This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 has been filed by M/s. National Cooperative Supply Corporation Ltd. Through its General Manager against the Federation of Pakistan and other Authorities of Income Tax.
2. The petitioner is admittedly a Society registered under the Cooperative Societies Act, 1912 and later on under the Cooperative Societies Act, 1925. It deals in fertilisers, seeds and other agricultural chemicals and equipments and is also running a cotton ginning pressing factory at Hasilpur. Ever since 1968-69, the petitioner was being assessed as an Association of Persons by the Income Tax Authorities. However, in the year 1991-92, the status of the petitioner was changed from Association of Persons to Private Limited Company by the Deputy Commissioner of Income Tax/Wealth Tax vide order dated 30-5-1994.
3. Aggrieved, the petitioner moved an application under section 156 of the Income Tax Ordinance, 1979 for correction of the status of the Company but the same was refused. The petitioner took the matter to the Commissioner of Income Tax in revision under section 138 of the Income Tax Ordinance, 1979 but that, too, was dismissed with the result that the petitioner has now approached this Court.
4. The learned counsel for the petitioner has submitted that for the purposes of Income Tax Laws, the Cooperative Society is separate and distinct from a Company created under the Companies Ordinance, 1984 and notwithstanding that the Cooperative Society continues to be an Association of Persons for the purpose of Income Tax laws. In this connection, the learned counsel has drawn the attention of this Court to the definition of "Company" appearing in section 2(16) of the Income Tax Ordinance, 1979 which reads as under:--- .
2(16). "Company" means:---
(a) a company as defined in the Companies Ordinance, 1984, or
(b) a body corporate formed by or under any law for the time being in force: or (bb)a trust formed by or under any law for the time being in force; or
(c) a body corporate incorporated by or under the law of a country outside Pakistan relating to incorporation of companies; or
(cc) a modaraba as defined in the Modaraba Companies and Modaiabas (Flotation and Control)
Ordinance, 1980,
(d) the Government of a Province;
(e) a foreign association, whether incorporated or not, which the Central Board of Revenue may, by general or special order, declare to be company for the purposes of this Ordinance for such assessm ent year or years (whether commencing before, on or after the first day of July, 1979) as may be specified in the said order.
Reference to subsection (17) of section 2 of the Income Tax Ordinance, 1979 was also made which reads as under:--- 2(17). "Cooperative Society" means a cooperative society registered under the Cooperative Societies Act, 1912 (XI of 1912) or under any other law for the time being in force in Pakistan for the registration of co-operative societies;
5. It is obvious from the above, a Cooperative Society has been separately defined in the Income Tax Ordinance, 1979. This clearly shows that the law itself has treated a Company as different and distinct from Cooperative Society as otherwise there was no occasion for a separate circumstances, the respondents could not change the status from "Cooperative Society" to a "Private Limited Company". Further--more, the petitioner was being treated as "Association of Persons" since 1968-69 and the respondents could not deviate. From this practice.
6. It goes to the credit of Mr. Zia Ullah Kdyani, Advocate that he has drawn the attention of this Court to the judgment of Sindh High Court reported as S.M. Zakir v. Commissioner of Income-tax (East)
Karachi and another (PLD 1976 Karachi 1022) wherein it was held that Cooperative Society registered under the Sindh Cooperative Societies Act, cannot be treated as an Association of Persons but this judgment cannot be given effect to in view of the pronouncement of the Supreme Court in Jullundur Cooperative Transport Society Ltd. v. Income-tax Officer. 1977 PTD 288.
7. Mr. Shafqat Mahood Chohan, learned counsel for the respondents has submitted that according to section 9 of the Income Tax Ordinance, 1979, Income tax is chargeable on the income of a "person" which according to section 2(32) of the Ordinance comprises of 6 categories. According to the learned counsel as Cooperative Society is a body corporate it can be treated as a limited Company. Reference was also made to section 23 of the Cooperative Societies Act:
8. There is no merit in this contention of the learned counsel for the respondents. So far as the definition of "person" in section 2(32) is concerned, it not only includes an individual but also an association of 8 persons, a Company and every artificial juristic person. If under the Income Tax Ordinance, a company was to be equated with Cooperative Society, there was no need of separately defining the Cooperative Society under section 2(17) of the Income Tax Ordinance, 1979.
9. The learned counsel for the respondents himself conceded that at various places in the Income Tax Ordinance, Company has been separately dealt with from the Cooperative Society. Be that as it may, the matter stands concluded by the pronouncement of the Supreme Court in Jullunduer Cooperative Transport Society Ltd. v. Income Tax Officer 1977 PTD 288,wherein the Supreme Court of Pakistan has been pleased to rule that for the purpose of Income Tax Act, the Society is to be assessed as an "Association of Persons" and not as an individual.