Latest news with #IncomeTaxOrdinance
Business Recorder
3 hours ago
- Business
- Business Recorder
IHC halts FBR tax recovery under Tax Laws Ord, 2025
ISLAMABAD: In a major development, Islamabad High Court (IHC) has stopped the Federal Board of Revenue (FBR) from immediate tax recovery against taxpayers under the controversial Tax Laws (Amendment) Ordinance, 2025. In this regard, IHC has issued an order on Tuesday in favour of the private limited companies (petitioners). The National Assembly Standing Committee on Finance has also categorically conveyed to the Federal Board of Revenue (FBR) that the government has bypassed Parliament for promulgating Tax Laws (Amendment) Ordinance, 2025, and urgently communicated ordinance to the FBR's field formations for recovery from taxpayers. Tax laws bill: NA panel defers Sec 114C until FBR system overhaul According to the order of the IHC, the court has issued notices to the FBR to submit comments and meanwhile, no coercive measure to be taken by the FBR against the petitioners. The petitioners have requested the IHC to declare that the Tax Laws (Amendment) Ordinance 2025, promulgated on May 2, 2025, as Ultra Vires of the Constitution and void ab initio. IHC should declare that sections 138 (3A), 140(6A), 175 C of the Income Tax Ordinance, 2001 (as amended), and section 27 (4) of the Federal Excise Act, 2005 are inconsistent with Articles 4, 8, 10-A, 18, and 25 of the Constitution, hence void. IHC should suspend the operation of impugned Tax Laws (Amendment) Ordinance, 2025 dated 02.05.2025, till pendency of this Writ Petition and restrain the Respondents (FBR) from enforcing or taking any coercive action under the impugned provisions till pendency of this Writ Petition, petitioners added. Copyright Business Recorder, 2025
Business Recorder
a day ago
- Business
- Business Recorder
IHC tax bench's order: All SOE references be routed thru ADRC
ISLAMABAD: The special tax division bench of the Islamabad High Court has ordered that all tax references filed by state-owned enterprises shall be referred to the Alternate Dispute Resolution Committee under Section 134A of the Income Tax Ordinance, 2001. The state-owned enterprises contended that those tax reference applications which were instituted prior to the enactment of the Tax Laws Amendment Act, 2024 ought to be adjudicated by the Court in accordance with the procedure applicable at the time of filing of the tax reference application. However, the counsel for the Commissioner, Osama Shahid (Advocate) placed reliance upon a recent judgment of the Supreme Court of Pakistan wherein a case filed in the year 2023 (i.e., prior to the enactment of the Tax Laws Amendment Act, 2024) was referred to the mandatory alternate dispute resolution committee under Section 134A of the Ordinance. In light of the Supreme Court's judgment, the Islamabad High Court referred to matters to alternate dispute resolution committee. Tax dispute: IHC grants conditional relief to SOE Earlier, the Islamabad Bench of the ATIR had referred several appeals filed by and against state-owned enterprises to the alternate dispute resolution committee. The Commissioner Inland Revenue (Appeals), Islamabad has also refused to adjudicate any appeal filed by a state-owned enterprise in light of the Supreme Court's judgment. It appears that the only recourse available to a state-owned enterprise in case of a tax dispute is the alternate dispute resolution mechanism provided under Section 134A of the Ordinance regardless of whether the dispute initiated prior to or after the enactment of the Tax Laws Amendment Act, 2024. It is pertinent to note that several state-owned enterprises have also assailed the vires of the Tax Laws Amendment Act, 2024 before the Islamabad High Court by filing writ petitions which are currently sub judice. Copyright Business Recorder, 2025
Business Recorder
2 days ago
- Politics
- Business Recorder
Section 122 (5A) ITO: Power granted to IR commissioners is not without boundaries: ATIR
ISLAMABAD: Appellate Tribunal Inland Revenue (ATIR) has held that the powers granted to Commissioners Inland Revenue to amend assessment orders under Section 122(5A) of the Income Tax Ordinance, 2001 are not without boundaries. The ATIR emphasised that the scope of investigation and inquiry under this provision is not open-ended, and must operate within clearly defined restrictions and limitations. In a strongly worded observation, the ATIR remarked that 'justice is a concept of moral rightness based on ethics and rationality,' asserting that unchecked investigative authority undermines both the legal process and individual freedoms. ATIR further stated that the investigative proceedings under the cited provision 'suffer not only from the vice of excessive delegation of legislative authority but also amount to a patent violation of fundamental rights and constitutional guarantees.' The ruling criticised the absence of adequate safeguards and procedural clarity, arguing that this lack opens the door to arbitrary use of power. Tax lawyer Waheed Shahzad Butt says this judgment could set a precedent for future challenges to administrative overreach and highlight the growing need for a balance between state authority and individual constitutional protections. The decision is being welcomed as a reaffirmation of the principles of due process and rule of law. ATIR order stated: 'under Section 122(5A) the scope of investigation and inquiry is not open ended without any restrictions and limitations. Matter of enquiries and fishing and roving inquiries is to be seen in the context of two mandatory prescribed conditions referred in the provision of law. Enquiries cannot be conducted without the presence of twin criteria of 'erroneous & prejudicial to interest of revenue' otherwise there would be no difference between (Regular Audit) Section 177 & (Amendment of assessment) Section 122(5A). Verification of any factual controversy is obviously out of purview of section 122(5A) and requires conduct of audit (if any) under section 177. Creation of tax demand under the umbrella of Section 122(5A) is a blunt violation. There is no concept of 'unfettered discretion' in the fiscal laws and arbitrary exercise of discretionary powers has to be struck down. Justice is a concept of moral rightness based on ethics and rationality, impugned order merits, cancellation, ATIR order added. Copyright Business Recorder, 2025
Express Tribune
3 days ago
- Business
- Express Tribune
Tarar for avoiding conflict of interests
Listen to article Law Minister Azam Nazir Tarar has advised the newly appointed members of appellate tribunals dealing with billions of rupees worth of tax matters to recuse themselves from hearing cases where the conflict of interests arises because of their past professional affiliations. The minister spoke to The Express Tribune after questions were posed about the conflict of interests in the case of some of the appellate tribunal members. "When the question of conflict of interests arises, the newly appointed members will choose the option of 'not before me'," Tarar said. Instead of appointing new members of the Inland Revenue appellate tribunal through the Federal Public Service Commission (FPSC), the government in January this year constituted a three-member selection committee. Among the committee members were Justice (Retired) Mushir Alam, Major General (Retired) Naveed Ahmad, who is a member of the FPSC, and Asim Zulfiqar, a senior partner of AF Ferguson chartered accountancy firm. On the recommendation of the committee, the federal cabinet has so far appointed 15 members from March to May this year. The newly appointed members have been given salaries equal to judges but they are not independent like the judges, said Dr Ikramul Haq, a senior lawyer at the Supreme Court of Pakistan. He also questioned the selection process, saying there were questions about some of the members' competency and conflict of interests. The members should either work under high courts or the Supreme Court instead of working under the executive branch, he suggested. To a question about bypassing the FPSC, the law minister said the selection process had been outsourced to management consulting firm AT Kearney "for ensuring independence" in the process. To another question how to ensure transparency and objectivity in deciding the cases if some of the tribunal members have worked with tax advisory firms, Tarar replied "we believe that these are mature people and will take care of the conflict of interests". The minister said that whenever such a situation arises, the members should exercise the "not before me" right to avoid hearing cases being pleaded by tax firms where they have worked in the past. The Ministry of Law has made these appointments under Section 130 of the Income Tax Ordinance, 2001. The law states that a person shall be eligible to be appointed as a member of the Appellate Tribunal, if he is an advocate of a High Court for not less than 15 years and possesses such other qualifications as may be prescribed by rules under this section; has for a period not less than 10 years practiced professionally as a chartered accountant and has for a period not less than 10 years practiced professionally as a cost and management accountant. An officer of the Inland Revenue in BS-21 or above; or an officer of the Inland Revenue in BS-20, having served in such a grade for three years or more, is also eligible for these appointments. The prime minister decided to appoint all these members from the private sector to address the issue of conflict of interests. There had also been incidents in the past where the Federal Board of Revenue (FBR) used to influence the outcome of cases, although the members were working under the administrative control of the law ministry. About Rs4 trillion in revenues are stuck at various levels – most of which before the commissioners appeal of the FBR and the appellate tribunals. The FBR and the office of the Attorney General of Pakistan had assured the PM to at least recover about Rs400 billion before June. Similar assurances had also been given to the IMF. However, so far no major breakthrough has been achieved, except in the case of windfall tax. A recent IMF report stated that the Pakistani authorities were actively pursuing the resolution of outstanding cases. It said efforts were being made to recover Rs367 billion out of a total of Rs770 billion under dispute. These included cases pending before the Supreme Court involving Rs43 billion, high courts in Islamabad, Sindh and Lahore involving Rs217 billion and the Appellate Tribunal Inland Revenue Rs104 billion. The report disclosed that the IMF had been assured that the Supreme Court had completed its initial hearing, with a final decision expected by mid-April. A favourable ruling could effectively resolve related cases worth an estimated Rs120 billion, according to the report. The IMF's view was that resolving the cases would help clarify the legality of the disputed claims, thereby supporting future revenue by reducing uncertainty and discouraging future litigation. The appointments of the new members have already been challenged in courts for the lack of transparency. According to media reports, the Islamabad High Court (IHC) has issued an interim order on the appointment of members in the Appellate Tribunal Inland Revenue, stating that all appointments would be subject to the final outcome of a writ petition. Earlier, the IHC issued notices to the Ministry of Law secretary, FPSC chairman and Attorney General of Pakistan following a constitutional petition challenging the appointment process of tribunal members. The petition challenges the unadvertised process of "head hunting" and the lack of transparency. It alleges that the appointment process did not follow the established rules and procedures.
Business Recorder
6 days ago
- Business
- Business Recorder
Property case: ATIR slams CTO Islamabad for subpar handling
ISLAMABAD: The Appellate Tribunal Inland Revenue (ATIR) Islamabad, in a significant development has sharply criticized the Corporate Tax Office (CTO) Islamabad for professional incompetence in handling a major taxpayer case related to the property business. The tribunal directed that the concerned officer initiate fresh reassessment proceedings starting from Tax Year 2019, citing serious procedural lapses and misapplication of the law by the CTO tax employees. Sources told that in a recently issued landmark order, ATIR underscored the inefficiency and negligence exhibited in the case by CTO Islamabad and issued stern instructions to ensure strict compliance with statutory provisions under Sections 39(3), 69, 90, 109, 153(1)(b), 113C, and 18(1)(d) of the Income Tax Ordinance. Resident Pakistanis in UAE, UK: Rental income, capital gain not taxable: ATIR DB The ATIR further added that any failure to address these legal obligations would constitute a gross disregard of statutory duty and result in continued loss of public revenue. The directive serves as a clear warning to CTO tax officers to uphold professional standards and enforce tax laws diligently, especially in high-stake cases involving large-scale businesses. Tax experts added that this landmark ruling is expected to prompt a closer review of operational practices within the CTO Islamabad and may set a precedent for greater accountability across other tax offices. The ATIR order states 'Principal business activity of appellant involves real estate marketing, including the sale and purchase of land, plots, apartments, houses, plazas, multi-storied flats, malls, commercial offices, shops, markets, and warehouses. Currently, engaged in the acquisition of land on behalf of Private Company utilizing advances received under a mutual agreement. Assessing Officer is instructed to recharacterise the arrangement as a service agreement and accordingly treat the income as service income under Section 153(1)(b). The income must be subjected to minimum tax at 8% or normal tax at 29%, whichever yields a higher revenue outcome. A substantial amount (Rs.36.1 billion) was recorded as an advance. Investments made in TDRs and PLS accounts. Invoke Sections 39(3), 69, and 90 to assess income in the hands of the true economic owner. Rigorously evaluate all relevant documentary evidence, intercompany transactions, and audited financial statements to ascertain the true economic substance. Failure to address these issues will amount to disregard of statutory duty and continued loss of public revenue: ATIR ordered. Copyright Business Recorder, 2025
