Law: Income Tax Ordinance, 2001

Section: 100C,150,151,159,159(1),159(2),233,Secon dSched.PartIV,Cl.47B

Income Tax Ordinance (XLIX of 2001)-----Ss. 150, 151, 233---Second Sched. Part IV, Cl. 47B---Federal Board of Revenue Circular No.I(43)DG(WHT)/2008-Vol.11-66 dated 12.05.2015---Deduction/collection of advance tax---Exemption or lower rate certificate---Mandatory nature of requirement of obtaining an exemption certificate under section 159(2) of the Income Tax Ordinance, 2001---Petitioners impugned Federal Board of Revenue Circular No.1(43)DG(WHT)/2008-Vol. 11-66 dated 12.05.2015 which required that a valid exemption certificate be first obtained prior to availing benefit of Clause 47B of Part IV of Second Schedule to the Income Tax Ordinance, 2001---Validity----Under section 150,151 and 233 of the Income Tax Ordinance, 2001 every person making certain specified kinds of payments was required to first deduct withholding tax however, to avail some concession / exemption from the same by the person receiving said payment, an exemption certificate was required to be obtained under section 159 of the Income Tax Ordinance, 2001 ----Clause 47B of Part IV of the Second Schedule to the Income Tax Ordinance, 2001 granted statutory exemption to certain categories of entities whose payments were covered under section 150,151 and 233 of the Income Tax Ordinance, 2001 and such payments were not liable to advance tax deduction---Clause 47B of Part IV of the Second Schedule to the Income Tax Ordinance, 2001 itself however was not sufficient to avoid such deduction of tax and section 159(2) of the Income Tax Ordinance, 2001 provided that a person who was required to make advance tax deduction from payments that were covered under Ss. 150, 151 and 233 of the Income Tax Ordinance, 2001 then it was obligatory upon such person to deduct withholding / advance tax unless the other party presented a valid exemption certificate issued under S. 159(1) of the Income Tax Ordinance, 2001---Only upon the presentation of such an exemption certificate, the withholder stood discharged from its obligation to make advance tax deduction and such exemption certificate first had been made mandatory specifically under S. 159(2) of the Income Tax Ordinance, 2001 before the concession of Clause 47B of…

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