ITANo.834/LB/2010 (Assessment Year 2006) ITANO.835/LB/2010 (Assessment Year 2007) The CIR, Legal Division, RTO, Lahore. Versus

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1 IN THE APPELLATE TRIBUNAL INLAND REVENUE, LAHORE BENCH, LAHORE ITANo.834/LB/2010 (Assessment Year 2006) ITANO.835/LB/2010 (Assessment Year 2007) The CIR, Legal Division, RTO, Lahore. Appellant Versus M/s. Tri Star Board Pvt, Ltd. Lahore, Respondent Applicant by Respondent by : Mr. Dr. Idrees D.R. : Mr. Syed Ahmad Mushir Ali Qadri FCA Date of hearing : Date of order : ORDER These two appeals arise out of the order of the learned CIR (Appeals) dated , whereby she deleted the tax charged u/s 161/205 of the Income Tax Ordinance, 2001 for both the years under appeal. 2. Facts leading to the instant appeal, briefly stated, are that in order to ascertain the level of compliance with the withholding tax provisions, the taxation officer initiated proceedings by issuing notice u/s 161 of the Income Tax Ordinance, In response, the company's AR filed certain details and information which were examined by the taxation officer. After scrutiny of these details, the company was treated to be a taxpayer in default and tax liability of Rs.56, 722/- and Rs.182, 173/-, was determined 1 Pak Law Publication

2 (2) ITA No.834,835/LB/2010 as payable u/s 161/205 of the Income Tax Ordinance, 2001 for the tax years 2006 & 2007 respectively. Being aggrieved, the taxpayer company filed appeal before the learned CIR (Appeals) who vide her impugned order deleted the tax charged u/s 161/205 of the Income Tax Ordinance, 2001 with the observation that the taxation officer was not justified to charge tax without affording adequate opportunity of being heard to the taxpayer. Now the Revenue feeling aggrieved has come up in appeal before this forum. 3. Initiating the arguments on appeal, the learned DR contended that the tax was charged by the taxation officer after thorough scrutiny of record. He referred the observation of the taxation officer at page-2 of the assessment order wherein he observed that the amounts subjected to withholding tax were duly confronted to the taxpayer company and it was only when it (the taxpayer) admitted that tax had not been deducted as required under the law that tax was charged u/s 161 of the Income Tax Ordinance, In rebuttal the learned AR produced copy of the letter dated addressed to the taxation officer Enforcement and Collection Unit-ll, whereby all the details and information requisitioned by him were furnished 2 Pak Law Publication

3 (3) ITANo /LB/2010 Along with the explanation as to why tax had not been deducted from certain payments. Elaborating his contention, the learned AR stated that the audit fee in both the years was payable on the closing date and as such question of deduction of tax did not arise because u/s 158 of the Income Tax Ordinance, 2001 tax was to be deducted when actual payment was made. He further submitted that the Directors' remuneration and salaries of the employees were below taxable limit and necessary details in this behalf containing particulars of the directors as well as employees were furnished to the taxation officer. In respect of payments made for purchases for the tax year 2007 he contended that the taxation officer was not justified in treating the company as a taxpayer in default because the company was never confronted with any default in respect of purchases. 5. I have given due consideration to the rival arguments and also gone through the relevant record available on file. As far as tax year 2006 is concerned the learned AR's contention with regard to the directors' remuneration being below taxable limit has been found to be correct. From the breakup of their salaries it stands established that the salaries of all the directors were below taxable limit. Accordingly, deletion of tax in respect 3 Pak Law Publication

4 (4) ITA No /LB/2010 of directors' remuneration by the CIR(A) is upheld. As far as audit fee in both the years is concerned, it was shown as payable on the closing date and, therefore, question of deduction of tax did not arise. Deletion of tax raised u/s 161 of the Income Tax Ordinance, 2001 an account of non-deduction of tax from the audit fee is, therefore, confirmed. Details with regard to the salaries paid to the employees as produced before the taxation officer have also been examined which reveal that only aggregate amount paid to the employees every month has been recorded in the ledger account without particulars of the employees. The learned AR, however, explained that the relevant particulars of the employees & their CNICs were produced before the taxation officer at the time of hearing. Since particulars of the employees are not available on the ledger produced before me, I deem it appropriate to set aside the assessment order on the point of salaries of employees and remand the case to the taxation officer with the direction to obtain particulars of the employees from the taxpayer company and if taxpayer's AR's contention regarding the particulars of the employees and their salaries being below taxable limit is found correct, tax raised u/s 161 of the Income Tax Ordinance, 2001 and consequential additional tax be deleted. 4 Pak Law Publication

5 (5) ITANo /LB/ Since non-deduction of tax from the amount paid in consideration of purchases was not confronted to the taxpayer in the tax year 2007, tax charged u/s 161/205 of the Income Tax Ordinance, 2001, being against the principles of natural justice is held to have rightly been deleted by the learned first appellate authority. 7. In nutshell the order of the learned first appellate authority is upheld to the extent of deletion of tax on directors remunerations, audit fee for tax year 2006, whereas on the point of salaries of the employees, the order is remanded to the taxation officer with the direction, recorded hereinabove. Tax charged u/s 161/205 of the Income Tax Ordinance, 2001 in respect of purchases for the tax year 2006 stands confirmed. 8. The departmental appeals are disposed of as above. (ABDUL RAUF) Accountant Member Empowered u/s 130(8) (a) of the Income Tax Ordinance, 2001,...sitting singly. Jan. 12/29-33 Mushir 5 Pak Law Publication

APPELLATE TRIBUNAL INLAND REVENUE.HEADQUARTERS BENCH, ISLAMABAD. ITA No. 38/1B/2012 (Tax year 2009) ITANo. 136/IB/2012 (Tax year-2009)

APPELLATE TRIBUNAL INLAND REVENUE.HEADQUARTERS BENCH, ISLAMABAD ITA No. 38/1B/2012 (Tax year 2009) ITANo. 136/IB/2012 (Tax year-2009) ITANo. 137/IB/2012 (Tax year 2010) The Commissioner Inland Revenue,