Act/Law wise: Judgment of Supreme Court of Bangladesh


Income Tax Act, 1922
Section/Order/Article/Rule/Regulation Head Note
Sections 2(9) and 5(5)

Person—Meaning of—’Person’ mentioned in sub-section (5) of section 5 includes an association of persons or a firm or a company or a local authority—Under clause (9) of section 2, ‘person’ includes an individual, a Hindu- undivided family, a firm, an association of persons or a body of individuals, whether incorporated or not, a company, a local authority and every other artificial judicial person — Firm is a ‘person’ for the purpose of Income— Tax Act. The Commissioner of Taxes Vs. M/s.M. Ismail and sons, 3BLD(AD)273 ....View Full Judgment

Sections 3, 6, 10 and 13

Assessment of Income Tax — Change of accounting from mercantile system of accountancy to cash system whether can be allowed — Whether tax is payable on income, profit or gains alleged to have accrued or arisen or deemed to have accrued or arisen or whether tax is payable on income, profit or gains actually received by the assesses makes no difference for the Income Tax Department — There is no possibility of escaping from taxation if cash method of accounting is restored to — There is nothing in the Income Tax Act to show that assessee has to follow a particular method of accounting or it cannot change the method of accounting so far followed — There is no bar on changing over to a new system of accountancy. [Majority. Per Munim. CJ. (Masud and S.M. Mohsen Au. JJ concurring)] Law does not permit an assessee to show two kinds of incomes, one for the purpose of depicting the correct picture of the business and the other for payment of tax. finding of the Income Tax Authorities as well as the High Court Division to this effect is found to have been based on t as stated by the assessee itself in its accounts which were regularly maintained in this way. In the circumstances, the Income Tax authorities are not only entitled, hut are also hound under section I 3 to tax the total income as accruedIrrespective of the question whether any part tion behind this condition is to discourage the of the income has remained unrealised [Per Ahmed, J (dissenhing)] M/s. Hoque Building Finance Corporation Vs. The Commissioner of Income Tax, Dhaka North Zone, Dhaka, 5BLD(AD)239 ....View Full Judgment

Section 4(3)(i)

Exemption from income tax — Whether income from a business held and carried on by or under a trust is exempted from income tax — Income from property held in trust wholly for religious or charitable purpose is exempted from income tax — But income from a business carried out by the trust since 195 1 not exempted though the income of such business is wholly applied for religious or charitable purpose unless such business is carried on in the course of the carrying out the purpose of the trust or institution. The intention behind this condition is to discourage the trust or the institution from entering into business with its properties unless such business is directly related to the objectives of the trust or the institution — It is the income of such business which is exempt from taxation — Proviso to section 4(3)(i) inserted by amendment in 1951 drastically restricting the scope and the field of the general exemption under the main provision of the law being imposed by the conscious act of the makers of the law is not within the power of the Court to dilute the restriction by liberal interpretation ignoring the language of the statute — But. after omission of this proviso in 1973 by an amendment now all incomes ftom property, whether a business or not, if held in trust, is totally exempted from income tax. Commissioner of Taxes, Dhaka (East) Zone Vs. Gaus—I—Pak—I—Azam Welfare Trust, 4BLD(’AD,)265 ....View Full Judgment

Section 5(8)

In this case the National Board of Revenue has only issued a circular in exercise of its powers under section 5(8) of the said Act. The circular is in the nature of a direction upon Assessing Officers to appreciate evidence of certain materials produced before them in a particular manner, instructions which are binding on them. The only argument which was available with the Appellate Joint Commissioner of Taxes in avoiding the circular is that the assessments were already made when the circular had not yet been issued and therefore the assessments were a closed transaction. But obviously the assessments were not a closed transaction and the Appellate Joint Commissioner of Taxes had the whole question of assessment open before him. If there was a subsequent circular of the National Board of Revenue requiring the assessing officer to treat the evidentiary value of an audit report in a particular manner then that circular was as much binding on the Appellate Joint Commissioner of Taxes as upon the original assessing officer because the assessment had still not attained a finality. [Para-24] Dhaka Vegetable Oil Industries Ltd. Vs. Commissioner of Taxes 5 BLT (AD)-171. ....View Full Judgment

Sections 6 and 24

Set off of Loss in assessing income tax — Loss or profits or gains in any year made any of the heads mentioned in section 6 is allowed to be set off against income, profits or gains under any other head. The provision of section 24 does not contain any reference to a loss sustained by an assessee as capital loss’ — If a loss caused by the cyclone is ‘a loss’ as referred to in section 24. this can be set off — Provisions of sub-section (2A) provide for including the loss of the nature sustained by the assessee under the head ‘Capital Gains’ and the provisions of sub-section (2B) provide for carrying forward such loss to be set off against capital gains for the year. Commissioner of Income Tax, Dhaka Vs. M/s. United Shipping Lines Ltd; 3BLD (AD)242 ....View Full Judgment

Section 9(2)

Assessment of Tax — Basis fli It is the determination of bonafide annual iIue of the puperty — Th. Authority is t determine the sum for which the landlord could let out the premise having regard to the prevailing circumstances — There is nothing to show that the Income Tax officer was not aware of all the facts when he determined the annual value of the house in question and completed the assessment — If the Estate Agents sub-let the house making good profit themselves, that profit cannot be included in the income of the assesses — appellant. Zebunnessa Vs. The Commissioner of Income Tax, Dhaka (North Zone), Dhaka, 3BLD (AD) 113 ....View Full Judgment

Section 10(2)( VII)

Income tax—Whether compensation awarded is taxable—In 1962 in the wake o( compulsory acquisition the legislature houg it fit to amend the law—The amendment deemed the amount of compensation aft computation of the difference between ordinal cost and written down value to be profits of the previous year — For profits and gains of business carried on by an assesse, the tax shall be payable under the head ‘business’. Comilla Electric Supply Ltd. Vs. The Commissioner of Income Tax, Chittagong Zone, Chittagong, 3BLD(AD) 174 ....View Full Judgment

Sections 10(2)(VI), 59(1)(e)

Sections — 1O(2)(VI), 59(1)(e) Assessment of Income Tax — Initial depreciation allowance is allowable under Rule 9(1) but the same cannot be allowed to a nonlocal Shipping Company after amendment section 2(b) of the Income Tax Act by the Finance Act of 1967 — Addition depreciation allowance can be allowed to a non-local Shipping Company under Rule 9(2) if the shi1 was installed after lst.April, 1948 and before 1st July, 1965 and amendment of 1967 doe not affect the same as the amendment is no retrospective Rule 9(2) is not ultra vires as the same has been framed under the Rule making poet- under section 59(1)(e) of Income Tax Act — High Court departed from all cannons of interpretation in declaring the Rule ultra vires when the point was neither raised nor debated. M/s. Everett Orient lines Inc. Vs. Commissioner of. Income Tax, 3BLD (AD) 39 ....View Full Judgment

Section 13

Assessable Income — Computation of — The assessing officer has been given the power to reject the accounts of the assessee — He is competent to change the basis of gross profits as calculated by the assessee and raise it to a higher percentage— He is only required to record with reasons that the system of accounting employed by the assessee does not reflect true income. The Commissioner of Income Tax Vs. Harendra Kumar Sil, 3BLD (AD) 48 ....View Full Judgment

Section 15(c)

Bonus Shares — Whether an assessee can claim rebate or exemption from tax on account of investment in bonus shares — Bonus share will be a part of the income accruing to the company — Necessarily it has nothing to do with the total income of the assessee — As it is not a part of his total income the question of his investment does not arise — He ‘is not entitled to exemption or rebate from tax. Commissioner of Income Tax (North Zone), Dhaka Vs. Abdul Aziz, 5BLD (AD)46 ....View Full Judgment

Sections 18A and 23

Additional tax — Question of separate notice for imposing additional tax — The Deputy Commissioner of Taxes is under obligation to work out the additional tax that is payable — The law does not provide for another notice for the purpose in as much as it is the continuation of the same proceeding and not a different proceeding. The Commissioner of Taxes (East) Zone, Dháka Vs. M/s Mallick Brother, 6BLD (AD)196 ....View Full Judgment

Section 19(2)(X)

read with Ordinance no. XXIII of 1973 Section-3
By notification No.HCD-37/73/950/l 973 all workers of the Sector Corporation were allowed festival and incentive bonus and since the respondent assessee paid the bonus to the employees as per provision of the Government under the provision of the above Ordinance and notification, the question of earning profit of bonus did not arise. We are in agreement with the view expressed by the High Court Division. As payment of bonus to employees is incentive for service rendered by them, such payment of bonus as directed by the government is not dependent on profit. Commissioner of Taxes & Ors. Vs. M/S U. M. Factory. 11BLT (AD)-100 ....View Full Judgment

Sections 22 (1), 22(2) and 34(1)

read with
Income Tax Ordinance
[XXXVI of 1984]
Section 160 —If the assessee fails to comply with notice under sections 22 (1) and 22(2) notice under section 34(1) can be issued at any time. The provision of sub-section (2)of section 34 prescribes a period of limitation for assessment of the assessee other than those who did not file return under sections 22 (1) and 22(2).
The Appellate Division observed that there is no gainsaying the fact that the applicant did not file any return under sections 22(1) and 22(2) and as such, comes within the exception of sub-section(2) for which no time limit is provided for. Clause-(a) of section 34(1A) does not fix any time limit for service of notice but there is time limit for service of notice under clause (b) of that sub-section. Therefore, it follows that completion of assessment within 1 (one) year from service of notice under section 34 (1A) is not applicable to those who fall under clause (a) of sub-section (1A) of section 34. The applicant falls under clause (a) of section 34(1A) of the Act and there is no time limit for service of notice under section 34 and there is also no time limit for completion of assessment. The High Court Division failed to comprehend the underlying meaning of sub-section (1A) and exception of sub-section (2) of section 34 and as such, arrived at an erroneous decision.
Commissioner of Taxes, Dhaka -Vs.- Md. Abdul Awal. (Civil) 12 ALR (AD) 153-156 ....View Full Judgment

Section 23

Income tax —Assessment of j- Capital receipt and revenue receipt — Whether amountby the assessee on account of termination of title agency is a capital revenue receipt — In determining whether 4 particular receipt is a capital receipt or nue receipt the nature of the transaction h be ascertained —. If it is a remuneration of assessee then it is a revenue receipt — The income of the assessee went up to a much hi figure in the following year. Hence it could said that the termination of the agency question had resulted in the destruction of profit — making structures of the assessee the amount was paid as compensation termination of the agency resulting in ter nation of the assessee’s business itself it the compensation paid will be capital red — Since termination of the agency has brought the assessee’s business practically stand still nor has it destroyed the p making apparatus of the assessee, the am received will be revenue receipt and capital receipt. The Commissioner of Taxes, Dhaka M/s. Macneil and Kilburn Lid; 7BL (AD)160 ....View Full Judgment

Sections 29, 45 and 46

Income Tax — Assessment of tax made by agreement with the assessee under MLR 32 of 1969 of excess income declared in 1969—Administrative review of such assessment not maintainable—Assessment is final and tax assessed becomes a debt due to the Government when demand for the same is made. Commissioner of Taxes and others Vs .M/s. Mallick Brothers, 1BLD(AD)286 ....View Full Judgment

Sections 31(2) and (2B)

The view taken by the High Court Division that there is no provision in the said Act for taking fresh evidence or materials at the appellate stage is not correct — We find that the appellate powers of the Appellate Joint Commissioner of Taxes are no different and no less than those of the Deputy Commissioner of Taxes. [Paras- 17 & 18] Dhaka Vegetable Oil Industries Ltd. Vs. Commissioner of Taxes 5 BLT (AD)-171 ....View Full Judgment

Section 34A

Assessment of tax — Jurisdiction of reporting — Application of section 34A of Income Tax Act to assume jurisdiction and power under this section can be exercised only when assessment was erroneous and pre judical to the interest of revenue — There must be some materials for finding that the order of the Income Tax Officer was such — was mere observation to that effect is not sufficient to assume his jurisdiction. Zebunnessa Vs. The Commissioner of Income Tax, Dhaka (North Zone), Dhaka, 3BLD (AD) 113 ....View Full Judgment

Section 34(2A)

Reopening of assessment — Notice of reopening assessment if can be issued after 8 years of assessment—Whether it is barred by limitation—Notice for reopening of an assesment can be issued at any time notwithstanding that at the time of issuance of such notice We period of 8 years had expired—Reassessment of tax upon such notice cannot be called in question on the ground of limitation. The Commissioner of Taxes Vs. M/s. M. Ismail and sons, 3BLD (AD) 273 ....View Full Judgment

Section 41 and 66B

Income Tax — Assessment of — Question of violability The assessee company exactly knew what was all about — Mistake, defect want of form shall not make the assessm void unless the assessee is prejudiced — The assessee could not make out a case of prejudice and therefore no objection could be taken to the assessment order. Commissioner of Taxes, Chittagong Zone, Chittagong Vs. M/s. Metropolitan Tanneries Ltd; 4BLD (AD)310 ....View Full Judgment

Section 47B(2)

Plaintiff-appellant is entitled to the statutory interest under the law and the Court has no discretion in the matter. Chaina Marine Products Ltd. Vs. Reliance Insurance Ltd. 6BLT (AD)-234. ....View Full Judgment

Section 60

Salary of the Judges of Supreme Court—Salary income of the Judges of the Supreme Court is exempted from taxation by President’s Order 21 of 1973 and it cannot be included for the purpose of taxation while computing total income.
The assessee is a Judge of the Supreme Court of Bangladesh. The salary income of the Judges of Supreme Court is exempted from taxation by President’s Order No. 21 of 1973 and it cannot be included for the purpose of taxation while computing total income. But the Deputy Commissioner of Taxes while assessing the income of the assessee by the misapplication of a notification (SRO. Nq. 440/ L/176 dated 18.12.76 vide item No. iii) issued under section 60 of the Income Tax Act, 1922 erroneously included the salary income of the Judge while computing the total income. Such notification is included for other class of persons and can have no manner of application when it involves the question of assessment of the assessee who is a Judge of the Supreme Court of Bangladesh. The reason is that the Constitution came into force on the 16th December, 1972 and the President’s Order No.21 of 1973 was promulgated in pursuance of paragraph 3 of the Fourth Schedule of the Constitution read with Article 147 which settled the terms and conditions of ser ice t the Judges of the Supreme Court. Accordingly, the terms and conditions of service of a Supreme Court Judge were sanctioned by constitutional provision and the P.O. 21 of 1973b having the backing of constitutional provision achieved the status of sub—constitutional legislation and such constitutional legislation cannot he displaced by notification in exercise of the powers confirmed by sub-section (1) of Section 60 of the Income Tax Act which is a statutory law but no notification under such law controls the sub-constitutional legislation. The Commissioner of Taxes Vs. Mr. Justice Shahabuddin Ahmed, 10 BLD (AD) 145 ....View Full Judgment

Section 66

Income tax matter: Tribunals Jurisdiction .—In Income Tax matters it is for the Tribunal to decide questions of fact, and in a reference -under section 66 of the Act, the High Court Division, not constituted as a Court of appeal. exercises an advisory jurisdiction only and lays down the law in the facts found by the Tribunal. Where the High Court finds that there is no evidence to support the finding of fact of the Tribunal, or finding of the Tribunal is so unreasonable or perverse that no person acting judicially and properly instructed as to the relevant law could have arrived at it, then in such circumstances, there would arise a question of law which can be agitated before the High Court Division. The question of the applicability of a section of the Act to a particular set of facts or its construction is always a question of law. Mackinon Mackenzie and Company (Pakistan) Ltd. Vs. Commissioner of Taxes, Chittagong (South) Zone, Chittagong, 12 BLD(AD)51 ....View Full Judgment