High Court Division
(Special Original Jurisdiction)
AFM Abdur Rahman J
FRM Nazmul Ahsan J
Padma Oil Company Ltd
………..Assessee-Applicant
Judgment
August 7th, 2012.
Commissioner of Taxes
… ……………. Respondent*
Income Tax Ordinance (XXXVI of 1984)
Sections 49(m), 52 and 53 (e)
The advance income tax was deducted by the customers under the provision of section 49(m) or section 52 of the Ordinance, treating the assessee as a “supplier” company, that cannot be a basis for assessment of income of the assessee for two reasons; since the advance income tax was deducted upon the entire price of the product and that any advance income tax to be deducted from the assessees must be done from the “commission” as receivable by the assessees. . ….. (25)
Commission Agent
All these companies deal in distribution of petroleum products produced by the Petrobangla upon monetary commission allowed by the Petrobangla. .. …. (13)
Sarder Jinnat Ali, Senior Advocate with Md Umber Ali, Advocate-For the Assessee-Applicant.
Md. Abdur Rahim Bhuiyan, DAG with Mahfuza Begum. Assistant Attorney-General-For IT Department.
Judgment
AFM Abdur Rahman J : Both these Income Tax Reference Application being No. 405 of 2009 and Income Tax Reference Application No. 233 of 2011 along with a Rule 198(ref) of 200] filed by the same assessee-applicant, Padma Oil Co. Ltd. have been taken together for hearing as both the matter involve the similar question of law and therefore disposed of by this single judgment.
2. In the Income Tax Reference No. 405 of 2009 and Income Tax Reference No. 233 of II the following questions of law has been formulated by the assessee-applicant Padma Oil Company Limited, for an opinion from this court;
“Whether the learned tribunal was legally justified to confirm the assessment complete under section 83(3)/82c of the Income Tax Ordinance, 1984 on the basis of tax deducted at source 52 read with Rule 16 having treated the sales as supplied and without having considered the commission income assessable under section 83(2)”
Facts of the case:
3. It has been asserted in both applications that the assessee-applicant is a subsidiary company of the Bangladesh Petroleum Corporation, operating under the Ministry of petroleum having status of the publicly traded company, incorporated under the Companies Act, 1994. The assessee-applicant company is engaged in business of distribution petroleum product under the Bangladesh Petroleum Corporation and derives income from commission money, rate of which was time to time, fixed by the government upon distribution and marketing of petroleum and alike product to various government offices and non-government organizations. The assessee-applicant also derives income from import and sale of agro chemical products and also from the bank interest. The books of account of the assessees-applicant are maintained regularly under the mercantile system of accounting and the same are audited and certified by the qualified chartered accountants and approved by the Ministry of Petroleum which thereafter accepted by the Board of Directors in the annual general meeting of the company, a copy of which was further filed to the register of the companies and firms as per requirement of the Companies Act 1994. The assessee-applicant thereafter distributes dividend from its profits @ 10% to its shareholders and thereby qualified itself for taxation at 27% instead of 30% applicable to a public limited company, not distributing any dividend.
4. The Assessees-Applicant filed return for the assessment year 2006-2007 involved in Income Tax Reference Application No. 405/2009 and for the assessment year 2008-2009 involved in the Income Tax Reference Application No. 233 of 2011 showing an income of Taka. 17,82,23,252 and 33,78,43,603 respectively, before the Deputy Commissioner of Taxes (OCT), company circle-8 taxes zone-2, Chittagong.
5. But the concerned ECT under a total misconception of law treated the assessee-applicant company as a company engaged in general “supply” of fuels and assessed the tax liability of the assessee-applicant under the provision of section 83(2)/82c of the Income Tax Ordinance, 1984 estimating the income of Taka 25,34,66,877 for the assessment year 2006-2007 and Tk. 69,21,63,641 for the assessment year 2007-2008.
6. Upon filing two unsuccessful appeal before the Commissioner of Taxes (appeal) and then to the taxes appellate tribunal the assessee-applicant upon formulating aforementioned the question filed the instant Income Tax Reference for an opinion from this court.
7. Upon service of the notice the learned Deputy Attorney-General Mr Abdur Rahim Bhuiyan, appeared on behalf of the taxes department and filed affidavit-in-opposition stating inter-alias, that no illegally was committed by the DCT concerned in treating the assessees-applicant as ‘supply’ as the assessee-applicant deals in supply of fuel to different organization as agent of the petroleum corporation.
8. At the time of hearing of the reference the learned advocate Mr Umbar Ali along with the senior counsel Mr Sardar Jinnat Ali, represented the assessee-applicant while the learned deputy attorney-general argued on behalf of the tax department.
9. The learned senior advocate Mr Sarder Jinnat Ali appearing on behalf of the assessee-applicant at the very outset informed this court that the question as has been formulated in the outset Income Tax References has already been decided by this bench in Income Tax Application No. 94 of 2011, wherein this bench has confirmed that the Jamuna Oil Company Limited, another sister company of the Petrobangla, dealing in distribution of petroleum products under the Petrobangla acts as a “commissioner agent” and as such its income is assessable under the provision of section 83(2) of the Income Tax Ordinance, 1984 and any assessment under the provision of section 83c of the Income Tax Ordinance, 1984, relying on the deduction of advance income tax at source under the provision of section 49 of the Income Tax Ordinance, 1984 shall be in violation of the provision of law. The assessee-applicant being similar company under the Petrobangla engaged in distribution and marketing of petroleum products as its commissioner agent the said decision made in the said income tax reference application is equally applicable to the instant assessee-applicant.
10. On the other hand, learned deputy attorney-general Mr Abdur Rahim Bhuiyan without taking any pain of argument afresh, conceded the fact that this bench has already decided the point, raised herein, in the income tax Reference Application No. 94 of 2011.
11. We have heard the learned advocates, perused the. materials on record.
12. It appears that under the provision of Bangladesh Oil and Gas Corporation Order, 1973 the three subsidiary company being Jamuna Oil limited, Padma Oil Limited and Meghna Petroleum Limited were floated under the Companies Act, 1994 which are publicly traded company dealing in distribution of petroleum products under the Petrobangla.
13. All these companies deal in distribution of petroleum products produced by the Petrobangla upon monetary commission allowed by the Petrobangla currently @ Taka 0.027 per liter and therefore this court on a similar question raised in Income Tax Reference Application No. 94 of 201l decided that the Jamuna Oil Company Limited is a “commission agent” under the Petrobangla.
14. The learned senior Counsel Mr Sarder Jinnat Ali supplied the memorandum and article of association of the assessees-applicant Padma Oil Company Limited, wherefrom it appears that the instant assessee-applicant company has the status alike Jamuna Oil Company Limited and therefore this court is in irresistible view that the instant company Padma Oil Company Limited also derives its income as a commission agent under the Petrobangla for distribution of petroleum product.
15. It appears from the assessment for the assessment year 2006-2007 and 2008-2009 that the concerned DCT while assessing the income of the assessee-applicant relied upon the Advance Income Tax (AIT) deducted at source by the different government agencies which received the supply of petroleum product from the assessees-applicant company and accordingly the concerned DCT in the assessment year for 2006-2007 made an opinion in the following language;
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16. In Income Tax Reference Application No. 233 of 2011 the concerned DCT also opined in the following language;
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17. The learned senior counsel Mr. Sarder Jinnat Ali upon indicating the provision of section 82c of the Income Tax Ordinance, 1984 argued that the concerned DCT wrongly considered the assessee-applicant as a ‘supplier’ and therefore, the above assessment is not tenable in the eye of law.
18. This question whether the subsidiary company Jamuna Oil Company Ltd. Having the similar status of the instant assessee-applicant Padma Oil Company ltd. is ‘supplier’ or ‘commissioner agent’ has already been decided in Income Tax Reference Application No. 94 of 2011 in the case of the said Jamuna Oil Company Limited and this court in that reference application found that treating the assessee-applicant company as a ‘supplier’ is a palpable wrong on the facts and circumstances of the mode of business and the status of the assessee-applicant company.
19. This court further held in that reference application that as the assessee-applicant company is a “commission agent” any advance income tax to be deducted at source must be done under the provision of section 53E of the Income Tax Ordinance, 1984. But as the advance income tax was deducted by the customers under the provision of section 49(m) or section 52 of the Income Tax Ordinance, 1984 treating the assessee-applicant as a “supplier” company, that cannot be a basis for assessment of income of the assessee-applicant for two reasons; since the’ advance income tax was deducted upon the entire price of the product and that any advance income tax to be deducted from the assessee-applicant must be done from the “commission” as receivable by the assessee-applicant under the provision of section 53(e) of the Income Tax Ordinance, 1984.
20. In the instant case the aforesaid decision is equally applicable and, as such, this court finds that the question as has been formulated by the assessee-applicant herein is required to be answered in negative and in favour of the assessee-applicant, since both the lower appellate authorities did not consider this aspect of the law and therefore the impugned orders cannot be sustained under the facts and circumstances of the case.
21. Therefore, the instant Income Tax references succeed.
22. Accordingly, the question as has been formulated by the assessee-applicant is answered in negative and in favour of the assessee-applicant.
23. The connected Rule being No. 198(ref) of 2011 is also disposed of and the order of stay passed earlier by this court is vacated.
24. However, there shall be no order as to cost.
