NASIM SIKANDAR, J.- This is a case stated by the Lahore Bench of the Income Tax Appellate Tribunal.
The question framed for our opinion and answer are stated below:-
(a) Whether item manufactured by the assessee company is entitled to 10% rebate of super tax as provided under any of the provisions made under sub-clause (v) of Clause (1) of Para A of Part-II of the First Schedule to the Income Tax Ordinance, 1979?
(b) Whether on the facts and circumstances of the case, the Tribunal was justified in allowing super tax rebate to the assessee company under sub- clause (v) of Clause (1) of para A of Part-II of the first Schedule of the Income Tax Ordinance, 1979 by holding that an element of preserving was involved in transporting the ice cream from the factory to the sale point destination?
2. The assessee-respondent is a private limited Company which, during the period involved viz assessm ent years 1981-82 to 1986-87 engaged itself in manufacturing of Ice cream. While disclosing income at various sums in these years, the assessee claimed 10% super tax rebate as per provisions of Clause (v) of sub para (1) of para A of Part- II of the first Schedule of the Income Tax Ordinance, 1979 which at the relevant time read as under:- "a rebate of 10% to such Company in respect of its income profits and gains to which clause (c) of Section 26 applies or which are derived by it in Pakistan from processing freezing, preserving and canning of food, vegetable, fruit, grain, meat, fish' and poultry."
3. However, the Assessing Officer refused the claim on the ground that the last" para of the afore- said clause clearly stated different types of food items like fruit, grain meat etc. Indicating the intention of the legislature that 10% rebate on super tax was allowable only to the companies which were engaged in preserving, canning, freezing or processing of the items which exist as food in their natural shape.
4. The learned first appellate authority also agreed. However, on further appeal, a Division Bench of the Income Tax Appellate Tribunal found the assessee to be entitled to the said rebate, In view of the learned Member after freezing in the factory, the ice cream was transported in freezer-fitted motor vans for delivery at selling points for distribution to far flung places. The activity, according to the learned Member was a distinct and additional activity with the sole purpose to ensure that the food item is preserved and retained its flavour and quality so that it is not decomposed, In their view, activity could safely be classified as falling under the category of "preserving" as mentioned in paragraph-A (1)(v) of Part II of the first schedule to the Ordinance.
5. After hearing the learned counsel for the Revenue, we will agree that the learned Tribunal unnecessarily stretched the meaning of the words of the statute to hold that the respondent was entitled to the claimed rebate. The Assessing Officer was clearly justified in holding that "processing, freezing, preserving and canning of food, vegetable, fruit, grain meat, fish and poultry" had restricted application which certainly could not be extended to ice cream or its products. The view adopted by the Tribunal that after the ice cream had been prepared and till it was distributed, the activity undertaken by the assessee company amounted to "preserving" has also not appealed us. The idea was certainly farfetched and not relevant to the intention of the law for which the afore-said concession was allowed. A rebate in rate of tax takes the colour of exemption and therefore, the same principle of interpretation are required to be adopted. These principles as expounded by the Hon'ble Supreme Court in 1992 S.C.M.R. 1652 Re: Army Welfare Sugar Mills Ltd. V.
Federation of Pakistan clearly indicate a strict interpretation of these provisions. Also that in case of an ambiguity, the interpretation has to be the one in favour of the Revenue.
6. In the case in hand, the learned Tribunal adopted a contradictory view. On one hand they did not subscribe the theory that ice cream was a food product which after the process of hardening and freezing was entitled to the concession of rebate in super tax. At the same time by holding the ice cream as a food item they proceeded to allow the concession of rebate on account of the alleged activity after the process of production had already been completed. To preserve a thing means to get it in a certain condition for a certain period of time to ensure the quality as well as utility of the food item after a certain period of time. In the case in hand, it was only a distribution to various outlets where the re-tailers had their own refrigerators and other similar kinds of machinery to receive the item and to get it in a certain form till it actually reached the hands of buyers. The process in which the prepared ice cream was transported from Factory to sale of-lets was not of the kind of "preservation" contemplated by the afore-said provisions of the First Schedule of the Ordinance. Also we are of the view that the Tribunal was wrongly impressed by the view expressed by Ministry of Commerce in their letter dated 8.10.1987 wherein they had rated ice cream under the category of Dairy Industry. The assessee never crystalized the context in which that opinion was expressed. However, eyen if that be correct in its own limited meaning, the concession of rebate was not given even to Dairy Products. It was meant for the purpose and to encourage an industry which was engaged in processing, freezing, preserving and canning of food, vegetable, fruit, grain, meat, fish and poultry. The assessee company was evidently not processing, preserving or canning any of the seven items given in the said clause. The use of word vegetable, fruit, grain etc. After the word "food" clearly specified and restricted the meaning of the word "food" in terms of the six categories which followed. Obviously the word "food" does not admit of a restricted meaning. One person's food may be a health hazard for the other. The use of specific words in the clause after the use of general expression of "food" clearly indicated the intention of the legislature that 10% rebate on the super tax was allowable only to those companies which were engaged in processing, freezing, preserving and canning of food, vegetable, fruit, grain, meat and poultry. Since the ice cream produced by the respondent assessee company did not fall in any of the said categories, the learned Tribunal, as observed earlier, was not correct in recording the afore-said finding, Also we are of the view that the meanings given by Ministry of Commerce, Islamabad had no relevancy to the concession claimed by the Company.
7. Lastly, we would like to express that the learned Tribunal Manifestly mis-understood the opinion expressed by this Court in Re: Crescent Sugar Mills and Distillery Ltd. V. C.I.T. Lahore, 1981 (430) Tax-1.
8. In the perspective of the afore-said judgment and the provisions of the First Schedule of the Income Tax Ordinance, 1979 our answer to the question is in the negative.