Income Tax Ordinance, 2001: undoing the legacy - II

Draft of proposed Income Tax Act CHAPTER I
PRELIMINARY
Part 1 - Enactment
1. (1) This Act may be called the Income tax Act, 2012.
(2) It extends to the whole of Pakistan.
(3) Save as otherwise provided in this Act, it shall come into force on the 1st July 2012.
(4) The Income tax Ordinance, 2001 is hereby repealed.
(5) If any difficulty arises in giving effect to the provisions of this Act, the Federal Government may, by general or special order, do anything not inconsistent with such provisions which appear to be necessary or expedient for the purpose of removing the difficulty.
(6) The Federal Government shall cause every Rule made and every notification or circular issued under the Act to be sent to the Parliament Secretariats within one month of its issue.
(7) Where both Houses of Parliament agree in making any modification in the Rule, circular or notification or both the Houses agree that the Rule, circular or notification should not be made or issued, the Rule, circular or the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under the Rule, circular or notification.
(8) No suit shall be brought in any civil court to set aside or modify any proceeding taken or order made under this Act, and no prosecution, suit or other proceedings shall lie against the Government or any officer of the Government for anything done in good faith or intended to be done under this Act.
Part 2 - Definitions
2. In this Act, unless the context otherwise requires-
(1) "agricultural income" means agricultural income as defined below:
(a) any rent or revenue derived from land which is situated in Pakistan and is used for agricultural purposes;
(b) any income derived from such land by-
(i) agriculture; or (ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to the market; or
(iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii);
(c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator, or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any operation mentioned in paragraphs (ii) and (iii) of sub-clause (b) is carried on:
Provided that the building is on, or in the immediate vicinity of, the land, and is a building which the receiver of the rent or revenue or the cultivator, or the receiver of the rent-in-kind by reason of his connection with the land, requires as a dwelling-house, or as a store-house, or other out-building;
(2) "amalgamation", "company", "director", "dividend", "manager", "managing agent", "principal officer" and "public sector company" have the meanings respectively assigned to them in the Companies Ordinance, 1984;
(3) "assessee" means a person in whose name a proceeding under the Act has been initiated or is intended to be initiated;
(4) "Taxation Officer" means any authority who is vested with the relevant jurisdiction under the Act;
(5) "average income-tax rate" means the rate arrived at by dividing the amount of income-tax on Gross Annual Income as per the rates in the First Schedule by such Gross Annual Income;
(6) "Board" means the Federal Board of Revenue established under the Federal Board of Revenue Act, 2007 (Act No IV of 2007);
(7) "business" includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture;
(8) "capital asset" means property of any kind except-
(a) stock-in-trade, consumable stores or raw materials held for the purposes of business or profession,
(b) movable property excluding jewellery held by an individual or a Hindu Undivided Family, and
(9) "charitable purpose" and "charity" shall have the meaning assigned to them in the Trust Act of 1882;
(10) "co-operative society" means a co-operative society registered under the Co-operative Societies Act, 1912 (XI of 1912), or under any other law for the time being in force in any Province for the registration of co-operative societies;
(11) "fair market value" of an asset means the price that the asset would fetch if sold in the open market on the relevant date;
(12) "firm", "partner" and "partnership" shall have the meanings respectively assigned to it in the Partnership Act, 1932 (IX of 1932);
(13) "income" includes any receipt in cash or in kind or by settlement through account, whether due or not, which is assessable under the Act and shall include
(a) gifts received,
(b) value of any assets received by way of inheritance or under will or on death of any person in any manner, which exceeds Rs one million, and
(c) goodwill;
(14) "legal representative" shall have the meaning assigned to it in clause (11) of section 2 of the Code of Civil Procedure 1908 (V of 1908);
(15) "non-resident person" shall be one as defined in the Foreign Exchange Regulation Act of 1947 and as a person who is not a non-resident shall be treated as a resident person;
(16) "person" includes -
(a) an individual,
(b) a Hindu Undivided Family,
(c) a company,
(d) a firm,
(e) an association of persons or a body of individuals, whether incorporated or not,
(f) a local authority,
(g) every artificial juridical person, not falling within any of the preceding sub-clauses, and
(h) federal government, provincial government or any person, body or institution, responsible for paying any sum under the Act;
(17) "prescribed" means prescribed by the Board;
(18) "profession" includes vocation;
(19) "public servant" has the same meaning as given in section 21 of the Pakistan Penal Code (XLV of 1860);
(20) "transfer" has the same meaning as given in the Transfer of Property Act, 1882 (IV of 1882) and shall include -
(a) the transfer of a capital asset by a person to a firm or association of persons or body of individuals in which he is or becomes a partner or member, by way of capital contribution or otherwise and
(b) the transfer of a capital asset by way of distribution of capital assets on the dissolution of a firm or association of persons or body of individuals;
(21) "year", save as otherwise provided in any provision of this Act, means the financial year, and where a business or profession is newly set up, or a source of income newly comes into existence on a date within the said financial year, the year shall be the period beginning with that date and ending with the financial year or earlier.
Part 3 - Administration
3. (1) The Federal Government shall constitute a Federal Board of Revenue consisting of a Chairman and Members required from time to time to implement this Act.
(2) The Board shall exercise such powers and perform such duties as may be entrusted to the Board by or under any law subject to the control of the Federal Government.
(3) All decisions of the Board shall have the consent of at least three Members of the Board (including the Chairman).
4. (1) The Board shall have the following classes of tax authorities under its control and management for the purposes of the Act:
(a) Chief Commissioner Inland Revenue,
(b) Commissioner of Inland Revenue,
(c) Additional Commissioner Inland Revenue,
(d) Deputy Commissioner Inland Revenue,
(e) Assistant Commissioner Inland Revenue,
(f) Taxation Officer,
(g) Inspector.
(2) The Federal Government shall appoint as many of the Inland Revenue authorities mentioned in clause (1) as may be necessary for the purposes of the Act.
5. Subject to the rules and orders of the Federal Government regulating the conditions of service of persons in public services and posts, the Board itself or by authorising the Chief Commissioner in this behalf, may appoint such executive or ministerial staff as may be necessary to assist the Inland Revenue authorities in the execution of their functions.
6. The Board may issue orders, instructions and directions, without interfering with the judicial discretion of an appellate authority, to any tax authority for the following purposes and all such orders, instructions and directions shall be binding on all such authorities -
(1) Relaxation of any provision contained in Chapters 4 and 6 of the Act in respect of any class of incomes or class of cases, which, in the opinion of the Board, is necessary in the public interest;
(2) Admission of an application or claim for any exemption, deduction, refund or any other relief under the Act after expiry of the specified period to avoid genuine hardship in any case; and
(3) Proper administration of the Act including the regulation and control of the procedure for implementing the provisions of Chapters 5, 7, 8 and 9.
7. (1) The Board shall assign jurisdiction to the inland revenue authorities, and may also authorise other authorities to assign such jurisdiction to such other authorities as it may deem proper, to exercise all or any of the powers and to perform all or any of the functions under the Act, control and manage the authorities and the staff.
(2) Any case or any proceeding under any provision of the Act in respect of a case shall be transferred from one Officer to another as prescribed by the Board provided that, where, it is sought to be transferred not at the option of the assessee, the assessee shall be given a reasonable opportunity of being heard in the matter and the reasons for doing so shall be recorded by the authority transferring the case.
8. Whenever in respect of any proceeding under the Act an authority ceases to exercise jurisdiction and is succeeded by another who has the jurisdiction, the authority so succeeding may continue the proceeding from the stage at which the proceeding was left by the predecessor:
Provided that the assessee concerned may demand that before the proceeding is so continued, the previous proceeding or any part thereof is reopened or that before any order is passed against him, he is reheard.
Part 4 - General
9. Every person in respect of whom proceeding under any provision of the Act has been initiated or who is required to have a National Tax Number (NTN) under any notification issued by the Board in this behalf, and who has not been allotted such a number shall, within one month of the initiation of the proceeding or issue of the notification, as the case may be, apply in the prescribed manner to the Taxation Officer for the allotment of the number.
10. Every person, who has been allotted a National Tax Number shall -
(1) quote such number in all his returns to, or correspondence with any inland revenue authority;
(2) quote such number in all challans for the payment of any sum due under this Act; and
(3) quote such number in all documents pertaining to such transactions as may be prescribed by the Board.
11. Every person shall intimate to the Taxation Officer any change in his address or in the name or nature of his business or any changes in the constitution, succession or dissolution of a firm or a company.
12. A notice or requisition under this Act may be served on a person as provided under the Code of Civil Procedure, 1908 (V of 1908) by an Inland Revenue authority for -
(1) enforcing attendance;
(2) examination on oath;
(3) producing books of accounts or any other document; and
(4) issuing commissions.
13. Where a notice or requisition under section 12 has been issued to a person, the powers available to a court as provided in Chapter VI of the Code of Criminal Procedure shall be available to the inland revenue authority to compel appearance.
14. Any assessee who is required to appear before any inland revenue authority under any proceeding under the Act except under section 12 may appear through an authorised representative as prescribed by the Board.
(To be continued)