Law: Income Tax Ordinance, 1979

Section: 52,86,50(3)&SecondSched.,

Income Tax Ordinance (XXXI of 1979)----Ss.52, 86, 50(3) & Second Sched., Cl. (177-A)---Liability of persons failing to deduct or pay tax---Exemption---Interest payable to non-resident on account of loan utilized towards industrial investment was claimed as exempt from tax---Exemption was refused on the ground that assessee company had to file an application for issuance of exemption certificate in case the income was exempt from tax which was not filed at the relevant time---Determination of taxability and exemption was the exclusive prerogative of the Assessing Officer and assessee himself had not to become the Judge of his own cause---Assessee was treated assessee in default under S.52 of the Income Tax Ordinance, 1979 for not withholding tax under S.50(3) of the Income Tax Ordinance, 1979---Validity---Interest payable to a non-resident company in respect of foreign loan utilized for foreign industrial investment of Pakistan was exempt from the income tax under Cl.(77-A) of the Second Schedule of the Income Tax Ordinance, 1979---No provision for filing of application existed or was a condition precedent; it had not been specifically provided in Cl. (77-A) of the Second Schedule of the Income Tax Ordinance, 1979 that assessee will file an application to the Deputy Commissioner of Income Tax---Interest on foreign exchange loan was exempt from tax and assessee was not required to withhold any amount of income tax on the interest income. 1993 PTD 722 rel. ORDER By the above titled appeal the assessee has assailed the appellate order dated 3-8-2002 recorded by the C.I.T.(Appeals). As per memo. of appeal as many as nine grounds have been taken however, gist of the same that the assessee is aggrieved by confirmation of tax default under sections 52/86 of the repealed Income Tax Ordinance, 1979. 2. Brief facts of the case are that the assessee is a public limited company deriving income from manufacturing and sale of cement. Assessing Panel vide letter dated 1-10-2001 specifically asked the appellant as to why appellant's company failed to deduct tax under section 50 (3) on the interest paid to Messrs Nichimen Corp. U.K. A portion of the said letter is as…

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