ISLAMABAD: The Appellate Tribunal Inland Revenue (ATIR), Lahore Bench has held that the Super Tax is not chargeable on imputable income over and above the income as per audited accounts where the taxpayer's income tax return falls under the Presumptive Tax Regime (PTR).
According to the tax experts, the judgment is apparently in conflict with section 4B(2) of the Income Tax Ordinance, 2001 wherein it has been laid down that for the purpose of levy of Super Tax the income shall be the sum total of taxable income as well as imputable income as defined in clause (28) of Section 2. The rational of the decision is that where the taxpayer company maintains books of accounts and produces the audited accounts wherein the income is certified by the firm of Chartered Accountants and the income falls under the presumptive tax regime and is less than the imputable income then levying tax on imputable income is not in accordance with the principles of taxation. It was further held that imputable income would be taken into account only for calculating the threshold of Rs.500 million for levy of super tax but actual chargeability would be on taxable income declared in the audited accounts.
The ATIR observed that the higher judicial fora, so far, has not permitted that the final tax so withheld could become a further basis for working back income for imposition of tax on such worked back figure which could be a daydreaming, extremely imaginary with undeniably a practically non-existent.
However, Dr Ishtiaq Ahmad Khan, Director Law, FBR based at Lahore in his report to the Board has reported that the decision of the ATIR is in violation of express provisions of law and a binding judgment of the Lahore High Court and if this decision is followed as precedent it would result in loss of billions of rupees to the national exchequer. As per his report, there is no equity in taxation and no intendment. Where the subject taxed under a very clear provision of law then any hardship thereof cannot be considered by the appellate authorities and courts while interpreting the same. He further reports that when the Lahore High Court has rejected the Writ Petitions challenging the levy of super tax then that type of interpretation regarding its chargeability in the context of imputable income is beyond the legal mandate of the Tribunal.
Copyright Business Recorder, 2020