Law: Income Tax Ordinance, 1979

Section: 50,50(2B)

[Income Tax Ordinance, 1979 (XXXI of 1979) - Section 50(2B) - Deduction of tax - Banking company - Call deposit receipt - Withholding tax - Petitioner a banking company - Notice to deduct withholding tax on call deposit receipts - Whether any withholding tax is to be deducted by the petitioner on the call deposit receipt - Held no The question as to whether any withholding tax is to be deducted by the petitioners on the call deposit receipt issued by them at the behest of their customers. Having considered the arguments of the learned counsel for the parties the answer to this question has to be in the negative. On its plain reading section 50(2B) of the Income Tax Ordinance, 1979 applies to those instruments by virtue of which transfer of money takes place from one person to another and not to the transaction Involving no such transfer. This interpretation is borne out not only from the language of the provision in question but also be circular issued by Central Board of Revenue on 24-07-1994. clarifying that it is only where transfer of money takes place under the special deposit receipts that withholding tax may be deducted by the Bank. A further clarification was issued by the Central Board of Revenue on 17-4-1995 according to which the Banks were liable to deduct withholding tax on special deposit receipts irrespective whether there was any transfer of money or not. The subsequent clarification is not only contradictory to the earlier press release but is not borne out by the language of the provision itself. In view of the above, all these petitions are allowed and it is held that no deduction on account of withholding tax could be made in respect of call deposit receipt issued by the Bank prior to the amendment of section 50(2B) of income Tax Ordinance, 1979 by Finance Act, 1996. K.G. Old Principal Christian Technical Training Centre Gujranwaia v. Presiding Officer Pun/ab Labour Court, Northern Zone and 6 others (PLD 1976 Lah. 1097) ref. ORDER The Judgment of the Court was delivered by Malik Muhammad Qayyum, J. - This judgment shall dispose of writ petitions No.6430/96, 6432/96, 6746/96, 6747/96 and 10963/96 in all of which the petitioners are banking…

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