Law: Income Tax Ordinance, 1979

Section: 50(4),(2),2(29)(32),2(34)&34,2(34)(a ),2(34B)

Income Tax Ordinance (XXXI of 1979)----Ss. 50(4), (2), 2(29)(32), 2(34) & 34---Circular No. 11 of 1991, dated 30-6-1991---Deduction of tax at source-- -Assessee in default ---WAPDA--¬Bank---Collection of bills---Service fee---Bank charged service charges on collection of electricity bills from WAPDA in violation of agreement between WAPDA and Bank that Bank will not be entitled to charge any Bank commission and will render all services free of cost to WAPDA---Assessing Officer treated the Director Finance, Area Electricity Board as assessee in default for non-deduction of tax on service charges paid to Bank and demanded payment---First Appellate Authority confirmed the action of the Assessing Officer---Validity----Perusal of procedure laid down for collection of payment of electricity bill clearly shows that no commission or any other charge was to be paid by WAPDA to Banks---Assessing Officer and First Appellate Authority acted in excess of their jurisdiction in treating the Director Finance as assessee in default---Further, WAPDA was a company formed under a statute and was deemed to be a company within the meaning of Income Tax Ordinance, 1979---Principal Officer had been defined in S.2(34) of the Income Tax Ordinance, 1979 and Director Finance did not fall in any of the categories in S.2(34)(a) of the Income Tax Ordinance, 1979---If Director Finance, Area Electricity Board was to be treated a Principal Officer by the Assessing Department notice should have been served upon him in terms of S.2(34-b) of the Income Tax Ordinance, 1979---Orders of the Department were declared without lawful authority and of no legal effect in the circumstances by the High Court. JUDGMENT The Water and Power Development Authority has filed this petition under Article 199,of the Constitution of Islamic Republic of Pakistan, 1973 to challenge orders, dated 26-3-1997 and 19-4-1995 passed by respondents Nos.l and 2 whereby the Director Finance of WAPDA who is petitioner No. 1 in this petition has been treated as assessee in default. 2. The facts relevant for the present purposes are that WAPDA is a statutory body set up by the Water and Power Development Authority Act, 1958.…

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