1. SHAHID MASOOD MANZAR (CHAIRMAN).---The instant two applications have been filed by the applicant/taxpayer requesting for rectification in the consolidated order dated 02.03.2017 of this Tribunal in I.T.A. No.2010/LB/2016 for tax year 2014 and I.T.A. No.2056/LB/2016 for tax year 2015 to be rectified under section 221 of the Income Tax Ordinance, 2001 due to factual as well as legal mistakes apparent from the record on the following grounds: - i. That the titled appeal was filed by the applicant in this august Forum which was remanded back to the assessing officer for de novo proceedings with the direction to finalize assessment after decision of the Commissioner on the request of the taxpayer regarding entitlement of tax credit under section 65-D of the Ordinance as well as affording adequate opportunity of being heard to the taxpayer . A copy of the order is attached. ii. That the appellant company incorporated and started its business in 2013 for which tax exemption was allowed for the initial period of five (5) years with regard to minimum tax and tax payable subject to the condition that no bank loan or borrowing has to be resorted to for installation and purchase of machinery and equipment and that it will be 100% equity based investment except for borrowing for working capital etc. This fact/ aspect instead of being considered for adjudication, the Hon'ble Tribunal has skipped and ignored the same inadvertently which needs to be rectified by recalling its combined orders dated 02.03.2017 passed in I.T.A. No. 2010/LB/2016 for tax year 2014 and I.T.A. No. 2056/LB/2016 for tax year 2015. iii. That when no such borrowing from the bank has been availed by the appellant company then obviously the appellant becomes entitled to tax credit under section 65-D which fact should have been adjudicated upon straightaway in the light of the given and settled law by an authoritative judgment by this. Hon'ble Tribunal instead of remanding back to the assessment authorities for re-assessment which will become a burdensome and lengthy processing detrimental to the business of the appellant company . iv. That when the department does not have any contrary judgments on the subject/ issues involved in the titled case, the remanding back would amount to a painful exercise especially when exemption is provided by law.
2. This is, in fact, an omission by this Hon'ble Tribunal which needs to be recalled for rectification of mistake under section 221 of the Income Tax Ordinance, 2001. v. That since this Hon'ble Tribunal has authority to prob the facts of the case which are obvious without any ambiguity as the set up was launched/ started/ incorporated in 2013. There remains hardly any justification for remanding back the case to the assessing authority for re-assessment especially in view of the clear ;my on the subject for which this Hon'ble Tribunal should have given its findings which were skipped inadvertently . Hence this application under section 221 of the Income T ax Ordinance, 2001 for recalling its orders dated 02.03.2017. vi. That the appeal filed by the appellant was decided on few of the grounds while the other grounds and issues involved as incorporated in the original appeal have never been addressed nor considered by this August Forum in the right perspective and in accordance with law. It is humbly pointed out that had the grounds in the titled appeal as well as the issues of the case taken and viewed in the light of the relevant law, the impugned order in the titled appeal would have brought different results i.e. vacation of orders of both the lower fora. vii. That since the exemption was wrongly denied by the department which was available under section 65-D of the Income Tax Ordinance, 2001 and there was no dispute whatsoever regarding the set up of the business of the appellant company by the lower fora, therefore, both tax is also leviable as well as tax credit is also permissible for which the case should have been decided by this Hon'ble T ribunal which was ignored and skipped inadvertently . viii. That :he main grounds and the issues which were neither addressed nor considered as mentioned in the impugned order which is contrary to the facts and circumstances of the case espe cially the law laid down in this regard. ix. That this august tribunal did not appre ciate the legal position with regard to the treatment given to the appellant company as the legal provisions and the facts are specific grounds on. x. That, if at all the Hon'ble Tribunal deemed it appropriate to remand the case to the assessing officer for de novo assessment of profit/ income, it was legally bound to give a finding on the admissibility of tax credit envisaged in under section 65-D of the Income Tax Ordinance, 2001. But due to an oversight the Hon'ble Tribunal has not given an authoritative finding on the subject which formed the crux of the appeal. Hence this application for rectification.
2. Mr. Tahir Mahmud learned Advocate of the taxpayer has argued that the Tribunal is final fact finding authority and the mistake to be rectified is not limited to a mistake of fact/law and may be gathered from the impugned order as well as from the record which includes the record of the proceedings of the assessment or refund to discover the error or mistake which is noticed by the Tribunal itself or pointed out by the taxpayer and failure to apply the indisputable provision of law could be rectified. Reliance is placed on the decision reported as 1983 PTD 246 (Honourable Karachi High Court) and 2017 PTD 2227 (Honourable Balochistan High Court) wherein it was held that the facts of the case has not been appreciated despite all the documents and details were placed on record by the appellant, this will be a mistake liable to be rectified.
3. He contended that the case was remanded without considering the details of documents, submitted by the appellant in its true perspective meaning thereby that such issues were ignored/om itted therefore, the order needs to be rectified specially for allowing tax credit under section 65D of the Income Tax Ordinance, 2001 when all the requisite documents fulfilling the conditions is part of the record.
4. He has contended that it is a settled law for rectification under section 221 of the Income Tax Ordinance, 2001 which can be resorted when this Forum erred in not considering the issues/grounds as per law. He placed reliance on the case reported as 1998 PTD (Trib) 3866 . He again placed reliance on Honourable Balochistan High Court Judgment cited as 2017 PTD 2227 while arguing that the rectification of order , in fact, is a process whereby something is wrongly omitted or entered.
5. It is argued that tax credit reduces the amount of tax to be paid by the tax payer. In view of 100 % tax credit facility available to the tax payer from 2011 to 2016 workability of tax or reassessment or amendment of deemed assessment will be adjustable/ offset as the appellant has submitted the required documents such as. incorporation certificate, registration certificate, import documents for machinery and equipment to be installed, installation certificate for erecting the machinery plus details of 100 % share capital as shown in the audited accounts of the company which were inadvertently omitted to be considered by this Tribunal thus needing rectification under section 221 of the Ordinance.
6. It is contended that the department allegations against the applicant company on the basis of presumptions is totally uncalled for and not permissible under the law. This does not warrant remanding the case back to the department under the law and as such mistakes floating on the surface of the order need to be rectified.
7. The learned AR of the taxpayer argued that the issue of tax credit under section 65D of the Income Tax Ordinance, 2001 was required to be decided by the CIR on the basis of four pre-requisites as provided under the relevant section of the Ordinance for which the documentary evidence was already on the record i.e. Incorporation certificate, Registration certificate under Companies Ordinance, 1984, Import Documents for Machinery and Equipment (bill of entry) together with installation certificate for erecting the machinery besides, the audited accounts of the company showing (100) percent equity of the share holders. These were the requisite documents for determining eligibility for tax credit under section 65D of the Ordinance but unfortunately the Addl. CIR without any justification proceeded against the taxpayer. It is contended that the learned CIR (Appeals) has also not taken cognizance of this matter of the fact as well as the legal provision on the subject and endorse the contention of the Addl. CIR without giving due consideration to the spirit of legal provision as well as the factual controversy on the issue of tax credit. It is submitted that the factual as well as legal mistake floating on the surface were neither addressed by the lower fora nor by this Tribunal which, if other wise, considered the decision would have been altogether different in favour of the appellant.
8. The learned AR argued that the whole facts of the case were not considered despite the fact that all the relevant documents were available on record whereas, on the basis of only one ground the case was remanded back on the issue of tax credit under section 65D though the conditions were fulfilled but inadvertently omitted for consideration by this Tribunal. In this regard, reliance is placed on the decision of the Honourable High Court, Karachi cited as 2000 PTD 2407.
9. It is argued that the order of this Tribunal to remand back the case to the OIR for de novo proceeding with the direction to finalize the assessment after decision of the Commissioner regarding entitlement of tax credit under section 65D of the Ordinance was only on the same premises to determine eligibility due to misconceived notion of Additional CIR which is full of mistake of facts as well as mistake of law in as much as the requisite documents which determine the eligibility of the appellant for tax credit under section 65D of the Ordinance have already been placed on record such as incorporation certificate, registration certificate, import documents including GDs showing the import of machinery for installation which was dully cleared by the Custom Authority after payments of duties etc. and the fourth condition i.e. 100 (per cent) equity based on share capital. All these documents are part of record on the basis of which the eligibility of the appellant for availing 100 percent tax credit was to be determined. Unfortunately the Addl. CIR instead of allowing the facility of 100 percent of tax credit entered the domain of definite information and, that too, on the basis of presumptions which were neither permissible under the law nor warranted in the instant case. Thus remanding back the case on this sole premises constitute both mistake of facts as well as mistake of law requiring rectification under section 221 of the Ordinance. Reliance is placed on already referred cases 1983 PTD 246 (Honourable Karachi High Court) and 2017 PTD 2227 (Honourable Balochistan High Court).
10. The learned AR of the appellant highlighted another aspect of this case that was extension in time granted by Finance Act, 2015 wherein the tax credit facility was extended upto 30.06.2016. Due to extension in time almost all the points raised in show-cause notice as well as order in original by the Addl. CIR stand automatically answered which fact has inadvertently been ignored by this Tribunal thus needing rectification of the mistake floating on the surface of the order and record against the settled law as well as Government Policy to give incentive to the newly established industrial undertaking.
11. It is argued that the addition under section 39(3) which was treated as share holders capital by the Addl. CIR in the tax year 2013 has already been adjudicated upon by this Tribunal on the basis of audited accounts and explanatory note while accepting the version of taxpayer that such amount was an advance for purchase of products of the company . Since this issue has again been taken by the Addl. CIR which needs to be resolved by this Tribunal, therefore, remanding the case to the tax authorities need to be rectified.
3. On the other hand the Learned Depar tmental Representative opposed the application and has contended that there is no mistake in the order and application for rectification is liable to be rejected.
4. We have heard the learned representatives of both the parties, perused the order of this Tribunal dated 02.03.2017, the impugned orders of the lower fora and gone through the relevant record produced before us. As far as issue of rectification is concerned, it has been settled that a mistake of fact as well as law can be rectified to resolve the disputed issue provided the rectification sought is within the period of limitation.
12. The scope of rectification has also been determined by the Hon'ble Karachi High Court in its judgment cited as 2000 PTD 2407 wherein it had been spelt out to eliminat e errors even to the extent of cancellatio n of the whole order , if necessary . The relevant part of the judgment is reproduced as under:- "RECTIFICATION OF MISTAKE ... Jurisdiction ... Scope ... Jurisdiction to rectify mistakes apparent on the face of the record is obligatory ... Once the mistake was pointed out, the authority was under a mandatory obligation to rectify the mistake brought to its knowledge ... Once the mistake, which was apparent on the face of the record, was detected by the Authority, the power to correct the mistake was wider and not confined to only such rectifications which were available and floating on the face of record ... In other words, once the mistake is corrected all consequential orders could be passed ... while looking into mistake apparent on the face of record it was not necessary to look only at the order ... Term "RECORD" contemplated proceedings, evidence and record which were relatable to the order of assessment including applicable law determining the error....... Scope of rectification had been spelt out to eliminate errors even to the extent of cancellation of the whole order, if necessary ... Power of rectification did not authorize investigation or reassessment of evidence ... However, such powers were to be exercised where any mistake was apparent from the record."
13. Regarding the tax credit under section 65(D) we are of the view that it is a settled law with regard to section 65D of the Ordinance where the Honourable Lahore High Court Lahore in its judgment cited as 2013 PTD 1883 has held that: "Tax Credit and "Tax Exemption" worked on opposite sides of the same equation, and were two sides of the same coin, at least when it came to applicability of Section 159 (1) of the Income T ax Ordinance, 2001.
14. It was further held that: "Section 65D of the Income Tax Ordinance, 2001 provided incentives of tax credit to newly established Industrial undertakings including Corporate farming ... Exercise of charging advance tax at the import stage appeared to be unnecessary as the petitioner enjoyed (100) percent tax credit against its tax liability arising from concerned Industrial under taking.." "Tax credit for newly established industrial undertakings is fiscal incentive for boosting the economy and must receive a positive interpretation advancing the legislature's intent"
15. The Hon'ble High Court in this reported decision has held in Para 14 that "It is important to give support to the legislative desire behind sections 65D and 159 of the Ordinance. These .provisions extend fiscal incentives for boosting our economy and must receive progressive interpretation advancing the legislative intent."
16. Therefore, keeping in view the above observation of the Hon'ble High Court the reassessment of tax irrespective of the amount is bound to be offset by the tax credit regime available under section 65-D of the Ordinance. Thus the main issue in the instant applications is to determine the eligibility of the applicant /appellant for 100% tax credit is subject to certain conditions.
17. During the course of argument the main issue for determining the eligibility for 100 (percent) tax credit keeping in view the four conditions as per section 65D of the Ordinance for which the relevant record produced by the appellant amply prove the eligibility of the appellant for 100 (percent) tax credit under section 65D of the Ordinance. There is a force in the arguments of the learned AR of the applicant/appellant that since the extension in time upto 30.06.2016 granted by Finance Act, 2015 adequately addressed the objections raised in show cause notice. The tax credit facility for new industrial under taking which was initially available upto 30.06.2014 and extended upto 30.06.2016 by Finance Act, 2015, the issues raised by the Department became infructuous warranting no further explanation from the taxpayer.
18. The spirit of Section 65D of the Ordinance is to give 100 (percent) tax credit to the new industrial undertaking so as to boost the economy on one hand and encourage investment in the country on the other. The Hon' able Lahore High Court Lahore in a case cited as 2013 PTD 1883 have observed that said provision extended incentives for boosting the economy and must received a progressive interpretation advancing the legislature intent. Therefore, Section 65D of the Income Tax Ordinance, 2001 inserted through Finance Act, 2011 provides 100 (percent) "tax credit" on tax payable on the taxable income arising from newly established industrial undertaking. This benefit under section 65D of the Ordinance is available to the applicant/appellant since he has submitted the requisite record and documents which are necessary for availing the 100 (percent) tax credit under section 65D of the Ordinance for which fishing enquiries on the basis of assumptions as resorted to by the Department is neither warranted under law nor conducive for boosting the economy . The requisite documents which have also been furnished before this Tribunal adequately fulfilled the requirement of section 65D of the Ordinance and inadvertently were not considered by this Tribunal while passing order dated 02.03.2017. Therefore, the facility as per provision of law to be allowed.
19. As regard addition under section 39(3) of the Income Tax Ordinance, 2001 which was treated as share holders capital by the Addl. CIR in both years has already been adjudicated upon in previous years by this Tribunal on the basis of audited accounts and explanatory note while accepting the version of taxpayer that such amount was an advance for purchase of products of the company. We have noted that inadvertently it has been ignored that the same issue has already been decided by this Tribunal in the previous years, therefore, the addition made is deleted. As same issue involved in the years under appeal therefore, on the basis of documents available with this court the same is hereby deleted.
20. As regard addition made under sections 21(c) and 111 of the Income Tax Ordinanc e, 2001, we have found that this issue was also inadvertently not properly considered the record available reveals that additions were made on assumption and presumption basis. All documents produced before this forum has been examined on the basis of which additions made in both years are hereby deleted.
5. The order dated 02.03.2017 in I.T.A. Nos.2010 and 2056/LB/2016 for the tax years 2014 and 2015 of this Tribunal is, therefore, rectified in the above mentioned terms. The rectified order will be deemed to be operative from 2-3-2017. The two applications titled above for rectification are decided in 'the manner referred above.