2011 PTD 329

ORDER

1. KHALID WAHEED AHMED, JUDICIAL MEMBER.--- The above titled appeals at the behest of the assessee-appellant are directed against the order dated 11-6-2002 pertaining to assessment years 1997-98, 1998-99 and 1992-2000 passed by the Inspecting Additional Commissioner of Income Tax, Range-II, Karachi under section 66A of the Income Tax Ordinance, 1979 (hereinafter called the repealed Ordinance).

2. The assessee-appellant, in this case, is a non-resident company of France which carries out seismic and geophysical survey for oil exploration companies operating in Pakistan. Returns for the assessment years 1997-98, 199.8-99 and 1999-2000 were filed to declare loss of Rs.1,65,91,553 income of Rs.27,730,988 and loss of Rs. (6,076,394) respectively. The declared results for the three years under consideration are reproduced as hereunder:

2. Assessment year 1997-98

3. CGG (Pakistan)

4. 17,509,245

5. BPB Wireline

6. 1,561,901

7. Shell Pakistan

8. -

9. Tullow Pakistan

10. 72,594,209

POL

11. 96,921,486

12. Union Texas Pakistan

13. 1,180,328

14. Lasmo Oil

15. 62,549,741

16. OMV Pakistan

17. -

18. Premier Exploration

19. 75,254,222

20. B.G. Pakistan

21. -

22. Unocal Pakistan

23. -

24. Occidental Pakistan

25. -

PPL

26. 76,305,125

27. Premier Pakistan

28. 403,876,257

29. Add: Other income

30. 1,036,353

31. 404,912,609

32. Less: Expenditure

33. 421,504,162

34. (loss)/income

35. 16,591,553

36. 1998-99

37. 1999-2000

38. CGG (Pakistan)

39. 20,116,136

40. 1,206,539

41. BPB Wirline

42. 2,869,804

POL

43. 3,312,015

44. 217,189

45. Union Texas Pakistan

46. 3,296,202

47. -

48. Lasmo Oil

49. 404,009,614

50. 16,595,173

51. B.G. Pakistan

52. (2,374,033)

53. -

54. Occidental Pakistan

55. (154,560)

56. -

57. Orient Petro

58. -

59. 919,000

OMV

60. -

61. 3,385,225

62. Shell suede

63. -

64. 22,270,219

65. Premier Pakistan

66. 2,010,595

67. 202,437,715

68. 433,085,773

69. 247,031,092

70. Add: other income

71. 15,135,845

72. 3,932,348

73. 448,221,618

74. 250,963,440

75. Less: Expenditure

76. 420,490,630

77. 257,039,834

78. (loss)/income

79. 27,730,988

80. (6,076,394)

81. Assessments for the three years were framed under section 62 of the Repealed Ordinance in the following manner:--

82. Assessment year 1997-98

83. (1)

84. Net Loss as per account

85. 16,591,553

86. (2)

87. Less: Accounting Depreciation for separate Consideration

88. 59,760,003

89. (3)

90. 43,168,450

91. Add backs of unverifiable inadmissible expenses

92. (1)

93. Sub-contracting cost

94. 5,504,697

95. (2)

96. Spare and Consumable

97. 4,625,133

98. (3)

99. Food personnel

100. 1,798,386

101. (4)

102. Rent, Rates and Taxes

103. 1,533,250

104. (5)

105. Repairs and Maintenance

106. 760,234

107. (6)

108. Travelling expenses

109. 1,160,951

110. (7)

111. Miscellaneous expenses

112. 706,753

113. (8)

114. Head Office expenses as discussed above

115. 10,000,000

116. (9)

117. Provision against slow moving stock and supplies

118. 1,074,332

119. (10)

120. Provision for doubtful debts

121. 175,000

122. 27,338,736

123. 70,507,186

124. Less: Tax depreciation as per annexure

125. 55,739,602

126. Total Income for the year

127. 14,767,584

128. Assessment year 1998-99

129. Net income as per account

130. 27,730,988

131. Less: Accounting depreciation

132. 45,820;345

133. For separate consideration

134. Provision written back on account of slow moving stock and supplies already taxes in assessment year 1997-98

135. 546,191

136. 46,366,536

137. 18,635,548

138. Add backs of unverifiable inadmissible expenses

139. (1)

140. Sub-contracting cost

141. 5,789,913

142. (2)

143. Rent, Rates and Taxes

144. 1,005,663

145. (3)

146. Repairs and Maintenance

147. 1,126,465

148. (4)

149. Spare and Consumables

150. 6,625,211

151. (5)

152. Food expenses

153. 1,713,072

154. (6)

155. Travelling

156. 1,160,487

157. (7)

158. Miscellaneous expenses

159. 762,492

160. (8)

161. Head Office expenses as discussed above

162. 20,000,000

163. (9)

164. Provision against Doubtful debts

165. 9,830,810

166. 48,014,113

167. 29,378,565

168. Less: Tax depreciation as per

169. Annexure

170. 41,989,940

171. Total Income for the year

172. 71,368,505

173. Assessment year 1999-2000

174. Net loss as per account

175. (6,076,394)

176. Less: Accounting Depreciation for separate

177. 30,064,603

178. Consideration

179. 23,988,209

180. Add backs as discussed above

(1) Sub-contracting cost

181. 943,736

(2) Rent, Rates and Taxes

182. 256,553

(3) Repair and Maintenance

183. 600,743

(4) Spare and Consumables

184. 3,063,474

(5) Food expenses

185. 848,018

(6) Travelling

186. 573,678

(7) Miscellaneous expenses

187. 879,078

(8) Head Office expenses as discussed above

188. 12,000,000

(9) Fixed asset written off

189. 26,586,924

190. 45,752,204

191. 69,740,413

192. Less: Tax depreciation

193. 26,559,121

194. Provision written back on Account of slow moving Stock and doubtful debts Already taxes in assessment Years 1997-98 and 1998-99

195. 2,269,885

196. 28,829,006

197. Total income for the year

198. 40,911,407

199. The assessments framed by the DCIT under section 62 of the repealed Ordinance were found to be erroneous so far as prejudicial to the interest of Revenue by the IAC of Income Tax, Range-II, Companies-1, Karachi who proceeded to initiate proceedings under section 66A of the repealed Ordinance. Show-cause notices were issued on 24-2-2001 whereby the assessee was confronted that since it had never entered in the execution of contract for exploration and production of petroleum therefore the special treatment under clause (j) of Rule 8(5) of the Third Schedule to the repealed Ordinance was incorrectly given by the Assessing Officer. According to learned A.R. the company was simply providing technical know-how/services to the oil exploration companies operating in Pakistan, therefore sale proceed on account of re-export of plant and machinery were to be adopted under clause (i) of the Rule 8(5) of the Third Schedule to the repealed Ordinance. The explanation offered by the assesses was not found tenable by the IAC who relying on the decision of ITAT dated 1-1-2002 in I.T.As. Nos. 1447 and 1432/KB of 2001 modified the assessments framed by the DCIT for all the three years under consideration to the extent that the sale proceed on account of re-export of machinery were considered as per clause (i) instead of clause (j) of Rule 8(5) of the repealed Ordinance. Thus the sale proceed were taken as original cost for all the three years under consideration and the demands were recomputed accordingly. The order passed by the IAC under section 66A of the repealed Ordinance are assailed by the assesses-appellant through the instant appeals on the following common grounds for all the three years under consideration:--

(1) That the order dated June 11, 2002 issued under section 66A of the learned Assistant Additional Commissioner of Income Tax/ Wealth Tax, Range-II. Companies-I Karachi is bad in law and contrary to the facts of the case.

(2) That the learned IAC has grossly erred in law in invoking the provisions of section 66A on the basis of probabilities/ possibilities and presumptions, without taking into consideration the arguments advanced by the appellant and in disregards to the pronouncements of following case-law:

200. 1999 PTD 3229, 1999 PTD 285 and 1997 PTD (Trib.) 902.

201. (2.1) It is requested that the order under section 66A may kindly be deleted being ab initio and without lawful jurisdiction".

(3) That without prejudice to above grounds, IAC also misdirected himself in taking original cost of assets as sale proceeds in view of Rule 8(5)(i) instead of Rule 8(5)(j) without considering true facts of the case and Appellant's plea.

202. (3.1) That the case-law I.T.A. No. 1447/KB of 2001 referred by the IAC is not relevant to our case as the issues raised by the appellant in its reply has not been discussed and adjudicated in the aforesaid order.

203. (3.2) It is requested that instruction be given to treat the sale proceed in view of 8(5)(1) of Third Schedule to the Income Tax Ordinance, 1979.

3. Mr. Khalid Majid, FCA, the learned AR appeared on behalf of the assessee-appellant and Mr. Muhammad Tahir Khan the learned DR appeared on behalf of the Revenue.

4. Learned AR the assessee, at the time of hearing, requested for raising following additional ground in the grounds of appeals filed against the order passed under section 66A of the repealed Ordinance:

204. That the IAC had erred in law by invoking the provisions of section 66A without considering the fact that the case has been-barred by time.

5. Learned AR, of in his arguments contented that the order passed by the IAC under section 66A of the repealed Ordinance for the assessment year 1997-98 was not maintainable in law being barred by limitation of time. According to learned AR the original assessment for the assessment year 1997-98 was framed by the DCIT under section 62 of the repealed Ordinance on 20-3-1998. Learned AR contended that the order passed on 11-6-2002 was barred by time because the limitation to initiate proceedings under section 66A had already expired on 19-3-2002. It was the contention of learned AR that the IAC was not justified in saying that with passing of the rectification order on 3-3-2001 the limitation was to be counted from 3-3-2001. Learned AR submitted that through the rectification made on 3-3-2001 only the credit of tax paid was allowed and no rectification was made in the assessment of income or, other order. According to learned AR, the limitation was to be counted from the date of the order giving rise to the issue and not from the date of subsequent order of rectification through which only the tax credit was allowed and no change was made in the assessment order itself. In this context, the learned AR relied upon the decision of the Tribunal reported as (1986) Tax 137(sic). Learned AR contended that the additional ground raised was purely of legal nature and the facts involved therein were not disputed. According to learned AR, the issue involved in the additional ground was going to the roots of the case which could be raised at any stage during the pendency of the appeal. Learned DR, however, in his arguments, contended that the order passed by the IAC under section 66A for the assessment year 1997-98 was not barred by limitation of time. According to learned DR, the original order was substituted by the rectified Order dated 3-3-2001 therefore, the IAC was justified in initiating proceedings under section 66A which were within limitation period of four years from the date of rectified order. However, learned DR was unable to provide the details regarding facts and decision of the Tribunal in I.T.As. Nos. 902 and 904/KB/DB of 2000-01 dated 20-3-2002 relied upon by the IAC in the impugned order.

6. After hearing the arguments of learned representatives of both the parties, we are inclined to accept the request for admittance of additional ground raised by the learned AR of the assessee. We-are also in agreement with the viewpoint expressed by the learned AR that for initiation of proceedings under section 66A, the limitation period is to be reckoned from the date of the relevant order wherein the issue under consideration has been discussed and decided. In the case before us, there is no force in the contention of learned DR that the limitation period is to be counted from the date of the rectification order whereby only the credit of the tax paid was allowed and no change was made in the assessment order itself. As a result the order passed under section 66A of the repealed Ordinance for the assessment year 1997-98 stands vacated having been passed after the expiry of limitation period. Consequently, the original assessment framed under section 62 of the repealed Ordinance stands restored.

7. The main issue involved for the remaining two years under consideration as well as for the assessment year 1997-98 is that the original assessment framed for the three years were not erroneous or prejudicial to the interest of the Revenue. It was the contention of learned AR of the assessee that the IAC was not justified in initiating the proceedings under section 66A of the repealed Ordinance for the three years under consideration. According to learned AR. the provision of clause (j) of sub-rule (5) of Rule 8 of the Third Schedule to the repealed Ordinance were rightly applied by the Assessing Officer. It was the contention of learned AR that the IAC was not justified in saying that provision of Rule 8(5)(i) of the Third-Schedule were applicable in the case of the assessee. Learned AR submitted that equipment' re-exported was imported for the purpose of exploration and production of petroleum in Pakistan. Learned AR stated that the assessee-appellant carried on the work of geophysical survey by seismic reflection method under a contact executed with POL and other petroleum companies who had been granted licence for exploration and production of petroleum in Pakistan. It was the contention of learned AR that the carrying out of geophysical survey was the initial and an essential part of the process of exploration of oil. Learned AR submitted that the seismic survey and seismic exploration were the exploration techniques used during .the exploration phase. Learned AR further submitted that the geological and geophysical survey was not only essential but also necessary to be carried out as per the licence granted for exploration and production of petroleum under the Petroleum concession agreement. In this context, learned AR referred to Article III of the Petroleum Concession Agreement executed between the President of Islamic Republic of Pakistan and OGDC and other petroleum companies and stated that certain amounts was required to be allocated for the said purposes. It was the contention of learned AR that the licensee company as well as its contractors or their sub-contractors were entitled to export there items imported into Pakistan which were no more required for the operation, without any restriction and without the payment of any fee, tax or export duty. In this context, learned AR referred the clause 13.2 of Article XIII of the Petroleum Concession Agreement. It was the contention of learned AR that in view of the provision of Petroleum Concession Agreement executed by the President of Pakistan with the companies engaged in, the exploration and production of oil, the assessee was entitled to the concession allowed as per said agreement. According to learned AR the petroleum concession agreement had been executed by the President of Pakistan with the oil companies in pursuance of rules made under section 2 of the Regulation of Mines and Oilfields and Mineral Development (Government Control) Act, 1948 (hereinafter called the Act). Learned AR further submitted that under the Mining Concession Rules of 1986 the President was empowered to enter into agreement for exploration and production of Petroleum with Oil companies. Learned AR further submitted that in view of the provisions of section 4 of the Act, 1948 the provisions of Income Tax Ordinance were not applicable in case of the Petroleum Agreement executed in pursuance of the Rules framed under the said section. According to learned AR no tax could be charged on the export of equipment, used by the assessee company in the exploration of petroleum in Pakistan. Learned AR further contended that the concession to oil companies were granted by the Government to lessen the cost of petroleum for encouraging its exploration in Pakistan. In this context, learned AR referred to the Petroleum Policy, 1994 announced by the Ministry of Petroleum and Natural Resources, Government of Pakistan in March, 1994 whereby various incentives were provided for the oil companies. Learned AR further submitted that this aspect of the case was not considered by the Tribunal while deciding the appeals in I.T.As. Nos.1447 and 1432/KB of 2001 decided on 1-1-2002. Learned AR contended that the benefits or concession allowed to the company to whom a licence or lease to explore prospects and mines petroleum was granted were also available to its contractor and sub-contractor. Learned AR submitted that according to provision of section 3B of the Act of 1948 the contractors and sub-contractors of the licensee companies were also entitled to the concession specified in the Schedule as well as allowed under any other law or the rules made under the said Act. According to learned AR the concession granted as per Petroleum Concession Agreement executed by the President of Pakistan with the oil companies for the discovery and production of petroleum was applicable to the contractor and sub-contractor because of the agreement having been made in pursuance of the rule made under section 2 of the Act of 1948. It was the contention of learned AR that the assessee was a contractor of the licensee company on whose behalf the exploration work was carried out for the purpose of exploration and production of petroleum in Pakistan. Learned AR of the assessee produced a copy of contract between Pakistan Oilfields and the assessee company executed for carrying out geophysical survey by seismic reflection method in Ahmadal (East Dhornol and Central Potwar). Learned AR submitted that the agreement with the other companies were also made on the similar line. Learned AR of the assessee also referred to the C.B.R's Circular No.7 of 1981 dated July 6, 1981 and stated that the purpose as explained therein was to encourage investment in the petroleum exploration. Learned AR stated that according to the clarification of the C.B.R., the assets used for petroleum exploration brought in Pakistan under contract executed after 1-7-1.981 when exported outside Pakistan shall suffer tax to the extent of 'initial depreciation. Learned AR of the assessee submitted that while interpreting the provision of law the intention of the legislation was also to be considered if meanings were not clear. In support of his contention learned 'AR of the assessee cited the judgment of Supreme Court of India reported as 1995 PTD 741. It was the contention of learned AR that the equipment was used in the exploration of oil and thus was entitled for the benefit allowed under Rule 8(5)(j) of the Third Schedule to the repealed Ordinance, 1979 as per explanation of C.B.R through Circular No. 7 of 1981. Learned AR further stated that the equipment was imported under the licence for the purpose of carrying out the exploration of petroleum work in Pakistan and therefore also it was entitled to benefit of Rule 8(5)(j) supra. Learned AR of the assessee contended that action taken by the IAC under section 66A of the repealed Ordinance was unjustified and uncalled for. According to learned AR the order passed by the Assessing Office was neither erroneous nor prejudicial to the interest of revenue. It was further contended by the learned AR that the IAC was not justified in initiating the proceedings under section 66A on the basis of a judgment of the Tribunal in I.T.A. No.1447/KB of 2001 dated, 1-1-2002 which was subsequent to the order passed by the Assessing Officer under section 62 of the repealed Ordinance. To support his contention, learned AR of the assessee cited the following case law:-

TABLE

205. 1986 PTD (Trib.) 805

206. Cancellation of assessment

207. Cancellation of an assessment cannot be approved if the same was cancelled on the basis of a judgment which was subsequent to the date of framing of the assessment order.

208. 1968 Tax 86 (SC) (sic)

209. Re-opening of assessment

210. That a subsequent binding decision after the disposal of the case cannot be said to be discovery of a new important matter or of a mistake or an error apparent on the face of record and that mere conflict or divergence of opinion cannot amount to an error apparent on the face of record.

211. 2001 PTD 77 (H.C. Ind.)

212. Subsequent decision of the Tribunal

213. We have no hesitation in coming to the conclusion that a Tribunal deciding a case on certain debatable issues wherein there is no decision of the jurisdictional High Court could not be deemed to have made a mistake because subsequent to the decision of Tribunal a judgment has been rendered by the jurisdictional High Court.

214. According to learned AR, it was now a settled principle of law that when two interpretations of the provisions of law were possible the issue was to be resolved in favour of the assessee. Learned AR contended that no proceeding under section 66A could be initiated unless it was established by the IAC that the order passed was erroneous as well as prejudicial to the interest of revenue. The decision of the Tribunal reported as (1984) Tax 16(sic) was referred by learned AR of the assessee in this context. Learned AR further submitted that Reference in the case of order dated 1-1-2002 of the Tribunal in I.T.As. Nos. 1447 and 432/KB of 2001 was pending for adjudication and decision before the Karachi High Court and the issue had not been finally decided.

8. Learned DR, in his arguments, supported the impugned order on the same grounds as relied upon by the IAC. According to learned DR, the assessee was not entitled for the concession available under rule 8(5)(j) of the Third Schedule to the repealed Ordinance. It was the contention of learned DR that the concession was available only to the companies granted licence for exploration of petroleum in Pakistan. According to learned DR, there was no ambiguity in the provisions of law. Learned DR submitted that firstly it was not established that the assessee-respondent was a sub-contractor. It was further submitted by learned DR that the concession under clause 8(5)(j) supra was not available to the contractors or sub-contractors of the companies granted licence for exploration and production of petroleum. Learned DR further submitted that it had not been established by the assessee that the equipment under consideration was imported for the purpose of carrying out the exploration work under the contract executed with oil, companies for exploration of petroleum. Learned DR Further contended that no evidence was produced by the assessee that the equipment was imported in the name of the assessee company or the company granted licence for exploration and production of petroleum. According to learned DR, the IAC was justified in initiating the proceedings under section 66A and to modify the order passed under section 62 for the three years under consideration which were erroneous as well as prejudicial to the interest of Revenue.

9. Arguments put forth by the learned representatives of both the parties have been heard. The facts of the case have been considered and the case law cited by the learned representatives of the parties have also been perused. The perusal of the original assessment framed under section 62 of the repealed Ordinance for all the three years under consideration reveal that for the purposes of calculation of income under Rule 7 of the Third Schedule, the sale proceed of the equipment exported by the assessee were taken at cost less normal depreciation allowed during previous years as per provisions of clause (j) of Rule 8(5) of the Third Schedule to the repealed. Ordinance. This treatment of the Assessing Officer was found to be erroneous in so far as prejudicial to the interest of revenue by the IAC in terms of provision of section 66A of the repealed Ordinance. According to IAC since the assessee had not entered into any contract for exploration and production of petroleum the provision of rule 8(5)(j) were not attracted in his case as wrongly applied by the Assessing Officer. However, before the Tribunal the main and foremost contention of learned AR of the assessee was that the exemption from payment of tax on re-export of equipment used in the exploration of petroleum in Pakistan was available to the assessee under the provision of Regulation of Mines and Oilfields and Mineral Development (Government Control) Act, 1948. According to learned AR exemption from payment of tax on export of equipment imported for the purpose of 'exploration and production of petroleum in Pakistan was available to operators i.e. licensee as well as its contractors and their sub-contractors as per para. 13.2 of Article XIII of the Petroleum Concession Agreement executed by the Government of Pakistan with the oil companies. As per view point expressed by the learned AR, the assessee-appellant being a contractor of the licensee company was entitled to the exemption provided under para. 13.2 of Article XIII of the Concession Agreement which was executed by the President of Pakistan empowered to execute such agreement under the provisions of the Act of 1948. According to learned AR no tax was payable on the equipment exported in view of the provision of para. 13.2 of the Article XIII supra. The arguments put forth by the learned representatives of both the parties give rise to the following questions:--

(i) Whether the services provided by the assessee-appellant are in the nature of exploration work for the purposes of production of petroleum?

(ii) Whether the above work is was done by the assessee-appellant under the contract with the licensee company?

(iii) Whether the case of the assessee-appellant is covered under the provision of clause (j) of sub-rule (5) of Rule 8 of the Third Schedule to the repealed Ordinance, 1979?

(iv) Whether the export of the equipment treated as gains on sale proceeds of assets under Rule 7 of third Schedule are exempt from payment of income tax in view of exemption allowed to operators as well as contractors and sub-contractors as per Petroleum Concession Agreement executed in pursuance of the rule made under the provision of the Regulation of Mines and Oilfields and Mineral Development (Government Control) Act, 1984?

(v) Whether the IAC was justified in initiating the proceedings under section 66A of the repealed Ordinance, 1979?

10. So far as the question at serial (i) is related considering the facts of the case the answer is in affirmative. In our-considered opinion, the carrying out of survey which may be made through any method is an essential part of the process for discovery and production of petroleum.

11. From the facts available before us as well as the evidence produced by the assessee it is established that the work of survey was carried out under a contract. A copy of contract between Pakistan Oilfields and the assessee company was produced by the AR of the assessee and it had been contended before the Tribunal as had been contended before the IAC that the agreement with the other companies were executed on the similar line. In our opinion the claim of the assessee that the geophysical survey through seismic reflection method was performed by the assessee-appellant under a contract with the different oil companies is found to be correct though the assessee company itself had not entered into any with the Government of Pakistan for exploration and production of petroleum in Pakistan.

12. So far as the entitlement of the assessee to the benefit of concession provided under Rule 8(5)(j) of the Third Schedule is concerned, the issue has been discussed in detail and decided by the Division Bench of I.T.A.T. in I.T.As. Nos. 1447 and 1432/KB of 2001 dated 1-1-2001. We agree with the findings of the Division Bench that the benefits as per Rule 8(5)(j) is available only to the original contractors who have been granted licence for exploration and production of petroleum in Pakistan and is not available to their contractors or sub-contractors. Thus the assessee-appellant not being the original contractor but a contractor of the licence, company is not entitled to the benetits of the said clause. The relevant part of the judgment of the Division Bench is reproduced as hereunder:--

215. "The AR of the assessee has also put emphasis that the Rule 8(5)(j) of Third Schedule may be appreciated that it is the encouragement of investment in the Petroleum Sector that the assets used in the Petroleum Exploration and Production brought into Pakistan under a contract entered into on or after 1st July, 1981 when exported shall stiffer tax only to the extent of initial depreciation. This contention of the appellant might be true had there be no words stated in the bracket in Rule 8(5)(j) such as (such contract having been entered into by the assessee on or after 1st day of July, 1981). The emphasis is on the word "Assessee". The sale proceeds may be determined under Rule 8(5)(j) on the assets exported by the assessee who has entered into the execution of contract for the exploration and production of petroleum. Besides above, the word "Such" is also more important. The word "Such" is not defined in the. Income Tax Ordinance, 1979, therefore, the meaning of the word "Such" as taken by the Court would be helpful. For this purpose it is better to refer to CIT Punjab etc. Jagan Nath Maheshwary (1957) 32 ITR 418 431 (Punjab) wherein it is held as under"

216. "In its grammatical usage and in its natural ordinary sense the word "Such" is understood to refer to the last antecedent, unless the meaning of the sentence would thereby be impaired. The word "Such" indicates something just before specified or spoken of that is proximately and not merely previously. It particularizes the immediately preceding antecedent and not everything that has gone before. It signified what has preceded proximately and not just previously or formerly."

217. In view of the above-legal position of word "SUCH" one can easily arrive that the word "Assessee" itself speaks that the said "such contract" should be executed by the "assessee" meaning thereby the assessee who has entered into execution" of contract for the exploration and production of Petroleum in Pakistan.

218. It is established principle of statute that if the language of the statute is clear and ambiguous then nothing can be added or subtracted but the law may be read without any addition and multiplication. The honourable High Court of Sindh in reported decision as 1999 PTD 2901 has also laid down the said principle "it is an established principle of interpretation then the Court is to give its effect without taking into consideration anything extraneous. Reliance of the above is placed on the pronouncement made to the above effect by the honourable Supreme Court in the case reported as 1992 SCMR 663". The plain reading of the Rule 8(5)(j) reveals that it is the benefit available to assessee himself who has entered into the execution of contract for exploration production of petroleum and it has nothing to do with the contractors and sub-contractors of the person who has entered into the execution of contact for exploration and production of petroleum.

219. In view of the aforesaid discussion, the benefit of Rule 8(5)(j) of Third Schedule is not applicable in the appellant's case and the order of IAC under section 66-A is confirmed.

220. As a result of above discussion we are not inclined to accept the, plea of the learned AR of the assessee. We agree to the viewpoint already expressed by the D.B. as quoted above that the benefits of Rule (5)(j) are L not available to the contractors and sub-contractors of the licensee company granted license for exploration and production of petroleum in Pakistan.

13. The next contention of the assessee that no tax was leviable on the re-export of equipment used in Pakistan for the exploration and production of petroleum in view of the "Concession agreement" executed by President of Pakistan and oil companies in pursuance of rule made under section 2 of the Act of 1948 for exploration and production of petroleum in Pakistan have also been taken into consideration. The order of the ITAT dated 1-1-2002 in I.T.As. Nos. 1447 and 1432/KB of 2001 relied upon by the department has also been perused and the contention of the assessee that the claim of exemption granted in the light of above mentioned Concession Agreement was not considered has also been taken into consideration. The contention of the assessee that the exemption from levy of tax on re-export of said equipment was available to the assessee as per clause 13.2 of Article XIII of the Petroleum Concession Agreement executed by the President of Pakistan with the companies, engaged in the exploration and production of oil in Pakistan under the rules framed in pursuance of section 2 of the Act of 1948 is found to carry weight. The- relevant clause of the agreement is reproduced as hereunder:-

221. "13.2 The Operator, its contractors or their sub-contractors shall be entitled to export such of their items as have been imported into Pakistan and are not required for the Operations without restriction and without the payment of any fee, tax or export duty. Drawbacks if admissible will be available as per relevant rules. The Operator shall ensure that equipment/material is imported by it, its contractors or sub-contractors under Article XIII against its import-cum-export authorization are exported if all the Joint Operations under this Agreement are terminated unless otherwise permitted in accordance with this Agreement."

222. The perusal of the above provision reveals that the exemption from payment of tax is also available to the contractors and sub-contractors of the licensee companies form payment of tax on re-export of equipment imported by them. In our opinion the word tax used therein also includes the income tax. The Concession Agreement executed by the President of Pakistan in pursuance of the provisions of the Regulations of Mines and Oilfields and Mineral Development (Government Control) Act, 1948 being specific in nature will prevail upon the provision of Income Tax Ordinance, 1979 being general in nature. Thus no tax could be charged on the re-export of equipment used in Pakistan for the exploration and production of petroleum in view of the above mentioned provisions of Concession Agreement executed by the President of Pakistan with the oil companies in pursuance of the rules framed under the provisions of Act, 1948. It is, therefore, hereby held that no addition shall be made to the income by making enhancement in the value of equipment re-exported either on account of adding back of depreciation or otherwise. As a result, the above findings the order of the IAC under section 66A of the repealed Ordinance are, therefore, not maintainable. The IAC was not justified to initiate the proceedings under section 66A for the years under consideration because in our considered opinion the assessments framed were not prejudicial to the interest of Revenue because of our findings that no tax is leviable on re-export of equipment used to Pakistan for, exploration and production of petroleum. The order of the I.A.C. for all the three years under consideration is hereby vacated and the original assessments stand restored.

14. As a result, the appeals of the assessee for all the three years succeed.

223. C.M.A./181/Tax(Trib.) Appeals accepted.