JUDGMENT MUHAMMAD SIDDIQUE FAROOQI, J. - The above titled reference applications have been filed by the petitioners under the provision of Section 136(2) of Income Tax Ordinance, 1979 against the order of the Income Tax Appellate Tribunal passed on 19.10.1983, in respect of the Assessment Years 1976-77 and 1977-78.
2. This is second round of litigation. Previously order of the Income Tax Appellate Tribunal relating to these two financial years was assailed before the High Court. This Court vide judgment dated 12.2.1983 accepted the petitions ; id directed that question of status of assessee whether they are individuals or ADP shall be determined by the Tribunal. The Tribunal vide its order dated 19.10.1983, after considering the case of the petitioners held that they are A.O.P.
3. An application for reference was made to the Tribunal that the case may be referred to the High Court but the Tribunal declined to do so, on the ground that question raised, is a question of fact and not a question of law. In the opinion of the Tribunal, the reference could not be made. The present petitions have been thus moved before this Court, under Section 136(2) of Income Tax Ordinance, 1979.
4. The counsel for the parties were heard. The counsel for the petitioners maintained that the finding of the Tribunal was not based on any evidence. He argued that when finding is not based on the evidence or the relevant evidence has been ignored the matter is to be treated as a question of law. The High Court is therefore, competent to review the matter and pass order thereon. To support his contention, the learned counsel cited the following cases: - PLD 1958 SC (Ind.) 151, J.974 PTD 207 PLD 1976 Lahore 353, 1962 Taxation 239, 1953 I.T.R. Vol. 24 Page 506.
5. The learned counsel for the petitioners argued that the Tribunal has held that the petitioners were AOP but there was no evidence on record. The material referred by the Tribunal has no relevancy to the matter in issue. On other hand the sale, deed by the previous allottee in favour of the petitioner which was a relevant document has not been taken into consideration. According to the learned counsel the finding of the Tribunal should be brushed aside. He referred to 1974 PTD 207- The learned Judges of the Karachi High Court in this case held:- "3. The questions stated by the Tribunal are, in our opinion, rather repetitive, and, though may not reformulate the questions, so as to include therein any new matter, we are competent to say as to what are, in effect, the points on which the Tribunal has sought the opinion of the High Court. In our view, all the three questions raise only one issue, and it is: Whether there was material before the Assessing Officer on which he could come to the conclusion that the aviation agency business and the shipping agency business were distinct and separate businesses of the assessee". The question falls under section 24(2) of the Income Tax Act, 1922. Ordinarily, such a question is a question of fact, but a reference to the High Court is competent if the finding of the Assessing.
Officer and the Appellate Authorities are not supported by any evidence, See Messrs Doving Ram Bros. Ltd. v. The Commissioner of Income Tax, Central Bombay (1946)/12 ITR 764 or if a proper legal inference from facts has not been drawn. See S.N.A. Al-Childminder, Chettiar v. The Commissioner of Income Tax, Madras (1945) 13 ITR 177) or if the Tribunal has misdirected itself in law. See Rekhabchend Sarogi and others v. The Commissioner of Income Tax, Bihar & Orissa. The present case comes up to these tests as held by the High Court in its judgment given on 8th February, 1967, under section 66(2) of the Income Tax Act on an order of the Tribunal refusing the assessee application to refer the aforesaid question for the opinion of the High Court."
This decision of High Court bears the reference to a number of cases.
In the case 1962 Tax 239, the Assam High Court at page 242 held:- "The matter was again summed up in the following terms in the case of Sree Meenakshi Mills Ltd. u.
Commissioner of Income Tax, (1957) 31 ITR 28(SC)
(1) When the point for determination is a pure question of law such as construction of a statute or document of title, the decision of the Tribunal is open to reference to the Court under Section 66(1).
(2) When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final its decision as to the legal effect of those findings is a question of law which can be reviewed by the Court.
(3) A finding on a question of fact is open to attack under section 66(1) as erroneous in law when there is no evidence to support it or if it is perverse.
(4) When the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact."
In PLD 1976 Lahore 353, the learned Judges of the Lahore High Court at pages 354 and 355 held:- "Sh. Abdul Haque, learned counsel for the Income Tax Officer has submitted that it is a pure question of fact and cannot be raised in a Tax Reference since only questions of law can be agitated before the High Court in this jurisdiction. It is, however, not denied that the Income Tax Appellate Tribunal in deciding the case of the petitioner completely ignored the aforesaid piece of evidence, which was the main factor in influencing the judgment of the Appellate Assistant Commissioner.
In Muhammad Afsar and 7 others v. Allah Ditta and 13 others (1970 SCMK 118) the Supreme Court observed that:- "It is true that in a second appeal a finding of fact cannot be reversed unless that finding is' vitiated by a misreading of evidence or nonconsideration of material evidence. In the present case important material evidence had been ignored.
This is a case of non-consideration of material evidence, wherefor, we have no option but to accept the Reference and to set aside the order of the Income Tax Appellate Tribunal. The Reference is answered in the affirmative."
In the case PLD 1958 SC (Ind) 161, it was held:- "The test laid down by this Court is to be found in the various passages in that judgment. At p. 701 (of SCR) : (at p. 55 of A.I.R. Venkatarama Ayyar, J., pointed out that questions of fact are not open to review by the Court unless they are unsupported by any evidence or are perverse. At p. 706 (of SCR); (at p. 58 of AIR it was observed:- "In between the domains occupied respectively by questions of fact and of law, there is a large area in which both these questions run into each other, forming so to say, enclaves within each other. The questions that arise for determination in that area are known as mixed questions of law and fact. These questions involve first the ascertainment of facts on the evidence adduced and then a determination of the rights of the parties on an application of the appropriate principles of law to the facts ascertained."
The law was thus summoned up at p. 726 (of SCR); - (at p. 68 of AIR).
(1) When the point for determination is a pure question of law such as construction of a statute or document of title, the decision of the Tribunal is open to reference to the Court under section 66(1).
(2) When the point for determination is a mixed question of "him and fact, while the finding of the Tribunal on the facts found is final its decision as to the legal effect of those finding is a question of law " which can be reviewed by the Court.
(3) A finding on a question of fact is open to attack under section 66(1) as erroneous in law if there is no evidence to support it or if it is perverse.
(4) When the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact."
From the perusal of the authority quoted hereinbefore it j| follows that a finding of fact not based on evidence or where a material evidence is ignored a reference to the High Court will be maintainable.
Muhammad Najeeb were AOP. Reference has been made by the Tribunal to the fact that the property was purchased by the assessee from Abdul Salam and Ghazi Anwar. The Tribunal is reported to have requisitioned record from the Mirpur Development Authority but there is no reference to the contents of the i.e. The Tribunal has mentioned that assessee failed to prove that each of them contributed towards the construction of the Hotel. The Tribunal failed to appreciate the contents of the sale deed. The sale deed dated 22.6.1974 is important piece of evidence for determining the real question, involved in this case. The following portion of the sale deed is relevant for the purpose (Annexure V):- J})^ ti ^ I ayhctjjj>\ 44r> -W'"3^ I I r -mm - - ' '
In the above reproduced portion of the sale deed it has been stated that the plot was sold to four persons; The word " is specifically mentioned. The words convey that all the four vendees shall be the proprietors of the plot in equal shares. By use of the phrase 'equal share'; there remains not doubt about the proportion of the share of the vendees inter se . It means that right of each one of them extends to 1/4th of the entire property purchased. Consequently the benefits arising out of this property will be apportioned by the purchasers in equal share and no one is entitled to have more than 1/4th.
Section 9(3) of the repealed Income Tax Act 1922, which was applicable in 1976-77 and 1977-78 is reproduced below: 'Where property is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not in respect of such property be assessed as an association of persons, but the share of each such person in the income from the property as computed in accordance with this section shall be included in his total income".
These provisions have been again incorporated in Income Tax Ordinance, 1979 as per section 21 which is as follows: "21. Liability in the case of co-owners: Where any property to which section 19 applies is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not, in respect of such property, be assessed as an association of persons, but the share of each person in the income from the property shall be included in his total income."
8. The provisions of the repealed Act as well as of new law are identical. According to contents of section 21, share of each partner is to be computed separately and then it is to be added in other income of assessee if any. No other provisions of the Income Tax Law has been cited by the counsel for the respondents to show that Income Tax authorities had the powers to make the assessment as AOP of a person whose shares are well defined. In the case/bf property, the share are to be determined by reference to the title dead. In the present case, the sale deed dated 22.6.1974 is the title deed, which indicates that share of all the vendees will be equal. Since there is no other evidence to support the finding of the Tribunal, it is held that its finding is not warranted by law.
As upshot of the above discussionis we accept reference applications and hold that the petitioners who initially purchased the property were not AOPs but four different individual, hence the income derived by them from this property respecting the Assessment Years 1976-77 and 1977- 78 shall be assessed as individuals and not as AOP.
The copy of this order shall be forwarded by the Registrar to the Appellate Tribunal Income Tax as required under section 135(5) of the Income Tax Ordinance, 1979 for further action.