COMMISSIONER OF INCOME TAX vs Messrs NIPPON YUSEN KAISHA And Other
This matter concerns a series of appeals involving foreign, non-resident shipping companies and their entitlement to initial and additional depreciation allowances under the Income-tax Act, 1922. The core legal question was whether such depreciation could be claimed for ships registered outside Pakistan, not installed in Pakistan, and not plying in Pakistan. Relying on the precedent set in Civil Appeal No. K-45 of 1971, the Court held that for non-resident shipping companies whose income is assessed based on world income under the Income-tax Rules, initial and additional depreciation allowances are available. Regarding six specific appeals where the assessment years fell after the Finance Act, 1967—which amended the relevant provisions to require that a ship be 'installed in Pakistan'—the Court declined to adjudicate the issue. The Court reasoned that leave to appeal was not granted on the question of the 1967 amendment's impact, and the point was neither urged in the petitions nor addressed by the High Court. Consequently, all appeals were dismissed.
- Are non-resident shipping companies whose income is assessed on a world-income basis entitled to initial and additional depreciation allowances under the Income-tax Act, 1922?
- Does the requirement that a ship be 'installed in Pakistan' for depreciation purposes apply to assessment years governed by the Finance Act, 1967?
- Section 10(2)(iv), Income-tax Act 1922
- Section 10(2)(vi), Income-tax Act 1922
- Rule 8(2), Income-tax Rules
- Rule 33, Income-tax Rules
- Finance Act 1967
ZAFFAR HUSSAIN MIRZA, J.--Leave was granted in all these appeals on the basis of the order granting leave in Civil Petition for Special Leave to Appeal No. K-36 of 1971, Commissioner of Income-tax, Karachi v. Messrs Shenjohon Steamship Company Limited which was subsequently registered as Civil Appeal No. K-45 of 1971. Therefore, there is a common point of law involved in all these appeals, namely, whether initial and additional depreciation can be allowed under section I 10(2) (iv) of the Income-tax Act, 1922 and Rule 8(2) (now Rule 9) of the Income-tax Rules in case of a ship registered outside Pakistan and not installed in Pakistan and which did not ply in Pakistan for then first the. In Civil Appeal No. K-45 of 1971 it has been held that in the case of non-resident shipping company whose ships ply throughout the world and whose income was being assessed on the basis of world income under Rule 33 (now Rule 40) of the Income-tax Rules, initial and additional depreciation under the aforesaid provisions of law will be available while assessing the income of such non-resident assessee --company under the aforesaid method of computation.
2. It is accordingly not necessary to set out the facts in detail in respect of each case in this judgment. All the respondents' companies in these appeals are also foreign shipping companies non-resident in Pakistan and have been assessed under the same provisions as in the case of Messrs Shennihon Steamship Company Limited in Civil Appeal No. K-45 of 1971. However, six appeals are slightly distinguishable in regard to the facts because in these appeals the assessm ent years under consideration by the Authorities under the Act were after the Finance Act, 1967 which brought about a change in the relevant provisions of section 10(2)(vi), so that the depreciation allowance thereunder was available only in regard to a ship "not having previously been used in Pakistan has been installed in Pakistan." The words "in Pakistan" were, therefore, not a part of the law before amendment of 1967. But in the case of the following six appeals the law had been amended as indicated:- CIVIL APPEAL NOYEAR OF ASSESSMENT
1. Civil Appeal No. K-173/801968-69
2. Civil Appeal No. K-178/801967-68
3. Civil Appeal No. K-184/801967-68
4. Civil Appeal No. K-194/801967-68
5. Civil Appeal No. K-195/801967-68
6. Civil Appeal No. K-196/801968-69
3. Before dealing with the aforesaid six appeals it may be stated that the decision in Civil Appeal No. K-45 of 1971 applies on all fours to the rest of the appeals herein and they are, therefore, accordingly dismissed with costs for the same reasons.
4. Learned counsel for the appellants in the aforesaid six appeals urged that the law having changed in 1967, the depreciation allowances in question in these appeals would only be available in regard to ships which were installed or registered in Pakistan in view of the clear import of the language incorporated by the amendment. It way, therefore, contended that the Tribunal and the High Court was not justified in disposing of these appeals on the same basis as the cases falling for determination under the pre-existing law before the said amendment. We are, however, not inclined to consider this question in these cases as leave was not granted on this question of law, nor was this point specifically urged in the petitions which are a verbatim copy of the petitions filed in regard to cases relating to the period prior to the amendment. It seems that this point was also not urged before the High Court, so that we do not have the benefit of the view of the High Court on this point. We accordingly dismiss these six appeals also