ANEES UR REHMAN vs COMMISSIONER INLAND REVENUE, RTO, LAHORE Ss — 2025 PTD 1227 INLAND REVENUE APPELLATE TRIBUN

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ANEES UR REHMAN VS COMMISSIONER INLAND REVENUE, RTO, LAHORE Ss. 107, 111(1)(b) & 111(4)(a)---Circular No. 05 of 2021 dated 30.08.2021 issued by Federal Board of Revenue---Memorandum No. EPD 30-04-2021-97865, dated 07th May 2021, issued by the State Bank of Pakistan---Non-resident, declaration of income---Double taxation, avoidance of---International treaty between Pakistan and any other country---Foreign remittances being proof---Scope---Allegation against the Taxpayer/Individual (non-resident) was that he declared foreign remittances in the return, however, e-folder of the return showed no evidence in respect of fulfillment of conditions of subsection (4) of S.111 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001')---Appellant (Taxpayer /overseas Pakistani) filed appeal before the Appellate Tribunal Inland Revenue as the Commissioner Inland Revenue (Appeals) confirmed amended assessment order---Validity---There is a treaty between Pakistan and Germany in respect of avoidance of double taxation with respect to taxes on income ('Treaty-under-consideration')---Article 4 of the Treaty-under-consideration defines the status of resident and as per its sub clause (c), if a person is residing in any of the two countries he shall be deemed to be a resident of the said country in which he is national---Admittedly, appellant is the national of Germany---Record further transpires that an amount of 48,780/-Euros were remitted back to Pakistan in foreign bank account of the taxpayer which were withdrawn from the foreign account bank and subsequently encashed from the money exchange duly approved by the State Bank of Pakistan---Firstly, the taxpayer being a non-resident was not amenable to tax and, even otherwise, the documents (including certificates/receipts of exchange companies) produced by the appellant fully substantiated that foreign remittances were remitted back from Germany to Pakistan through banking channel and was encashed from the money exchange---Federal Board of Revenue has issued a Circular No. 05 of 2021, dated 30.08.2021, clarifying the issue of foreign remittances through Money Services Businesses (MSBs), Exchange Companies (ECs), and Money Transfer Operators (MTOS) on the basis of a Memorandum No. EPD 30-04-2021-97865, dated 07th May 2021, issued by the State Bank of Pakistan---Federal Board of Revenue has accepted the SBP's position of legitimizing remittances via MSBs, Exchange Companies and MTOs equating them with "scheduled banks" as S. 111(4)(a)---Further, the Government of Pakistan always encourages for more and more foreign remittances and the concerned officers should be very careful while charging tax in respect of foreign remittances as the same may discourage overseas Pakistanis if they are subjected to unnecessary taxation---Thus, in the present case, the foreign remittance was brought in Pakistan through banking channel and after withdrawal from the foreign bank account the same was encashed from money exchange dealer duly approved by State Bank of Pakistan; hence, the taxpayer had been subjected to unnecessary taxation especially when there is also a treaty between Germany and Pakistan in respect of Avoidance of Double Taxation with respect to taxes on income---Admittedly taxpayer was a German national---International treaty of avoidance of double taxation between Pakistan with any other country would prevail over provisions of the Ordinance, 2001---Officer Inland Revenue had wrongly made addition in taxpayer's income under S. 111 of the Ordinance, 2001 and charged tax stating that conditions of subsection (4) of S. 111 of the Ordinance, 2001, were not fulfilled as record suggested otherwise and the Commissioner Inland Revenue (Appeals) had also erred in law while confirming the assessment order which was not based on correct appreciation of law and facts of the case---Appellate Tribunal Inland revenue set aside impugned orders passed by the tax authorities below---Appeal, filed by Taxpayer (non-resident), was allowed, in circumstances.

ANEES UR REHMAN vs COMMISSIONER INLAND REVENUE, RTO, LAHORE Ss — 2025 PTD 1227 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN

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