The COMMISSIONER OF INCOME TAX, COMPANIES ZONE-II, NEW INCOME TAX BUILDING, SHAHRAH-E-KAMAL ATTATURK, KARACHI

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The COMMISSIONER OF INCOME TAX, COMPANIES ZONE-II, NEW INCOME TAX BUILDING, SHAHRAH-E-KAMAL ATTATURK, KARACHI VS PAK SAUDI FERTILIZERS LTD., KARACHI S. 80-C---Contract Act (IX of 1872), S. 182---Sale of Goods Act (III of 1930), Ss. 19 & 20---Presumptive tax regime---Fertilizer manufacturing company and marketing company---Whether principal-agent relationship---Income Tax Appellate Tribunal held that as marketing company was an agent of the fertilizer manufacturing company, hence, keeping in view the relationship of agent and principal, the manufacturing company could not claim any benefits under the presumptive tax regime provided under section 80-C of the Income Tax Ordinance, 1979 ('ITO 1979') and was liable to dealt with through normal assessment under section 62 of the I.T.O., 1979---High Court, however, held that the agreement between the two companies envisaged the outright sale of fertilizers manufactured by the manufacturing company to the marketing company, thus, the advance income tax deducted under section 50(4) of the I.T.O., 1979 upon the payments made by the latter to the former qualified to be treated as the income of the manufacturing company under section 80-C of the I.T.O., 1979 and the assessment should be finalized for the year in question under section 80-C of the I.T.O., 1979---Held, that survey and analysis of the terms and conditions of the 'Agreement' between the two companies showed that it was an agreement for outright sale by means of which the payments were being made in full after deduction of the advance income tax by the marketing company for settlement of invoices---Neither substratum of the agreement under lined any characteristics of agency nor contained any provision for agency commission---Even if issue of relationship between the companies was left to one side, section 80-C of the I.T.O., 1979 articulates that any amount received under which tax was deductible under Section 50(4) was deemed to be the total income tax liability of the assessee which was not disputed or resisted by the tax department in the present case, therefore, the amount received after deduction under section 50(4) was rightly deemed to be the total income tax liability and for all practical and legal purposes, the manufacturing company could not be deprived of the benefit of section 80-C of I.T.O., 1979---No irregularity or perversity was found in the impugned judgments passed by the High Court---Appeals were dismissed.

The COMMISSIONER OF INCOME TAX, COMPANIES ZONE-II, NEW INCOME TAX BUILDING, SHAHRAH-E-KAMAL ATTATURK, KARACHI vs PAK SAUDI FERTILIZERS LTD — 2023 PTD 1550 SUPREME-COURT

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