COMMISSIONER OF INCOME TAX, LEGAL DIVISION, R.T.O. VS MATRIX PRESS (PVT.) LTD., 2016 PTD-KARACHI-HIGH-COURT-SINDH 97 (2015)

Income Tax Ordinance (XLIX of 2001)---

----Ss.21(1)(m), 22(15) & 133---Depreciation, claim of---Disallowance of expenses---Concurrent findings of facts---Authorities were aggrieved of finding of Appellate Tribunal holding that claim of initial and normal depreciation were allowable in spite of facts that same related to repair and maintenance---Validity---Question relating to disallowance of expenses or claiming depreciation on fixed assets while transferring expenses on construction work incurred in previous years which was completed during tax year under consideration were questions of fact which had been dealt with in detail by forums below by recording concurrent findings on such facts---Such finding of facts could not be disturbed in Reference under S. 133 of Income Tax Ordinance, 2001, unless such concurrent finding was either perverse or contrary to record---Findings of facts did not give rise to a question of law which could be entertained by High Court under its reference jurisdiction---No merit was found in reference application, whereas questions proposed were questions of facts and no question of law had arisen from order passed by Appellate Tribunal---Reference was dismissed in circumstances.

Commissioner of Income Tax v. Electronic Industries Ltd. Karachi 1988 PTD 111 and E.M. Oil Mills and Industries Ltd. v. Commissioner of Income Tax, Audit Division II, Companies III, Karachi 2011 PTD 2708 rel.

Amjad Javaid Hashmi for Applicant.

Nemo for the Respondent.

Date of hearing: 7th May, 2015.

ORDER

AQEEL AHMED ABBASI, J.---Through instant reference application, applicant department has proposed the following questions, which according to the learned counsel for the applicant, are questions of law arising from the impugned order passed by the Appellate Tribunal Inland Revenue of Pakistan, Karachi, ITA No.352/KB/2010 (Tax Year 2007) under Section 122(1):--

"(1) Whether on the facts and under the circumstances of the case learned ATIR, Karachi was justified in holding that the claim of initial and normal depreciation are allowable inspite of the facts that the same relates to 'repair and maintenance' keeping in view the provisions of Section 22(15) of the Income Tax Ordinance, 2001, disentitled the taxpayer in claiming the depreciation on both the corners?

(2) Whether on the facts and the circumstances of the case learned ATIR, Karachi was justified the addition on account of salary (cost of service/administrative expenses) which were made in violation of law and provisions of Section 21(1) and (m) and the onus of proof the evidence rested with the taxpayer as held by the Superior Courts?

(3) Whether on the facts and the circumstances of the case the learned ATIR, Karachi was justified in rejecting the appeal on the basis of evidence produced before the Appellant Authorities not produced before the Assessing Officer at the time of assessment?"

2. Learned counsel for the applicant after having readout the impugned order passed by the Appellate Tribunal in instant case submits that the learned Tribunal was not justified while dismissing the appeal of the department by deleting disallowance in Salary expenses, directing the Taxation Officer to allow the initial depreciation claimed by the assesse, and to accept addition in fixed assets. Per learned counsel, disallowance of salary expenses by the Taxation Officer was made for the reason that the amount claimed towards salary expenses for the tax year under consideration i.e. 2007 was higher than the amount which was claimed by the taxpayer on the previous years, whereas, complete detail, along with CNIC of the employees was not furnished. It is further contended by the learned counsel that the initial depreciation claimed by the assesse for the tax year under consideration was not supported by documentary evidence, hence it was added to the net income of the taxpayer. It has been contended by the learned counsel that the impugned order of the Appellate Tribunal may be set-aside and the question proposed may be answered in favour of the applicant.

3. We have heard the learned counsel for the applicant, perused the impugned order passed by the Appellate Tribunal Inland Revenue as well as the orders of the Authorities below, which reflect that the controversy raised through instant reference application by the applicant relating to dis-allowance of salary expenses and allowing the initial depreciation on fixed assets, has been decided after detailed examination of the facts and proper application of law thereon, whereas, there is concurrent finding of two Appellate Forums on subject controversy against the applicant department. We have observed that the Taxation Officer could not substantiate the treatment meted out to the accounts of the respondent for the tax year 2007, whereas, no sufficient cause has been given, which could justify either addition towards salary expenses claimed in the profit and loss account, merely on the pretext that since such expenses are higher than the expenses as claimed by the taxpayer for the previous year, therefore, the addition was justified towards salary expenses. Similarly, the expense incurred on construction work started in the previous year and stood completed during the tax year 2007 and was accordingly transferred to fixed assets, therefore, could not be treated as an expense towards repair and maintenance falling under the provisions of Section 22(15) of the Income Tax Ordinance, 2001. Learned counsel for the applicant has not been able to produce any material, which could possibly justify the disallowance of salary expense or to disentitle to taxpayer in claiming the initial depreciation by treating the same to be relatable to repair and maintenance. We may observe that the question relating to disallowance of expenses or claiming the depreciation on the fixed assets while transferring the expenses on construction work incurred in the previous years, which was completed during the tax year under consideration, are questions of facts which have been dealt with in detail by the forums below by recording concurrent finding on such facts whereas, such finding on facts cannot be disturbed while exercising reference jurisdiction under Section 133 of the Income Tax Ordinance, 2001, unless such concurrent finding is either perverse or contrary to the record. We are of the view that a finding on facts does not otherwise, give rise to a question of law, which may be entertained by this Court under its reference jurisdiction. Accordingly, we do not find any merits in the instant reference application, whereas, the questions proposed are questions of facts and no question of law arises from the impugned order passed by the Appellate Tribunal in the instant case. Reference in this regard can be made to the cases(s) reported as Commissioner of Income Tax v. Electronic Industries Ltd. Karachi (1988 PTD 111) and E.M. Oil Mills and Industries Ltd. v. Commissioner of Income Tax, Audit Division II, Companies III, Karachi (2011 PTD 2708).

Instant reference application being devoid of any merit is hereby dismissed in limine along with listed application.

MH/C-9/SindhReference dismissed.