| Citation(s) |
|---|
| 2025 SLG 4249 2025 SLD 4249 |
C.P.L.A. 2845-L of 2022 (Against judgment dated 16.06.2022 passed by the Lahore High Court, Lahore in P.T.R. No.349/2010.)
PRESENT: MR. JUSTICE MUNIB AKHTAR MR. JUSTICE MUHAMMAD SHAFI SIDDIQUI MR. JUSTICE MIANGUL HASSAN AURANGZEB
For the Petitioner : Mr. Ahmed Pervaiz, ASC (via video-link, Lahore) For the
Respondent : Mr. Muhammad Shoaib Rashid, ASC (via video-link, Lahore) Date of Hearing : 03.10.2025
Commissioner Inland Revenue, Lahore … Petitioner
VS
M/s Coca Cola Pakistan Limited, Lahore … Respondent
Law: Income Tax Ordinance, 2001
Section: 21(c), 153(1)(b), 161, 163
Tagline : Income Tax Ordinance, 2001: application of s.153.
This order concerns a tax dispute regarding the applicability of withholding tax under Section 153 of the Income Tax Ordinance, 2001, on an alleged payment labeled as "royalty" by the taxpayer (a Coca-Cola distributor) to its customer (McDonald's) through a rebate for exclusivity. The key issue was whether the rebate amount of Rs. 7,893,898 required withholding tax deduction as a payment for services.
Summary
The Department claimed the rebate was a payment for "advertising services" by McDonald's and thus subject to withholding tax under Section 153(1)(b). However, the court refused leave to appeal against the High Court decision that the rebate was not an actual payment from the taxpayer to the customer but merely a price discount. The law requires an actual payment for Section 153(1)(b) withholding tax to apply, which was absent here. Consequently, the provision did not apply, and the taxpayer was correct in not deducting tax.