1. ' S. SAEED ASHHAD, J.---This Income-tax Reference has raised from the order of the Income-tax Appellate Tribunal, dated 25-3-1987 passed in the reference application of the applicant/assessee, suffering a question of law to this Court for seeking its opinion. The question of law is as under: "Whether on the facts and circumstances of the case Income-tax Appellate Tribunal was justified in holding that unless there is an agreement between employer and employee and in accordance with terms of his employment if any dearness or cost of living allowance or bonus or commission become payable then alone it should be included in salary in the light of the explanation appended to section 24(i) of the Income Tax Ordinance, 1979."
2. ' The brief facts giving rise to this Income-tax Report are that the applicant/assessee who is a public limited company filed its return of income for the assessment year 1979-80. The Income-tax Officer while framing the assessm ent under section 62 of the Income-tax Ordinance (hereinafter referred to as the Ordinance), treated the amount paid by the applicant/assessee to its employees by way of bonus as perquisite as against the claim of the applicant/assessee that the bonus was part of salaries paid to its employees, consequently, the Income-tax Officer disallowed a sum of Rs,2,78,034 and added the same to the total income under section 24(i) being perquisites in excess of the prescribed limits. The Appellate Assistant Commissioner relying on the decision of the Income-tax Appellate Tribunal in I.T.As. Nos.1037 and 1038/KB of 1979-80 held that the bonus was not to be considered as perquisite to the employees and set aside the order of the I.T.O.
3. Remanding the case with the direction not to consider the bonus as perquisite in the hands of the employees. The Department feeling aggrieved with the aforesaid finding of the Appellate Assistant Commissioner filed a second appeal before the Income-tax Appellate Tribunal. The Appellate Tribunal by its order, dated 20-9-1986 relying on the order of the Full Bench reported in 1976(33) Tax 29 held that the bonus was not to be included in the salary. It further observed that there was no difference in the provisions of section 24(i) of the Ordinance and the relevant provisions of the repealed Income-tax Act regarding the definition of the word "salary" and, therefore, the decision in the case reported as above was applicable to the facts of the present case. The Tribunal further observed that for treating the bonus as part of salary it was necessary that there should be an agreement between the employer and employee for the payment of bonus. The applicant/assessee feeling aggrieved with the aforesaid finding filed a reference Application framing therein three questions of law and praying the Appellate Tribunal to refer the same to this Court for seeking its opinion. The Tribunal by its order, dated 25-3-1987 modified the question relating to the payment of bonus to the employees and referred it to this Court.
4. ' We have heard the arguments of M/s. Iqbal Naeem Pasha and Nasrullah Awan, learned counsels for the parties. We have also perused the material on record, the relevant provisions of the law and the case-law referred to us by the learned counsel for the parties.
5. ' The contention of Mr. Iqbal Naeem Pasha, the learned counsel for the applicant/assessee is that the Tribunal had fallen in error in holding that "bonus" paid by the applicant/assessee to its employees could be treated as part of salary only if there was an agreement between the applicant/assessee and its employees for regular payment of "bonus" to the employees. He further submitted that this finding of the Appellate Tribunal would have been justified in view of the provisions of Explanation to section 10 of the repealed Income-tax Act where the word "and" was used between the words "bonus" and "commission" but the said finding would not be justified in view of the provision of Explanation (i) to section 24(i) of the Ordinance wherein , the word "or" has been used between the words "bonus" and "commission" as a result of which the word "bonus" is not to be read in conjunction with the words "payable to an employee in accordance with the terms of his employment". He further submitted that by using the word "or" after the word "bonus" and before the word "commission" in Explanation (i) to section 24(i) of the Ordinance the Legislation has clearly spelt out its intention to include bonus within the salary payable to an employee irrespective of the existence of an agreement between the assessee and the employee.
6. In order to properly appreciate to the contention of Mr. Iqbal Naeem Pasha it will be appropriate to reproduce the relevant provisions of the Explanation to section 10 of the repealed Income-tax Act and Explanation (i) to section 24(i) of the Ordinance. Explanation to section 10 of the repealed Income-tax is as under:- "Explanation.---(1) The expression 'salary', as used in this clause, means remuneration or compensation for services rendered paid or to be paid at regular intervals and includes dearness, grain compensation or cost of living allowance and bonus and commission which are payable to an employee in accordance with the terms of his employment as remuneration or compensation for services but does not include the employer's contribution to a recognised provident or superannuation fund or any other sum which does not enter into the computation for pensionary or retirement benefits."
7. ' Explanation (i) to section 24(i) of the Ordinance is as under:--- " 'Salary' means remuneration or compensation for services' rendered paid, or to be paid, at regular intervals, and includes dearness or cost of living allowance and bonus or commission payable to an employee in accordance with the terms of his employment as remuneration or compensation for services but does not include the employer's contribution to a recognized provident fund or an approved superannuation or gratuity fund or any other sum which does not enter into the computation for pensionary or retirement benefits;"
8. ' The contention of Mr. Iqbal Naeem Pasha is that by using the word "and" between the words bonus" and "commission" in the Explanation to section 10 of repealed Income-tax Act the legislature had expressed an intention that bonus would be included within the definition of "salary" if it was payable to an employee in accordance with the terms of his employment as remuneration or compensation for service. He further submitted that however the legislature has expressed a different intention by using word 'or" between the words "bonus" and "commission" in Explanation (i) to section 24(i). According to him in the repealed Income-tax Act the word "commission" was used in conjunction with the word "bonus" for the purpose of qualifying the payment of bonus with the terms of employment, whereas in Explanation (i) to section 24 by using the word "or" between the words "bonus" and "commission", the legislature has expressed its intention that the words "commission" payable to an employee in accordance with the terms as remuneration" is to be read disjunctively and not in conjunction with the word bonus. He further submitted that the portion of Explanation (i) to section 24(i) of the Ordinance starting with the word "salary" till the word bonus" is to be read as one portion while the portion starting from the words "or commission payable" till the word "remuneration" is to be treated as a separate portion and that only the payment of commission is to be related or linked with or is qualified by the expression "in accordance with the terms of his employment as remuneration", while the payment of bonus is not to be related or linked with or to be qualified by the impression payable to an employee in accordance with the terms of his employment as remuneration".
9. ' Mr. Nasrullah Awan, learned counsel for respondent/Department, vehemently controverted the arguments advanced on behalf of the applicant/assessee and submitted that in interpreting a statute the words "and "or" some times are used in one and the same meaning and there is no hard and fast rule that the word "or" is always to be used as disjunctively. He further submitted that the mere fact that in the Explanation to section 10 of the repealed Income-tax Act the word "and" was used between the words "bonus" and "commission" whereas in Explanation (i) to section 24(i) of the Ordinance the word "or" has been used between the words "bonus" and "commission" does not imply an intention on the part of the legislature that it has departed from its previous intention of not treating the bonus as part of salary in the absence of an agreement to this effect between the employer and the employee and that bonus is now to be included in the definition of salary without the conditions qualification appearing in the latter part of Explanation (i) to section 24 of the Ordinance, i,e,, "payable to an employee in accordance with the terms of his employment as remuneration". He further submitted that though the word "or" is to be read as disjunctive and the word "and" is conjunctive but there is a fixed or hard and fast rule with regard to the use of these words as disjunctive and conjunctive and they are interchangeable. He further submitted that in order to give true expression to the intention of the Legislature the word "or" may be used as conjunctive and the word "and" as disjunctive. He referred us to the case of Abdul Razak v. Karachi Building Control Authority reported in PLD 1994 SC 512 in support of his above contention. He further submitted that merely by substitution of the word "or" in place of the word "and" in Explanation (i) to section 24(i) would not imply an intention on the part of the Legislature to deviate from its previous intention expressed in the Explanation to section 10 of the repealed Income-tax Act. He further submitted that the ordinance was promulgated to consolidate the repealed Income-tax Act and when a Statute is instituted to consolidate previous Statute then the Court would lean to a presumption that the Legislature has no intention to alter the law and may remove doubtful points by aid of such presumption rejecting literal construction. For the above proposition Mr. Nasrullah Awan placed reliance on the pronouncement of the Supreme Court in the case of Sardar Muhammad and others v. Municipal Committee. Jhelum, reported in PLD 1970 SC 497.
10. ' We have considered the respective arguments advanced in M/s. Iqbal Naeem Pasha and Nasrullah Awan. The word "and" in its ordinary usage in a statute is to be considered as conjunctive and the word "or" is to be considered disjunctive. We are in respectful agreement with the observations of the Hon'ble Supreme Court in the case of Abdul Rank v. K.B.C. Authority, reported in PLD 1994 SC 512 that there is no fixed or hard and fast rule with regard to the use of these words as conjunctive and disjunctive. These words are interchangeable and in order to give expression or to imply the true intention of the Legislature it may become necessary to read the word "or" as conjunctive in place of "and" and to use the word "arid" as disjunctive in place of the word "or".
11. However, such resort is to be had only when the ordinary meanings or use of the words "and" and "or" do not fit in or lead to giving affect to the expression or intention of the Legislature and on the contrary lead to an interpretation which does not make sense. Reliance for the above is placed on the cases of (i) Pakistan Tobacco Company Ltd. v. Karachi Municipal Corporation reported in PLD 1967 SC 241; and (ii) In re, Sabir Shah's References under section 8-B of the Political Parties Act, reported in 1994 M LD 1569. By using the word "or" as disjunctively in Explanation (i) to section 24 of the Ordinance between words "bonus" and "commission", the interpretation which would follow would neither be improbable nor without any sense or contrary to any provision of the Ordinance.
12. As a matter of fact the interpretation which would follow, i,e,, bonus paid to the employees would form part of their salaries notwithstanding that there is no agreement between the employer and the employees for payment thereof would be mere beneficial to the tax payer then the interpretation which would follow by using the word "or" conjunctively. It is an established principle of interpretation of statutes that if language of a statute is clear and unambiguous then the Court is to give its effect without taking into consideration anything extraneous Reliance for the above is placed on the pronouncement made to the above effect by the Hon'ble Supreme Court in the case of reported in 1992 SCM R 663. It will not be out of context to refer to the observations made by the Hon'ble Supreme Court in the case of Abdul Rehman v. I.G. Police, Punjab and others, reported in PLD 1995 SC 546, that where it is possible without doing any violence to the language of the statute, beneficial construction may be adopted while interpreting a statute which infringes upon the rights of a citizen. Explanation (i) to section 24(1) of the Ordinance was in our view conveys an intention on the part of the legislature to depart from its previous intention and to include "bonus" in the definition of the salary irrespective of the fact that it is not payable in accordance with any agreement between the employer and the employee. We have come to this conclusion in view of the settled principle that every word is to be given its natural and ordinary meaning in interpretation a provision of a statute and the word "or" is ordinarily to be used as disjunctive. We are not inclined to agree with the contention of Mr. Awan that the word "or" in Explanation (i) to section 24 of the Ordinance is to be used as conjunctively to give affect to the true intention of the Legislature which was embodied in Explanation to section 10 of the repealed Income-tax Act and the Legislature intended to retain the said intention when it promulgated the Ordinance by way of instrument to consolidate the repealed Income-tax Act. The Court in interpreting any provision of a statute must proceed on the assumption that Legislature means exactly what it said and give effect to the plain meaning of the words and expressions used in the statute. The Court is not to depart from the plain meaning of the word as has been held in the case of Rahmat Khan v. Abdul Razzaque reported in 1993 CLC 412. On this principle also we do not see any reason for holding that word "or" appearing in Explanation (i) to section 24(i) of the Ordinance is not to be used in its ordinary and natural use as disjunctive and to use it as conjunctive as to relate to the word "bonus" with the expression "payable to an employee in accordance with the terms of his employment as remember".
13. ' Upon the above discussion we are satisfied beyond any doubt that the Appellate Tribunal has erred in holding that the bonus payable by the applicant to its employees would not form part of the salaries paid to the employees if the payment thereof is not in accordance with the terms of their employment The finding of the Appellate Tribunal to this effect cannot be sustained.
14. Accordingly, this Income-tax Reference is allowed. The question is answered in the negative and the finding of the Appellate Tribunal on this issue in its order, dated 20-9-1986 is set aside.