SHAHZAD AKBAR KHAN, J.-- By this common judgment we propose to dispose of the three with petitions bearing No. 120/95, No. 129/98 with C.M. No. 116/98 and No. 147/98 with C.M. No. 139/98, as common questions of law and facts are involved in all the three petitions.
2. Facts in brief giving rise to the instant Constitutional petitions are that the petitioners are Officers in Habib Bank Limited and regular assessee's of Income-tax Circle 45 D.I.Khan. The Habib Bank Limited pays to the petitioners 70% of their salaries against self-occupied rented houses of their own which according to the petitioners are not liable to be taxed under the Income-tax law.
3. That now respondent No. 5 has imposed upon all the petitioners a tax under section 19(3) read with section 16(2) of the Income Tax Ordinance, 1979 and circular letter No. IT-JI-13 (24) 80-81, dated 8.7,1995 on the income being received by them from Habib Bank Limited on 70% of their salary for the assessm ent years mentioned therein.
4. In order to appreciate the conversy, Section 16 is reproduced as below:-- SECTION 16. SALARY
(1) The following incomes shall be chargeable under the head "salary", namely:-
(a) any salary due to the assessee from an employer in the income year, whether paid or not; and
(b) any salary (including arrears (or advances of salary) paid to the assessee in the income year by an employer: Provided that where any salary is included in the total income on the basis of that it has become due to an assessee, it shall not be included again on the basis that it is paid.
(2) For the purposes of sub-section (1):--
(a) "salary" includes:--
(i) any wages;
(ii) any annuity, pension or gratuity;
(iii) any fees, commissions, allowances, perquisites or profits in lieu of, or in addition to, salary or wages;
(b) "perquisite" includes:-
(i) the value of rent free accommodation;
(ii) the value of any concession in the matter of rent respecting any accommodation;
(iii) any sum payable by the employer whether directly or indirectly, to effect an insurance on the life of, or to effect a contract for any annuity for the benefit of, the assessee, or his spouse or any dependent child;
(iv) the value of any benefit provided free of cost or at a concessional rate;
(v) any sum paid by an employer in respect of any obligation of an employee;
(c) "Profits in lieu of salary" includes.
(i) the amount of any compensation due to, or received by, an assessee from his employer at, or in connection with, the termination of, or the modification 01 any terms or conditions relating to, his employment;
(ii) any payment due to, of received by, an assessee from a provident or other fund to the extent to which it does not consist of contributions by the assessee and the interest on such contributions;
(d) "employer" includes a former employer; and
(e) "employee", in relation to a company, includes a managing director or any other director or other individual, who, irrespective of his designation, performs any duties or functions in connection with the management of the affairs of the company.
5. The learned counsel appearing on behalf of the petitioners has seriously attacked the Notification No. C-1/167- 1/ITP/86, Government of Pakistan, C.B.R. Islamabad dated 16th July, 1996, and has made reference to the explanation added to Section 19 of the Income Tax Ordinance, 1979 by Finance Act, 1996. The explanation reads as follows:- "For the purpose of this section, any property, the owner of which is in receipt of any rent, whether in cash or otherwise, whether from employer or otherwise, shall not be taken to be in the occupation of such owner for the purposes of his own residence".
The explanation is very clear and does not speak about its applicability with retrospective effect.
However, the notification mentioned above is in the following language:--
3. Taxability of self-hired houses (Explanation to section 19) sub-section (3) of section 19 excludes from the application of section 19 cases where property is in the occupation of the owner for purposes of his own residence. The phrase "purpose of own residence" has been elaborated by the insertion of an explanation to the effect that a house given on rent, in whatever manner shall not be considered to be self-occupied.
This is to set at rest the controversy and consequent litigation on the point. The clarification is deemed to have always been there.
It means that the Central Board of Revenue, contrary to the intention of the Legislature as is evident from the above-quoted explanation, has given effect to the said notification retrospectively by adding the words "the clarification is deemed to have been there".
6. In this regard, the learned counsel made a reference to the explanation added by Finance Act, 1996 and contended that in the said explanation no such words are used so as to make the provision effective retrospectively, It clearly means that the impugned notification has overlapped the Statute which is without lawful authority. He contended that had the Legislature any intention to give effect to the newly added explanation, there was no impediment in its way to have made it expressly retrospective. Even otherwise it is a settled principle of law that wherever a law is amenable to double interpretation, then the one which favours the general public shall be preferred.
7. The learned counsel appearing on behalf of the respondents has fairly conceded that the notification stated above is violative of the statutory law and cannot be made applicable retrospectively. Thus, he conceded that the application of explanation added by way of Finance Act, 1996 would be from the day of its promulgation and not before.
8. We are, therefore, in view of the clear-cut concession of the learned counsel for the respondents, accept all the three writ petitions and declare the imposition of the tax prior into coming into force of the explanation by way of amendment through Finance Act, 1996 as without lawful authority and of no legal effect. However, in view of the legal position, the tax shall be payable after 30th June, 1996.