Law: Income Tax Ordinance, 2001

Section: 133

Law: Income Tax Ordinance, 1979

Section: 50

Income Tax Ordinance (XLIX of 2001)-- --S.133--Income Tax Ordinance (XXXI of 1979), S. 50--Reference to High Court--Deduction of tax at source--Scope--Assessee entered into different agreements with certain companies based in United Kingdom and United States and in that behalf made payments to them but no withholding tax was deducted under S.50(3) of the Income Tax Ordinance, 1979--Stance of assessee was that the payments were covered by Avoidance of Double Taxation Treaties executed between Pakistan, USA and UK--Validity--All the fora below except the Taxation Officer had concluded that the entities with which the respondent had been dealing did not have permanent establishment in Pakistan, hence payments made were covered under the Treaty-- High Court could not enter into the facts finding mission regarding the place of establishment of the parties with whom the respondent had been dealing--No question of law had arisen in the facts and circumstances of the case to be framed and answered by the High Court--Reference application by the department was dismissed. JUDGMENT AAMER FAROOQ, JUSTICE:---.--- This reference application is under Section 133(4) of Income Tax Ordinance, 2001, requesting framing of questions of law arising out of the decision of the Appellate Tribunal Inland Revenue, dated 21.01.2004 and answering the same. 2. The facts, in brief, are that the respondent / assessee was engaged in the business of sale of licensed video films and pursuant thereto entered into different agreements with certain companies based in United Kingdom and United States and in this behalf made payments to them. At the time of making payments, no withholding tax was deducted under Section 50(3) of Income Tax Ordinance, 1979; consequently a notice was issued under Section 52 read with section 86 of the Income Tax Ordinance, 1979. The stance of the respondent was that the payments were covered by Avoidance of Double Taxation Treaties executed between Pakistan, U.S.A. and U.K. and for the said purpose, deduction under Section 50(3) of 1979 Ordinance was not made as exemption existed. The Taxation Officer decided the matter against the assessee. Feeling aggrieved and appeal…

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