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I. T. A. No. 573/ KB of 1983-84, decided on 10th November, 1986.
--S. 22-A--Assessee filing return showing loss, held, was under no obligation to pay any amount of tax on basis of return.
--S. 45-A--Provisions of S. 45-A of Act, does not cover case of an 5sessee who is not required to pay-any amount of tax on basis of return either on account of total income returned, being not exceeding maximum amount which is not chargeable to tax or where total income returned is a loss.
-Ss. 22-A & 45-A--Words "has paid tax under S.22-A" used in S.45-A cannot be read as- "has paid no tax under S. 22-A"--Provisions of 45-A, held, was a charging section and was to be strictly interpreted--To read provisions of S. 45-A in negative would be contrary to all known principles of interpretation.
- ---Ss. 22-A & 45-A--Income-tax--Assessee's total income during previous year not exceeding maximum amount which was not chargeable to tax and assessee was under no obligation to file a return under S. 22(1)- Provisions of S.22-A, held, would not be attracted in such a case and provisions of S.45-A as a necessary corollary would not be made applicable.
Muhammad Farid, D.R. for Appellant.
Nemo for Respondent.
Date of hearing: 22nd October. 1986.
--This appeal pertaining charge year 1978-79, is directed against the order of learned Commissioner of Income-tax (Appeals) Zone-III, Karachi, whereby he has relying upon the decision of the Appellate Tribunal in I.T.A. Nos.462 and 463/ KB of 1978-79, dated 6th February,1979 set aside the order of the Income-tax Officer regarding the levy of additional tax under section 45-A of the repealed Income-tax Act, 1922 with the direction to follow the principle as laid down by the Tribunal vide its above referred decision. We are satisfied that the issue involved in this appeal is fully and conclusively covered by the decision of the Appellate Tribunal which, has been referred to and relied upon by learned Commissioner of Income-tax (Appeals) and hence it deserves to be summarily rejected. The learned Departmental Representative however, submitted that the Division Bench of the Appellate Tribunal does not appear to have correctly interpreted the provisions of section 45-A of the Act and hence he prayed that the case may be recommended to be heard by a Full Bench. We do not think that there is any substance in this contention. Section 45-A of the Act, as it stood at the relevant time is reproduced below:---
"45-A Additional tax . for delayed payment.-- Where any assessee--
(a) fails to pay the tax due from him, or
(b) has paid tax under section 22-A and the tax so paid is less than 80 per cent of the tax payable as a result of completion of the relevant assessment under section 23,
he shall, without prejudice to his liability under any other provisions of law, pay an additional amount of tax equal to 15 per annum of,--
(i) in cases referred to in clause (a), the amount of tax due from him from the date on or before which it was originally made payable (hereafter in this section referred to as the .said date) to the date of its payment;
(ii) in cases referred to in clause (b) the amount by which the tax paid under section 22-A falls short of 80% of tax payable under section 23, from the date of payment of the tax under section 22-A to the date of completion of the assessment under section 23:
Provided that nothing contained in this subsection shall apply to any tax payable under section 18-.A:
Provided that where at the request of the assessee, the tax is allowed to be paid in instalments, such additional amount of tax shall be payable in respect of each instalment from the said date to the date on which it is paid:
Provided further that where, upon an appeal under section 31 or section 33, or revision under section 33-A, or a reference to the High Court under section 66, or in appeal to the Supreme Court under section 66-A, the amount on which tax was payable under this section is reduced, the additional amount of tax shall be reduced accordingly and the additional amount paid in excess, if any, shall be refunded together with the amount of tax that is refundable."
Further, section 22-A of the Act is as under:-
-- Every person who is required to furnish under subsection (1) of section 22 shall pay the amount of tax payable on the basis of the said return as reduced by the amount of any tax already deducted from his income under section 18 or paid by him under section 18-A, in the following manner:-
| (a) where the whole are the major portion of total income consists of income to which the Sixth Schedule applies; | 50 % tax on the date on which he furnishes the return and the balance on 15th day of May next following. | < [if supportMisalignedRows]>
| (b) in other cases furnishes the return." | on the date on which he | < [if supportMisalignedRows]>
2. A bare perusal of section 22-A makes it manifestly clear that every person who is required to furnish return under section 22(1) is under a legal obligation to pay the amount of tax payable on the basis of the said return. The asses see-respondent before us admittedly was not obliged to pay any amount of tax payable on the basis of return inasmuch as it had filed a return for the year under appeal, showing a loss at Rs.15,761. The default of payment of the amount of tax, if any, payable on the basis of the return filed by a person has been made, inter alia punishable under section 45-A inasmuch as such person has to pay an additional tax in the manner and to the extent provided therein. Section 45-A, however, does not cover a case of an assessee who is not required to pay any amount of tax on the basis of return either on account of the total income returned being not exceeding the maximum amount which is not chargeable to tax, or the total income returned is a loss, as in the instant case, the tax became payable upon the service of notice of demand in the prescribed form specifying the sum payable by the assessee as laid down in section 29 and not upon submission of the return of income disclosing the loss. Section 45-A is couched in a positive language, namely, that, if a tax paid under section 22-A is less than 80% of tax payable as a result of completion of the relevant assessment under section 23, the assessee shall pay an additional amount of tax at the given rate from the date of the payment of the tax under section 22-A to the date of completion of the assessment under section 23. The words "has paid tax under section 22-A" cannot be read as "has paid no tax under section 22-A"
3. Section 45-A is a charging section and hence it is to be strictly interpreted. To read provisions of section 45-A(b) in the negative would be contrary' to all the known principles of interpretation of statutes. It was admittedly the first year of assessee's business and since its total income during the previous year did, as per its books of account, exceed the maximum amount which was not chargeable to tax, it was not obliged to file a return under section 22(1) of the Act. The assessee was thus not a person who was required to furnish a, return under subsection (1) of section 22 and hence even the provisions of section 22-A were not attracted to this case inasmuch as it is specifically provided in section 22-A that "every person who is required to furnish a return under subsection(1) of section 22 shall pay on or before the date on which he furnishes such return, the amount of tax payable on the basis of the said return as reduced by the amount of any tax already deducted from his income under section 18, or paid by him under section 18A. Since the assessee, as already stated, was not required to furnish a return under section 22(1) as explained above, the provisions of section 45A as a necessary corollary, could not be l made application to its case.
4. The facts and circumstances of the case decided by the Appellate Tribunal vide I. T. A. Nos.462 and 463/KB of 1978-79 (supra) are identical to the facts and circumstances of this case. Moreover, we are clearly of the view that the law as enunciated by the Tribunal in its aforesaid decision is, in our opinion, too, correct and hence the learned Commissioner of Income-tax (Appeals) has rightly decided this issue in hand by directing the Income-tax Officer to follow the principle as laid down therein.
5. In the result, the appeal is held to be devoid of force and is dismissed accordingly.
M. Y. H. Appeal dismissed.
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