Law:

Section: 161,205,SecondSched,(12),(25),SixthSched

[Income Tax Ordinance (XLIX of 2001)]....Sections 161 & 205, Second Sched: Part-I, Cls. (8), (12) & (25) & Sixth Sched., Part-II, R.5---Rules of Pakistan Telecommunication Corporation Employees Pension Fund, Rr.9 & 15---Failure to pay tax collected or deducted---Assessee in default---Voluntary Separation Scheme---Payments to employees retired under Voluntary Separation Scheme/pension---Assessee was treated as taxpayer in default due to non-deduction of tax on the pension/payments made to employees retired under Voluntary Separation Scheme---Claim of exemption---Department contended that taxpayer had rightly been treated as taxpayer in default for non-deduction of income tax on the payments made on account of commutation of pension as payments of commutation/pension did not qualify the provision of exemption under Cl. (12) of the Second Schedule of the Income Tax Ordinance, 2001 and exemption under CI. (25) of the Part-I of Second Schedule to the Income Tax Ordinance, 2001 had no applicability---Validity---Stand of taxpayer to claim exemption was Cl. (25) of Part-I of Second Schedule to the Income Tax Ordinance, 2001 was an afterthought because taxpayer itself applied to Federal Board of Revenue for exemption under Cl. (12) of the Part-I of Second Schedule to the Income Tax Ordinance, 2001 which was not granted---Order of refusing exemption could not be assailed before the Appellate Tribunal rather it might have been challenged by invoking extraordinary jurisdiction of High Court---Department, in an other case, had itself admitted that separate approval under Cl. (12) of the Part-I of Second Schedule to the Income Tax Ordinance, 2001 was not a requisite and earlier approved fund will suffice to serve the purpose---Majority out of thousands people employees were still receiving remaining pension periodically and withholding agent had option to deduct tax while making remaining payments---Huge number of employees whose pension payments were to fall under exemption shall suffer either due to the fault of Company/ taxpayer---Exemption had been provided through legislation but subject to approval which was just a procedural aspect for analyzing…