THE COMMISSIONER OF INCOME-TAX, CENTRAL ZONE 'B', KARACHI Versus MESSRS ELECTRONIC INDUSTRIES LTD., KARACHI

1. AJMAL MIAN, J .-- The learned Income-tax Appellate Tribunal referred the following question for soliciting opinion of this Court application filed by the Department:-

2. Whether, on the facts and circumstances of the case, the appellate Tribunal was justified in holding that provisions made for tax liability could be treated as retained income for the purpose of levy of surcharge?"

2. The brief facts leading to the making of the above reference are that the respondent Company submitted its income-tax returns for the assessment years 1977-78 and 1978-79. The Income-tax Officer by assessment orders purported to levy 10% surcharge even on the amount, which was assessed by him as income-tax in respect of the above two years. Against the above orders the respondent Company filed appeals which were allowed by the learned Assistant Appellate Commissioner by his order, dated 23-4-1981 against which the Department went in appeal before the learned Income-tax Appellate Tribunal which maintained the order of the learned Assistant Appellate Tribunal setting aside the order of the Income-tax officer but remanded the case to the learned Income-tax Officer with the following observations:-

3. "We have considered the facts of the case and we are of the opinion that since no details whatsoever are available regarding the retained income, we would vacate the Appellate Assistant Commissioner's and I.T.O.'s orders with the direction to the Income-tax Officer to decide the issue by excluding such income as is shown to have been retained in the final accounts of the respondent for meeting the tax liability or other working capital requirements of the company. In the charge years 1978-79, the issue regarding the liability for payment of taxes is not clear The Income-tax officer will please examine if any such provision exists in the final accounts so that it could also be excluded for working out the unretained income, if any."

4. The Department got the above reference made against the above order. It is an admitted position that at present there is no assessment order in the field and the question in issue is to be decided by the income-tax officer in terms of the above-quoted observation. In our view the reference is misconceived. We, therefore, dismiss the same as such but there would be no order as to costs.

5. M.B.A./C-27/K Order accordingly.