Law: Income Tax Ordinance, 2001

Section: 152

Law: Convention for Avoidance of Double Taxation between Pakistan and Egypt, 1995

Section: 7,12.2

Income Tax Ordinance (XLIX of 2001)--- ----S. 152---Convention for Avoidance of Double Taxation between Pakistan and Egypt, 1995, Arts. 7 & 12.2---Payment for consultancy/technical services provided by foreign non-resident company---Exemption from deduction of withholding tax---In terms of the consultancy agreement executed between the parties, the foreign company was to provide services of professional architects, urban/town planners and engineering consultant for development of infrastructure in Pakistan---Article 12.2 of the Convention for Avoidance of Double Taxation between Pakistan and Egypt, 1995 ('the Convention') provided that fee for technical services was to be taxed in the contracting State in which they arose and in accordance with the laws of that State---Tax payable in the present case was in respect of the consultancy services and not on any business profits, thus, tax-payer could not rely on Art. 7 of the Convention to avoid deduction of withholding tax---Request of the tax-payer for exemption from deduction of withholding tax in respect of the consultancy fee paid or to be paid by it to the foreign company was rightly rejected---Petition was dismissed. THIS ORDER PASSED BY: MAQBOOL BAQAR, JUSTICE:---.--- The petitioner engaged an Egyptian Company namely Medhat Abouzeid Egyptian Consulting House for providing services for preparation of Master Plan for a development scheme and infrastructure and for a Golf Course. The said Company being an Egyptian Company is a non-resident. The petitioner applied to the FBR for exemption from deduction of withholding tax under section 152 of the Income Tax Ordinance, 2001 ("ITO 2001") in respect of the consultancy fee to be paid by it to the Egyptian company. The request was not acceded to. The revision filed against such ejection also was dismissed and the petition filed there against was dismissed through the impugned judgment. 2. The question to be resolved in the instant case is as to whether or not the petitioner is liable to deduct…

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