Law: Income Tax Act, 1922

Section: 3,23

Income-tax Act, 1922 -Sections 3, 23 -- Income -Non-resident -Non-resident company promoting two companies in Pakistan -In terms of agreement between the foreign principal and the local concerns entire rights of management with foreign principals -Foreign principals to render managerial and other technical services through Managing Director appointed by them -Managing Director visiting Pakistan off and on for such purposes -Remuneration for management services remitted through proper channel to foreign principals under agreement -Whether liable to tax in Pakistan -Held yes -Whether assessable in the hands of the Managing Director -Held no -Perquisites -Boarding, lodging and conveyance expenses incurred by Managing Director during his visits to Pakistan borne by local concerns -Whether liable to tax -Held no - Salaries-B, a foreign company promoting two companies in Pakistan -Agreement of promotion settling entire rights of management of two companies to be entrusted to foreign principals for 10 years -Foreign principals under agreement appointing a Managing Director who had to visit Pakistan twice a year -Fares and other incidental expenses of visits of Managing Director borne by local concerns -Income-tax Officer treating expenses incurred on account of Managing Director's visits as remuneration payable for services rendered by Managing Director and as such holding them to be his salaries earned in Pakistan and taxed them as such -Held: Remuneration was in fact receipt of income of foreign principals and not that of Managing Director who was in fact employee of his foreign principals -- Corresponding Sections: Income-tax Ordinance, 1979 -Section 9(1) -- ORDER The order was passed by M.T. SIDDIQUI, President.---These five appeals by a non-resident arise in the following circumstances. 2. The appellant is a Managing Director of M/s. W.B. Ltd., a non resident company, which has promoted two companies under the style of W.B. and Pak B., in Pakistan. Under the agreement of promotion and incorporation between A.B.B. the foreign principals and W. Industries it was settled that the entire rights of management for the two companies to be floated were to be entrusted…

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