MRS. AMBREEN ASLAM, JUDICIAL MEMBER.----Through this single order, I intend to dispose off the titled appeals filed by the appellant/taxpayer against Order dated 31-01-2018, passed by the learned Commissioner Inland Revenue (Appeals-V), Karachi on the following common/similar grounds except amount and tax period:
1. That the order passed by Commissioner Inland Revenue (Appeals), Karachi is not only an illegal order, but also bad in law and on facts of the case, hence, the same is liable to be cancelled and Annulled/set aside and deleted.
2. That the Appellant had challenged the notice issued under section 122(5A), proceedings initiated and order passed under section 122(5A) as illegal, without and in excess of jurisdiction and also in violation to requirement of specific conditions for treating the deemed order as erroneous and prejudice to the interest of revenue, the Commissioner Inland Revenue (Appeals) was not justified and confirming the proceeding under section 122(5A) is illegal and against the facts of the case hence, the order passed is not sustainable in law and is liable to be cancelled and Annulled/Deleted.
3. That the appellant had contested that the order passed under section 122(5A) is illegal and without jurisdiction as the alleged notice issued under sections 122(5A)/122(9) for alleged compliance on 22-03-2017 was neither issued nor served on the Appellant which is obvious from the order as neither the date of issue, nor the date of service of the alleged notice, nor the name of courier nor whether the actual notice was issued and served or NOT on the appellant has been mentioned. The Commissioner Inland Revenue (Appeals) has erred in confirming the order, instead canceling the same as illegal and without jurisdiction, authority and without service of notice passed by Commissioner Inland Revenue (Appeals) which is liable to be cancelled and Annulled/Deleted.
4. Without prejudice to grounds Nos.1 to 3, the order passed on 23- 07-2017 for alleged false non-compliance on 22-03-2017 without issuing afresh notice for 23-07-2017 is an illegal order, the Commissioner Inland Revenue (Appeals) should have cancelled the alleged order passed on 23-07-2017 as afresh opportunity for compliance on 23-0 7-201 7 has not been provided which Order is liable to be cancelled and Annulled/Deleted.
5. As per Ground No.3, The Appellant was contended that claimed exemption from deduction of tax on Special Judicial allowance of Rs.779,022/- for Tax Year 2011 and Rs.772,912 for Tax Year 2012) as per Clause (39) of Part I and 2nd Schedule of Income Tax Ordinance, 2001, but the Commissioner Inland Revenue (Appeals) has neither considered the said ground nor given any finding on it, which rendered the impugned order being arbitrary, illegal and liable to be cancelled and Annulled/Deleted.
6. That exemption has been claimed as per Clause (39) of Part I of Second Schedule of the Income Tax Ordinance, 2001. The Commissioner Inland Revenue (Appeals) has observed, that he is a Revenue Officer and NOT Judicial Officer, the observation of the both the officers are incorrect and is illegal without considering the clause (39) of Part I of 2nd Schedule of the Income Tax Ordinance, 2001, the Order passed and additions made both are illegal is not sustainable in law is liable to be cancelled and annulled/deleted.
7. The Appellant has claimed exemption Clause 39 of Part-I of Second Schedule of the Income Tax Ordinance, 2001, the Commissioner Inland Revenue' (Appeals) has wrongly mentioned and relied on alleged clause 39 of Part- VI of Second Schedule of the Income Tax Ordinance, 2001. The Said Clause is not applicable to the case of the Appellant. The Order passed and Refund disallowed/confirmed in Appeal beside being unjustified is not sustainable in law is liable to be cancelled and Annulled/deleted.
8. That the CIR (Appeals) was not justified is ignoring the judgment dated 20-04-2017 passed by Hon'ble Peshawar High Court in Writ Petition No.4747-P/2016 wherein it has been held that Special Judicial Allowance granted to the Judicial Officers of the District Judiciary of Khyber Pakhtunkhwa and Officers of the Peshawar High Court, that employees of Peshawar High Court are not liable to deduction of income tax at source within the section 148 of the Income Tax Ordinance, 2001, hence the Order passed by the Commissioner Inland Revenue (Appeals) is illegal without considering the Judgment of High Court of Peshawar. The said Order is fully applicable to the case of the Appellant. The order passed is illegal and not sustainable in law is liable to be cancelled and Annulled/deleted.
9. It is further submitted that the Five-Member Bench of Hon'ble Supreme Court of Pakistan in a judgment reported in 1991 SCMR 1041 (Para 26, page 1086) while dealing with Article 25 of the Constitution of Pakistan has held that "equal protection of law does not envisage that every citizen is to be treated alike in all circumstances, but it contemplates that persons similarly situated or similarly placed are to be treated alike.
10. In this view of the matter, the present appellant, who is employee of High Court of Sindh is also entitled to exemption of deduction of income tax on Special Judicial Allowance, as all the employees of all High Courts are similarly situated and similarly placed persons for the reasons that their Services Rules are framed under Article 208 of the Constitution of Pakistan.
11. That the Appellant craves permission to add, amend, alter, substitute, and take any further grounds of appeal at the time of hearing of this appeal.
2. Brief facts of the case as gathered from the record are that the appellant/taxpayer is a government salaried person posted in Sindh High Court as Private Secretary. The taxpayer filed return of income for the tax years 2011 and 2012 declaring salary income of Rs.926,434/- and Rs,1,240,457/- respectively which were accepted as 'deemed assessments' under section 120 of the Ordinance. Perusal of the record revealed that deemed assessment passed under section 120 of the Ordinance was erroneous and prejudicial to the interest of revenue; therefore proceeding were initiated under section 122(5A) of the Ordinance. Based on the proceedings initiated, ACIR, passed orders bearing DC Nos.15/31 and 16/31 both dated 23-07-2017 under section 122(5A) of the Ordinance and disallowed refunds of Rs.116,592/- and Rs.137,531/- and creating tax liabilities of Rs.161,197/- Rs.165,555/- for the Tax Years 2011 and 2012 respectively.
3. Against the treatment meted out from the aforementioned orders passed by ACIR, the taxpayer preferred appeals before learned CIR(A) who decided appeals of the taxpayer by passing Orders in respect of tax years 2011 and 2012 both dated 31-01-2018 with following observations: "5.1 Dynamics of the proceedings mentioned in the impugned order revealed that the Additional CIR passed the order under section 122(5A) of the Ordinance, on the basis of Clause 56 Part I of the 2nd Schedule, which is reproduced as under:- The following perquisites, benefits and allowances received by a Judge of Supreme Court of Pakistan and Judge of High Court, shall be exempt from tax.
(1) (a) Perquisites and benefits derived 1 [from] use of official car maintained at Government expenses.
(b) Superior judicial allowance payable to a Judge of Supreme Court of Pakistan and Judge of a High Court.
(c) Transfer allowance payable to a judge of High Court.
(2) The following perquisite of 'fie Judge of Y Supreme Court of Pakistan and Judge of High Court shall also be exempt from tax during service, and on or after retirement.
(a) The services of a drive and an orderly.
(b) 1000 (one thousand) fee local telephone calls per month.
(c) 1000 units of electricity as well as (25 hm3 of gas) per month and free supply of water; and
(d) 200 liters of petrol per month.
(3) If during service, a judge dies, exemption from tax in respect of benefits and perquisites provided to widow as mentioned in sub-clause (2) shall also be available to the widow.
However, the AR of the appellant in the grounds of appeal contended that the appellant case falls within the ambit clause (39) of Part IV of the Second Schedule where as clause (39) of Part IV has already been omitted by the Finance Act, 2003. Therefore clause (39) of Part IV of the Second Schedule has no relevance with the instant case, as mentioned in the grounds of appeal.
The undersigned holds that the AR of the appellant has not adduced anything concrete evidence or logical explanation to warrant inference in the impugned orders because the appellant does not fall within the ambit of clause 56 of Part I of the second schedule as appellant is not a judge of Supreme Court or High Court.
Hence in view of the above facts and circumstances the undersigned found no compelling reason to interfere with the impugned orders which are hereby upheld and confirmed."
4. Being aggrieved and dissatisfied with the aforementioned orders passed by the learned CIR(A), the taxpayer preferred titled appeals before this Tribunal:
5. On the date of hearing, Mr. Aqeel Ahmed, appeared on behalf of the appellant/taxpayer while Mr. Ali Hassan, DR attended on behalf of tht respondent/department.
6. Learned counsel for the appellant/taxpayer argued that the order passed by Commissioner Inland Revenue (Appeals), Karachi is not only an illegal order, but also bad in law and on facts of the case, hence, the same is liable to be cancelled and Annulled/set aside and deleted.
7. Learned counsel for the appellant/taxpayer further argued that the Appellant had challenged the notice issued under section 122(5A), proceedings initiated and order passed under section 122(5A) as illegal, without and in excess of jurisdiction and also in violation to requirement of specific conditions for treating the deemed order as erroneous and prejudice to the interest of revenue, the Commissioner Inland Revenue (Appeals) was not justified and confirming the proceeding under section 122(5A) is illegal and against the facts of the case hence, the order passed is not sustainable in law and is liable to be cancelled and Annulled/Deleted.
8. Learned counsel for the appellant/taxpayer urged that the appellant had contested that the order passed under section 122(5A) is illegal and without jurisdiction as the alleged notice issued under sections 122(5A)1122(9) for alleged compliance on 22-03-2017 was n ither issued nor served on the Appellant which is obvious from the order as neither the date of issue, nor the date of service of the alleged notice, nor the name of courier nor whether the actual notice was issued and served or NOT on the appellant has been mentioned. The Commissioner Inland Revenue (Appeals) has erred in confirming the order, instead cancelling the same as illegal and without jurisdiction, authority and without service of notice passed by Commissioner Inland Revenue (Appeals) which is liable to be cancelled and Annulled/Deleted.
9. Learned counsel for the appellant/taxpayer contended that the order passed on 23-07-2017 for alleged false non-compliance on 22-03-2017 without issuing afresh notice for 23-07-2017 is an illegal order, the Commissioner Inland Revenue (Appeals) should have cancelled the alleged order passed on 23-07-2017 as afresh opportunity for compliance on 23-07- 2017 has not been provided which Order is liable to be cancelled and Annulled/Deleted.
10. Learned counsel for the appellant/taxpayer further contended that the claimed exemption from deduction of tax on Special Judicial allowance of Rs.779,022/- for Tax Year 2011 and Rs.772,912 for Tax Year 2012) as per Clause (39) of Part I and 2nd Schedule of Income Tax Ordinance, 2001, but the Commissioner Inland Revenue (Appeals) has neither considered the said ground nor 'given any finding on it, which rendered the impugned order being arbitrary, illegal and liable to be cancelled and Annulled/Deleted.
11. Learned counsel for the appellant/taxpayer argued that exemption has been claimed as per Clause (39) of Part I of Second Schedule of the Income Tax Ordinance, 2001. The Commissioner Inland Revenue (Appeals) has observed, that he is a Revenue Officer and NOT Judicial Officer, the observation of the both the officers are incorrect and is illegal without considering the clause (39) of Part I of 2nd Schedule of the Income Tax Ordinance, 2001, the Order passed and additions made both are illegal is not sustainable in law is liable to be cancelled and annulled/deleted.
12. Learned counsel for the appellant/taxpayer further argued that the Appellant has claimed exemption Clause 39 of Part-I of Second Schedule of the Income Tax Ordinance, 2001, the Commissioner Inland Revenue (Appeals) has wrongly mentioned and relied on alleged clause 39 of Part-VI of Second Schedule of the Income Tax Ordinance, 2001. The Said Clause is not applicable to the case of the Appellant. The Order passed and Refund disallowed/confirmed in Appeal beside being unjustified is not sustainable in law is liable to be cancelled and Annulled/deleted.
13. Learned counsel for the appellant/taxpayer urged that the CIR (Appeals) was not justified is ignoring the judgment dated 20-04-2017 passed by Hon'ble Peshawar High Court in Writ Petition No.4747- P/2016 wherein it has been held that Special Judicial Allowance granted to the Judicial Officers of the District Judiciary of Khyber Pakhtunkhwa and Officers of the Peshawar High Court, that employees of Peshawar High Court are not liable to deduction of income tax at source within the section 148 of the Income Tax Ordinance, 2001, hence the Order passed by the Commissioner Inland Revenue (Appeals) is illegal without considering the Judgment of High Court of Peshawar. The said Order is fully applicable to the case of the Appellant. The order passed is illegal and not sustainable in law is liable to be cancelled and Annulled/deleted.
14. Learned counsel for the appellant/taxpayer stated that the Five-Member Bench of Hon'ble Supreme Court of Pakistan in a judgment reported in 1991 SCMR 1041 (Para 26, page 1086) while dealing with Article 25 of the Constitution of Pakistan has held that "equal protection of law does not envisage that every citizen is to be treated alike in all circumstances, but it contemplates that persons similarly situated or similarly placed are to be treated alike."
15. Learned counsel for the appellant/taxpayer contended that in this view of the matter, the present appellant, who is employee of High Court of Sindh is also entitled to exemption of deduction of income tax on Special Judicial Allowance, as all the employees of all High Courts are similarly situated and similarly placed persons for the reasons that their Services Rules are framed under Article 208 of the Constitution of Pakistan. Lastly, he prayed for setting aside of impugned orders passed by learned CIR(A).
16. On the other hand, learned DR vehemently opposed the arguments advanced by the learned counsel of the taxpayer by stating that the order passed by the learned Commissioner-IR (Appeals) is well within the framework of law and carries no illegality and infirmity. He prayed for dismissal of titled appeals of the taxpayer.
17. I have heard learned representatives of both parties, perused the impugned orders of the below authorities and have gone through the record. To decide the instant appeals question before me is whether impugned order require interference?
18. Precisely the department alleged against the taxpayer that he being Private Secretary filed return and claimed exemption on judicial allowance resulting in excess tax as refundable amount, the department found deem assessment erroneous and prejudicial to the interest of revenue. Consequently, notice under section 122(A) was issued and confronted the issue of amendment in income under section 122(5A) of the Income Tax Ordinance, 2001.
19. Keeping in mind above assertions of the department, I have taken in account order-in-original, perusal of the same indicates that the same was passed on 23-7-2017 and the date of compliance in the order is mentioned to be 22-3-2017, the said order does not reflect that any other notice was issued for compliance to the taxpayer or not as it is also emphasis by the FBR through SROs that at least three opportunity of hearing must be given to the taxpayer. Even otherwise, it is against the root of natural justice that ample opportunity being heard is not be allowed to the litigants/citizens by the authorities.
20. So far question regarding seeking exemption of judicial allowance by the tax taxpayer is concerned, in this context, I feel necessary to bring on record the background approval and mandate of special judicial allowance. .For the sake of convenience, I am reproducing here the relevant excerpt from the order passed by the Hon'ble High Court in C.P. No.D-1637 of 2013, I also cautious enough to mention here that the above order is related to pension matter, since in the said order Hon'ble High Court was pleased to dilate its decision on the root cause of this matter which is special judicial allowance. The Honourable High Court of Sindh was pleased to observe that:- "8. The learned counsel for the petitioner and the learned A.A. G. both had agreed that this petition may be disposed of at katcha peshi stage and they argued this case extensively.
9. Heard the arguments. According to Rule 2 of the High Court of West Pakistan (Civil Services) Delegation of Powers Rules, 1960, the Chief Justice of the High Court of West Pakistan have the powers in respect of Judicial Officers up to the level of District and Sessions Judges and all the powers of Government in Administrative Department under the Civil Services Rules in force in the different integrating units of West Pakistan in respect of the officers and servants of the High Court, its Benches and Circuits other than C.S.P. and P.C.S. officers, and the establishment of the Civil and Sessions Courts. For ready reference and convenience, Rule 2 of High Court of West Pakistan (Civil Services) Delegation of Powers Rules, 1960 is reproduced as under:--
2. Notwithstanding any provision to the contrary in any Civil Services Rules for the time being in force in the Province or any part thereof, the Chief Justice of the High Court of West Pakistan shall have -
(i) the powers specified in column 2 of Appendix 'A' to these rules to the extent mentioned in column 3 thereof in respect of Judicial Officers up to the level of District and Sessions Judges; and
(ii) all the powers of Government in the Administrative Department under the Civil Services Rules in force in the different integrating units of West Pakistan, in respect of -
(a) The officers and servants of the High Court, its Benches and Circuits other than C.S.P. and P.C.S. officers, and
(b) The establishment of the Civil and Sessions Courts.
10. Appendix "A" of the aforesaid Rules elucidates and explicates the delegation of powers to the Chief Justice in respect of judicial officers. Entry No.35 delegates the chief justice full power to sanction pension provided the pension is covered by the rules and the certified by the Audit Officer to be admissible and no deduction is to be made therefrom while Entry No.36 delegates the powers to sanction commutation of pension provided the conditions laid down in the rules are fulfilled.
11. In the case of Government of Sindh v. Sharif Faridi reported in PLD 1994 SC 105. The honorable Supreme Court held that "financial independence of the judiciary can be secured if the funds allocated to the Supreme Court and High Courts (by the Parliament and the Provincial Assemblies in their respective annual budgets) are allowed to be disbursed within the limits of the sanctioned budget by the respective Chief Justices of these Courts without any interference by the Executive (in practical terms without reference and seeking the approval of the Ministry of Finance / the Provincial Finance Department). Thus, the Chief Justice would be competent to make re-appropriation of the amounts from one head to another, create new posts, abolish old posts or change their nomenclature and to upgrade of downgrade etc. as per requirements of their respective Courts and this should be possible, as has been observed earlier, without being obliged to seek the approval of the Ministry of Finance or the Provincial Finance Departments as the case may be, provided of course the expenditure that is incurred by them falls within the limits of the budget allocation for their Courts.
To ensure financial discipline, as Accounts Officer of the Accountant-General may sit in all Courts for pre-audit and issue of cheques. In this way, the control of the executive over the judiciary in this important sphere will be eliminated and the judiciary enabled to function independently".
12. In the case of Registrar, Supreme Court of Pakistan, Islamabad v. Qazi Wali Muhammad reported in 1997 SCMR 141, the apex Court held that "the status of persons employed in the Provincial High Courts, Federal Shariat Court and the Supreme Court of Pakistan and whose terms and conditions were governed under the rules framed by virtue of Article 208 of the Constitution directly arose in the case of Government of Punjab v.
Mubarik All Khan, supra, and the view taken by the High Court in that case that the employees of the Provincial High Court, Lahore, do not find within the category of civil servants as defined in the Civil Servants Act. In the case Mubarik Ali Khan supra, PLD 1993 SC 375 the apex court held that "the Legislature was not given any role the determine the terms and conditions of the employees including their remunerations and this exclusionary rule was found in conformity with the concept of independence of judiciary as enshrined in the Constitution.". It was further held by the apex court that "definition of service of Pakistan itself divides those included into two broad categories i.e. one of those employed in connection with the affairs of Federation and the other of those employed in connection with the affairs of a Province. Applying this definition, the employees of the High Court Establishment would fall within the definition of service of Pakistan and have been taken to be employed in connection with the affairs of the Province".
13. Article 208 of the Constitution of Pakistan provides in clear terms that the Supreme Court and the Federal Shariat Court, with the approval of President and a High Court, with the . approval of Governor concerned, may make rules providing for appointment by the Courts of officer and servants of the Court and for their terms and conditions of employment. Why the officers and servants of the Superior Court are to be treated differently than the civil servants employed by the Governments not far to see. To object in making special dispensation for the officers and servants of the Court as provided by Article 208 of the Constitution is to secure the independence of the Superior Courts which is essential for the working of any demodratic form of Government. The Constitution ensures that as far as possible the High Court should remain independent and free from interference in its affairs by the executive authorities. Reference can be made to 1991 MLD 2546.
14.The Sindh High Court Establishment (Appointment and Conditions of Service) Rules, 2006 were framed on 21-10-2006 (Notified on 18-11-2006) in exercise of powers conferred by Article 208 of the Constitution of Pakistan, 1973 which repealed the High Court Establishment (Appointment and Conditions of Service) Rules, made under the authority of the Constitution 1956. It would be. most expedient to keep an eye on Rule 15 pertaining to the terms and conditions of employment which is reproduced as under:-- "15. Terms and Conditions: Subject to these Rules other terms and conditions of service including pay, allowances, retirement, deputation, pension, gratuity, provided fund, benevolent fund, group insurance or other privileges of an employee shall be governed by the provisions for the time being in force and applicable to the employees in posts in the same scale in the Provincial Government.
Provided that the powers of the Provincial Government shall be exercised by the Administration Committee or such other Judges upon whom power, may be delegated by the Administration Committee.
Provided further that the Chief Justice whenever he thinks fit may grant a special allowance to any officer or an employee keeping in view the nature of the services that he is required to perform."
15. Let us first clarify that the Sindh Judicial Staff Services Rules, 1992 have no relevance or application in the present controversy and reliance on these rules by the learned A.A. G is beside the point for the reason that these rules are meant for regulating recruitment of the staff to the posts specified in Rule 3 such as the staff in the various districts and sessions courts( small causes court Karachi and the subordinates civil courts in the province of Sindh. So far as the Sindh High Court Establishment (Appointment and Conditions of Service)
Rules, 2006 are concerned, these rules were framed on 21-10-2006 to regulate the appointment and conditions of employment of the officers and servants of the High Court of Sindh and its Rule 15 is based on a broad spectrum and canvas which includes the benefit of pension also so this is not the case of the petitioners or they have not knocked the doors of this court for awarding the pension which is already being paid to them as per terms and conditions of service but what they are claiming is the inclusion or effect of judicial allowance for the purpose of calculation of their pension which was part of their emolument/pay or salary. The payment of judicial allowance cannot be treated as an ad hoc relief or any benefit of contingent or reliant nature but it was one of the components of the emoluments which was being paid during active service without any interruption or interval but after retirement the benefit of allowance was recalled for the purposes of pension which is without any sagacity or rational. Despite encompassing field of Sindh High Court Establishment (Appointment and Conditions of Service) Rules, 2006, we cannot ignore Rule 2 of the High Court of West Pakistan (Civil Services)
Delegation of Powers Rules, 1960 which is also encircling field under which the Chief Justice of the High Court has the powers in respect of judicial Officers and all the powers of Government in the Administrative Department under the Civil Services Rules in force in the different integrating units of West Pakistan in respect of the officers and servants of the High Court, its Benches and Circuits other than C.S. P. and P.C.S. officers, and the establishment of the Civil and Sessions Courts. Despite issuing repeated administrative orders / notifications from time to time, the Government of Sindh failed to implement the notifications and in the end the petitioners had left with no other option but to pray to the constitutional jurisdiction of this court for recompense and straighten out their grievance.
16. Now we would like to embark upon the entreaty of the respondents as regards the minutiae of Article 486 of Civil Service Regulations (CS.R): SECTION IV -- ALLOWANCES RECKONED FOR PENSION Emoluments and Average Emoluments [486. The term "emoluments" means the emoluments which the officer was receiving immediately before his retirement and shall include:-
(a) Pay as defined in FR 9 (2) (a)(1);
(b) Senior Post Allowance;
(c) Special Pay of all types and nature;
(d) Personal Pay;
(e) Technical Pay; (f) Indexed Pay;
(g) Increments accrued during leave preparatory to retirement;
(h) Any other emoluments which may be specially classed as Pay.
Since the sub-article (a) of Article 486 C.S.R also refers to FR 9(21) (a) (i) therefore in order to make more clarity, we also refer to FR 9(21)(a)(i) as under-- Combined Set of F. R and S.R. Vol. I and II (Revised Edition)
(21)(a) Pay means the amount drawn monthly by a Government servant as-
(i) the pay, other than special pay or pay granted in view of his personal qualifications, which has been sanctioned for a post held by him substantively or in an Officiating capacity, or to which he is entitled by reason of his position in a cadre, and
(ii) overseas pay, technical pay, special pay and personal pay, and
(iii) any other emoluments which may be specially classed as pay by the Governor-General.
17. If the reliance placed by the respondents on the aforesaid F.R. and S.R. and C.S.R is considered to be literal and ingenuous even then they have no conceivable justification to deprive or divest the effect of judicial allowance from the calculation of pension. In addition thereto, the Special Pay of all types and nature is part of emoluments including other emoluments which may be specially classed as Pay. So far FR 9(21) (a) (i) of F.R. and S.R. is concerned it also does not debar or make any embargo under which the Government may obliterate or wipe out the effect of judicial allowance from the pension's calculation rather overseas pay, technical pay, special pay and personal pay are also integral part of it except the pay, other than special pay or pay granted in view of personal qualifications; which has been sanctioned for a post held by an employee substantively or in an officiating capacity or to which he is entitled by reason of his position in a cadre. The judicial allowance was allowed to the employees across the board, neither it was extended to a person specific nor it was allowed on contingent or transient basis nor sanctioned for a post held by an employee substantively or in an officiating capacity or to which he is entitled by reason of his position in a cadre. The terms "emoluments" used under Article 486 of C.S.R. means the emoluments which the officer was receiving immediately before his retirement and judicial allowance was also part of emolument in this case. Besides much extended meaning of emolument, clause (h) of it makes it more clear that any other emolument which may be specially classed as pay. The nomenclatures of emoluments alluded to Article 486 and FR 9(21)(a)(i) of F.R. and S.R are not restrictive but exhaustive in nature and if we get hold of it there would be no improbability to perceive that judicial allowance is a part of emoluments/pay/salary and reckonable being one of the components for pension calculation. It is worthwhile to draw attention to Article 487 of Civil Service Regulations (C. S.R.) in which the term "Average Emoluments" means the average calculated upon the last three years of service while Article 488 defines the allowances which do not count such as local allowances and deputation (local) allowances; messing allowances, working allowances and provision allowances to office department which is not the case at this juncture.
18. After considering the pros and cons it is quite visible that under the delegated powers conferred through 1960 Rules, the Chief Justice of High Court has all the powers of government in the administrative department under the Civil Services Rules in respect of the officers and servants of the High Court and these powers are in addition to and not in derogation of the powers already vested in or delegated to him under any law, rule or order in force. Even the rules made under Sindh High Court Establishment (Appointment and Conditions of Service Rules, 2006 have no overriding effect on the delegated powers of the Chief Justice of the High Court.
Albeit the administrative order passed by the then. Chief Justice on 6.7.2012 do show that judicial allowance per policy decision dated 13-4-2006 of the then Hon'ble Chief Justice was treated as emolument for the purpose of pension, in respect of judicial officers. Erstwhile A.C. in its meeting dated 17-2-2007 made applicability of judicial allowance with effect from 03-01-2000 and the benefit of judicial allowance was however extended to the staff and officers of High Court of Sindh by the then Hon'ble Chief Justice. The above order further refers to that in principle it was decided that staff/officers of this court were allowed/entitled to judicial allowance which was treated as emolument for the purpose of pensionary benefit per terms of Article 486 Section IV of C.S.R. So taking into account forgoing raison d'etre we have 'reached to an unequivocal concluding stage that judicial allowance is reckonable for the calculation of pension as part of emoluments.
21. From the above excerpt of the Judgment passed by the Honourable High Court , it is clear that Honourable Chief Justice of Sindh has the powers in terms of Rule 2 of the High Court of West Pakistan (Civil Services)
Delegation of Powers Rules, 1960 in respect of Judicial Officers and all the powers of government in administrative department under the Civil Services Rules in force in the different integrating units of West Pakistan in respect of the officer and servants of the Honourable High Court.
22. So far expression judicial allowance is concerned the same was expended to the staff and officers of Honourable High Court of Sindh by the then Honourable Chief Justice. Now the question is that whether the said Special Judicial Allowance is part of salary or is not and should have to be tax as per department's view or not. In this respect Honourable High Court of Peshawar was pleased to accord its decision on the point in issue in 2018 PTD 806. Keeping in mind the rules and regulations settled by the Honourable High Court, Peshawar in above case law I feel necessary for the sake of convenience at very outset, I would reproduce Section 12 of the Income Tax Ordinance, 2001, it says as under:-
12. Salary.--- (1) Any salary received by an employee in a tax year, other than salary that is exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head "Salary".
(2) Salary means any amount received by an employee from any employment, whether of a revenue or capital nature, including---
(a) any pay, wages or other remuneration provided to an employee, including leave pay, payment in lieu of leave, overtime payment, bonus, commission, fees, gratuity or work condition supplements (such as for unpleasant or dangerous working conditions) 1 [;]
(b) any perquisite, whether convertible to money or not;
(c) the amount of any allowance provided by an employer to an employee including a cost of living, subsistence, rent, utilities, education, entertainment or travel allowance, but shall not include any allowance solely expended in the performance of the employee's duties of employment;
(d) the amount of any expenditure incurred by an employee that is paid or reimbursed by the employer, other than expenditure incurred on behalf of the employer in the performance of the employee's duties of employment;
(e) the amount of any profits in lieu of, or in addition to, salary or wages, including any amount received --
(i) as consideration for a person's agreement to enter into an employment relationship;
(ii) as consideration for an employee's agreement to any conditions of employment or any changes to the employee's conditions of employment;
(iii) on termination of employment, whether paid voluntarily or under an agreement, including any compensation for redundancy or loss of employment and golden handshake payments;
(iv) from a provident or other fund, to the extent to which the amount is not a repayment of contributions made by the employee to the fund in respect of which the employee was not entitled to a deduction; and
(v) as consideration for an employee's agreement to a restrictive covenant in respect of any past, present or prospective employment;
(f) any pension or annuity, or any supplement to a pension or annuity; and
(g) any amount chargeable to tax as "Salary" under section 14.
23. There is no denial that the salary of a person is chargeable to income tax so for chargeability of tax of allowance is concerned, in that context Section 12(2)(c) is relevant in the issue in question. Section 12(2)(c) categorize the amount of allowances after specification of allowances the above clause (c) starts in the middle from the expression "but" (inverted commas are my intensity). Expression "but" is segregating other allowances from the allowance which include solely expanded in the performance of the employees' duties. Beside this in clause of Section 12(2)(c) another expression is used after expression "but" that is "shall not" (inverted commas are my intensity) in legal discourse word "shall" has great significance it coerce that every act required to be done as opposed to the term "may" which simply means that legislature intended through the above clause that the allowance expended in the performance shall be excluded from the definition of salary.
24. Since I have already mentioned above that the said special judicial allowance was extended to staff and officers of the judiciary by the Honourable Chief Justice of Sindh, therefore, as per the definition mentioned in 12(2)(c) of Income Tax Ordinance, 2001, I am of the view that the said special judicial allowance expended in the performance of the staff and officials was extended by the Honourable Chief Justice of Sindh in account of their performance, for more clarity it is also wroth while to mention here that clause 39 of Part-I of Second Schedule of Income Tax Ordinance, 2001 has great antecedent the said clause accentuates that any special allowance or benefit (not being entertainment or conveyance allowance) or other perquisites within the meaning of Section 12 specially granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit, the clause of Part-I of Second Schedule if is read in consonance with Section 12(2)(c), it clearly manifests that the said special judicial allowance is not part of other allowance, therefore; as per above notion mentioned in above Section and clause, I am of the view; the said special judicial allowance does not fall within the scope of salary therefore, the same is not chargeable to income tax, my observations are find strength from the above judgments mentioned supra.
25. So with great honour and respect by following the above judgments of the Honourable High Court, I hold that the impugned order does require interference therefore, the same is set aside in result appeal D of the taxpayer is accepted.
26. The titled Appeal stand disposed off in the manner is indicated above.