Law: Income Tax Ordinance, 1979

Section: 12(1),2(32),2(40),9

Income-tax Ordinance (XXXI of 1979)----Ss. 12 (1), 2 (32), 2 (40) & 9--C.B.R. Circular No.3(2)-I.T.J.U: /76 dated 22-3-1987--Notification No.IT-JU-3 (2)/76 dated 17-9-1985--Constitution of Pakistan (1973), Arts. 1 (2) & 246--Assessee, an individual deriving income from salary as an employee of a Bank at Swat where Income-tax Ordinance, 1979 had not been extended--Residential status and liability to pay income-tax by assessee-¬Residential status of an individual assessee, held, would govern his liability for payment of tax. Assessee was an individual deriving income from salary as an employee of Habib Bank Ltd. Mingora, Swat. Income-tax Officer, Circle-1, Mardan on the basis of information received in the statement under section 139 of the Income ¬tax Ordinance booked the case. Accordingly, notices under sections 56 and 61 of the Ordinance were issued. In response to the notices most of the employees in Malakand, Dir, Swat and Chitral submitted that they were serving in non-taxable area hence were not liable to pay the lax. The assessing officer again referred the case to higher authorities because Notification No. IT-JU-3-(2)/76, dated 17-9-1985 covered the cases of bank employees serving in Swat as liable to tax under section 12 (1) of the Ordinance. No reply was received from the higher Authorities. The assessing officer was left with no option but to assess the income, which he did under section 63 of the Ordinance: He passed ex parte order and assessed income of the assessee. Held, residential status of an individual assessee should govern his liability for payment of tax. Section 9 provides for charge of income-tax in respect of total income of the income year or years as the case may be of every person at the rate or rates specified in the First Schedule. The definition of person includes individual whose liability for payment of tax shall be determined in view of his being resident in relation to any income year. The provisions of section 2 (40) of the Ordinance would show that income-tax in' respect of the total income of the income year or years as the case may be of every person at the rate or rates specified in the First Schedule is to be…

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