Case Law (Definitions given in the Banking Words ‘loan’ and ‘advance’ are used synonymously and reference may....)

 Words ‘loan’ and ‘advance’ are used synonymously and reference may, e.g., be made to the definitions given in the Banking Companies Ordinance, 1962 and the Financial Institutions(Recovery of Finances)Ordinance, 2001(being ss. 2(gg) and 2(d)(iv), respectively).Arguably, it is possible to also consider the “immediate” payment of price for the sale of goods(for deferred delivery of the same) to be an ‘advance’. However, we are of the view that the word ‘advance’ as used in the subsection does not include such payment of price. The reason is that S.12of the 1979 Ordinance, in as much as it brought to tax by way of deeming provisions various transactions and amounts, wasa charging provision. It is well settled that such provisions are to be construed strictly, and if two reasonable interpretations are possible the one in favour of the assessee is to be adopted. The approach and interpretation put forward by the department falls foul of this fundamental principle and hence cannot be accepted. We may note that this is not a case of reading the word ‘advance’ ejusdem generis with ‘loan’ but,rather,an application of what is one of the most fundamental rules of tax law to the former term itself. Furthermore, and this is the second reason why in our view the department’s case must fail,as submitted by learned counsel for the assessee the amounts in question were in any case the gross receipts of each assessee for the supply/sale of goods (i.e.,were brought to revenue account in the ordinary course of business) and were taxed accordingly. To bring these amounts also within the ambit of the subsection and hold them liable to tax for that reason as well would,in the facts and circumstances of the present cases, be tantamount to an impermissible double taxation

.C.P.1591-L/2017

Commissioner Inland Revenue, Lahore v. Kohinoor Sugar Mills Ltd. Lahore.