Law: Income Tax Act, 1922

Section: 23,23A(1)

Income tax Act (XI of 1922)---S.23 A Finance Act (XI of 1968), Sched 4, Part II, Provision (i)(a) and Proviso (iii) Super tax, rate of Maximum differential Double Taxation Avoidance Agreement Maximum differential, held, could not be more than 10% in rate of super tax between a company which did and a company which did not make prescribed arrangement for declaration and payment of dividend in Pakistan as per Article VI (1) of Agreement between Government of Pakistan and Government of United Kingdom to avoid double taxation Company qualifying under Proviso (1) (a) and Proviso (iii) of Part 11 of Schedule 4 to Finance Act, 1968, held, was liable to pay super tax to extent of 15% maximum differential would thus make it 25% in case of "company which had not made arrangements for declaring dividend but was covered by 23(A)Explanation 1, Income ¬tax Act Assessee, held, was liable to pay super tax at 25% on commitment commission if it satisfied requirement laid down in Explanation 1 to S.23 A (1) of Income tax Act, 1922. JUDGMENT AJMAL MIAN, J. The applicant through this reference has raised the following question of law. "Whether on the facts and circumstances of the case the Tribunal was justified in holding that super tax @ 25% to be charged on commitment commission in view of the double taxation avoidance agreement between Pakistan and the United Kingdom?" The brief facts leading to the filing of the above reference are that the assessee Company is a resident of U.K. being incorporated and having its registered office in U.K. The Income tax Officer while assessing the income tax and super tax for the year 1966 67 levied super tax @ 25%. However, the Assistant Appellate Income tax Commissioner in exercise of suo motu power under section 34 A of the Income tax Act (hereinafter referred to as the Act) by his order, dated 28 10 1970 held that the assessee Company was liable to pay super tax @ 30% and not 25%. The assessee Company being aggrieved by the above order filed appeal before the learned Income tax Appellate Tribunal, which was allowed subject to the proviso that the super tax should be charged @ 25% on commitment commission of the assessee subject to…

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