MUHAMMAD ZAHOORUL HAQ, J. The following 2 questions are raised by the applicant:--- "(1) Whether having regard to the facts and circumstances of the case, the Income-tax Appellate Tribunal was justified in disallowing the sum of Rs. 36,295 as business expenditure being the amount paid by the applicant for the expenses of air journeys and stay in Pakistan of the expatriate technicians of Ciba Limited, Basel.
(ii) Whether having regard to the facts and circumstances of the case, the Income-tax Appellate Tribunal was justified in disallowing the sum of Rs.36,516, as business expenditure being the amount of tax paid by the Company on behalf of Mr. H. Leuenberger, who was an expatriate sent to Pakistan by Ciba Limited, Basel, Switzerland, and who had come to Pakistan to recognize the applicant's factory in Pakistan."
2. The relevant facts are that Demecron of the value of Rs. 5,14,80,000, was permitted to be imported in Pakistan through Ciba Ltd. Basel Switzerland through their Agents Ciba Lab. Pakistan Ltd. Company in Switzerland was allowed the import of Basmati Rice and other commodities from Pakistan. The applicant was paid 4% commission by their Swiss parent Company and the applicant in turn had appointed Messrs Intrafin (Pakistan) Limited and Messrs Ali Gohar & Company Pakistan Limited as their agents for this purpose and had agreed to pay a commission to each one of them out of their 4 % commission.
3. Certain employees of the Swiss Company had come to Pakistan in connection with the import of Demecron, pertained to the business of Swiss Company, and the applicant spent a sum of Rs.
36,285, on the stay of those: expatriates and claimed it as a business expenses. The 1. T. O. Did not allow that expenses and Appellate Tribunal also agreed with the I. T. O. And observed that it did not find any evidence that there was an agreement between the parent Company (Swiss Company) and the Company in Pakistan that the expenses on the visit of expatriates will be borne by the Pakistan Company.
4. Mr. Sharif has contended that inference was sound to be drawn by the I. T. O. And Appellate Tribunal that there expenses did pertain to the business of the applicant Company, as the expenses were incurred in respect of its own business. This applicant Company was to get 4 % commission out of the import of Demecron, and therefore, the visit of the Swiss Expatriate was as much for the purposes of business of the applicant Company as well as the Parents Company. Mr. Shaikh Haider for the Department submitted that it was a finding of fact and hence it was not within the jurisdiction of High Court to interfere with that. He relied upon 1982 PTD 339 where it was observed that it was for the Tribunal to find facts and for the High Court and Supreme Court to lay down law applicable to the facts found.
5. We agree that the applicant has not been able to substantiate that; this was an expense for the business of the Applicant Company solely, inasmuch as that it was in the interest of both Pakistan Company as well as the Parents Company that Demecron should be imported properly in Pakistan and therefore, the Parents Company was as much responsible for the expenses of the expatriate as the applicant. In fact the interest and stakes of Parents Company were for higher than that of the Applicant Company and, therefore. The liability of the Company in respect of these expenses could be established only upon production of an agreement between Applicant Company and the Parents Company in this behalf. We are conscious that the agreement could be in the form of correspondence between the two companies but even that has not been done and inference is being drawn by the Applicant Company that since they were getting 4 % commission, therefore, they were bound to pay the expenses of the expatriate. We do not find any justification in that inference and we are of the view that some sort of evidence was necessary to establish the contractual liability of the Company to pay the expenses of the expatriate.
6. Another expenses of Rs. 36,516 was disallowed. The applicant had paid that amount as Income- tax liability of Mr. H. Leuenberger as tax on the salary which that gentleman received for assessm ent year 1964-65. B The basis of rejection was that tax was deductible at source in the previous year and as such could not be allowed as deduction for assessment of the appellant for year under consideration. Mr. Sharif has not been able to show that this was not a correct position.
Another argument relied upon by the Tribunal was that the concerned gentleman was an employee of the Head Office in Basel, and therefore, die taxes should be borne by the Swim Company. The finding was that this employee was paid by the Head Office and that finding has not beep challenged to be either arbitrary or unfounded if the salary is paid by the Head Office then one cannot understand the reason as to why tax on that salary should be paid by the Company in Pakistan. If there had been an agreement to that effect entered into by the Parents Company and the Pakistan Company then of course it would Lao been a difficult position and in that case possibly the applicant could claim that they were liable for the Income-tax liabilities of the gentleman concerned, particularly in view of the fact that the Tribunal has held that the gentleman concerned was in Pakistan on a legitimate business of the Company.
The answer to the question is, therefore, in affirmative. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.