Law: Income Tax Ordinance, 1979

Section: 50(4),52,86,151

Income Tax Ordinance (XXXI of 1979)----Ss.50(4), 52, 86 & 151---S.R.O. 586(I)/91, dated 30-6-1991-Deduction of tax at source ---Assessee-Company deriving income from manufacture and sale of products of pulses and food grains---Failure of company to deduct tax at source while making payment for purchase of pulses and food grains---Validity---Payments received by persons from such company for supply of agricultural produce would not be subjected to deduction at source under S.50(4) of Income Tax Ordinance, 1979---Such company was not liable to deduct tax at source. The Commissioner of Income-tax, Punjab and N.-W.F.P. and Bahawalpur v. Mrs. E.V. Miller, (deceased) represented by (1) Mrs. Brickwood and (2) The Gindlays Bank Ltd., Lahore PLD 1959 SC (Pakistan) 2i9; Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, Circle XVIII, South Zone, Karachi and others 1992 PTD I and Dr. Rajah Sir M.A. Muthiah Chettiar (Legal Heir) v. Commissioner of Income-tax 2001 PTD 121 ref. JUDGMENT NASIR-UL-MULK, C.J.---Income Tax Appellate Tribunal, Peshawar, has referred the following question of law for determination:-- "Whether on the facts and circumstances of the case, the L/ITAT, Peshawar was justified in upholding that the assessee was not liable to be treated as assessee in default under sections 52/86 of the Income Tax Ordinance, 1979 for non-deduction of tax under section 50(4) on account of payments to various shopkeepers who are not actually of the agricultural products and have been involved in the processing and packing of the agricultural products. In this regard reference is made to section 151 of the Income Tax Ordinance, 1979". 2. The background in which the above question arises is that the respondent Messrs New Capital Dall Mills (Pvt.) Ltd., Hattar, is a private limited company, deriving income from the manufacture and sale of various products of pulses and other food grains. The company purchased raw material in the shape of pulses during the assessment year 1998-99. Since it did not deduct tax under section 50(4) of the Income Tax Ordinance, 1979, the Assessing Officer, held the company to be defaulter under section 52 of the Ordinance. The…

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