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ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to issue a clarification regarding rectification of tax credit to a regulatory authority of telecom sector under section 221 of the Income Tax Ordinance 2001.

According to an order issued by the FTO on Friday, while deciding a complaint filed by M/s Pakistan Telecommuni-cation Authority, regarding an order under section 221 of the Income Tax Ordinance, 2001 by creating a demand instead of providing tax credit, the FTO has recommended FBR to issue a clarification regarding rectification of tax credit under section 221 of the Income Tax Ordinance.

The FTO has observed that in the instant case, on 18th February 2022 the department passed an order u/s 221(1) for tax year 2014, wherein, without confronting the taxpayer in terms of section 221(2) of the said Ordinance instead of restoring deemed assessment and allowing credit of tax recovered from the bank accounts, demand equal to the recovery was created afresh.

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Nowhere in the said order the alleged mistake apparent from record was mentioned, confronted or discussed.

The FTO further observed that no doubt the said order was appealable but passing an outright illegal, perverse and unjust order cannot be justified in the guise of mindless litigation. Eight years old matter of a regulatory authority was being handled in an arbitrary manner.

Accordingly, the FTO has recommended FBR to direct IR-Policy and Legal wings to examine the instant case in depth and issue necessary clarification/ instructions to all IR field formations with reference to the scope of section 221 of the Ordinance and in the light of aforesaid clarification, if so required, the Commissioner concerned may like to revisit the order passed u/s 221 of the Ordinance for TY 2014, after granting proper opportunity of being heard and as per law, the FTO added.

Copyright Business Recorder, 2022

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