SHAKEEL AHMAD, J.- This reference under section 133 of the Income Tax Ordinance, 2001, has been filed for setting aside the order dated 06.08.2018, passed by the Appellate Tribunal Inland Revenue Islamabad, communicated on 03.12.2018.
2. The facts of the case, in brief, are that the respondent No.1 as Government Contractor, filed returns of income for tax years 2011/2012 and 2013, with claims of refund for the said period on the ground that contract work was done through FWO/National Highway Authority in the Northern areas and Torghar District of Khyber Pakhtunkhwa during the period relevant to tax years 2011 to 2013. The refund applications dated 7-7-2014 were considered by the Inland Revenue Officer and the verified refund claimed for contracts work completed in Northern areas was issued while the remaining refund of Rs.3,742,405/- (in ground at serial No.1, the respondent No.1 noted the said refund as Rs.1,618,458/-) was disallowed on the ground that the said refund/tax deduction related to contracts work completed in the area of Torghar District of Khyber Pakhtunkhwa to which Income Tax Ordinance, 2001 is attracted. The respondent No.1 felt aggrieved by the rejection of the refund claim went in appeal before Commissioner Inland Revenue (Appeals), which was declined on 13.04.2015. Dis satisfied with the same, the respondent NO.1 filed second appeal before the Appellate Tribunal Inland Revenue, Headquarters Bench, Islamabad / respondent No.2. After providing an opportunity of hearing to the learned counsel for the parties, the learned Chairman agreed with the contentions of the learned counsel for the respondent No.1, set aside the impugned order dated 13.04.2015, passed by the Commissioner Inland Revenue, however, the learned Member disagreed with the findings and observations rendered by the learned Chairman of the Tribunal and wrote a dissenting note vide order dated 06.08.2018. The matter was referred to the Judicial Member, who agreed with the view expressed by the learned Chairman of the Tribunal Inland Revenue. Consequently, the income tax withheld on contracts work done in District Torghar was directed to be refunded to the respondent No.1 vide order dated 28.11.2018. Being aggrieved of the same, the appellant / Commissioner, Inland Revenue has filed this reference.
3. The learned counsel representing the appellant by referring the provisions of Article 246 and 247(6) of the Constitution of Islamic Republic of Pakistan, 1973 argued that District Torghar, formerly known as Kala Dhaka, was a Tribal area adjoining District Mansehra. However, in exercise of powers conferred by clause (6) of Article 247 of the Constitution upon the President of Pakistan, it was made a District vide SRO 11/(1)/011 dated 10.02.2011, therefore, all laws, including Income Tax Ordinance, 2001, enforced in the settled area of KPK Province, automatically became applicable to District Torghar (Kala Dhaka) formerly a Tribal area adjoining Mansehra District; He next argued that after cessation of Torghar (Kala Dhaka) to be a Tribal area, the laws applicable to the settled area does not need extension as required by Article 247(3) of the Constitution. He lastly argued that the impugned order passed by the learned Appellate Tribunal is based on misinterpretation of law, therefore, the same is not sustainable and prayed for setting aside the same.
4. Conversely, learned counsel representing the respondent (M/S Tahir and Brothers Oghi Mansehra), contended that despite cessation of Torghar (Kala Dhaka) from the tribal area of adjoining District Mansehra, the Income Tax Ordinance, 2001, requires extension in terms of Article 247(3) of the Constitution, however, no such notification was issued to make it applicable to District Torghar, therefore, demand of the appellant under the said law for the work done in that area is illegal and without lawful authority and went on to say that the impugned order passed by the learned Appellate Tribunal Inland Revenue, Islamabad, being based on correct interpretation of relevant law, needs no interference and prayed for dismissal of the reference.
5. We have heard submissions of the learned counsel for the parties at length and examined relevant provisions of the Constitution and documents appended with the reference with their able assistance.
6. The key question for determination before us is that as to whether after cessation of District Torghar formerly known as Kala Dhaka, a tribal area adjoining Mansehra district vide SRO No.118(1)/2011 dated 10.02.2011, all laws including Income Tax Ordinance, 2001, enforced in the country/settled area, automatically became applicable to District Torghar or not?
Before adverting to the issue, we deem it appropriate to reproduce Article 246, 247 and 265 of the Constitution, as under:- "246. In the Constitution,-- (a) "Tribal Areas" means the areas in Pakistan which, immediately before the commencing day, were Tribal Areas, and includes-- (i) the Tribal Areas of Balochistan and the Khyber Pakhtunkhwa Province (ii) the former States of Amb, Chitral, Dir and Swat;
(b) "Provincially Administered Tribal Areas" means-- the districts of Chitral, Dir and Swat (which includes Kalam) the Tribal Area in Kohistan district, Malakand Protected Area, the Tribal Area adjoining Mansehra district and the former State of Amb; and Zhob district, Loralai district (excluding Duki Tehsil), Dalbandin Tehsil of Chagai district and Marri and Bugti Tribal territories of Sibi district;
(c) "Federally Administered Tribal Areas" includes -- Tribal Areas, adjoining Peshawar district; Tribal Areas adjoining Kohat district; Tribal Areas adjoining Bannu district; Tribal Areas adjoining Dera Ismail Khan district; (iva) Tribal Areas adjoining Tank district; Bajaur Agency; (va) Orakzai Agency; Mohmand Agency; Khyber Agency; Kurram Agency; North Waziristan Agency; and South Waziristan Agency; and
(iiia) Tribal Areas adjoining Lakki Marwat district;
(d) On the commencement of the Constitution (Twenty-fifth Amendment) Act, 2018, the areas mentioned in--
(i) paragraph (b),-- in sub-paragraph (i), shall stand merged in the Province of Khyber Pakhtunkhwa; and in sub-paragraph (ii), shall stand merged in the Province of Balochistan; and (ii) paragraph (c), shall stand merged in the Province of Khyber Pakhtunkhwa."
"247- (1) Subject to the Constitution, the executive authority of the Federation shall extend to the Federally Administered Tribal Areas, and the executive authority of a Province shall extend to the Provincially Administered Tribal Areas therein.
2. The President may, from time to time, give such directions to the Governor of a Province relating to the whole or any part of a Tribal Area within the Province as he may deem necessary, and the Governor shall, in the exercise of his functions under this Article, comply with such directions.
3. No Act of Majlis-e-Shoora (Parliament) shall apply to any Federally Administered Tribal Area or to any part thereof, unless the President so directs, and no Act of Majlis-e -Shoora (Parliament) or a Provincial Assembly shall apply to a Provincially Administered Tribal Area, or to any part thereof, unless the Governor of the Province in which the Tribal Area is situate, with the approval of the President, so directs; and in giving such a direction with respect to any law, the President or, as the case may be, the Governor, may direct that the law shall, in its application to a Tribal Area, or to a specified part thereof, have effect subject to such exceptions and modifications as may be specified in the direction.
4. Notwithstanding anything contained in the Constitution, the President may, with respect to any matter within the legislative competence of Majlis-e-Shoora (Parliament), and the Governor of a Province, with the prior approval of the President, may, with respect to any matter within the legislative competence of the Provincial Assembly make regulations for the peace and good government of a Provincially Administered Tribal Area or any part thereof, situated in the Province.
5. Notwithstanding anything contained in the Constitution, the President may, with respect to any matter, make regulations for the peace and good Government of a Federally Administered Tribal Area or any part thereof.
6. The President may, at any time, by Order, direct that the whole or any part of a Tribal Area shall cease to be Tribal Area, and such Order may contain such incidental and consequential provisions as appear to the President to be necessary and proper: Provided that before making any Order under this clause, the President shall ascertain, in such manner as he considers appropriate, the views of the people of the Tribal Area concerned, as represented in tribal jirga.
7. Neither the Supreme Court nor a High Court shall exercise any jurisdiction under the Constitution in relation to a Tribal Area, unless Majlis-e-Shoora (Parliament) by law otherwise provides: Provided that nothing in this clause shall affect the jurisdiction which the Supreme Court or a High Court exercised in relation to a Tribal Area immediately before the commencing day.
'265. (1) This Constitution shall be known as the Constitution of the Islamic Republic of Pakistan.
(2) Subject to clauses (3) and (4), the Constitution shall come into force on the fourteenth day of August, one thousand nine hundred and seventy-three or on such earlier day as the President may, by notification in the official Gazette, appoint, in the Constitution referred to as the "commencing day".
(3) The Constitution shall, to the extent necessary--
(a) for the constitution of the first Senate;
(b) for the first meeting of a House or a joint sitting to be held;
(3) for the election of the President and the Prime Minister to be held ; and
(d) to enable any other thing to be done which, for the purposes of the Constitution, it is necessary to do before the commencing day, come into force upon the enactment of the Constitution, but the person elected as President or Prime Minister shall not enter upon his office before the commencing day.
(4) Whereby the Constitution a power is conferred to make rules or to issue orders with respect to the enforcement of any provision thereof, or with respect to the establishment of any court or office, or the appointment of any Judge or officer there-under, or with respect to the person by whom, or the time when, or the place where, or the manner in which, anything is to be done under any such provision, then that power may be exercised at any time between the enactment of the Constitution and its commencement.'
It will also be advantageous to reproduce S.R.O NO.118(1)/2011 dated 10.02.2011 vide which District Torghar formerly known as Kala Dhaka, a Tribal Area adjoining Mansehra district was ceased to be a tribal area, for the sake of convenience and ready reference as follows: "Government of Pakistan State and Frontier Regions Division O R D E R Islamabad, the 10th February, 2011 S.R.O.118(I)/2011-In exercise of powers conferred by clause (6) of Article 247 of the Constitution of Islamic Republic of Pakistan, the President, after ascertaining he views of the people of the Tribal area adjoining the Mansehra District as represented in the Tribal Jirga, is pleased to direct that the aforesaid Tribal Area shall cease to be a Tribal Area with immediate effect.
Asif Ali Zardari President."
8. The word "cease" as per Black's Law Dictionary Eighth Edition means, To stop, forfeit, suspend or bring to an end, To become extinct, To pass away.
9. No doubt, the commencing day of the Constitution of Islamic Republic of Pakistan, 1973 as given in Article 265 is 14.08.1973 and the tribal areas which find mentioned in Article 246 of the Constitution, and were tribal areas before 14.8.1973 shall continue to enjoy the status of tribal area, and the Federal or Provincial laws were not applicable to the inhabitants of tribal areas unless in case of former the President and in case of the latter the Governor with the approval of the President so directs as envisaged in clause (3) of Article 247 of the Constitution. However, one should not be lost sight of clause (6) of Article 247 of the Constitution, whereunder, the President of Pakistan has been empowered to abolish forfeit or change the status of tribal area. Thus, keeping in mind the definition of word 'cease' or 'cessation' as provided by Black's Law Dictionary, we came to the conclusion that previous status of District Torghar formerly known as Kala Dhaka a tribal area of adjoining District Mansehra, has come to an end, after issuance of SRO (referred to above) by the President of Pakistan as envisaged in clause (6) of Article 247 of the Constitution. It has merged into settled area and like residents of settled area, the inhabitants of merged area have entered into tax regime and all laws applicable to settled area including Income Tax Ordinance, 2001 has become applicable to them, automatically, and the special status given to it by clause (3) of Article 247 of the Constitution is no more attracted to it, after ceasing to be a tribal area.
9. For the reasons mentioned above, this reference filed under section 133 of Income Tax Ordinance, 2001 is answered in affirmative. Consequently, the impugned order dated 06.08.2018 and 28.11.2018, passed by the Appellate Tribunal Inland Revenue, Islamabad is laid to eternal peace and the respondent is held not entitled to claim refund amounting to Rs.3,742,405/- for the work done in District Torghar of Khyber Pakhtunkhwa.