WARTSILA PAKISTAN (PVT.) LTD. vs COMMISSIONER INLAND REVENUE, LTO, LAHORE Ss

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WARTSILA PAKISTAN (PVT.) LTD. VS COMMISSIONER INLAND REVENUE, LTO, LAHORE Ss. 2(28a), 4C(2)(i), 4C(2)(iii), 154a & 233---Income against Foreign Indent Commission ---Commission---Super tax , chargeability of ---Final Tax Regime ---Scope ---appellant (taxpayer/company), accruing Foreign indent commission, filed income tax return for tax year 2023 which, upon scrutiny, revealed that the taxpayer failed to discharge the liability of payment of super tax under S. 4C of the Income Tax Ordinance, 2001 ('the Ordinance, 2001')---Stance of the appellant / taxpayer was that the word "commission" used in clause (1) of S.4C(2) refers to the commission given in S. 233 of the Ordinance, 2001---Whether income against foreign indent commission (being subject to final taxation under S. 154a of the Ordinance, 2001) is liable to be included as imputable income or the same is separately Included under S. 4C(2)(i) of the Ordinance, 2001?---Held: Section 4C(2)(iii) of the Ordinance, 2001 stipulates that imputable income as defined in clause (28a) of S. 2 excluding amounts specified in clause (1) ibid would be summed up in calculating taxpayer's income ; there is clearly an exclusion given in said clause which states that only imputable income not falling any of the heads specified in sub-clause (1) shall be included under sub-clause (iii) and any income falling in any of the heads specified in sub-clause (i) shall not be included as imputable income---as per definition given imputable income in relation to an amount subject to Final Tax means the income which would have resulted in the same tax, had this amount not been subject to final tax which clearly means that imputable income is always in relation to amount subject to final tax, whereas undisputedly payment of tax on commission under S. 233 is not subject to Final Tax ---If the taxpayer's stance (that the word 'commission' used in clause (1) of S.4C(2) refers to the commission given in S. 233) is accepted then question arises that any Income, which cannot be imputed how can the same be excluded? and which commission income would be excluded as imputable income as stated in Clause (iii) ---Section 4C(2)(ii) clearly allows those imputable incomes to be included under this provision which do not fall under heads specified in clause (1) which covers the word commission---While interpreting clauses (1) and (iii) of S. 4C(2) of the Ordinance, 2001, on their own language, both clauses when read in juxtaposition, would mean that commission income shall not be included as imputable though may be subject to Final Tax Regime and is required to be included under clause (1) of S.4C(2) as a sum in the taxpayer's income for the purpose of charging super tax ---Thus, contentions of the appellant was not in line with the scheme of law and was misconceived---The most appropriate interpretation of S. 4C of the Ordinance, 2001 is that commission income shall not be included as imputable though may be subject to Final Tax Regime and is required to be included under clause (i) of S.4C(2) of the Ordinance, 2001 as a sum in the taxpayer's income for the purpose of charging super tax---appellate Tribunal Inland Revenue upheld the impugned order---appeal, filed by Taxpayer/Company, being merit-less was dismissed.

WARTSILA PAKISTAN (PVT.) LTD. vs COMMISSIONER INLAND REVENUE, LTO, LAHORE Ss — 2025 PTD 1707 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN

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