Law: Income Tax Ordinance, 1979

Section: 163

Income Tax Ordinance (XXXIX of 1979)----S. 163---Convention for Avoidance of Double Taxation between Pakistan and Sweden, Art. XIII (i)---Avoidance of double taxation and prevention of fiscal evasion---While supervising the errection of machinery non-resident Swedish nationals were acting for and on behalf of a Swedish Company and were not employees of company in Pakistan---Stay of such persons in Pakistan was less than 183 days---Such persons, held, qualified for the exemption of tax under Art. XIII of the Convention. JUDGMENT M. MAHBOOB AHMAD, C.J.---This judgment shall dispose of Civil References Nos.30, 31, 32,. 33, 35 and 36 of 1976 in which controversy involved is the same. 2. The petitioners in all these petitions are non-resident Swedish nationals and were in the employment of M/s. Defibrator A.K. Ticlolag of Stockholm, Sweden, which was granted a contract by M/s. Crescent Sugar Mills and Distillery Ltd., Lyallpur (now Faisalabad), for the supply and erection of a plant for manufacture of soft board and semi-hard board in Pakistan. The first agreement in this behalf was executed between the parties on 16th August, 1966, which was supplemented by another agreement, dated 8th September, 1969. According to this agreement, the Swedish Company was to provide services of technicians, to supervise the erection of the machinery. It is common ground between the parties that the petitioners came to Pakistan in pursuance to that agreement and supervised the erection of the plant. It is also not in dispute that the charges for rendering these services were paid by M/s. Crescent Sugar Mills and Distillery Ltd., to the Swedish Company, which in turn paid emoluments to the petitioners. 3. The petitioners in all these petitions filed their returns of income which were processed by the Income Tax Officer, who vide his order, dated 31st May, 1971 was of the view that the petitioners were liable to pay tax on the various amounts received by them in Pakistan like DA., rent free accommodation etc. from the Mills. 4. Before the Income Tax Authorities, it was claimed by the petitioners that by virtue of an agreement for avoidance of double taxation arrived at between the…

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