Before Muhammad Tauqir Afzal Malik, Judicial Member and Amjad Ali Ranjha, Accountant Member Versus Before Muhammad Tauqir Afzal Malik, Judicial Member and Amjad Ali Ranjha, Accountant Member
ORDER
MUHAMMAD TAUQIR AFZAL MALIK (J`UDICIAL MEMBER).‑ ‑‑This is a miscellaneous application under section 156 for rectification of mistake in the order, dated 1‑6‑1999 in I.T.A. No.4840/LB of 1997 relating to the assessment year 1993‑94.
2. The contention of the AR is that the titled appeal alongwith other appeals was decided by this Honourable Court vide order, dated 1‑6‑1999.
3. He further contended that the main issue in the appeal was disallowance of part of the claim for sale promotion and advertisement expenses. This issue infact comprised of the following two sub -issues:‑‑‑
(a) Disallowance of 5 % of the expenses.
(b) The deferment of half of the expense to the next years.
4. That while deciding the above issues the Tribunal based its order on the history and in particular on the order of the Tribunal for the assessment years, 1989‑90 and.1990‑91, dated 20‑3‑994.
5. That the order of this Honourable Court, dated 1‑6‑1999 needs rectification as following mistakes are apparent from the record:‑‑
(i) That there is no provision in the Income Tax Ordinance under which a part of the expenses of a particular year can be deferred.
(ii) That the order, dated 1‑6‑1999 was based on the order of the Tribunal, dated 20‑3‑1994, which was the judgment per in curium for two reasons:
(a) The said order was passed ignoring the provisions of law as provided in Income Tax Ordinance, 1979
(b) That the order of the Tribunal, dated'20‑3‑1994 being order per in curium could not have been followed by the Tribunal.
(c) That this Court subsequently to the order, dated 20‑3‑1994 has itself held that expenses could not be amortized in more than one year. Reliance is placed on 1998 PTD (Trib.) 1935 Tribunal. While passing the impugned order this judgment has not been considered.
(iii) That in the order, dated 20‑3‑1994 the disallowance of 5 % vas not upheld. As a matter of fact the issue of disallowance was set aside by the Tribunal.
(iv) That this Honourable Court has wrongly assumed that disallowance of 5 % of the sale promotion expenses was the history of the assessee and ignoring the fact that in 1992‑93 no disallowance was made out of the disputed expenses.
6. That the above mistakes are patent on the face of the record, which require rectification.
7. It is, therefore, most respectfully prayed that the impugned order passed in I.T.A. No.4840/LB of 1997 relating to the assessment year 1993‑94, dated 1‑6‑1999 may kindly be modified and the full claim of the expenses may be allowed as each and every item of expense is verifiable and this position was accepted by the department in the immediately past year.
8. Arguments heard. Record perused
9. The perusal of the assessment order shows that the originally return was filed declaring loss of Rs.160,581,247 accompanied by computation chart of income, schedule of depreciation, balance sheet and notes to the audited accounts. As per computation chart, net income for the year under consideration, works out to Rs.1,539,373. The break‑up has been given in the assessment order, at pages 1 and 2.
While filling in the IT‑11 Form, loss declared for the assessment year 1991‑92 at (Rs.166,549,278) and income declared for the assessment year 1992‑93, at Rs.44,28,658 has also been taken into consideration. The revised return was furnished declaring loss of Rs.98,855,248). The said amount has been arrived at as under:‑‑ (Page 2 of assessment order).
Loss as per profit and loss Rs.5,175,48 account
Less: Accounting depreciation included in:
Cost of goods sold Rs.57,454,110
Selling expenses Rs1,158,659
Admn: and General Expenses Rs . 2,285,164
Amortisation of assets
Subject to finance lease Rs. 1,108,917
Rs.62,006,850
Mark‑up on assets subject to Rs. 1,447,704
Finance lease .
Excess perquisites, benefits etc. Rs. 9,532,571 under section 24(i)
Donation included in other Rs. 46,100 charges
Provision for ad and doubtful Rs. 1,000,000 debts
Excess of sale proceeds overtax Rs. 118,770
WDV of assets disposed of
One‑half of sale Promotion and Rs.52,527,741
Advertisement expenses deferred to 1994‑95
Rs.126;679,736
Income: (Rs.121, 504, 250)
10. Meaning thereby for. the assessment year 1993‑94 the assessee has himself deferred one‑half, of sale promotion expenses and advertisement expenses deferred to 1994‑95.
11. On the issue of sale promotion and advertisement the following assessment was made:‑‑‑(Page‑4).
In the assessment years 1989‑90 and 1990‑91, the Assessing Officer, did not allow sale promotion and advertisement expenses in full in the year of claim but instead amortized it over a period of 2 years. This treatment has been upheld by the ITAT vide their order, dated 20‑3‑1994. Subsequently the claim for sale promotion and advertisement expenses for 1993‑94, has been amortized over a period of 2 years in the revised return by adding back one‑half of the expenses for the year and claiming it in the subsequently year.
The perusal of the orders of the learned ITAT contained in I.T.A. Nos.5386/LB of 1991‑92, 3338, 3339/LB of 1992‑93, dated 20‑3‑1994, for the assessment years 1987‑88, 1988‑89, 1990‑91, as well as order of the learned CIT(A) contained in Appeal No. 1900, dated 26‑3‑1996, assessment year 1991‑92, however, reveals that disallowance under this head is to be made @ 5 % of the total claim (of Rs.105,055,483 which come to Rs.5,252,774) the balance amount which works out to Rs.99,802,709 is to be allowed in two years i.e. assessment years 1993‑94 and 1994‑95, working out to Rs.49,901,354 for each of the said years. The assessee as stated above has, however, added back an amount of Rs.52,527,741 under this head whereas additions are to be made as under:‑‑
(i) 5% Disallowance as discussed Rs.5,252,774 above
(ii) 50% of the balance claim which is to be deferred to the assessment year
1994‑95, as stated above. Rs.49,901,354
Total disallowance for the year under Rs.55,154,128
Consideration
Less
Amount already added back by the Rs.52,527,741 assessee as per revised return as stated above
Balance to be disallowed Rs.2,626,387
12. Consequently an assessment at total income of Rs.32,611,987 was made on 30‑6‑1996 which is available on record.
13. The assessee went in appeal. On various grounds the CIT(A) vide his order, dated 23‑8‑1997 decided the issue in hand as under:‑ (pages 3 and 4)
Assessment year 1993‑94 (Ground No. l)
A perusal of the assessment order/records shows that the Assessing Officer has rightly disallowed sales promotion and advertisement expenses because in appellant's case the learned ITAT and CIT(A) have contained in their orders for the previous years that the disallowance under this head is to be made @ 5 % of the total claim (Rs.10,50,55,483) which comes to Rs.52,52,774 and the balance of Rs.9,98,02,709 is to be allowed in two years i.e. 1993‑94 and 1994‑95, working out to Rs.4,99,01,354 for each of the said years. However, the assessee has added back an amount of Rs.5,25,27,741 under this head whereas the resultant additions were to be made as worked out at page‑4 of the‑ order. The arguments of the A.R. carry no weight. The Assessing Officer has made disallowance as per history of the case and in the light of learned ITAT and CIT(A) orders. A detailed discussion has been made in this context at the aforesaid page of the order. The additions made by the Assessing Officer being inconformity with the history o! the case are confirmed.
14. The second appeal by the assessee came up for hearing before us which was decided on 1‑6‑1999 alongwith other appeals the relevant Appeals bearing No.4840/LB of 1997 in which this application has been moved. This tribunal relying upon in assessee's own appeal for the charge years 1987‑88, 1989‑90 and 1990‑91 decided the appeals dated 20‑3‑1994.
15. It has further been contended that the judgment of the Tribunal, dated 20‑3‑1994 the disallowance of 5% was not upheld. As a matter of fact the issue of disallowance was set aside by this Tribunal.
16. The perusal of the impugned order shows that this contention is also wrong in para. 10 of page 11 of the impugned judgment by Mr. Naseem Sikandar, Judicial Member now Mr. Justice Naseem Sikandar and Mr. M. Sarwar Khawaja, Accountant Member as they then were the following his finding on this issue.
The claimed promotional expenses in both of the years were disallowed by the Assessing Officer after on the ground that the benefit of advertisement continued for a couple of years; specially the sign boards and advertisement through national media. The Assessing Officer also took notice of the fact that in the succeeding year viz. 1991‑92 the assessee of his own amortised media cost amounting to Rs.98,62,444 and offered the same to tax in the computation chart. The Assessing Officer also found some of the expenses to lack in complete particulars. Learned First Appellate Authority allowed the relief to the extent of reducing the disallowance by 5%. It was also directed that expenses should be amortised over the period of two years as auditors of the company suggested. The submission that these expenses were of Revenue nature was again repelled. However, keeping in view the submissions made in the grounds of appeal, the First Appellate Authority directed that the expenses should be deferred/adjusted in two years instead of five years as directed by the Assessing Officer. Learned A.R. for the assessee has not been able to convince us as to how the impugned direction in this direction is prejudicial to the interest of the assessee when the same was allowed as per submissions made in the grounds of appeal before the First Appellate Authority and also as per suggestion of the Chartered Accountant of the. assessee‑company. The contentions in this regard in both of the years do not bear any weight and the order of the First Appellate Authority in this regard is confirmed.
17. The A.R. of the assessee has also relied upon judgment cited as 1998 PTD (Trib.) 1935 contending that the order, dated 1‑6‑1996 was based on the Tribunal's order, dated 20‑3‑1994 which was the judgment per in curium for two reasons:‑‑
(a) The said order was passed ignoring he provisions of law as provided in Income Tax Ordinance, 1979.
(b) That the order of the Tribunal, dated 20‑3‑1994 being order per in curium could not have been followed by the Tribunal.
We are afraid that the contention of the counsel is incorrect. As per the discussion given supra, the assessment order was passed in view of his own return which attained finality on 20‑3‑1994. Therefore, the order which has been challenged in this petition is in view of principle of Stare Decisis. This petition moved under section 156 of the Ordinance being against the record and history of the case is dismissed.
C.M.A./M.A.K./210/Tax (Trib.) Petition dismissed