PETER C/o Messrs PETER & CO. vs COMMISSIONER INLAND REVENUE, RTO, ISLAMABAD Ss

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PETER C/o Messrs PETER & CO. VS COMMISSIONER INLAND REVENUE, RTO, ISLAMABAD Ss. 172(3)(a), 172(3)(b), 172(3)(c), 172(3)(d), 172(3)(e), 172(3)(f) & 173---No-resident person---Authorized / statutory representative of taxpayer, role of---Scope---A non-resident company conducted business through a branch office in Pakistan, which had been represented by a Chartered Accountants Firm, however, later non-resident company closed its business---Chartered Accountants (Appellant) assailed orders passed by the Tax Authorities (the Commissioner Inland Revenue and the Assistant Commissioner Inland Revenue) treating them (Appellant) as a representative of said non-resident Company under S.172(3)(f) of the Income Tax Ordinance, 2001 ('the Ordinance 2001')---Validity---Section 172 of the Ordinance, 2001 stipulates that a representative appointed under S.172(3)(f) must establish a fiduciary relationship with the non-resident person they represent ; subsection (f) of S.172(3) must be interpreted in conjunction with subsections (a) to (g) of the same section to ensure a harmonious understanding; without said interpretation, the tax authorities would be armed with unbridled powers, enabling them to appoint any individual as a representative, regardless of the necessary relationship with the non-resident person---Said relationship is essential to ensure that the representative can effectively fulfill their legal obligations, including the payment of tax liabilities--A representative must bear vicarious liability for the taxes owed by the non-resident company, which inherently requires a significant business connection between the representative and the non-resident company---Furthermore, S.172(3)(f) should be read in conjunction with S.173, which outlines the liabilities and obligations of representatives---As per subsection (1) of S.173, every representative is responsible for performing duties and obligations imposed under the Ordinance, 2001, including the payment of tax---In the absence of any fiduciary relationship with the non-resident company, appointing a representative under S.172(3)(f) could result in the individual being held vicariously liable for tax responsibilities without any actual involvement or relationship with the non-resident company, as clearly intended by sub-sections (a) to (g) of S.172(3)---Thus, status of Appellant did not automatically qualify them for appointment as a representative under S.172(3)(f) of the Income Tax Ordinance, 2001, but the same required a distinct fiduciary relationship and financial connection with the non-resident company---Appellate Tribunal Inland Revenue annulled the orders passed by the Tax Authorities---Appeal was allowed, in circumstances.

PETER C/o Messrs PETER & CO. vs COMMISSIONER INLAND REVENUE, RTO, ISLAMABAD Ss — 2025 PTD 1904 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN

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