COMMISSIONER INLAND REVENUE vs STANDARD ICE AND COLD STORAGE, LAHORE Ss

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COMMISSIONER INLAND REVENUE VS STANDARD ICE AND COLD STORAGE, LAHORE Ss.18(1)(d), Explanation to, 70, 34(5) & Second Schedule , Part-IV, Cl. (3A) [enacted through Finance Act, 2004]---BPD Circular No.29 dated 15.10.2002 issued by State Bank of Pakistan---Circular No.14 of 2004 dated 17.07.2004 issued by (the then) Central Board of Revenue---Benefits under clause (3A) of Part-IV of Second Schedule to the Income Tax Ordinance, 2001---Applicability---Retrospective effect---Scope---Deemed assessment order of S. 120 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') was reviewed by the Taxation Officer invoking S. 221 of the Ordinance, 2001, and addition was made by the Taxation Officer treating amount of loan as income, waived under State Bank's Amnesty Scheme in lieu of irrecoverable loans / debts while denying benefit of Clause-3A of Part-IV of Second Schedule to the Income Tax Ordinance, 2001---Taxpayer's first appeal was allowed, and addition was deleted---Department filed Reference Application against judgment passed by Appellate Tribunal Inland Revenue ('Tribunal'), whereby its appeal was dismissed while affirming order of the deletion of addition passed by Commissioner (IT/WT)-Appeals---Plea of the Applicant / Department was that extending the benefit of Clause 3A to the taxpayer against Tax Year 2004, without appreciating that Clause (3A), was inserted through Finance Act, 2004, was wrong as that Legislative intent could not be stretched otherwise to extend retrospective effect to Clause (3A)---It was the case of the applicant Department that waiver of loan, by the ZTBL under State Bank of Pakistan Banking Policy Department's Circular No.29 dated 15.10.2002 (BPD Circular No.29), had to be treated as income of the taxpayer and no benefit could be extended or claimed in the garb of Clause (3A), which was not attracted retrospectively, to the Tax Year 2004---Validity---There was another aspect of the matter; Clause (3A) was deleted through Finance Act, 2008---And lately such benefit, drawn by way of waiver of profit on debt or the debt itself under State Bank of Pakistan Banking Policy Department's Circular No.29 dated 15.10.2002, was declared as income upon adding Explanation to clause (d) subsection (1) of S. 18 of the Ordinance, 2001, by virtue of Finance Act, 2011---In the wake of deletion of Clause (3A), through Finance Act, 2008 and addition of Explanation to clause (d), it was evident that no exemption, in terms of subsection (5) of Ss. 34 & 70 of the Ordinance, 2001, thereafter was available, but such benefit could not be denied from the date of the effectiveness of BPD Circular No.29 till deletion of Clause (3A)---Taxpayer, in the present case, was fully covered---Question of law was answered in the affirmative and decided against the Department, declaring that Clause (3A) was declaratory and had retrospective effect---Reference application , filed by the Department, was dismissed, in circumstances. Citation Name: 2025 PTD 35 LAHORE-HIGH-COURT-LAHOREBookmark this Case COMMISSIONER INLAND REVENUE VS STANDARD ICE AND COLD STORAGE, LAHORE Ss. 70, 34(5) & Second Schedule, Part-IV, Cls. (3A) [enacted through Finance Act, 2004]---BPD Circular No.29 dated 15.10.2002 issued by State Bank of Pakistan---Circular No.14 of 2004 dated 17.07.2004 issued by (the then) Central Board of Revenue---Benefits under clause (3A) of Part-IV of Second Schedule to the Income Tax Ordinance, 2001---Applicability of---Retrospective effect---Scope---Deemed assessment order of S. 120 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') was reviewed by the Taxation Officer invoking S. 221 of the Ordinance, 2001, and addition was made by the Taxation Officer treating amount of loan as income, waived under State Bank's Amnesty Scheme in lieu of irrecoverable loans / debts while denying benefit of Clause-3A of Part-IV of Second Schedule to the Income Tax Ordinance, 2001---Taxpayer's first appeal was allowed and the addition was deleted---Department filed Reference application against judgment passed by Appellate Tribunal Inland Revenue ('Tribunal'), whereby its appeal was dismissed while affirming order of the deletion of addition passed by Commissioner (IT/WT)-Appeals---Plea of the applicant / department was that extending the benefit of Clause 3A to the taxpayer against Tax year 2004, without appreciating that Clause (3A) was inserted through Finance Act, 2004, was wrong as that the Legislative intent could not be stretched otherwise to extend retrospective effect to Clause (3A)---It was the case of the applicant department that waiver of loan, by the ZTBL under State Bank of Pakistan Banking Policy Department's Circular No.29 dated 15.10.2002 (BPD Circular No.29), had to be treated as income of the taxpayer and no benefit could be extended or claimed in the garb of Clause (3A), which was not applicable retrospectively to the Tax year 2004---Validity---Clause (3A) ousts applicability of subsection (5) of Ss.34 & 70 of the Ordinance, 2001 and extends benefit(s), derived by way of waiver of debt(s) by the Banks, under State Bank's BPD Circular No.29 dated 15.10.2002 ('BPD Circular No.29')---Purpose of BPD Circular No.29 was to facilitate recovery of irrecoverable-cum-non-performing loans against payment of FSV of the properties / securities, determined according to the mechanism provided under the BPD Circular---It was a one-time opportunity, having cut-off date of 14.04.2003 - which was extended later, but still such extension had no consequence with respect to the issue-at-hand---Such benefit was available and effective from the date of BPD Circular No.29, i.e., 15.10.2002 and applicability whereof could not be denied for the purposes of Tax Year 2004---Clause (3A) was impregnated with retrospectivity, and any construction contrary to such plain and textual interpretation would render it superfluous---Reference to the date of effectiveness of BPD Circular, i.e., 25.10.2002 was a clear indication, let alone an explicit declaration---It is absurd to construe Clause (3A) in a manner as suggested by the department - to apply it prospectively and extend benefit to one set of debtors - post Finance Act 2004 - and deny benefit to other taxpayers, both benefactors of BPD Circular 29 - a distinctive class of persons---Clause (3A) possessed all the features and attributes of a curative, declaratory and beneficial enactment, affirming the spirit of the BPD Circular---Retrospectivity of Clause (3A) stood endorsed in terms of the clarification made, by the then CBR, through Circular No.14 of 2004 dated 17.07.2004 - reference to which was made in the order of CIT(A)---In these circumstances, mere insertion of Clause (3A) through Finance Act, 2004, would not make its application prospective, denuding it of its curative and declaratory character---Retrospective effect to Clause (3A), in view of the facts and circumstances of the present case, could not be denied---Question of law was answered in the affirmative and decided against the department, declaring that Clause (3A) was declaratory and had retrospective effect---Reference application , filed by the Department , was dismissed, in circumstances.

COMMISSIONER INLAND REVENUE vs STANDARD ICE AND COLD STORAGE, LAHORE Ss — 2025 PTD 35 LAHORE-HIGH-COURT-LAHORE

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