PAKISTAN MOBILE COMMUNICATIONS LIMITED (PMCL) vs COMMISSIONER INLAND REVENUE (ZONE-IV) LARGE TAXPAYERS, UNIT,

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PAKISTAN MOBILE COMMUNICATIONS LIMITED (PMCL) VS COMMISSIONER INLAND REVENUE (ZONE-IV) LARGE TAXPAYERS, UNIT, ISLAMABAD Ss. 2(29C), 9, 11, 97 113, 113C, 122, 133 & First Schedule, Division II, Part-1---Re-assessment---Turn over and accounting income---Distinction---Telecommunication companies---Status---Assets between wholly-owned companies---Benefit---Alternative Corporate Tax---Applicant / taxpayer was aggrieved of order passed by Appellate Tribunal Inland Revenue in holding that all shares of applicant / taxpayer were held by a non-resident company, therefore, it did not fulfill the requirements for the transaction to fall within the ambit of S.97 of Income Tax Ordinance, 2001---Validity---What is taxable in terms of S.4 read with Ss.9 and 11 of Income Tax Ordinance, 2001 and other related provisions, is the income of a taxpayer---Provision of Ss. 113 and 113C of Income Tax Ordinance, 2001 are exceptions to the rule that only income as determined in accordance with provisions of Income Tax Ordinance, 2001 can be subjected to tax---Provisions of Ss. 113 and 113C of Income Tax Ordinance, 2001 are in the nature of deeming provisions, where under S.113 of Income Tax Ordinance, 2001 turnover of a taxpayer is used as a measure to determine tax liability on a deeming basis, and under S.113C of Income Tax Ordinance, 2001 the accounting income of a taxpayer is used as a measure to determine tax liability on a deeming basis---As such Ss.113 and 113C of Income Tax Ordinance, 2001 are artificial rules that impose a liability on a taxpayer to pay tax even where no real income arise in the hands of the taxpayer---Taxpayer under S.113C of Income Tax Ordinance, 2001 is accordingly liable to pay taxes calculated in terms of income of the company subject to tax under Division II of Part 1 of First Schedule to Income Tax Ordinance, 2001 or the minimum tax due in terms of S.113 of Income Tax Ordinance, 2001 or the alternative corporate tax determined on the basis of accounting income in terms of S.113C of Income Tax Ordinance, 2001 whichever is greater---Exclusions for the purpose of calculating Alternative Corporate Tax are mentioned in S.113C (8) of Income Tax Ordinance, 2001 and do not state that any accounting income in relation to a S.97(1) of Income Tax Ordinance, 2001 as disposal of asset transaction is required to be excluded therefrom---If it was determined by the Commissioner that applicant / taxpayer had generated income from imports in relation to which advance tax was collected in terms of S.148(1) of Income Tax Ordinance, 2001 only then the question of applicant / taxpayer being an industrial undertaking would become relevant---Applicant / taxpayer did not qualify as an industrial undertaking for purposes of tax year 2018---Transaction of disposal of tower business by applicant / taxpayer to its wholly owned subsidiary company, did not qualify for tax deferral in terms of S.97 of Income Tax Ordinance, 2001---Applicant / taxpayer did not qualify as an industrial undertaking in terms of S.2 (29C) of Income Tax Ordinance, 2001 in tax year 2018---High Court directed the Commissioner to undertake an analysis regarding advance tax collected under S.148 of Income Tax Ordinance, 2001 before generating any demand in terms of S.148(7) of Income Tax Ordinance, 2001---High Court further declared that appeals effect order passed in terms of S.124 of Income Tax Ordinance, 2001 did not include no demand in relation to S.148(7) read with S.148(1) of Income Tax Ordinance, 2001 without such prior inquiry---Reference was disposed of accordingly.

PAKISTAN MOBILE COMMUNICATIONS LIMITED (PMCL) vs COMMISSIONER INLAND REVENUE (ZONE-IV) LARGE TAXPAYERS, UNIT, ISLAMABAD Ss — 2026 PTD 45 ISLAMABAD

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