time, will become useless and require replacement. Hence it is essential that out of the profits of the business or (income from other sources) as the case may be, each year a certain sum be earmarked to take care of the fall in the value of the assets so that when the assets need replacement there is no undue strain on the resources of the organization in that year. Since depreciation is a genuine and accepted expense of each business organization, it is permitted to be deducted for income-tax purposes. Tax need be paid only on the profit that remains after depreciation has been provided for. However, the depreciation allowance that is permitted for income-tax purposes is at the rates specified in 3rd Schedule to the Income Tax Ordinance, 2001 or even if this rate differs from the rate at which the organization depreciates its assets in its books of account. Therefore, when an assessee computes his/its income for tax purposes, it is first required to add back to the profit for the year the depreciation claimed as per the books of account and then deduct the depreciation permissible under the Income Tax Law / Rules. Like other objects, business premises. building, plant and machinery employed by a Taxpayer in the course of his business or source of income has a limited life. The vigour, strength, capability, etc. of every such object gradually exhausts by the factors of use and time. These have undoubtedly aided the taxpayer to earn the "income" from such business as per nature (whether Income from Business or Income from Other sources) which is subjected to the levy of tax. Unless provision was made for proper recompense of such diminution in the vigour, strength, capability, etc. the apparent profits / income [income from business or income from other sources as the case may be] would not give a correct picture. Allowance for depreciation is born out of the necessity for such recompense.
According to Webster's New World Dictionary, "depreciation" means "a decrease in value of property through wear, deterioration or obsolescence: the allowance made for this in book- keeping, accounting, etc." Depreciation is the inherent decline in the value of an Asset from any cause whatsoever. Depreciation is the diminution which takes place in the value of a wasting asset despite the amount expended on it in repairs [The Business Encyclopedia, Vol. II, page 365. The wear and tear of the assets utilized and allowance will have to be made for wear and tear. This is what is notionally understood as depreciation are;
(i) ordinary wear and tear.
(ii) unusual damage,
(iii) inadequacy, and
(iv) obsolescence.
These factors include not only those relating to physical deterioration but also those referring to the suitability of the asset as an economically productive unit after a period of time. The depreciation allowance under section 40 read with section 22 is, however, a statutory mandatory allowance not confined expressly to diminution in value of the asset by reason of wear and tear and cannot be restricted on the basis of quantum of earned income / profit or under any imagination whatsoever. The concept of depreciation is that any asset, on account of normal wear and tear, is required to be replaced at a point of time in future. 'Depreciation' is nothing but decrease in the value of property through wear, deterioration or obsolescence and allowance is made for this purpose in book keeping, accountancy, etc. It is the exhaustion of the effective life of a fixed asset owing to use or obsolescence. It may be computed as that part of the cost of the asset which will not be recovered when the asset is finally put out of use. The object of providing for depreciation is to spread the expenditure, incurred in acquiring the asset, over its effective lifetime; the amount of the provision, made in respect of an accounting period, is intended to represent of such expenditure, which has expired during that period. If depreciation is not allowed as a necessary deduction in computing the income then there would be no way to preserve the assets as in the instant case which entitled to depreciation in respect of the assets owned by the taxpayer.
14. The provisions as to depreciation in a taxing law like the Income Tax Ordinance, 2001 contain elements of allowance and are also informed by considerations of policy of the tax and do not reflect purely economic criteria relevant to the determination of the depreciation. Section 40 also allows depreciation. Even though a liberal, benevolent and curing interpretation should be given to this allowance as it is mandatory, statutory allowance and as such relief should not be denied on any technical grounds, such as Depreciation could not be segregated/ restricted/ reduced/dump/ minimized or proportionate in any manner or under any personal imagination and the same ought to be allowed full depreciation irrespective quantum or quantification of income. It is not necessary to show that the expenditure was a profitable one or that in fact any profit was earned: Moore v.
Stewarts and Lloyds [(1906) 6 Tax Cas. 501] and Usher's case 1(1915) AC 433]; The connection between the expenditure incurred and the income earned need not be direct. Even if the connection is indirect or incidental, that can be regarded as sufficient for the purpose of [-- Income from other source i.e. Section 40 of Income Tax Ordinance, 2001]. It is also settled doctrine that the fact that the taxpayer, in incurring the expenditure, has been an imprudent businessman or that it was not necessary for him to bear the entire expenditure or that the expenditure ensure also to be benefit of others is entirely irrelevant in determining the question whether the expenditure ought to be allowed as a deduction [under section 40 of Income Tax Ordinance, 2001].
The section 40 does not require that this purpose must be fulfilled in order to qualify the expenditure for deduction. It does not say that the expenditure shall be deductible only if any income is made or earned or income must be more than allowance/ expenditure.
15. Tax depreciation under section 40 of the Income Tax Ordinance, 2001, where taxpayer who owned building plant and machinery and who let the same to the lessee, was, despite the letting, entitled to full claim of mandatory statutory depreciation allowance, since such allowance was by the provisions (supra) relating to grant of depreciation to an owner who used the building plant and machinery for the purpose of his business. This is nothing but time honored settled principles and the courts decided in favour of such an allowance on the reasoning that the owner who let building plant and machinery should be regarded as engaged in the business of letting and consequently as having used the building plant and machinery in such business, viz, the business of letting, instead of e.g. manufacturing himself/itself. It was observed that an honor may work on his building plant and machinery himself, deriving business income thereby, it is absolutely his discretion, or he may let the building plant and machinery to another, equally deriving a business income consisting of the rent from the lease and from the lessee and the owner of the building plant and machinery was fully entitled to claim full allowance of depreciation on these assets. At the same time we may observe that the department did not suffer whether the depreciation allowance was granted in the hands of lessor-owner in one hand and also in the hands of lessee- user, since any how only the owner of the building plant and machinery shall be and would be granted as full claim of allowance of depreciation. In this case this tribunal has rightly held vide judgment bearing I.T.As. Nos.434, 435, 436 and 437/KB/2016 read with order of this Tribunal 432, 433/KB/2017. "That the income of the taxpayer (SML)'s falls under the head income from other source under section 39 and depreciation is legally allowance to the title holders i.e. (TAXPAYER) i.e. Saindak Metals Limited. Therefore, the depreciation on building plant and machinery shall be fully allowed against rental income to the owner even if resulting in loss, the department would not restrict or disallow mandatory statutory allowance on any ground whatsoever, and the appellant
(SML) can adjust such loss, being part of head of income against any other source of income under that head.
16. The above fully covers that the taxpayer (SML) is fully entitled for the full claimed of depreciation under section 40 as claimed in appeal effect application and in grounds of appeal filed before this court being owner of the assets and it cannot be restricted by any stretch of imagination. The Tax Department cannot arbitrarily restrict or reduce the same on the basis of presumption or on the basis of ratioof income. The Lessee i.e. MRLD evidently neither is an owner of these assets nor is claiming any depreciation allowance on these assets. Depreciation must be allowed to the absolute owner of the Assets as income is being derived by it by using the (assets) Building, plant and machinery. For our own reasons and our this view is further fortified by a earlier judgment of the Division Bench of the Tribunal comprising Syed Muhammad Farooq Shah Judicial Member (as he then was) now the Hon'ble Judge of the High Court of Sindh and Mr. Khalid Siddiqui, the then learned Accountant Member of the Tribunal bearing 538, 539/KB/2010 in the case of CIT v. M/s. Atlas Honda Ltd., Karachi dated 26-01-2010 wherein the Tribunal had observed as under:-- ".........We are of the view that this objection of taxation officer is devoid of any merit for the reason that the equipments are given to its vendors who have requisite expertise. We are of the view that the ownership of the subject equipment is not disputed therefore, the taxpayer is entitled to claim depreciation allowance on these equipments."
Further reliance is also placed on the judgment reported as 1996 PTD 627 wherein it has been held by the Hon'ble High Court of Sindh as under:-- ".........Assessee a private limited company deriving income from hire of its four flour mills-income held to be assessed as Income from Other Sources such an assessee, held was entitled to depreciation allowance and his income being from the hire of plant / machinery would be assessable under section 30(2) (d) of the Income Tax Ordinance, 1979."
17. In view of the above discussions and further keeping in view the judgment of the Tribunal and High Court and for our own reasons, we are of the considered opinion that the taxpayer is legally entitled to claim full depreciation allowance as claimed in appeal effect application and we, accordingly, direct the tax department/concern officer/CIR to allow full claim of depreciation as claimed by the taxpayer for all the years and to allow adjustment of loss as per law against any other income where depreciation allowance results in loss of income falling under section 39(1)
(f).
18. Before parting with this judgment we may observe that the DCIR while passing the order under section 124 has ignored / by passed the earlier order of the Tribunal. This is contumacious act on the part of the department and the department should avoid recurrence of such action in future. In the case 1996 PTD (Trib.) 388 it was held" a judgment of the Income Tax Appellate Tribunal has the force of precedent which can be inferred from the fact that the judgments of those Courts and Tribunal which are reported in the law journals under the Law Reports Act, 1875 which have the force of precedent. Explanation to Section 5 of the Law Reports, 1875 reads as follows:-- Explanation - For the purpose of this Act the expression, 'Court or Tribunal' includes the Federal Shariat Court, A service Tribunal, the Income Tax Appellate Tribunal and the National Industrial Relations Commission."
A judgment delivered by the Tribunal is binding on the sub-ordinate court including tax authorities and CIR(A). They are bound to follow the judgment of the Tribunal in its true letter and spirit. The Assessing Officer/OIR being an inferior officer vis--vis the Tribunal, was bound by the judgment of the Tribunal and therefore. They should not have tried to distinguish the same on untenable grounds. It is well established tenets of precedents that Tribunal decision to be followed by lower authorities.
Law is legislated by the legislature with valid Peace of legislation Law is not always framed by the court but courts interpret for advancement of justice, therefore, it should not be allowed to operate so as to defeat the ends of justice, since it is in the interest of justice to avoid miscarriage of justice.
The courts and quasi- judicial officers including CIR (A) are required not only to do meaningful speedy justice but also must perform their duties in such a manner that justice is seen to have been done. CIR (A) while discharging their judicial duties no steps should be taken which may create apprehension in the mind of an appellant /taxpayer that justice may not be done. CIR(A) being subordinate authority he is bound to follow and obey the Judgment/ Order of Tribunal (ATIR). It is not open to the CIR (A) to ignore decision of jurisdictional Tribunal or refuse to follow. It must scrupulously follow the said decision in letter and spirit. The language of the Statute clearly indicates that the powers of the Tribunal is very wide amplitude and are almost to the power of Civil Court under Order XLI, Rule 33, C.P.C. The ratio, deducible form the foregoing discretion is that the power of Appellate Tribunal Inland Revenue under section 135 of the Ordinance are almost analogous to the powers of Civil Courts under Order XLI, Rule 33, C.P.C. These powers are of a wide sweep and the judgment of Tribunal is binding on subordinate authority including CIR(A).
In this respect we quote the text of CBR's letter C. No. 1(7) DT-14/92 dated February 10, 1991 whereby it has been directed as under:-- "It has been brought to the notice of Board by the Learned ITAT through their order in ITA No. 684/HQ of 1990-91 (Assessment Year 1989-90) that the directions contained in their appellate orders are not being followed by the authorities below. The following observations were also made previously by the learned Tribunal in I.T.A. No. 951/HQ of 1990-91 vide order dated August, 1991:-- "The order of this Tribunal is binding on the subordinate Income Tax authorities and, therefore, we deprecate the manner in which the Commissioner of Income Tax (Appeals) has sidetracked the order of this Tribunal, we disapprove such practice on the part of sub-ordinate income tax authorities and expect that in further the orders passed by this Tribunal shall be properly respected and followed. "
2. 1 am, therefore, directed to request to show proper respect to the orders of the Income Tax Appellate Tribunal as they are of binding nature on all subordinate Income Tax authorities and required under the law to be followed.
3. The above instructions may kindly be brought to the notice of all concerned."
The learned Tribunal vide its judgment reported as 2010 PTD (Trib.) 557 strongly deprecated the tendency of Ignoring or by passing the direction of the superior authorities on the part of revenue.
"We have in so many cases deprecated the tendency of ignoring or bypassing the directions of the superior authorities on the part of the Revenue Officers. This tendency needs to be cured for better administration of justice, observance of discipline and maintaining rule of consistency and law. The Taxation Officer in this case having scanty knowledge of the dispensation of justice and interpretation of statute has tried to demonstrate that he knows the law and the legal proceedings better than his superior officer and he may be right in thinking so but while acting as a judicial/ Quasi Judicial which have always been viewed very seriously and may entail into an appropriate action which however, we do not propose to take in this case."
Further the ATIR (Tribunal) has ruled in 1996 PTD (Trib.) 388 that its judgments are binding on the appellate authorities subordinate to the Tribunal under hierarchy of judiciary.
19. This doctrine means to abide by former precedents." Blackstone elucidated the doctrine thus: "For it is an established rule to abide by former precedents, where the same points come again in litigation: as well as to keep the scale of justice even and steady and not liable to waver with every new judge's opinion as also because the law in that case being solemnly declared and determined, what before was uncertain, and perhaps indifferent, is now become a permanent rule, which is not the breast of any permanent judge to alter or vary from, according to his private sentiment, therefore, the ratio decidendi of a judgment is a binding precedent."
In Finale we may add that the Taxing authorities cannot assume on themselves the role of substituting it or clarifying or modifying it as they consider proper Any order passed by the Tribunal. not only entitled to respect but are binding and have to be enforced and obeyed strictly.
No Court much less an authority howsoever high can ignore it. Any doubt or ambiguity can be removed by the Court which passed the order and not by an authority including income tax authorities and CIR (A) according to its own understanding.
If any taxing authority refuses to follow any decision of the Tribunal (ATIR), on the above grounds, it would be clearly guilty of committing contempt and is liable to be proceeded against.
Appeal bearing ITA No. 171/KB/2017 (Tax Year 2011) under section 122(5A)
20. This leave us to appeal bearing ITA No. 171/KB/2017 (Tax Year 2011) wherein the taxpayer has agitated the restriction of depreciation allowance as well as the issue of "Income from Other sources" instead of "Income from Business". The grounds relating to restriction of depreciation allowance has been decided by us in the preceding paragraphs, therefore, the appeal is hereby allowed on this ground and it is directed that full depreciation be allowed to the taxpayer for this year too.
21. As regards the controversy in respect of classification of income "Income from other source", the same has been decided by the tribunal in the aforesaid judgment of the Tribunal bearing I.T.As.
Nos.434 to 437/KB/2016 dated 14-10-2016 whereby the Tribunal had held that the taxpayer's income within the ambit of section 39 i.e. income from other sources. This issue was subsequently further re-affirmed and approved by the Hon'ble High Court of Quetta now also reported.
22. As the issue had been decided against the taxpayer and the controversy regarding classification of income of the taxpayer had been set at rest by the aforesaid judgments, the findings of the learned CIR(A), so far as head of income is concerned, do not warrant any interference in this regard. The order of the learned CIR (A) is hereby maintained to the extent as observed above.
23. Consequently, the appeals filed by the Taxpayer for all the tax years mentioned in the title page of this order are hereby disposed of accordingly.