Instances where the commission's view differs from the view taken by the income tax department at the assessment stage and where the commission considers that its view on items is of material nature is in accordance with law, the amounts are shown as contingent liabilities.
The SECP annual report said that the SECP [the "Commission"] has ?led the tax returns for the tax years 2003 to 2007 in pursuance of the order of the Federal High Court, by claiming exemption on total income in terms of Section 49 of the Income Tax Ordinance, 2001 [the "Ordinance"], the SECP's independent auditors said.
However, the Additional Commissioner of Income Tax, Audit Division [the "ACIT"] amended the assessments of the Commission under section 122(5A) of the Ordinance by rejecting the claim of exemption and thereby creating tax demand aggregating to Rs 892.60 million.
The Appellate Tribunal Inland Revenue [the "ATIR"] had upheld the annulment of order of ACIT for Tax Year 2003 and maintained the order for the Tax Years 2004 to 2007, while disposing of the appeals ?led by the Commission against the order of the Commissioner Appeals [the "CIR(A)"].
The Commission ?led the reference applications before the Islamabad High Court (IHC), who held that the amendments brought in section 49 of the Ordinance through the Finance Act, 2007, are not applicable retrospectively. As a result of this, payment of tax demands previously made by the Commission under protest; stands refundable.
The income tax department has led an appeal in the Supreme Court against the order of the Islamabad High Court. Secondly, the Officer Inland Revenue [OIR] charged default surcharge aggregating to Rs 111.90 million for delay in payment of the tax demands for the tax years 2004 to 2007.
While disposing of the appeals ?led by the Commission, the CIR (A) has upheld the charge of additional tax and directed the OIR to re-compute the amount of default surcharge after taking cognizance of the tax refunds available with the Commission for the tax years 2008 and 2009.
During the reassessment proceedings, the OIR followed the same procedure to work out the default surcharge, which action was rejected by the CIR (A) with the directions to follow the instructions earlier given by the CIR(A). The Commission has contested the order of CIR (A) to uphold the charge of default surcharge before the ATIR.
The ATIR also upheld the order of the CIR (A) for charge of default surcharge, however the ATIR ordered for deletion of the default surcharge for the period for which the stay granted by the IHC through order dated February 19, 2009 was in force.
However, since, in view of the order of the IHC, the tax demands for the tax years 2004 to 2007 stood vitiated, therefore, consequent charge of default surcharge is also liable to be deleted.
The tax authority has amended the assessment of the Commission for the tax year 2008, thereby, disallowing the excessive tax depreciation of Rs 24.47 million allegedly claimed by the Commission.
The CIR (A) has set-aside the amended assessment order on appeal led by the Commission. Against the appellate order of the CIR (A), the Commission has led an appeal before the ATIR, which is sub judice till to-date.
Thirdly, the Commission has ?led the return for the tax years 2008 to 2017, which stood assessed in terms of Section 120 of the Ordinance.
The Commissioner Inland Revenue [the "CIR"] selected the Commission for audit relating to the tax year 2010.
However, the Commission has challenged its selection for audit by the CIR in the IHC.
The writ petition of the Commission was rejected by the IHC.
Against this rejection, the Commission has led an intra-court appeal to the Division Bench of the IHC, thereby addressing certain issues.
Being not satisfied with the order of the IHC, the Commission as well as the Tax Department have led appeal before the Supreme Court.
Consequent to reassessment proceedings for the tax year 2013, the tax authority amended the assessment of the Commission thereby making certain disallowances and curtailing income tax refund by Rs 31.94 million. Being aggrieved with the amended assessment order, the Commission preferred an appeal before the CIR (A), who has set-aside the amended assessment order and has remanded back the case to the tax authority.
Being not satisfied with the order of the CIR (A), the Commission has led appeal before the ATIR, which is pending disposal till to-date.
The tax authority has confronted the Commission with regard to alleged short deduction of tax from salaries of various employees for the tax year 2017.
On detailed reply led by the Commission, the tax authority has not so far proceeded in this matter.
The management expects favourable outcome of the appeals and therefore no provision against these cases has been recognized on these matters in these financial statements, the SECP annual report added.