AJMAL MIAN, J. -The above two references which relate to the assess--ment years 1969-70 and 1970-71 raise following question of law: - Whether in the facts and circumstances of the case the Tribunal was justified in holding that the applicant Company was only entitled to a tax-holiday for two years as against the claim of the applicant --Company that it was entitled to a tax-holiday for six years.
The brief facts leading to the filing of the above references are that the applicant/assessee was set up on 4th August, 1966. The Central Board of Revenue by S. R. O. 1137 (K)/66, dated 11-8-1966 in exercise of the powers conferred by sub-clause (v) of clause (b) of subsection (4-A) of section 15- BB of the Income-tax Act, 1922 approved the applicant/asses see as an industrial undertaking in respect of its manufacture of beverages (7-Up) in its unit at Islamabad for the purpose of exemption from the tax under the said section. It may be advantageous to reproduce hereinbelow the above noti--fication, which reads as follows :- "In exercise of the powers conferred by sub-clause (r) of clause (b) of subsection (44) of section 15-BB of the Income-tax Act, 1922 (XI of 1922), the Central Board of Revenue is pleased to approve Messrs International Beverages Limited, Karachi, as an Industrial under--taking in respect of its manufacture of beverages (7-Up) in its unit at Islamabad for purpose of exemption from the tax under the said section. This exemption is on the basis of information supplied regarding use of raw material produced in Pakistan and is subject to the conditions being fulfilled as are laid down in sub-clause (iv) of clause (b) of subsection (4-A) of section 15-BB of the Income-tax Act.--- It further seems that the above notification was followed by a letter, dated 8th November, 1966 from the Deputy Director of Inspection (Taxes) of the Central Board of Revenue with reference to the applicant assessee's application for tax exemption. It may be pertinent to reproduce the above letter, which reads as follows :- "From Abdul Aziz Khalid, P. T. S., Deputy Director of Inspection (Taxes).
Central Board of Revenue, Karachi.
To The Managing Director, International Beverages Limited, Bank House No. 3, Habib Square, Karachi-2.
Subject:Tax-holiday-section 15-BB (4-A) of the Income-tax Act--Messrs International Beverages Limited, Karachi-unit of the Company at Islamabad for beverages.
I am directed to invite a reference to your application No. 27-3-1965 and the subsequent correspondence on the above subject and say that the industrial undertaking has been approved in respect of its manufacture of beverages (7-Up) in its unit at Industrial Area, Islamabad under section 15-BB (4-A) of the Income-tax and a notification is being published in the official Gazette.
This approval is on the basis of informa--tion supplied regarding the use of raw materials produced in Pakistan and is subject to compliance of other statutory conditions.
(Sd.)
(Abdul Aziz Khalid) P. T. S., Deputy Director of Inspection (Taxes).
1. Copy forwarded to the Commissioner of Income-tax Karachi (East), Karachi with reference to his letter No. Jud. 84 (104)/65/715, dated the 25-9-1965. The company has been approved under section 15-BB (4-A) of the Income-tax Act to respect of its above unit, i.e. For the reduced period. An undertaking has been given that separate accounts would be maintained for each industrial undertaking in respect of which tax-holiday has been allowed.
2. The company has further intimated that value of imported raw materials to be used in the industrial undertaking would not exceed 21% of the value of total raw-materials consumed. The exemption allowed is subject to this condition.
This information may be communicated to the Income-tax Officer concerned."
It seems that the applicant/assessee was assessed on the assumption that it was allowed tax- holiday for only two years. However in the assessment year 1969-70 it was contended by the applicant/assessee that it was entitled to tax-holiday of six years for its unit situated in Islamabad which conten--tion was rejected by the Income-tax Officer as well as by the learned Income-- tax Appellate Tribunal by its order, dated 23-i0-1972. The applicant/assessee has, therefore, filed the above two references and sought the opinion of this Court on the question framed.
2. In support of the above references Mr. Khalid Anwar learned counsel for the applicant assessee has urged as follows:-
(i) That the above letter, dated 8th November, 1966 quoted herein above cannot reduce the tax- holiday period of six years to two years.
(ii) That the learned Income-tax Appellate Tribunal erred in holding that the best competent authority to decide the question whether the applicant assessee was entitled to two years or six years tax-holiday is the Board of Revenue though it was the function of the Tribunal to place proper construction on the relevant notification.
(iii) That on the basis of the relevant provision and the notification, the applicant/assessee was entitled to tax-holiday of six years.
On the other hand Mr. Shaikh Haider learned counsel for the respondent has urged as follows :-
(i) That since the applicant/assessee was granted tax holiday specifically for a reduced period, it is not, entitled to tax-holiday for a longer period.
(ii) That upto the year 1969-70 the applicant/assessee accepted the position that it was granted tax-holiday of two years and, therefore, it amounted to waiver.
(iii) That on the basis of the relevant provision of the Income-tax Act and the notification, the applicant/assessee was entitled to two years tax-holiday.
3. Before dealing with the above contentions of the learned counsel for the parties, it may be pertinent to refer subsection (4-A) (a) of sec--tion 15-BB of the Income-tax Act, 1922 which reads as follows :- "(4-A) (a) Subject to the provisions of this Act the income, profits and gains of an industrial undertaking set up in Pakistan between the first day of July, 1965 and the thirtieth day of June, 1970 (both dates inclusive), shall be exempt from the income-tax and super tax payable under this Act for a period of two years beginning with month in which the undertaking is set up or the commercial production is com--menced, whichever is later: Provided that in the case of an Industrial undertaking set up in such areas as may be specified in this behalf by the Central Government, by notification in the official Gazette, this subsection shall have effect as if for the words `two years' the words "four and six years" were substituted Provided further that in case of any industrial undertaking or class of such undertaking set up the Central Government may, by notifica--tion in the official Gazette, exempt without reference to the areas specified under first proviso, the income, profits and gains of such industrial undertaking or class of undertakings from the income-tax payable under this Act for a period not exceeding six years beginning with the month in which the undertaking is set up or commercial production is commenced, whichever is later."
A perusal of the above-quoted subsection indicates that a tax-holiday for a period of two years to industrial undertakings set up in Pakistan between list day of July, 1965 and 30th June, 1970 (both dates inclusive) was granted which period was to be computed from the month in which the undertaking was set up or the commercial production had commenced whichever was later.
However, the first proviso to the above subsection provided that in case of an industrial undertaking set up in such areas as allay be specified in this behalf by the Central Government by a notification in the official Gazette as if for the words "two years" the words "four years and six years" were substituted. The second proviso to the above subsection contemplated the granting of exemption from the payment of tax for a period of not exceeding six years to any industrial undertaking or class of such undertaking as may be notified by the Central Government without reference to any particular area.
4. In the instant case as observed hereinabove the applicant/assessee unit in Islamabad was set up on 4-8-1966 and, therefore, ordinarily the applicant/assessee would be entitled to a tax-holiday of two years as provid--ed in the above-quoted subsection (4-A) (a) unless the applicant/ can show that the Central Government either under proviso 1 or under proviso 2 to the above subsection has provided a period longer than two years. We are inclined try agree with Mr. Khalid Anwar that a letter from the Deputy Director of Inspection (Taxes) could not have reduced the period of tax-holiday if it was under the section or under a notification a longer period was provided. We are also inclined to agree with him that the jurisdiction to interpret a particular provision of enactment or a notification is within the competency of a Tribunal before which it is canvassed.' However, the basic question in the present two references is, whether on the basis of subsection (4-A) (a) of section 15-BB or on the basis of any notification, it can be held that the applicant assessee was entitled to tax-holiday for a period longer than two years as provided in subsection (4-A) (a). The above S. R. O., dated 11-8-1966 does not provide any period of tax exemption and therefore, ordinarily the applicant/assessee would be entitled to a period of two years as provided in subsection (4-A) (a) unless there is a notification either under proviso 1 or proviso 2. Mr. Khalid Anwar learned counsel for the applicant/assessee has relied upon S.R.O. 153 (K)/68 dated 28-1-1968 (Annexure `C' to the petition) which provided tax-holiday period of four years and six years, It may be advantageous to reproduce herein--below the above notification, which reads as follows:- NOTIFICATIONS Income-tax Act, 1922 (IX of 1922)
(Specification of areas in which exemption under section 15-BB is available).
MINISTRY OF FINANCE S. R. O. 153 (K)/68, dated 23-1-I968. -In exercise of the powers con--ferred by subsection (4-A) of section 15-BB of the Income-tax, 1922 (XI of 1922), the Central Government is pleased to specify hereunder the areas in which the exemption under the said section shall be available for a period of four and six years respectively: -
1. Area eligible for the tax exemption for four years
2. Area eligible for the tax exemption for six years.(1) The cities of Dacca, Chittagong and Khulna and the areas within radius of ten miles of the municipal limit of these cities.
(2) The whole of West Pakistan excluding-
(a) the areas referred to in item 2 (2) below ;
(b) the Tehsils of Nowshera, Mardan, Rawalpindi, Jhelum, Sialkot, Gujranwala, Lahore, Lyallpur and Multan and the Talukas of Sukkur and Hyderabad ; and
(c) Karachi
(1) The while of East Pakistan excluding the areas referred to in item 1
(1) above.
(2) The arear of West Pakistan lying to the-west of the line represented by the river Jhelum to the point of its confluence with the Chenab, the river Chenab from this point to the point of its confluences with the Panjnad, the Panjnad to the point of its confluence with the Indus and river Indus thereafter; but excluding the Tehsils of Peshawar, Nowshera, Mardan and Rawalpindi and also excluding Karachi.
This notification would have effect in respect of industrial undertakings set up on or after 1st July, 1965."
Mr. Khalid Anwar has relied upon particularly on sub-para. 2(2) of the above notification. It has been vehemently urged by him that Islam--abad area falls within the boundaries given in the above-quoted sub-para. (21 and that though geographically Islamabad could be said to be part of Rawalpindi Tehsil but for the purpose of tax exemption it is a separate area which cannot be construed as part of Rawalpindi Tehsil. In furtherance of his above argument he has referred to Article 211 (1) (2) and (7) of the late Constitution of Pakistan, 1962, section 2 (e) (p) and section 3 of the Capital Development Authority Ordinance, 1960 (Ordinance XXIII of 1960) and section 2 of the Capital of the Republic (Determination) Ordinance, 11963 (Ordinance VI of 1963).
It may be observed that sub-Article (I) of Article 211 of the late Constitution of 1962 provided that the Capital of the Republic shall be Islamabad situated in the District of Rawalpindi in the Province of West Pakistan at the site for the Capital of Pakistan before the enactment of the above Constitution, whereas sub-Article (2) provided that the area of the Capital shall be determined by the Central Legislature but shall no C be less than 200 square miles. Furthermore, sub-Article (7) provided that until provision was made for establishment of Central Government at Islamabad, the principal seat of the capital shall be at Rawalpindi in the Province of West Pakistan. It may further be observed that sub-clause (e of section 2 of Ordinance XXIII of 1960 defines "Capital Site" means the part or parts of the specified areas declared to be the site for the Pakistan Capital under section 3, whereas sub-clause (p) defines 'specified areas" a means the areas specified in the Schedule and such other area or areas may from. Time to time be included therein by the Central Government b a notification in the official Gazette. It may also be stated that section of the above Ordinance provided that the Central Government may fro time to time by a notification in the official Gazette declare any part o parts of the specified areas to be the site for the Pakistan, Capital. It ma also be pointed out that under section 2 of above Ordinance VI of 1963, it was provided that the area specified in the Schedule measuring 350 square miles or thereabout within the District of Rawalpindi in the Pro--vince of West Pakistan at the site selected for the Capital of Pakistan shall be the areas of the Capital of the Republic. It may also be highlighted that under sub-Article (1) of Article 211 of the late Constitution of Pakistan, 1962 as well as under section 2 of Ordinance VI of 1963, it was provided that the Islamabad Capital was situated within the District of Rawalpindi. It is true that for administrative purpose an area was carved out from the District of Rawalpindi for setting up the Capital of the Federation of Pakistan but geographically it remained the part of the District of Rawalpindi. We are inclined to hold that the conclusion arrived at by the learned Income-tax Appellate Tribunal that Tehsil Rawalpindi referred to in sub-para. 2(2) of the above notification, date 23-1-1966 would include even Islamabad area as admittedly geographically that Islamabad is the part of Tehsil Rawalpindi. Mr. Khalid Anwar then referred to Annexures "E" and "F" to the petition which are notifications, dated 30-6-1970 and 28-6-1967 in order to demonstrate that even the Central Board of Revenue has made a reference to Islamabad Capital territory as distinct from Rawalpindi Tehsil. Notification dated 30-6-1970 relates to Income- tax exemption under subsection (4-A) of section 15-BB, whereas the other notification, dated 28-6- 1967 relates to Income-tax exemption for the residential sector of Islamabad. It is true that in the first notification Islamabad territory has been shown distinctly even for the purpose of subsection (4-A) of section 15-BB, whereas in the other notification of 1967 the tax exemption for the residential sector of Islamabad was allowed. The first notification, dated 30-6-1970 has some relevancy to the point in issue but the above other notification has no direct bearing. We are inclined to hold that the fact that in the above notification, dated 30-6-1970 Islamabad capital territory has been shown distinctly, would not negate the fact that under Article 211 (2) of the late Constitution of Pakistan, 1962 and also under section 2 of Ordinance VI of 1963 Islamabad was treated as a part of the District of Rawalpindi.
5. We inquired from the learned counsel for the parties, whether Islamabad has any separate Income-tax Commissioner or whether there is one Income-tax Commissioner for Rawalpindi and Islamabad. Mr. Khalid Anwar learned counsel for the applicant has submitted that he has no instructions on the above point, whereas Mr. Shaikh Haider learned counsel for the respondent has stated that there is only one Income-tax Commissioner for the twin city of Rawalpindi and Islamabad. Be that as it may, we are of the view that the reference to Rawalpindi Tehsil in the relevant notification of 1968, dated .23-1-1968 referred to hereinabove is geographical.
6. Before parting with the above discussion, we may also observe that Mr. Khalid Anwar, learned counsel for the applicant has also invited our attention to page 3 of the statement of case, dated 28-12-1972 filed by the applicant, wherein an alleged extract from brochure issued by the Capital Development Authority in 1964 has been quoted, which reads as follows "The Government in the last budget have granted a tax holiday for eight years to the industries established to the west of River Ihelum. This 8-years holiday would also be available to the industries set up in the Industrial area of Islamabad."
It will suffice to observe that this point was not agitated before the' learned Income-tax Appellate Tribunal and, therefore, in our view it is not, necessary for us to take into consideration the alleged extract from the brochure issued by the Capital Development Authority to 1964. However, it will suffice to observe that above brochure cannot be equated with a notification under subsection (4- A) of section 15-BB of the Income-tax Act.
7. For the aforesaid reasons our answer to the question framed is in the affirmative.