' RAJA MUHAMMAD KHURSHID KHAN, C. J.-This certificated appeal arises out of the judgment passed by a Division Bench of Azad Jammu and Kashmir Hi h Court, dated the 6th of July, 1981, in the following way. The impugned report disposes of the reference made to the High Court, under section 66(1) of Income-tax Acc, by the Income-tax Appellate Tribunal with the finding that according to an arrangement made between the two Governments, I e. Azad Kashmir Government and the Government of Pakistan, to avoid double taxation, 50% of the total income of the non- petitioner (a firm dealing with the matter) is to be assessed to income-tax in Azad Kashmir; and the law prohibits apportionment of the income between the two Governments in ratio of 50 : 50.
The reference is to the effect :- "Whether on the facts and circumstances of the cases the Tribunal was justified in holding that it is the demand of assessed tax on an income accrued in Azad Kashmir and Pakistan that should be divided in the ratio of 50 : 50 between Azad Kashmir and Pakistan and not the assessed income?"
2. To understand the controversy the facts in brief may be stated. The firm Messrs Haji Ali Khan, respondent herein, was working as a forest lessee in Azad Kashmir and this very firm was also conducting its business in Pakistan. The firm had been assessed to the income-tax by the Income- tax Officer (Azad Kashmir), vide Order, dated 20-3-1974, for the years 1963 to 1979 on the whole income and profits accruing to him out of the timber extracted from Azad Kashmir forest and imported for sale to Pakistan.
3. Dissatisfied with the order, the respondent moved an appeal before the Appellate Assistant Commissioner (District Judge M'abad), who, vide order, dated 2-4-1979, accepted the appeal and discharged the order passed by the Income-tax Officer. The learned Court observed that the appellant can only be assessed to income-tax under the terms of an agreement dated the 15th of March, 1962, arrived at between the Government of Pakistan and Azad Kashmir Government which, inter alia, stipulates that not the income-tax but the income shall be divided in equal shares between the Azad Kashmir Government and the Government of Pakistan.
4. The order of the Income-tax Officer, as said earlier was, however, quashed by the Appellate Assistant Commissioner (District Judge) .Vide his judgment, dated 2-4-1979, and it was held that not the tax but the income shall be apportioned in equal shares between the two Governments.
The judgment of the Appellate Assistant Commissioner (District Judge), however, was set at naught by the Appellate Tribunal and it was held that not the income but the income-tax shall be apportioned in equal shares between the two Governments. Out of this judgment reference was made to the High Court which was answered in the manner indicated above.
5. This judgment of the Appellate Tribunal, as said earlier, was sought to be recalled by way of a reference to the High Court which was answered in the manner indicated above. Hence this appeal to impeach the said order of the High Court.
6. It may be observed that for avoidance of double taxation an agreement between the two Governments was made. Both the parties based their claim on this arrangement arrived at between the Government of Pakistan and Azad Kashmir Government which is incorporated in an agreement No, N-353/60-61/5007/J, dated the 9th of January, 1962.
7. The parties are also in agreement that some forest lessees (as is respondent here) do their business in Azad Kashmir as well as in Pakistan. So to meet the situation the Governments of Pakistan and the Azad Kashmir had mutually agreed to make arrangement regarding levying of income-tax in such like cases. To achieve the objective agreements to the effect (reference to them will be made at a proper stage) were made by both the Governments.
8. Sardar Rafique Mahmood, the learned Additional Advocate-General, questioned the validity of the judgment of the High Court, inter alia, on the ground that the basic agreement dated the 15th of March, 1962, being violative to section 49(D), is to be ignored and that the learned Judge in the High Court erred in holding that this is an arrangement between the two Governments under section 49(AA) of the Income-tax Act. He contended that as the Azad Kashmir Government has not so far been recognized by the Pakistan Government, the arrangement by virtue of the said agreement cannot be said to be an arrangement between the two Governments and, therefore, we have to fall back on section 49 (D) of the Income-tax Act, which stipulates that it would be the income-tax which is to be divided in equal shares and not the income between the two Governments, to avoid double taxation.
8. It would thus appear that the main grouse of the learned Additional Advocate-General is that it is not the income but the income-tax which is to be divided between the two Governments in the ratio of 50 : 50.
9. To appreciate the merits of the arguments advanced it would be proper to look into the agreements arrived at between the two Governments, i,e, the Government of Pakistan and the Azad Kashmir Government. The basic arrangement arrived at is embodied in circular letter No, N- 353 60-61/5007/J, dated the 9th of January, 1962. The relevant part of the circular letter is reproduced below:- "The I.-T. Os. Occasionally come across cases of persons who are residents of Pakistan but carry on business in Azad Kashmir territory and vice versa. Under the existing Income-tax laws of the respective Government, the Income of such persons is subjected to tax twice. A formal and full- fledged agreement under section 49(AA) for the avoidance of double taxation with Azad Government of the State of Jammu and Kashmir is not possible because it has not so far been recognised by the Government of Pakistan. For the time being, however, the Governments of Pakistan and Azad Kashmir have made working arrangement to avoid double taxation on the following lines:- (underlining* is ours)
Forest lessees.-The business operations of forest lessees are carried on in Azad Kashmir as well as in Pakistan territory. Considering this fact, it has been decided that :50% of the profits will be regarded as attributable to the operations in Pakistan and 50% to Azad Kashmir."
On the point there is another circular letter No -Fb/302-4/S0 11/62, dated 15-3-1962. The relevant part of the circular letter is as under :- "As mutually agreed by the representatives of the two Governments at a meeting held in the Ministry of Kashmir Affairs on 17th November, 1961 regarding avoidance of double taxation and as communicated in the minutes of the said meeting copy received under Ministry of Kashmir Affairs No, Min. Of K. A. No: D. 1(24)/60 (KI), dated 21st November, 1961 it is hereby directed that the income from forest lessees should be regarded as attributable to operations in the Territories of Pakistan and Azad Kashmir in the ratio of 50 : 50."
10. Both the parties rely on the contents of the said letters to bring home their respective contentions. The case of the respondent is that the plain meaning of the agreement made by the two Governments is that Azad Kashmir and Pakistan Governments were to divide the Total - income in ratio of 50 : 50 for the purposes of levying tax and not that income-tax was to be divided in ratio of 50 : 50 after the assessm ent of total income.
11. It would thus appear that the only legal point involved in this case pertains to the interpretation of the arrangement incorporated in the above-mentioned documents.
12. We have examined the documents and have also given our considered thought to the arguments advanced at the bar and are of the considered view that the submissions made by the appellant have no merit. In both the documents referred to above the words 'income' from forest lessees and 50% of the 'profits' are -self-speaking and hardly admit the interpretation put forth by the appellant's counsel that it was the sum of tax which was to be divided and not the income. Had the parties intended that it was the sum of income-tax which was to be divided and not the taxable income then the words 'income-tax' instead of words 'income' and 'profit' would have been employed in both the circular letters referred to above. *Ware in italics)
13. There is still another very important feature of the case which supports our view. It may be observed that even before the arrangement on the basis of the circular letters, referred to above, a letter from the Office of Commissioner Income-tax North Zone West Pakistan. Dated 9-1-1962, which deals with the instructions for double taxation in Pakistan and Azad Kashmir is in line without finding. The relevant part of the document reads :- "Forest lessees.-The business operations of forest lessees are carried on in Azad Kashmir as well as in Pakistan territory. Considering this fact, it has been decided that 50 % of the profits will be regarded as attributable to the operations in Pakistan and 50% to Azad Kashmir."
It thus admits of no doubt that it is the whole income and not 'income-tax' which is to be apportioned fifty between the two Governments, i,e,, Government of Pakistan and the Azad Kashmir Government. Whether these documents can be brought under section 49(AA) as contended by the respondent or they are to be Jooked into in view of section 49(D) of the Income-tax Act, to us has very small importance. It is correct as held by Justice Hamoodur Rehman, J. (as he then was) in Noor Hussain v. The State (1), that the Azad Kashmir territory which does not constitute a part of the Republic of Pakistan as defined in the Constitution of Pakistan is a foreign territory. Nevertheless for all particular purposes, it has all the constitutional features of a Government. It has got its own Constitution, its own High Court and Supreme Court and, therefore, it is a Government for all practical purposes; and it matters little as to whether this Government is recognized by the Government of Pakistan or not. Besides, both the agreements referred to above were made by the representatives of the Government of Pakistan and the Government of Azad Kashmir. They specifically enters so. Therefore, both the Governments or their representatives cannot wriggle out the agreements to avoid them. The principle of ,estoppel operates with full force against them.
15. It is significant that certain subjects under the provisions of section 31 of the Azad Jammu and Kashmir Constitution Act, 1974, are exclusively dealt with by the Azad Jammu and Kashmir Council under the Chairmanship of the President of Pakistan who holds this constitutional post by virtue of his office. The relevant part of this section reads :-
(2) Subject to subsection (3) :-
(a) the Council shall have exclusive power to make laws with respect to any matter in the Council Legislative list set out in the Third Schedule, hereinafter referred to as the Council Legislative list; and
(b) the Assembly shall and the Council shall not, have power to make laws with respect to ,any matter not enumerated in the Council Legislative list.
16. It is thus manifest that for compelling reasons both the Governments in their action even recognize the status of each other for smooth functioning of the administration till the fate of Azad Jammu and Kashmir State is decided on the basis of UNCIP Resolution.
17. Therefore, our considered view is that it cannot be said that no agreement under section 49(AA) of the Income-tax Act can be arrived
(1) PLD 1966 SC 8$ at between the Government of Pakistan and the Azad Kashmir Government. However, even we exclude the possibility of such an agreement under section 49(AA). Section 49(D) of Income-tax Act, we are afraid would not render the agreements referred to above a nullity. We feel that even section 49(D) would not be of any help to the appellant.
18. We are, therefore, of the view that for the forest lessees who operate business in Azad Kashmir as well as in Pakistan considering the above-mentioned documents 50% of the profits or income will be regarded attributable to the operations in Pakistan and 50% to Azad Kashmir. Therefore, in this case 50% of the income and not the income-tax shall be apportioned in equal shares between the two Governments, i. e., the Government of Pakistan and the Government of Azad Kashmir.
19. This very method had also been followed by the Income-tax authorities of Peshawar. On this aspect the learned counsel for the respondent has placed on record the copies of the assessm ents issued by the Income-tax authorities at Peshawar to sustain his view point. Different methods of assessm ent, in our view, would negate the intention and spirit of the arrangement referred to above and cannot be allowed to be carried on in Azad Kashmir to depart with method adopted in Pakistan (Peshawar).
19. Before we part with the case it may be noted that it is settled principle of law of interpretation of documents and the statute that the words used should be given ordinary and plain meanings and nothing should be excluded, included or substituted while interpreting the documents. We are not competent to give meanings to the words 'income' and 'profit' except their plain dictionary meanings. It is elementary principle of interpretation of statute and documents that when a particular word is not defined in a statute, Courts are to give it the natural plain dictionary meanings and that very meaning is supposed to depict the intention of the author of the document or the law-makers.
20. Maxwell in his book 'Interpretation of Statutes' Seventh Edition relying on "Income-tax Commissioners v. Pinsel" and "River Wear Commissioners v. Adamson" says at page 2 :- "If the words of the statute are in themselves precise and unambiguous no more is necessary than to expound those words in their natural and ordinary sense, the words themselves in such case best declaring the intention of the Legislature."
Again, relying on "R v. City of London Court and Mrsey Docks and Harbour Board v. Turner" Maxwell says at page 4:- "The rule of construction is to intend the Legislature to have meant what they have actually expressed."
"It matters not, in such a case, what the consequences may be. Where, by the use of clear and unequivocal language capable of only one meaning, anything is enacted by the Legislature it must be enforced, even though it be absurd or mischievous. The underlying principle is that the meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the Court as to what is just or expedient."
' Elaborating the point at page 5 it is stated again that :- "However unjust, arbitrary or inconvenient the meaning conveyed may be, it must receive its full effect. When once the meaning is plain, it is not the province of a Court to scan its wisdom or its policy."
' Craies on Statute Law, Seventh Edition, Chapter 5th, at page 65 says :- "Where the language of an Act is clear and explicit, we must give effect to it, whatever may be the consequences, for in that case the words of the statute speak the intention of the Legislature."
' It is further stated at page 66:- "Some flay years before in Salomon v. A Salomon & Co. Ltd. Lord Watson had said, "Intention of the Legislature, is a common but very slippery phrase, which, popularly understood, may signify anything from intention embodied in positive enactment to speculative opinion as to what the Legislature probably would have meant, although there has been an omission to enact it. In a Court of law or equity what the Legislature intended to be done or not to be done can only be ascertained from what it has chosen to enact, either in express words or by reasonable and necessary implication." After expounding the enactment it only remains to enforce it, notwithstanding that it may be very generally received opinion that it "does not produce the effect which the Legislature intended", or might with advantage be modified."
' The point is further clarified at page 67 whereat it is stated :- "Even though a Court is satisfied that the Legislature did not contemplate the consequences of an enactment, a Court is bound to give effect to its clear language. Thus Lord Herschell in Co. v. Hakes, said: "It is not easy to exaggerate the magnitude of this change (i,e, that discharge from custody by a Court of competent jurisdiction does not protect from further proceedings); nevertheless, it must be admitted that if the language of the Legislature interpreted according to the recognised cannons of construction, involves this result, your Lordships must frankly yield to it, even you should be satisfied that it was not in the contemplation of the Legislature."
' The question of creeping of an error in a statute is dealt with at page 68. It is stated thereat :- "In lee v. Bude etc. Ry. Where it -was argued that certain Acts of Parliament had been obtained by inserting in them false recitals, I would observe," said Willes, J., "that these Acts of Parliament are the law of the land, and we do not sit here as a Court of appeal from Parliament. . . If an Act of the Parliament has been obtained improperly, it is for the Legislature to correct it by repealing it; but so long as it exists as law the Courts are bound to obey it."
' The upshot of the whole discussion is that this appeal has no force and is accordingly dismissed with costs. 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.