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
Comments
Comments are closed for this article.