Find a Lawyer

I.‑T. A. No. 754/IB of 1985‑86, decided on 26th August, 1986.

‑‑‑S. 10‑‑Levy of surcharge‑ ‑Jaria (Jem Setter)‑‑Person who derived income from setting Jems in ornaments' on receipt of labour charges, held, not a person engaged in business of manufacturing and sale of gad and silver ornaments‑‑Levy of surcharge in case of a jem setter was, therefore, wholly misconceive d‑‑Jaria could not be treated or held to be a jeweller so as to be visited with levy of surcharge on his income.

Tahir Latif Sheikh, D.R. for Appellant.

Respondent in person.

Date of hearing: 9th July, 1986.

This departmental appeal pertains to charge year 1984‑85. It seeks to call in question the order of the learned Appellate Assistant Commissioner, Range ' B' Multan whereby he has deleted the levy of surcharge on the assessee‑respondent by treating him to be not a manufacturer of gold and silver ornaments. The assessee filed return declaring total income of Rs.18,100. While processing it under section 59 (1) of the Income‑tax Ordinance, 1979, the Income‑tax Officer levied surcharge @ 6% on total income. On appeal, the learned Appellate Assistant Commissioner deleted the levy of surcharge. His order is reproduced below:

"Scrutiny of the relevant record reveals that the appellant is a Jaria 'Gem Setter' and not a manufacturer which fact is also proved from the A.A.C‑B Range's Order Nos.2020 and 2021, dated 9‑5‑1984. As the appellant is a Jaria by profession, levy of jewellers surcharge is, therefore, ordered to be deleted."

2. Relying upon a single Bench decision of the Appellate Tribunal assed in I.T.A. No.885/LB/83‑84, dated 17‑4‑1985 the learned Departmental Representative contended that gem setting is a process of manufacturing of ornaments and, therefore, the assessee‑respondent as rightly subjected to levy of surcharge. The learned authorities representative of assessee‑respondent, on the other hand, submitted hat assessee derives income from setting gems in the ornaments made jewellers on payment of labour charges only.

3. Upon perusal of the abovereferred orders of my learned brother he Judicial Member (Mr. Abrar Hussain Naqvi) I find that he has, in his order, dated 17‑4‑1984 (supra) held that "the gem setting is a part of manufacturing process". whereas in his latter order, dated 23‑1‑1985 passed in I.T.A. No:884/LB/83‑84 he held that "no doubt the process of gem setting is a manufacturing process but the surcharge could only be levied if the assessee has been manufacturing on his own account". I have been able to lay my hand on two other decisions passed by my learned brother, Mian Abdul Khaliq, Judicial Member, wherein he has in unambiguous terms held that the jem setter cannot be a manufacturer. In his order, dated 3‑8‑1986 passed in I.T.A. No.879/LB of 1958‑86 he held as under:‑

6. On my enquiry, the respondent stated that he was setting gems in the ornaments manufactured by the jewellers on receipts of labour charges. The finding of the learned Appellate Assistant Commissioner to the effect that 'appellant is a Jaria' has also not been assailed in the grounds of appeals.

7. Having heard the arguments of the parties' representatives and upon perusal of the abovereferred orders, I am convinced that a person who derives income from setting gems in the ornaments on receipt of labour charges cannot by any stress of reasoning be held to be a person engaged in the business of manufacturing and sale of gold and silver ornaments. The levy of surcharge in the case of a gem setter is, therefore, wholly misconceived. Agreeing, therefore, with my learned brother Mian Abdul Khaliq, Judicial Member, I would hold that 'Jaria' (gem setter) cannot be treated or held to be a jeweller so as to be visited with the levy of surcharge on his income.

8. In the result the departmental appeal fails and the impugned order of the learned Appellant Assistant Commissioner is upheld.

M.Y.H. Appeal dismissed.

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.