Tax experts from UK gave a demonstration on the 'Alternative Dispute Resolution' system in a complicated tax case pertaining to investment in real estate and income source of the investor.
The presentation of ADR was made on an imaginary case in ideal conditions at a workshop on 'Alternative Dispute Resolution', organised by Qudrat Ullah, Regional Commissioner of Income Tax, Northern Region, Islamabad, here on Friday.
The idea was to inform chartered accountants, commissioners of income tax and lawyers about the proposed mechanism to be adopted for dispute resolution through internationally accepted mediation process.
However, the local tax consultants and lawyers pointed out that such an ideal situation was not workable in Pakistan, as there are many cases involving huge amount of revenue in courts on the basis of legal interpretation of tax laws.
Lawrence Kershen, commercial mediator, UK, played the role of chief mediator, while Carey Haslam, community mediators/trainer, UK, acted as co-ordinator of the ADR committee. The role of departmental representative was played by Mansoor Ali Shah, advocate, Supreme Court of Pakistan, while taxpayer's consultant part was given to Kath, an expert from UK.
The case in question related to valuation of the property and questionable investment under various provisions of Income Tax Ordinance 2001. The department opined that property transaction was under-valued. In the absence of any independent evidence, the department's valuation should be used for calculation of due tax.
On the other hand, the 'taxpayer' claimed that it was a genuine investment from an independent source.
During the whole 'drama', the chief mediator conveyed to the local tax experts that ADR committees would only work when its members maintain the confidentiality of taxpayer's record and ADR members should remain patient during the entire proceedings.
The chief mediator also emphasised on both parties to settle the issue to save cost of litigation. "There should be a strong will for the resolution of disputes," he said.
Meanwhile, CBR Member, Legal, Mumtaz Shaikh said that there are constitutional issues barred by legal interpretation. However, ADR has successfully settled complex issues raised by the foreign investors pending for the last 10 years.
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