COMMISSIONER OF INCOME-TAX, RAWALPINDI vs Messrs RURAL FOOD
This matter originated as a case stated by the Income-tax Appellate Tribunal to the Lahore High Court, seeking a determination on whether income derived from the hire of a factory should be classified as 'income from business' or 'income from other sources' under the Income Tax Ordinance, 1979. Specifically, the question addressed whether the Tribunal erred in classifying such income as business income despite the provision in Section 30(2)(d) of the Ordinance, which categorizes income from the hire of machinery along with a building as 'income from other sources'. During the proceedings, counsel for the respondent informed the Court that the respondent company had been liquidated in 1994. The Court held that it does not answer questions of purely academic interest. Since the respondent company no longer exists as a legal entity, any ruling on the tax liability would be ineffective and result in no practical change. Consequently, the Court declined to answer the referred question, establishing the principle that the judiciary will not adjudicate on matters that have become moot or academic due to the dissolution of the assessee.
- Does the High Court have the jurisdiction to answer a question of law that has become purely academic?
- Should the Court answer a reference question if the assessee company has already been liquidated?
- Is a court required to answer a question of law referred by the Income-tax Appellate Tribunal if the answer will not affect the tax liability of the assessee?
- Section 30(2)(d), Income Tax Ordinance 1979
ORDER
NASIM SIKANDAR, J.---This is a case stated by the Lahore Bench of the Income-tax Appellate Tribunal. The following question of law has been framed for our consideration and reply:--- "Whether in the facts and the circumstances of the case the Income-tax Appellate Tribunal was justified to hold that the income received by the assessee from the hire of its factory was the income from business notwithstanding that clause (d) of subsection (2) of section 30 of the Income Tax Ordinance, 1979 specifically provides that income from the hire of machinery alongwith building is to be computed as 'income from other source'?"
2. The learned counsel for the respondent at the outset states that since the respondent Company stands liquidated in the year 1994, any answer to the question will be of any academic interest only.
However, the learned - counsel for the Revenue insists that a question of law having been framed by the Tribunal it needs to be answered.
3. We will not agree. It is by now well-settled that this Court does not answer questions of academic interest only. Where an answer to a question will not result into any change in the tax liability of an assessee, the issue raised would of an academic interest only. In the present case, since the respondent-assessee already stands liquidated and as such no legal person stands in existence, any answer to the aforesaid question even. In favour of the Revenue will not change the situation as far the tax liability of the respondent company is concerned.
4. Therefore, we will decline to answer the question. .
Cited by 3 cases
- Messrs SQUIBB PAKISTAN PVT. LTD. and another vs COMMISSIONER OF INCOME TAX and another 2017 PTD 1303
- M/s. Squibb Pakistan Pvt. Ltd. vs Commissioner of Income Tax. 2017 PTD 1303, 2017 SCMR 1006, 2017 SCP 892, PTCL 2017 CL. 646
- (1) M/s Squibb Pakistan Pvt. Ltd (2) Commissioner Income Tax (Legal 2017 SCP 892