Law: Income Tax Ordinance, 2001

Section: 113

INCOME TAX ORDINANCE, 2001 (XLIX OF 2001)---Section 113---It is the gross fee and not the gross receipts, which shall be treated as part of turnover for the purposes of commuting the minimum tax liability in terms of Clause (b) of sub-section (3) of Section 113, which excludes reimbursable expenses.-- Fundamental question is whether the amounts, comprising of freight charges, terminal charges, shipment handling charges payment of duties and other taxes (�other amounts�), otherwise distinguishable from the fees paid in lieu of rendering of services in terms of clause (b) of sub-section (3) of section 113 of the Income Tax Ordinance of 2001 (Ordinance of 2001), could be treated as gross receipts. Factually, the claim of reimbursement of other amounts is not disputed. If construction proposed by learned counsel for the department is acknowledged - to treat other amounts and the service fees as part of gross receipts-, it would not only render clause (b) of sub-section (3) of section 113, redundant but conspicuously distort the meaning and effect of sub-clause (b) of clause (v) of sub-section (7) of section 153 of the Ordinance of 2001. and violates the ratio settled through various judicial pronouncements, wherein the term "gross fee� was elucidated.There is no cavil that the term �gross fee�, in the context of rendering of or providing of services, would exclude reimbursable expenses for the purposes of ascertaining the volume of the �turnover�. Accordingly, it is the gross fee and not the gross receipts, which shall be treated as part of turnover for the purposes of commuting the minimum tax liability in terms of clause (b) of sub-section (3) of section 113, and amounts comprising of freight charges, terminal charges, shipment handling charges payment of duties and other taxes have had to be excluded for the purposes of turnover in terms of clause (b) of sub-section (3) of section 113 of the Ordinance of 2001.We endorse the determination by Appellate Tribunal, which rightly differed with the determinations by the CIR (Appeals) and Commissioner, which had erroneously treated the amounts, comprising of freight charges, terminal charges, shipment…