MIAN ABDUL BASIT , JUDICIAL MEMBER .----These Income Tax Appeals for the Tax Years, 2013 are filed by the appellant/T axpayer against the Order Nos.46 and 47/2013 dated 12.08.2013 passed by learned. CIR (Appeals-I), Islamabad. As common question of law and facts are involved in both the appeals we are, therefore, intend to decide both the appeals through this single order . The grounds of appeals raised by the appellant/taxpayer are as follow:
1. That Deputy Commissioner Inland Revenue WHT Unit-II Regional Tax Office, Islamabad was not justified to hold that tax under section 236-A of the Income Tax Ordinance, 2001 becomes due at the time of auction and time of payment is of no consequences and Commissioner Inland Revenue (Appeals-I) was not justified to confirm the same.
2 Taxes are deducted on payments and collected on receipts, therefore, the Deputy Commissioner Inland Revenue WHT Unit-II, Regional Tax Office, Islamabad was not justified to treat Capital Development Authority as assessee in default for non collection when payments has not been received and Commissioner Inland Revenue (Appeals-1) was not justified to confirm the same.
3. Capital Development Authority since 2009 is collecting tax with installments and accepted by the departments, recovery now o. the time of auction constitutes changes of opinion.
4. The Section specifies "Sale by Auction "therefore, tax is to be collected at the lime of sale. When in accordance with laws of Pakistan sales is concluded. Ownership letters are issued to dibbers on completion of payments and passions is also handed over on completion of payment. Therefore, sale is concluded on receipt of full consideration, and recovery at any time before such date is against the law .
2. The facts gathered from the appeal files are that the appellant is a developmen t authority with the name and style Capital Development Authority Islamaba d (CDA). Capital Development Authority held public auction of commercial Immoveable properties during the period Tax Year, 2013. Information by the department was received form CDA that it auctioned 14 commercial plots at total amount of Rs.5,038,607,740/- and the tax department found that CDA was required to collect advance tax under section 236A at the time of sale by auction at the prescribed rates and deposit the same on the same day of auction but CDA failed to collect advance tax and Capital Value Tax (CvT) on All the properties/ plots on the day of auction. Resultantly , a show-cause notice was issued vide letter WHT (Unit-II)/2013/159 dated 01.06.2013 to CDA. The appellant/taxpayer submitted a reply , which was found unsatisfactory and assessment order under section 161/205 was passed. Being aggrieved by the above treatment taxpayer authority preferred appeals before the CIR (A-I), Islamabad, who upheld the order passed by the asse ssing officer. Being dissatisfied with the impugned finding of L/CIR (A-I), appellant has come up in the instant appeals before this forum on the grounds as cited above.
3. The case was fixed for hearing and on the due date, Mr. Zahid Hussain, ACMA present for taxpayer/appellant, while Ms. Naheed Akhtar Durrani, DR appeared on behest of respondent/Department.
4. The learned AR appearing on behalf of the CDA submits that the L/CIR (A) and the assessing officer as well was erred in law by holding that the total amount of advance tax, as per the provisions of section 236A of the Income Tax Ordinance, 2001, was required to be collected at the time of auction. He submits that advance tax is required to be collected at the time of receipt of payments against the auctioned goods / properties. He argues that the question of collection of tax does not arise when no payment is received by the collecting agent i.e. appellant/taxpayer . In the instant case the appellant collects the tax with each installment of payment received from the person who purchased the goods / property through auction on installment. The L/AR also relays upon a clarification letter dated 25.02.2020 issued by the Federal Board of Revenue to submit that the withholding agent is required to collect tax on each installment and not at the time of auction. He further argues that, vide Finance Act, 2020, the Legislature has added explanation in section 236A for clarificatio n of doubt by virtue of which it has been explained, for the purpose of section 236A, that where a payment is received in installments advance tax is to be collected with each installment., The L/AR submits by relying upon the said explanation added through Finance Act, 2020, that the appellant has committed no legal error while collecting and making payments of advance tax on receipt of each installment by the person who obtained the property / goods on installment through auction. On the other hand the L/DR appearing on behalf of respondent/department contends that the provision of section 236A does not allow the payment of advance tax on installment basis rather it is manifestly clear from the plain reading of the said section that the advance tax is to be collected and paid at the time when sales is completed through auction i.e. the advance tax is required to be collected and paid under section 236A on the day on which the auction was conducted . He also submits that where the legislation intended to collect the advance tax on installment the same would have been specifically and particularly mentioned in the section of the statute. The Learned DR for strengthening his argument, referred section 234 of the Ordinance, 2001, which allows to collect and 'pay the advance tax on motor vehicles in installments, whereas no such benefit by virtue of section 236A of the Ordinance, 2001 has been extended for the goods / properties sold through auction on installments. He therefore, submits that the orders of L/CIR (A) and the assessing officer are qualified to be a legal and lawful order in terms of section 236A of the Ordinance, 2001 and requires to be confirmed by this Tribunal.
5. We have heard both the learned representative, perused the statutory provisio ns of the Ordinance, 2001 and the explanation inserted vide the Finance Act, 2020 in section 236A. We, in order to decide the present controversy , are here by framing the issue that "whether the total amount of advance tax as per section 236A in case of auction on installment of goods / property is required to be collected at the time of auction or with each installment? In order to answer the issue it is appropriate to have a look at section 236A as was stood at the relevant tax year i.e. 2013 which is for ease of reference.is reproduced as under: 236A. Advance tax at the time of sale by auction.----(1) Any person making sale by public auction or auction by a tender , of any property or goods (including property or goods confiscated or attached) either belonging to or not belonging to the Government, local Government, any authority , a company , a foreign association declared to be a company under sub-clause (vi) of clause (b) of subsection (2) of section 80, or a foreign contractor or a consultant or a consortium or Collector of Customs or Commissioner of Inland Revenue or any other authority , shall collect advance tax, computed on the basis of sale price of such property and at the rate specified in Division VIII of Part IV of the First Schedule, from the person to whom such property or goods are being sold.
(2) The credit for the tax collected under subsection (1) in that tax year shall, subject to the provisions of section 147, be given in computing the tax payable by the person purchasing such property in the relevant tax year or in the case of a taxpayer to whom section 98-B or section 195 applies, the tax year, in which the "said date" as referred to in that section, falls or whichever is later .
Explanation.---For the purposes of this section, sale of any property includes the awarding of any lease to any person, including a lease of the right to collect tolls, fees or other levies, by whatever name called."
From the perusal of 236A reveals that admittedly it is not mention in the section that the advance is to be collected with each installment to be paid but at the same time it is also not mentioned in the section 236A of the Ordinance, 2001 that the advance tax is to be collected and paid at the time on the day of auction. We are of the considered opinion that as per the scheme of the Ordinance, 2001 for the withholding and collection of advance tax the same would be done at the time of actual payment made or received as the case may be. We do not find any provision in section 236A whereby the authority / person receiving the payment will mandatorily be required to collect tax at the time of auction if the auction is made on installment basis. We have also gone through the letter of clarification issued by the FBR vide C. No. 4(23)IT -Budget/2020 dated 25-.02.2020 reproduced as under: "Government of Pakistan Revenue Division Federal Board of Revenue C.No.4(23),IT - Budget/2020 Islamabad the 25th February , 2020 To, The Financial Advisor / Member Capital Development Authority , Islamabad.
TAX ORDNANCE, 2001 ON SALE OF IMMOV ABLE PROPER TY ON INST ALLMENT BASIS.
I am directed to refer to your letter No. CDA/FW/C-I/2020/1047 dated 18.02.2020 and to state that a person making sale of public auction or auction by tender of any immovable property is required to collect tax under section 236A of the Income Tax Ordinance, 2001 compu ted as per rate specified in Division VIII of Part VI of First Schedule on the basis of sale price of the immovable property at the time of sale.
2. In instances where payment is received in installments before completion of sale as envisaged in section 54 of the Transfer of Property Act, 1882, the withholding agent shall collect tax by apply the applicable rate on each installment.
3. However , it may be ensured that in no case shall the title / possession of the immovable property be transferred to the purchaser before full payment of tax computed under section 236A. "
(Dr. Muhammad Nauman Anees)
Second Secretary (CM), IR Policy"
From the perusal of the said clarification letter it is clear that withholding agent/collecting agent is required to collect the tax as per the rate applicable on each installment the corollary of which leads to the conclusion that the advance tax are to be collected and paid on each installment. The legal development made in section 236A of the Ordinance, 2001 through Finance Act, 2020, by inserting an explanation to subsection (1) of section 236A, also clarifies the position that if the payment of auction money is received in installment the advance tax will be collected with each installment. The explanation added to subsection (1) of section 236A is reproduced as under: "Explanation.---For the removal of doubt it is clarified for the purpose of this section that--
(a) the expression "sale by public auction or auction by a tender" include renewal of a licenses previously sold by public auction or auction by a tender; and
(b) Where payment is received in installments, advance tax is to be collected with each installment." (Underline ours)
Now the question arises whether this explanation can be given retrospective effect or not? We are of the opinion that any explanation clarificatory and directory in nature can be given retrospective effect not only this but to our mind such explanation is deemed to have always been a part of the section to which it is added since the time of insertion of the section. For our view we have respect fully got guidance from the observations rendered by the august Honorable Supreme Court of Pakistan in a case reported as Commissioner of Income Tax, Central Zone v. Karachi Asbestos Cements Industries Limited, Karachi ( 1993 SCMR 1276 ). "it was held that an Act of Parliament made to correct an error by omission in a former statute of the same session, has relation back to the time when the first Act was passed. Even when mistakes in legislative enactments are corrected by a later amending Act, the amending Act should be read as part of the Act which it was intended to correct. Though the Act is not called a declaratory or expla natory Act if from the words used in the Act the Court can come to the conclusion that it is a declaratory or an explanatory Act retrospective effect will be given to such Act." Hence from the judgment of the august Supreme Court of Pakistan it is obvious that in case where there is a doubt about true interpretation of a provision, the same may be clarified by introducing amendments in the law which may also be undertaken by adding an explanation. Such explanation is for all intents and purposes clarificatory and declaratory in -nature and such clarificatory/declaratory explanation lawfully inserted into a statute may operate retrospectively . In holding this view, we are fortified by the Judgments reporte d as Messrs Dreamland Cinema, Multan v. Commissioner of Income Tax, Lahore (PLD 1977 Lahore 292), Commissioner of Income Tax Zone-B, Lahore v. Sardar Muhammad (2001 PTD 2877 ), Mamukanjan Cotton Factory v. The Punjab Province and others (PLD 1975 SC 50), Muhammad Yusuf v. Chief Settlement and Rehabilitation Commissioner , Pakistan Lahore and another (PLD 1968 SC 101), Imtiaz Ahmad Lali v. Ghulam Muhammad Lali (PLD 2007 SC 369) and Yar Muhammad and 4 others v. Secretary Finance Deportment, Government of Punjab and others (2011 SCMR 1537 ).
6. We have also noted that while adding the explanation the Legislature has used the words "for the removal of doubt" which unequivocally demonstrates that there was a doubt regarding application of section 236A qua collection of advance tax in case of auction made on installments which has, now, been clarified by inserting the explanation in this very section. It is also a trite law that where there is a doubt in interpretation of any statutory provision the same is to be resolved in favour of taxpayer/assesse e as is held by the Honorable Lahore High Court in a judgment reported as Messrs Rijaz (Pvt.) Limited v . The W ealth T ax Of ficer Circle III, Lahore ( 1996 PTD 489 ) in the following words.
"According to the well-accepted principles of interpretation the doubt has to be resolved in favour of the citizen. In these circumstances, the law makers could clarify its intention by adding an explanation which cannot be legitimately object to".
This view is also fortified by the judgment s reported as 2006 PTD 1428 , (AIR 1963 AU 153, PLD 1972 Kar. 210, PLD 1975 Lah. 158, PLD 1976 Kar. 673, PLD 1979 Kar. 545, 1990 PTD 62, 1990 PTD 385, 1990 PTD 886). The Honorable Supreme Court of Pakistan in a case reported as Messrs Mehran Associates Limited v. The Commissioner of Income-T ax, Karachi (1993 SCMR 274) has held that "The cardinal principles of interpretation of a fiscal statute seem to be that all the charge upon the subject are to be imposed by clear and unambiguous words. There is no room for any intendment nor there is any equity or presumption as to a tax. A fiscal provision of a statute is to be construed liberally in favour of the taxpayer and in case of any substantial doubt, the same is to be resolved in favour of the citizen."
7. The provision of section 236A as stood in the year 2013 was silent on how to collect advance tax in the case of receipt of payment in installments, it is therefore the explanation has been added by the legislature to remove the doubt and to clarify that in the case of auction . of property / goods on installments the advance tax will be collected with each installment. And even in the present case, the Explanation, does not create or, add anything to the main section but merely illustrates as to what process may be adopted for collection of advance tax against the property / goods auctioned in installments. The amendment brought about by adding expla nation to subsection (1) of section 236A is, however , of explanatory type stated to have been introduced 'for removal of doubt' and the declaratory / explanatory amendment, not disturbing the substantive intent of the provision; clarifying the scope of the , provision, are to be construed as intended to lay down a rule for future cases and to act retrospectively . A declaratory amendment in existing statutory provision may be defined as an act of legislature to remove doubts present in the existing provision and such amendments are usefully held to be retrospective. The Legislature, as has been evolved through series of judgments, has the powers to clarify the already existing statutory provision by introducing amendments in law even by adding an explanation to existing provision of a statute. Reliance in this respect is placed on the judgments reported as Kohinoor Sugar Mills v. Federation of Pakistan and others (2018 PTD 821), The Commissioner Income Tax Lahore v. Messrs Chaudhary Dairies Limited (2019 PTD 452) Collective of Customs, Sambrial. v. Custom, Excise and Sales Tax Appellate. Tribunal (2002 MLD 127) and Imtiaz Ahmed Lali v. Ghulam Muhammad Lali (PLD 2007 SC 369 ).
8. The other key point of the case is that the honorable higher judicial forum of the country has candidly established that any beneficial and remedial amendment in a law / statute may be given retrospective effect. The explanation (b) added to the subsection (1) of section 236A is not only explanatory and clarificatory / directory in g nature' but is also a remedial / beneficial amendment because before the insertion of explanation there was no clarity as how to collect advance tax for the goods / properties auctioned in installments and through explanation it has been facilitated to collect advance tax with each installment. We are, therefore, of the view that there is no legal hindrance in giving retrospective effect to the said beneficial and curative explanation (b) added to subsection (1) of section 236A of the Ordinance, 2001. The. Honorable Supr eme Court of Pakistan in a case reported as Commissioner of Income Tax v. Shahnawaz Ltd. and others ( 1993 SCMR 73 ) has held that; "As explained in Crawford's "Statutory Construction" a statute relating to remedial law may properly , in several instances, be given retrospective operation and we are of the opinion that as the amendment in the instant case was introduced to redress an injury which in the words of Circular No.6 of 1973 (incom e Tax) issued on 7th July, 1973 by the Central Board of Revenue itself was "designed to soften the law in favour of tax-payers who could previously be charged to additional tax up to the date of assessment even though the finalisation of assessment was delayed due to no fault of theirs." This was a proper case in which retrospective operation, to the extent the High Court gave to it, could be given to the amending law"
This view is also fortified by the judgments reported as Anoud Power Generation Limited and others v. Federation of Pakistan and others (PLD 2001 SC 340) and Messrs Army Welfare Sugar Mills Limited and others v.
Federation of Pakistan ( 1992 SCMR 1652 ).
9. In view of foregoing circumstances and events, it is concluded that where the payment is received in installments against the auctioned goods / properties the advance tax is to be collected with each installment at the applicable rate of tax at the time of payment of installment. It is, however , clarified that the tax department should make sure that the appellant / taxpayer had collected advance tax with each installment and then deposited the same to government exchequer . ' Hence, both the appeals of the appellant department/ Taxpayer are accepted in the manner and to the extent as discussed above. These the appeals are here by disposed of.
10. This order consist of ten (10) pages and each page bears my signature.