Uniroyal Securities Ltd. Vs. Commissioner of Taxes, Dhaka, 1 LNJ (2012) 544

Case No: Income Tax Reference Application No. 433 of 2009

Judge: Md. Ashfaqul Islam,

Court: High Court Division,,

Advocate: Mr. Rafique-ul-Huq,Mr. Abdur Rahim Bhuiyan,,

Citation: 1 LNJ (2012) 544

Case Year: 2012

Appellant: Uniroyal Securities Ltd.

Respondent: Commissioner of Taxes, Dhaka

Subject: Income Tax,

Delivery Date: 2011-03-21

HIGH COURT DIVISION
(Special Original Jurisdiction)
 
Md. Ashfaqul Islam, J.
And
S.M. Emdadul Hoque, J.

Judgment
21.03.2011
  Uniroyal Securities Ltd.
...Applicant.
Vs.
The Commissioner of Taxes, Dhaka
...Respondent.  
 
Income Tax Ordinance (XXXVI of 1984)
Sections 52BBB, 53BBB, 82 (c) (4) and 106 (1)
On a plain reading of the provisions of the sections 52 BBB, 82(c)(2)(1c) and 82 (c)(4) of the Income Tax Ordinance, 1984, the irresistible and only inference that can be drawn is that the tax  that has been levied at source under section 53 BBB is the final discharge of tax liability within the meaning of section 82(c)(4).This is a special privilege that has been given by the legislature to a certain group of persons dealing with some particular business and in all fairness the legislature never wanted that they should be taxed twice. ….(11 and 12)
 
Mr.Rafiq-ul-Haq, Senior Advocate with
Ms.Nazmus Saliheen, Advocate
...For the Applicant.
Mr. Md Abdur Rahim Bhuiyan, D.A.G with
Ms. Mahfuza Begum, A.A.G
... For respondent

Income Tax Reference Application No. 433 of 2009
 
JUDGMENT
Md. Ashfaqul Islam, J:
 
          This Reference application under section 160(1) of the Income Tax Ordinance, 1984 (hereinafter referred to as Ordinance, 1984) has been filed by the applicant against an order  of the Taxes Appeal Tribunal, Division Bench-5 Dhaka, passed in Income Tax Appeal No.4408  of 2008-2009 (Assessment year 2007- 2008) dated 30.07.2009  arising out of the order dated 20.04.2009 of the Deputy Commissioner of Taxes, (Appeal) Taxes Appeal Zone-3, Dhaka in First Appeal No.159/Coy’s Circle-15/Taxes Zone-05/2008-2009.
 
2.         Facts leading to the filing of this Reference Application, in short, are that the applicant is engaged in share trading business as a limited company and a regular tax payee. Under section 53BBB of the Ordinance as a regular tax payee  he paid tax at the rate of 0.015%  at source on the value of shares, debentures, mutual funds, bonds or securities transacted by the company at the time of payment for such transaction. The applicant submitted his return showing his income in two heads (i) income from share trading business and (ii) income from bank interest. The Applicant has no case against the Respondent’s decision on the second head i.e. bank interest income. The applicant has paid tax of Tk. 3,15,396/= at the rate of 0.015% on turnover of Tk. 210,26,39,696/= and has shown Tk. 11,355.09.52/- as an income, less tax deducted at source, as per section 82C(4) of the Income Tax Ordinance. The applicant showed his expenditure from that tax deducted income at source and computed GP at Tk. 26,34,703/-.
 
3.         It has been further stated that this Division in Desh Petroleum Service Co. Ltd. vs. Commissioner of Taxes, Zones-5 12 MLR 48  has  decided that “As per section 82©(4), the tax amount deducted or collected on account of supply of goods of execution of contract falling under section 52 shall be deemed to have fully discharged from tax liability. The further levy of taxes by the Deputy Commissioner of Taxes is illegal” and this judgment has become a binding precedent. The Deputy Commissioner of Taxes (hereinafter called DCT) misunderstood the law and served a notice under 83(1) and 79 of the Ordinance for personal hearing and following notices the applicant through his Authorized Representative made submission  that the Deputy Commissioner of Taxes deducted the bank interest income from the shown GP at Tk.26,34,703/- and considering the rest Tk.19,91,452/-as net income, made a bad calculation and imposed tax of Tk.7,88,490/- at the rate of 40%. The Deputy Commissioner of Taxes most arbitrarily imposed double tax on the applicant, which was a flagrant violation of the decision referred to above.
 
4.         The applicant being aggrieved by the assessment order by the D.C.T. preferred appeal before the Commissioner of Taxes (Appeal) on the same ground but the Commissioner of Taxes (Appeal) failed to grasp the error in proper understanding of law and upheld the decision of the Deputy Commissioner of Taxes. Thereafter the applicant moved before the Tax Appellate Tribunal again on the same ground. The Tribunal even upheld the decision of the Commissioner of Taxes (Appeal) against which this Reference Application has been preferred in which following questions have been framed :-
“A. Whether, on the facts and in the circumstances of the case, the Tribunal was justified under section 53BBB, 82C(2)(1e) and 82C(4) of the Income Tax Ordinance in rejecting the appeal.” 
 
5.         By filing supplementary affidavit the petitioner also formulated two questions of law to be added with the paragraph 13A. Those are as under –

“B. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in imposing double tax on the Applicant ?
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not considering the Applicant’s  payment of tax at source under section 53BBB on their deemed income as per section 82C (1e), as Applicant’s final discharge of tax liability under section 82C(4).”
 
6.         Mr. Rafiq-ul Huq, the learned Senior Advocate appearing with Ms. Nazmus Saliheen, the learned counsel on behalf of the applicant in his submission mainly highlighted and emphasized question of law as envisage in supplementary affidavit   in particular the question of law (C).  The bone of his contention is that as per section 82(C )(4) of the Ordinance the tax amount deducted or collected at source in terms of 52BBB of the Ordinance shall be deemed to have been finally  discharged  from tax liability. The further levy of taxes by the Deputy Commissioner of Taxes is illegal. He placed reliance on the decision of 12 MLR 48 as referred to above. 
 
7.         Mr. Abdur Rahim Bhuiyan, the learned Deputy Attorney General appearing with Mrs. Mahfuza Begum, the learned Assistant Attorney General, on the other hand, by filing affidavit-in-opposition, on behalf of the respondent opposes the reference application and submits that the Appellate Tribunal was justified in law in rejecting the appeal as the D.C.T. made assessment computing income of Tk. 7,88,490/- under section 82C on the basis of tax deducted at source under section 53BBB at Tk. 3,15,396/- @ 0.015% against commission received at Tk. 1,13,55,091/- against purchase and sales of shares of Tk. 210,26,39,696/-. The assessee declared return of his income showing net profit of Tk. 26,34,703/- inclusive of interest income (FDR) Tk. 6,43,251/-. So the D.C.T. computed income under section 82 Cat Tk. 7,88,490/-, interest income (FDR) Tk. 6,43,251/- and the rest amount of declared returned income was computed as Deemed Income of the assessee at Tk. 12,02,962/- in accepting the total income declared by the assessee company.
 
8.         He referred to section 82C(5) and submits that the case of the applicant falls under the said provision and hence the principle enunciated in 12 MLR is not applicable in the instant case. 
 
9.         We have heard the learned Senior Advocate for the applicant and the learned Deputy Attorney General at length and considered their submissions. We have also carefully gone through the Reference application and the different Annexures thereto. For proper answer of the questions formulated in this Reference it would be profitable to go through the relevant provisions of the Ordinance on this behalf. Section 52 BBB states:-  

“The Chief Executive Officer of a stock exchange shall collect tax at the rate of [ zero point zero five percent (0.05%)] on the value of shares, debentures, mutual funds, bonds or securities  transacted by a member of a stock exchange at the time of payment for such transaction.]”
      Next section 82( C )(2) (le) states:- 
“The amount received on account of transaction by a member of a stock exchange for which tax is collectible under section 53BBB.”
 
10.       This provision was inserted in the Ordinance by Finance Act, 2006.

Then comes Section 82 (C)(4)  which reads as follows:

“Income referred to under sub-section (1) in respect of which tax has been deducted or collected on account of ……………………… transaction by a member of any stock exchange under section 53BBB, …………………………. shall be deemed to be the final discharge of tax liability under this Ordinance ” (Underlined by us)
 
11.       On a plain reading of all these provisions together the irresistible and only inference that can be drawn is that the tax that has been levied at source under section 53 BBB is the final discharge of tax  liability within the meaning of section 82 (C ) (4). Regard may be taken to the pertinent portion of the decision referred to above. In that decision his Lordships clearly observed in paragraph 8 as under :-

“The admitted position is that the applicant submitted its return for the assessment year 1999-2000 showing net income of Tk.2,31,3457/- from its business of carrying contract and it also appears that the tax deducted from its income of Tk.2,03,49,305.41 at  source at the prescribed rate on the basis of circular No.2 (Tax) 1999-2000 dated 23.9.1999 read with Rule -16 of the Income Tax Rules 1984, as of date, amounts to Tk.6,10,480100, and the same has been accepted by the Deputy Commissioner of Taxes.”
 
12. It would be relevant to mention in this context that the forgoing provisions are almost all new enactments and there are no provisions as such to this effect in the Income Tax ordinance 1922. Therefore, it is our considerate view that this is a special privilege that has been given by the legislature to a certain group of persons dealing with some particular business and in all fairness the legislature never wanted that they should be taxed twice. In the above decision we also find reflection of the view taken by us and for that reason the submission of the learned Deputy Attorney General that this case comes within the purview of section 82( C ) (5) has no legs to stands since Sec 82(C)(5) concerns about excess amount of expenditure categorized under Section 19 of the Ordinance.  (Underlings are mine)
 
13.       Section 82 ( C ) (5) runs as follows:

“Where an assessee, while explaining the nature and source of any sum, investment, money, valuable article, excess amount of expenditure referred to in section 19, takes into account any source of income which is subject to tax in accordance with the provisions of the section, he shall not be entitled to take credit of any sum as is in excess of any amount which, if taxed at a rate or rates, other than the rate applicable to income chargeable to tax under this section, would have resulted in tax liability equal to the tax payable in respect of income under this section.” (Underlined by us)
 
14.       The inevitable result that follows that this Reference Application should be allowed in favour of the applicant.
 
15.       Thus, we are of the view that questions of law as framed by the applicant in the Reference Application are answered in the negative and in favour of the applicant. Accordingly, the Reference Application is allowed without any order as to cost.
 
      The Registrar of the Supreme Court is directed to take necessary steps under section 162 of the Ordinance. 
 
        Ed.