Law:

Section:

(a) Words and phrases--- ----"Commission"---Meaning. Oxford English Dictionary; English Dictionary on historical principles (reprint 1961) and Commercial Dictionary by P.G, Osborn and ST. Grandage (1966) ref. (b) Words and phrases--- ----"Reimburse" and "Reimbursement"---Meaning. Oxford English Dictionary on historical Principles (1993) and Advanced Law Lexicon (Third Edition) (P. Ramanatha Aiyar) (2005) ref. (c) Words and phrases--- "--"Commission" and "reimbursed" or "reimbursement", Distinction stated. The term "commission" denotes remuneration or compensation to a factor or an agent for services rendered in respect of making sale or otherwise. It is generally calculated as a certain percentage on the amount of the transaction or on the profit to the principal. Whereas the term "reimbursed"/"reimbursement" implies payback and in ordinary parlance reimbursement means repayment of what has been spent. Each word denotes a particular and specific concept without the one including other, as such, both have different meaning. (d) Income Tax Ordinance (XXXI of 1979)--- ----Ss. 50(4A) & 52---Non-deduction of tax on payment made by assessee as reimbursement of expenses to distribution company for distributing its products as per distribution contract---Assessing Officer treated assessee in default after equating such payment as commission---Validity---Word "commission" denoted remuneration or compensation to an agent for services rendered in respect of making sale---Word "reimbursement" would mean repayment of amount spent---Both such words had different meanings---Record showed that distribution company had performed certain functions in connection with distribution of products of assessee---Distribution company for such services was to be paid certain fee for expenses incurred, which , expenses had been reimbursed by assessee---Assessing Officer had not challenged validity of reimbursement---Record showed that distributing company had deducted tax under S. 50 of Income Tax Ordinance, 1979---Such expenses reimbursed by assessee could not be treated as commission---High Court answered question in favour of assessee. Harihar Cotton Pressing Factory v. Commissioner…

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