Law: Income Tax Act, 1922

Section: 18,18(3B)

Law: Constitution of Pakistan, 1973

Section: 185(3)­

Income-tax Act (XI of 1922)---S. 18 (3-B) read with Constitution of Pakistan (1973). Art. 185 (3)­Words and phrases -Leave to appeal-High Court itself noticing fact of there being great difference of opinion as to interpretation of expres­sion "unless he is liable himself to pay any income-tax and super-tax thereon as an agent" occurring in S. 18 (3-B) and questions involved being legal and likely to affect a large number of cases, special leave to appeal granted by Supreme Court to consider question. ORDER ABDUL KADIR SHAIKH, J.-The petitioner, a public Limited Company, in order to set up and install a Sugar Mill purchased heavy machinery from M/s. Mitsubshi 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 Pakistani 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 years 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 assesses in default under section 18 (7) read with section 18 (3-B) of the Income-tax Act for 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 filed 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 to be incompetent…

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