Law: Income Tax Ordinance, 2001

Section: 153, 161, 205, 153(7), 153(1)(b), 153(1)(a)

Law: Income Tax Rules, 2002

Section: 44(4)

  Brief Facts Background of the Appeal Appellant (Taxpayer): M/s. Pakistan Gas Port Ltd., Lahore. Respondent (Department): The Commissioner Inland Revenue (CIR), CTO, Lahore. Forum: Appellate Tribunal Inland Revenue, Lahore Bench. Case No: ITA No. 124/LB/2023 (Tax Year 2016). Date of Order: 18.07.2023. Nature of Appeal: Assailing an appellate order regarding non-deduction of withholding tax under sections 161/205 of the Income Tax Ordinance, 2001. Initial Dispute and Departmental Action The appellant company is an unlisted public limited company involved in the business of importing, exporting, and distributing LNG/Natural Gas (though it had not commenced operations yet in the relevant tax year). Being a prescribed person, the appellant was legally obligated to withhold and deposit tax on payments made under various sections, including Section 153 (payment for goods/services). The Assessing Officer (DCIR) initiated proceedings and passed an order holding the appellant in default for failing to withhold tax on claimed expenses under various heads. The DCIR specifically held the appellant in default under Section 161 on payments of Rs. 37,200,000/- made to consultants, resulting in a tax charge of Rs. 3,720,000/- (@ 10%). The DCIR made this charge on the basis that the appellant failed to provide documentary evidence of tax payment on these amounts. Proceedings before CIR (Appeals) The taxpayer appealed the DCIR’s order to the Commissioner (Appeals) [“CIR(A)”]. The CIR(A) did not decide the matter on its merits but instead remanded the case back to the Assessing Officer for a de novo (fresh) consideration. This order of remand was appealed by the taxpayer to the Tribunal. Appellant’s Arguments before the Tribunal The appellant contended that the DCIR had ignored the documentary evidence provided during the assessment proceedings. The appellant submitted a detailed breakdown before the Tribunal, asserting that the full amount of tax (Rs. 3,720,000/-) on the payments to three consultants…