Law: Income Tax Act, 1922

Section: 23,10(4)(bb)&18

Income-tax Act (XI of 1922)----Ss.23. 10(4)(bb) & 18---Reference---Assessment year 1977---Assessing Officer disallowed commission paid to non-resident---Provision of S.10(4)(bb), Income-tax Act, 1922 was amended by Finance Act, 1978, with the insertion of words "chargeable under the provision of this Act"---Assessees plea was that by the said amendment deduction of tax at source of payment made to non-resident was removed as the commission paid was not chargeable under the provisions of Income-tax Act, 1922---Department contended that amendment was introduced by Finance Ordinance, 1978 to be effective from 1-7-1998 and would be applicable to the assessment year 1978-79---Contention of assessee was that amendment was a remedial or curative amendment/statute and such amendment/statute operated retrospectively and that the amendment or modification of S.10(4)(bb) of Income-tax Act 1922 being more beneficial and advantageous to assessee, would be deemed to operate retrospectively so as to be applicable to the case of assessee for the Assessment Year 1977-78---Validity---Finance Ordinance, 1978 by amending S.10(4)(bb) of the Income-tax Act, 1922 had removed burden of deducting tax at source on payment made to a non-resident in Pakistan for claiming such payment as an admissible deduction though it was not chargeable to tax under the Income-tax Act, 1922---Amending Ordinance had provided benefit both to the assessee and the non-resident in Pakistan---Amending Ordinance being a remedial or a curative statute would be operative retrospectively---Benefit of amending Ordinance would not be available only in respect of Assessment Year 1978-79, and thereafter but also for Assessment Years prior to 1978-79, subject to the condition that at the time when the amending Ordinance was promulgated the case had not been finally decided and was pending---Case of the assessee having not been finally decided at the time when the amendment was made, assessee would be entitled to the benefit provided by the amending Ordinance---Commission paid to the non-resident was allowed as expenses in circumstances. 1978 PTD 126 ref. 1993 SCMR 73 and Malik Gul Hasan & Co. and others v.…

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