COMMISSIONER OF INCOME TAX vs PAK LAND TRAVELS (PVT — 2023 PTD 1342 LAHORE-HIGH-COURT-LAHORE

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COMMISSIONER OF INCOME TAX VS PAK LAND TRAVELS (PVT.) LTD., FAISALABAD Ss.133, 115(4), 169(1)(b) & 233(3) [as amended by Finance Act, 2004]---CBR's Circular No. 7 of 2004 dated 1-7-2004---Withholding tax---Advance tax---Tax withheld from commission paid to Travel and Insurance Agents---Presumptive tax regime---Final tax---Scope---Loss was declared in annual return by the Tax payer/travel agent who was engaged in sale of air tickets on behalf of Travel Air Lines (Principal Company)---Authorities/applicant assailed order of Tribunal passed in favour of the taxpayer/respondent, contending that the commission earned by the Travel Agent from the principal company fell within the purview of Presumptive Tax Regime---Held, that the Travel and Insurance agents ('agents') were subjected to withholding taxes under subsection (3) of S.233 of Income Tax Ordinance, 2001 ('the Ordinance 2001')through an amendment introduced by Finance Act, 2004 and the tax withheld from commission paid to the agents was brought in the Presumptive Tax Regime under subsection (4)---Amendment made in subsection (b) of S. 169 of the Ordinance 2001 clearly provided that tax withheld from agents under S. 233(3) of the Ordinance, 2001 was to be treated as final tax---Section 115(4) of the Ordinance, 2001, was also amended to provide that the tax withheld from agents was the final tax and they were not required to furnish return of income for the tax year 2005 and onward---Said (amended) provision was also clarified vide CBR's Circular No. 7 of 2004, dated 1-7-2004---Tribunal, while misconstruing said provisions of law as well as circular, had concluded in the impugned order that the income of agents did not fall in the ambit of final tax for the year 2005 ---Tax deducted on payments on account of commission made by the principal to a Travel Agent @ 10% would be treated final discharge of tax liability for tax year 2005 and onward---Ordinance, 2001 used the term 'Advance Tax' for withholding tax because normally income tax was to be paid after the end of tax year accounting period but the withholding tax was deducted/collected during the tax year, hence, was in nature of tax paid in advance ---Judgment passed by the Appellate Tribunal was set-aside---Reference application was allowed.

COMMISSIONER OF INCOME TAX vs PAK LAND TRAVELS (PVT — 2023 PTD 1342 LAHORE-HIGH-COURT-LAHORE

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