Law: Income Tax Ordinance, 2001

Section: 172(3)(a), 172(3)(b), 172(3)(c), 172(3)(d), 172(3)(e), 172(3)(f), 223, 173

1. Income Tax Ordinance (XLIX of 2001)---

----Ss.172(3)(a), 172(3)(b), 172(3)(c), 172(3)(d), 172(3)(e), 172(3)(f) & 223---Nonresident person---Authorized / statutory representative of taxpayer, role of---Scope--A non-resident company conducted business through a branch office in Pakistan , which had been represented by a Chartered Accountants Firm, however, later nonresident company closed its business---Chartered Accountants (Appellant) assailed orders passed by the Tax Authorities (the Commissioner Inland Revenue and the Assistant Commissioner Inland Revenue) treating them (Appellant) as a representative of said non-resident Company under S.172(3)(f) of the Income Tax Ordinance, 2001 ('the Ordinance 2001')---Held, that the Assistant Commissioner's rational for declaring the appellant as statutory representative under S.172(3)(f) of the Ordinance, 2001, was legally flawed---The Assistant Commissioner relied on the fact that the appellant had previously acted as the authorized representative in the tax reference filed by the Commissioner Income Tax on 05.04.1997 and continued in this capacity up to the Appellate Tribunal level---Appellant served as an authorized representative in past which did not inherently validate their appointment as a representative under S. 172(3)(f) of the Ordinance, 2001---The role of an authorized representative under S.223 of the Ordinance, 2001 differs fundamentally from a statutory representative under S.172(3)(f), with the latter carrying specific fiduciary obligations and financial responsibilities, which fact, the Assistant Commissioner failed to comprehend---It is important to note that an authorized representative does not bear the same level of responsibility or vicarious liability as a representative---Therefore, the Tax Authorities cannot automatically appoint an authorized representative as a representative without establishing the required significant financial connection between the appellant and non-resident person, thus, such declaration lacked justification---Thus, status of Appellant did not automatically qualify them for appointment as a representative under S.172(3) (1) of the Income Tax Ordinance, 2001, but the same required a distinct fiduciary relationship and financial connection with the non-resident company---Appellate Tribunal Inland Revenue annulled the orders passed by the Tax Authorities--Appeal was allowed, in circumstances.

1. Income Tax Ordinance (XLIX of 2001)---

----Ss. 172(3)(a), 172(3)(b), 172(3)(c), 172(3)(d), 172(3)(e), 172(3)(f) & 223--Non-resident person---Authorized / statutory representative of taxpayer, role of--Scope---A non-resident company conducted business through a branch office in Pakistan , which had been represented by a Chartered Accountants Firm , however , later non-resident company closed its business---Chartered Accountants (Appellant ) assailed orders passed by the Tax Authorities ( the Commissioner Inland Revenue and the Assistant Commissioner Inland Revenue) treating them (Appellant) as a representative of said non-resident Company under S.172(3)(f) of the Income Tax Ordinance, 2001 ('the Ordinance 2001')---Held, that, the Assistant Commissioner based his decision on the pendency of an Income Tax Reference before the High Court, where notice could not be served on the respondents as directed by the (High) Court---Notably, the High Court, dismissed the tax reference-underdiscussion filed by the tax authorities against non-resident company---Therefore, the foundation on which the appellant was declared as statutory representative no longer held field, rendering the Assistant Commissioner's decision unsustainable and legally untenable---Thus, status of Appellant did not automatically qualify them for appointment as a representative under S.172(3)(f) of the Income Tax Ordinance, 2001, but the same required a distinct fiduciary relationship and financial connection with the non-resident company---Appellate Tribunal Inland Revenue annulled the orders passed by the Tax Authorities---Appeal was allowed, in circumstances.