1. ' SALEEM AKHTAR, J.--The applicants are exhibitors of motion pictures in their cinema known as Nishat Talkies. They collected Entertainment Duty and upto the year 1974-75 offered it for tax but claimed exemption. This amount was not paid to the Provincial Government as a dispute had arisen between Cantonment Board and the Provincial Government who were claiming the said amount. For the assessm ent year 1977-78 the petitioners disclosed in part-IV of the return an amount of Rs,11,48,309 as Entertainment Duty payable to the Provincial Government. The Income- tax Officer treated the aforesaid amount as trading receipt of the petitioners and added to their profits. The petitioner filed an appeal which was allowed and Rs,11,48,309 was deleted from the income. The Department then filed an appeal before the Tribunal which noted that Rs,11,48,309 is comprised of Entertainment Duty collected during the following three assessment years:
(1) 1975-76 Rs,3,86,354
(2) 1976-77 Rs,4,34,381
(3) 1977-78 Rs,3,27,574 ' For the assessm ent year 1975-76 and 1976-77 the Tribunal had decided earlier that these amounts were not liable to be taxed as they did not constitute trading receipt in the relevant assessment years. But so far Rs,3,27,574 in respect of assessment year 1977-78 is concerned the Tribunal came to the conclusion that as the petitioners have received the Entertainment Duty and have not paid it to the Provincial Government and further that as the entire amount of Rs,11,48,309 has been distributed amongst the partners during the relevant assessment year, it is liable to tax. It was further ordered that the applicants would be entitled to claim it as deduction in the year when it paid the aforesaid amount to Provincial Government or the Cantonment Board as the case may be. Dissatisfied with this finding the applicants filed an application under section 136 of the Income-tax Ordinance and the following question has been referred: "Whether in the facts and circumstances of the case the Tribunal was right in holding that the receipt of Rs,3,27,574 was taxable in the assessment year 1977-78."
2. ' It is an undisputed fact that the applicants have been collecting Entertainment Duty but did not pay to the Provincial Government. The nonpayment was due to the dispute between the Provincial Government and the Cantonment Board. When the Provincial Government threatened to realize the Entertainment Duty the petitioners filed Constitution Petition challenging the jurisdiction of the Provincial Government to levy and recover the Entertainment Duty from the applicant. This petition has been dismissed by a Judgment of the High Court of Sind which is reported in PLD 1976 Karachi
712. The applicants have filed appeal before the Supreme Court and leave has been granted to them. The Tribunal in its order at page 49 of the paper book has observed that 'the appellant though has been recovering the Entertainment Duty all these years yet it has failed to deposit it in Provincial Government Exchequer. It has thus recovered the amount under compulsion of a statute but has not discharged its obligation.' The Tribunal further noted that the applicants have been collecting Entertainment Duty with clear intention not to pay immediately after its recovery either to the Provincial Government or the Cantonment Board and finally they have distributed the entire amount amongst the partners in the relevant assessment year. The Tribunal did not disturb its orders in respect of assessm ent years 1975-76 and 1976-77 but Rs,3,27,574 was treated as trading receipt in the hands of the applicants. In arriving at this conclusion the Tribunal has relied on two judgments of the Supreme Court of India viz. (1) Chowrangi Sales Bureau (Pvt) Ltd. v. C.I.T. (1973) 87 I T R 547, and (2) Sine Lair Murray & Co. (Pvt.) Ltd (1974) 97 I T R 615.
3. ' In this regard reference can be made to P.IA. Corporation v. Commissioner of Income Tax 1988 SCMR 872 where the appellant claimed that the payment received for the sale of its ticket became its income only when the tickets were utilized and in the event of the tickets not being utilized the character of the moneys received could not be regarded as income merely by its transfer from the 'Unearned Transportation Account' to the 'profit and loss Appropriation Account.' The Honourable Supreme Court considering the question 'whether the amount against the unutilized tickets is a refundable deposit or a trading receipt' referring to Morley's case (1935-1939) 22 Tax Cases 51 observed as follows: ' The observation laid down the correct criteria necessary for determining the nature and character of the trading receipt. The contract of transport at the time of receipt of the sale price of the ticket was subject to the stipulation that if unutilized the money would be refunded. The receipt of the price cannot, therefore, be read in isolation. This stand was taken right from the very inception, and in the balance sheet the amount was shown as a liability."
4. ' The Honourable Supreme Court placed reliance on the following observation made in Commissioner of Income Tax v. E.V. Miller PLD 1959 S.C. 219: "But if income lying in reserve with the person is agricultural income which he himself cannot enjoy and is meant to be distributed among its rightful claimants, it cannot be disputed that no change of character is implied in the distribution of that income because income is earned for expending and a person who is precluded in law from expending it on his own enjoyment and holds it for the benefit of the others does not bring out any change in the nature of that income when he passes it on the beneficiary.'
5. ' While relying on this observation the Supreme Court in P.IA.' case held: "We do not see how this ratio is not applicable to the case under consideration as here too until the tickets are utilized the amounts received against those tickets are a liability of the airline and its mere transfer to its 'Profit and Loss Appropriation Account' could not change the character of the trading receipt although it retains that character despite the transfer."
6. ' Further the Honourable Supreme Court relying on E.V. Miller and Hotel Metropole's (1973 PTD 371) cases observed as follows: ' We would follow the criteria laid down in the aforementioned cases in determining the character and nature of the trading receipt rather than to follow the cases from Indian jurisdiction which had taken a contrary view and relied on by the High Court.'
7. ' It was finally held that sum of Rs,6,95,171 transferred to the profit and loss appropriation account could not be regarded as income within the meaning of Section 10 (2A) as it then existed) of the Income Tax Act.
8. In view of the principles laid down by the Supreme Court we find that the Entertainment Duty collected by the applicants has been always treated as a liability to be paid by them to the Provincial Government or Cantonment Board. It therefore can not be treated as income as the character of the receipt is determined from the date it was received initially. By transferring the amount of Entertainment Duty amongst the partners it can not be inferred that it was appropriated for their benefit. It remained in their hand as liability to be discharged by payment to the Provincial Government or the Cantonment Board. The partners will hold it for the benefit of the rightful claimant as they are precluded from enjoying it.
9. ' We therefore answer the question in the negative.
10. Before parting with the judgment we are constrained to observe that while deciding appeal the learned Tribunal has taken pains to refer in detail to several judgments of the Supreme Court of India and has relied on them without referring the judgment of the Supreme Court of Pakistan which was available and has been referred in this judgment. We disapprove the practice of not considering and relying upon the judgments of our superior Courts. It is the duty of every Court and Tribunal in Pakistan to follow the judgments of Supreme Court. Under Article 189 of the Constitution any judgment of the Supreme Court which decides a question of law or enunciates a principle of law is binding on all Courts in Pakistan. Likewise and in the same terms, Article 201 provides that subject to Article 189 all judgments of the High Court are binding on all the Courts subordinate to it.
11. We hope in future the learned Tribunal will be careful in this regard.
12. ' Answered in the negative.