1. MUHAMMAD ZAHOORUL HAQ, J.-These are two connected income-tax cases where the following question has been referred by the Commissioner of Income-tax. Karachi for our decision :- "Whether on the facts and in the circumstances of the case the learned Tribunal was justified in not approving the Income-tax Officer's action in assessing the entire profits of the works contracts in the hand of the respondent and directing that only 5 % of the disclosed receipts should be assessed in the hands of the respondent?"
2. The facts stated in the application are that the respondent is a private limited company which filed its returns for the years 1965-66 and 1966-67 and produced books of accounts which were duly examined but rejected. The I.-T. O. Completed assessment by making an estimate of profit. The I.-T.
3. O. Particularly held that the entire profits of the works contrast wee assessable in the hands of the respondent and were not liable to be bifurcate between the respondent and Messrs Muhammad Rasool Khan & Co., the so-called sublettees of the works contract. The respondent filed an appeal and the Income-tax Appellate Tribunal passed a consolidated order for both years and had declined to approve of the Income-tax Officer's action in assessing the entire profits in the hands of the respondent and directed that only 5 % of the disclosed receipts should be assessed in the hands of the respondent.
4. Mr. Nasrullah Awan, the learned counsel for the applicant had submitted that the assessment order passed by the I.T. O. Was a reasonable order and the I.-T. O. Had come to the conclusion that Messrs Muhammad Rasool Khan & Co- was the Benamidar of the respondent and, therefore, income from C. D. A. In respect of contract work granted by C. D. A. For raising and joining of pipes, excavation and filing trenches etc. Which had been allegedly given by the respondent to Messrs Muhammad Rasool Khan & Co. On 5% commission basis was actually the income of the respondent and not merely the 5 % commission as contended by the assessee.
5. The agreement of subletting of the contract was in writing and had been produced by the respondent before I.T.O. But the I.T.O. Construed this contract as nothing but a contract of an agency and of a Benamidar. The I. T. O. Held that the entire work was executed by the assessee and, therefore, entire profit belongs to the assessee. The I.-T. O. Also took into consideration a Martial Law Regulation case instituted against Mir Hassan, Managing Director of respondent and Muhammad Rasool Khan where the Martial Law Authorities bad treated Muhammad Rasool Khan as an agent of the respondent's company.
6. The Income-tax Appellate Tribunal in its detailed judgment has considered various clauses of the same agreement of subletting of contract and has come to the conclusion that there was nothing in the subletting agreement from which the Income-tax Officer could reasonably conclude that Messrs Muhammad Rasool Khan & Co. Were acting as a Benamidar of the respondent. The Appellate Tribunal has taken into consideration the Martial Law case, the factum of respondent agreeing to issue power of attorney in favour of the subletting coupled with the factum that the cheques issued by C. D. A. Could not be cashed by the sublettee on its own. The Appellate Tribunal has considered various explanations offered by the respondent in that regard and has accepted the same and finally reached the conclusion that the subletting contract was duly entered into between two genuine parties and that too by a document which has not been proved as sham in any manner. The Appellate Tribunal has also taken into consideration the factum that Messrs Muhammad Rasool Khan & CO. Were independent contractors who had been assessed to tax since 1960 and were duly approved by K. D. A. And they had been assessed at 10 % net on these very receipts and that 5 f of the respondent's share was excluded from the share of profit of Messrs Muhammad Rasool Khan & Co.
7. It appears to us that the Appellate Tribunal was acting within its jurisdic--tion and within its competency in taking a different view of the agreement of subletting of contract from the one which had been taken by the I. T. O. The Appellate Tribunal had the same powers which the I.-T. O.
8. Had in construing the said contract and the Appellate "Tribunal could certainty take a different view from the one taken by the Income-tax Offcer. It was all a question of construing a contract on the basis of the facts pleaded and found and therefore, the answer to the question referred to above is ire the affirma--tive.