Law: Income Tax Ordinance, 2001

Section: 153,153(1)(c,FirstSched.

Income Tax Ordinance (XLIX of 2001)--S. 153 & First Sched., Division III---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Deduction of tax from gross amount payable on execution of contract---Rate of tax---Contracts arrived at between parties were executed---Differences between petitioner/construction company and respondent/Department had arisen with regard to rate of tax---Department was demanding payment of income tax at the rate of while cording to petitioner it was 5% of the gross amount payable---6% Validity---as Clause (c) of subsection (1) of S.153 of Income Tax Ordinance, 2001 had provided that time of payment was the crucial date when the tax had to be deducted---Sub-clause (3) of Division III of Part-III of First Schedule of Income Tax Ordinance, 2001, the words used had left no ambiguity that rate of tax to be deducted from a payment referred in clause (c) of subsection (1) of S.153 of Income Tax Ordinance, 2001 would be 6% of the gross amount payable---Execution of' contract was in fact the prerequisite for completion of a project, otherwise in government contracts, no work could be assigned/allotted/ executed, unless it was executed through a written contract---Five per cent of the gross amount was payable under unamended provision of law which was substituted through the enforcement of Finance Act, 2005 which had taken its birth from 1-7-2005, resultantly after said date rate of tax would be applied and deducted at the rate of 6% of the gross amount payable---In the present case last date of payment was 31-2-2006, demand and claim of department which was 6%, could not he held illegal and unlawful in circumstances. ORDER SH. HAKIM ALI, J.---Messrs Subhan Construction Company has filed this writ petition challenging the levy of high rate of income tax than the prescribed one, which amount is being claimed and recovered by Public Health Engineering Department. 2. Facts leading to the filing of instant writ petition are that the writ petitioner, a registered firm was granted two projects of Urban Sewerage Scheme of Khanqah Sharif, Tehsil and District Bahawalpur, on 27-4-2005 for 15.511, millions and 18.535 millions.…

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