Law: Income Tax Act, 1922

Section: 18,18(313)(7)

Income tax Act (XI of 1922)---S. 18(3 13)(7) Question for consideration depending upon two equally possible interpretations of expression "unless he is himself liable to pay any income tax and super tax thereon as an agent" in S. 18(3 B) of Income tax Act Question likely to affect large number of cases Leave to appeal granted Constitution of Pakistan (1973), Art. 185(3). ORDER ABDUL KADIR SHEIKH, J. The petitioner, a Public Limited Company, in order to set up and install a Sugar Mill purchased heavy machinery from Messrs Mitsubishi Heavy Industries Limited, Japan, a non resident Company, and one of the terms of the contract for the supply of machinery was that the payment for the service by the supervisory staff deputed by the non resident Company would be made by the petitioner to the non resident Company, in accordance, with the prescribed formula, free of tax, in the Pakistan currency, and the tax liability rested on the petitioner. On 27 3 1970 the Income tax Officer, B Circle, Sargodha, completed, the assessment directly against the non resident Company for the assessment year 1966 67 and 1967 68 under section 23 (4) for default of notice issued under sections 34 and 22 (4) of Income tax Act. On 1 4 1970, the Income tax Officer passed another order holding the petitioner to be an assessee in default under section 18 (7) read with section 18(3 8) of the Income tax Act for the Income tax demand of Rs. 7,32,830 due from the non resident Company for the said two years. In addition, the Income tax Officer also levied penal interest for the assessment years 1967 68 under section 18 (7) at the rate of 2 % per annum, amounting to Rs. 5,52,402 for the default of deduction and payment of tax under section 18 (3 B). The petitioner fired three appeals before the Income tax Appellate Tribunal, two of these were directed against the assessments made on the non resident Company, and the third against the order under section 18 (7) of the Act holding the petitioner to be a defaulter under section 18 (3 B). Two appeals were held be incompetent for the reason that the petitioner had no locus standi to file them in respect of assessment made directly on the non resident…

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