KARACHI: A two-member bench of the Sindh High Court (SHC) headed by Justice Muhammad Iqbal Kalhoro announced a judgment on several income tax reference application (ITRAs) filed by M/s Telenor Micro Finance Bank Ltd against Commissioner Inland Revenue.
On 17 May 2022, court announced verdict, according to which, court observed that “applicant, a limited company engaged in the business of banking having branches in different parts of the country, being withholding agent was obligated to deduct tax at source u/s 151 of the Income Tax Ordinance, 2001 (the Ordinance, 2001) on payments of profit on debts.
It was served with notices u/s 176 of the Ordinance, 2001 requiring it to submit details/documents in respect of tax deducted and deposited along-with Challan of payment for the years 2012, 2014 and 2015. As applicant failed to comply with was served with showcause notices u/s 161(A)/205 of the Ordinance, 2001 on 20.07.2017 which it duly replied.
Notwithstanding, Orders u/s 161/205 of the Ordinance, 2001 were passed against the applicant. For the year 2012 total tax and penalty was worked out at Rs11,255,173/-, for 2014 at Rs933314, and for 2015 at Rs3039677/- which the applicant was directed to make good of.
The applicant however challenged the Orders in appeals before the Commissioner Inland Revenue Karachi, who upheld the same spurring the applicant to file income tax appeals for each tax year separately before the Appellate Tribunal Inland Revenue of Pakistan Karachi Bench Karachi have been dismissed through impugned Orders, hence these references.
Learned counsel for the parties have argued the case as set up in their respective pleadings. It is the main contention of learned counsel that the funds applicant collects fall within category of entries enumerated under clause 47B Part IV of the Second Schedule of the Ordinance, 2001, hence are exempted from advance tax deductions. And, in view of such legal position, requirement of obtaining valid exemption certificate u/s 159 (1) of the Ordinance, 2001 is not mandatory
As can be seen, above discussion and reasons articulated in support of findings comprehensively cover and reply adequately the question of law framed here. The question is therefore replied and decided in favour of the department and against the applicant.
It is held that the concession envisaged under clause 47B of Part IV of the Second Schedule of the Ordinance, 2001 cannot be availed by with-holdee out-rightly and directly from the withholder on account of bar contained in section 159(2) unless the withholding person has a valid exemption certificate issued to him u/s 159(1) of the Ordinance, 2001.
A copy of this decision may be sent under the seal of this Court and the signature of the Registrar to the learned Appellate Tribunal Inland Revenue, as required per section 133(5) of the Income Tax Act, 2001. Office is directed to place a copy hereof in each connected references”.
