Law: Income Tax Ordinance, 1979

Section: 50(4),52

Income Tax Ord., 1979 (XXXI of 1979) - Sections 50(4) & 52 - SRO. 368(I)/94, 07-05-1994 - Deduction of - Tax at source - failure to deduct tax - Assessee in default - Exemption disallowed - validity - Petitioner is exporter - It got cloth manufactured from third party, but did not make any tax deduction at time of making payment to such third party on ground that it being exporter, was exempted from provisions of section 50(4) Deptt. held that petitioner was in default and accordingly treated petitioner as assessee in default as per provision of section 52 - Appeal dismissed by CIR(A) and also by Tribunal - Reference to High Court - Whether perusal of sub-Section (4) of section 50, if read with SRO. 36(I)/94, 07-05-1994 shows that under such-section (4) of Section 50, any person responsible for making any payment in full or in part on account of supply of goods or for service rendered or execution of contract shall deduct advance tax, however, under SRO if such person being exporter of goods, making payment on account of supply of such goods as are purchased in respect of goods exported outside Pakistan, provision of sub-section (4 ) of section 50 will not apply to said person - Held yes - Whether SRO relates to person making payments against supply of goods, but it does not exempt person from applicability of such-section (4 ) of section 50 of Ordinance, 1979, who is making payment to third party against service rendered or execution of contract - Held yes - Whether any payment made against service rendered or execution of contract whether it brings value addition to goods or not, will not exclude such payment from purview of section 50(4) under SRO - Held yes - Whether transaction of execution of contract is also not covered under SRO 368(1)/94, 07-05-1994 for exemption, which is only confined to supply of goods, as are purchased in respect of goods exported outside Pakistan - Held yes - Whether question raised is answered in negative and resultantly both reference application filed by petitioner are decided against petitioner - Held yes. The perusal of sub-section (4) of Section 50 if read with aforesaid SRO shows that under sub-clause (4) of section 50,…

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