Large Taxpayer Unit Islamabad has recovered Rs 3 billion from Pakistan Telecommunication Authority (PTA) on account of non-payment of income tax for 2004-2007 tax period. It has been reliably learnt on Wednesday that the concerned bank has credited Rs 3 billion from the account of PTA to the LTU Islamabad. Now the PTA would pay the remaining income tax dues of around Rs 6 billion in instalments.
Therefore, the total recovery would be approximately Rs 9 billion including penalties under the relevant laws. Details revealed that the Islamabad High Court has vacated the stay order of the authority, enabling the tax department to resume recovery proceedings against PTA.
On Wednesday, income tax officials approached the relevant bank to transfer the amount from PTA account. Out of Rs 4 billion available in the account, the LTU managed to get an amount of Rs 3 billion in consultation with the authority. The amount has been subsequently transferred to the account of LTU. The recovery of the amount is related to the tax period of 2004, 2005, 2006 and 2007.
The department said that income tax exemption under section 49 of the Ordinance is not available to the authority in the wake of Article 165A of the Constitution.
Under sub-section 4 of section 49 of the Income Tax Ordinance 2001. Exemption under this section shall not be available in the case of corporation, company, a regulatory authority, a development authority, other body or institution established by or under a federal law or a provincial law or an existing law or a corporation, company, a regulatory authority, a development authority or other body or institution set up, owned and controlled, either directly or indirectly, by the federal government or a provincial government, regardless of the ultimate destination of such income as laid down in Article 165A of the Constitution of the Islamic Republic of Pakistan.
Whereas, the authority said that the provisions of section 49 have been amended vide Finance Act, 2007. After Finance Act, 2007, the income of the Federal Government shall be exempt from tax under this Ordinance. The income of a provincial government or a local authority in Pakistan shall be exempt from tax under this Ordinance, other than income chargeable under the head "Income from business" derived by a provincial government or local authority.
Vide recent amendment in the provisions of section 49, the exemption under this section has been denied to a corporation, regulatory authority, a development authority, other body or institution established by or under a federal law or a provincial law notwithstanding the ultimate destination of the income of such entities.
Such an amendment has been understood by the taxation officer to operate retrospectively ie before and after the tax year 2008.The authority was of the view that the order framed by the taxation officer under section 121 of the Income Tax Ordinance, 2001 was contrary to the facts of the case.
The authority opined that the enabling provision to bring the income of PTA to tax was brought under the tax net vide Finance Act 2007. Such amendments were clearly intended to be implemented prospectively and not retrospectively. The framing of assessment by bringing such income to tax prior to the tax year 2007 is thus, against the law.
The assessment framed by the taxation officer is unlawful and against the principles of justice as your appellant received the notice under section 121/176 of the Ordinance on the date of its compliance and when appellant reached the office of taxation officer, the adjournment was refused on the pretext that the assessment has already been finalised on ex parte basis this morning without considering the reply, PTA added.
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