ISLAMABAD: Federal Tax Ombudsman (FTO) has refused to grant tax relief to the owners of immovable properties in Punjab under SFTO denies tax relief under Section 7E of Income Tax Ordinance, 2001, imposing tax on deemed income from capital assets situated in Pakistan.
In this regard, the FTO office has issued an order prior to joining of the new FTO.
The issue was raised by leading real estate expert Muhammad Ahsan Malik, before the FTO Office.
The FTO order stated that perusal of complaint and record shows that the complainant came up before this forum to seek direction to the department to extend the benefit of the interim relief granted by the Supreme Court to all taxpayers across province of Punjab, It is observed that the Supreme Court of Pakistan has already delivered a detailed and compressive judgement on the issue where the Member legal and Member (Policy), FBR also entered attendance.
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Therefore, the tax authorities are bound to follow dictates of the said judgment without any directions from this forum.
As the matter is still pending with the Hon’ble Court for final judgement no further investigation is warranted from this office in terms of section 9(2)(a) of the FTO, Ordinance, 2000.
Therefore, in view of the above facts, no further investigation is required from this office. The case is therefore, closed, FTO added.
Muhammad Ahsan Malik informed the FTO that being similarly placed as those who have already been extended the benefit by the Supreme Court, he is entitled to the same treatment in the spirit of Article 25 of the Constitution.
The complainant further stated that he seeks parity in relief and prays that FBR may be directed to accept deposit of only 50% of the tax liability under section 7E for tax year(s) 2025/2026, pending final adjudication of the matter before the Hon’ble Supreme Court of Pakistan.
Malik prayed to direct the Federal Board of Revenue FBR to extend the benefit of the interim relief granted by the Supreme Court to all taxpayer across Province of Punjab including the applicant, ensure that no coercive measures are taken against the applicant for recovery of the remaining 50% of the deemed income tax under section 7E until final decision of the pending appeals before the Supreme Court; and grant any other relief deemed just and proper in the circumstance of the case.
The RTO, Islamabad filed written comments wherein, they stated that many taxpayers have voluntary discharged the tax liability u/s 7E, in Islamabad Capital Territory. The RTO, Islamabad further stated that the apex court has directed all the taxpayers to deposit 50 percent of their tax liability payable under section 7E of the Income Tax Ordinance.
However, so far, no coercive measures have been adopted for recovery of the 50 percent tax liability.
The RTO, Islamabad further stated that the directions of the Hon’ble Supreme Court are being uniformly adopted and no recovery measures have been taken. The RTO, Islamabad further added that no recovery is being undertaken to recover tax liability exceeding 50% as per the order of the apex court.
During hearing the DR from RTO, Islamabad stated that order of SCP will prevail.
Malik further added that various writ petitions were filed before all High Courts of Pakistan.
The Sindh High Court and Divisional Bench of Lahore High Court dismissed writ petitions against the section 7E, whereas, all other High Courts declared section 7E to be unconstitutional, Consequently, section 7E is not enforced in the Province of Balochistan, KPK and Islamabad Capital Territory.
He further stated that the judgment of the Sindh High Court was challenged before Supreme Court of Pakistan which is still pending.
The Apex Court did not suspend the Judgment of Sindh High Court; however, Apex Court granted an interim relief to taxpayers whereby only 50 percent of the tax under section & 7E was directed to be deposited with the remaining 50 percent to be subject to the final outcome of the appeal.
The Court further held that if the appeal is decided in favour of taxpayers, the deposited amount shall be refunded and vice versa.
Real estate expert further stated that despite the above interim “relief having been extended by the Supreme Court, the Federal Board of Revenue (FBR) is not uniformly applying the same to taxpayers in the province of Punjab thereby causing discrimination and hardship to similarly placed individuals.
Furthermore, the failure of FBR to extend identical treatment amounts to maladministration within the meaning of section 2(3) of the Federal Tax Ombudsman Ordinance, 2000, being arbitrary, unreasonable, discriminatory and contrary to the principles of equity and good administration.
The complainant further stated that being similarly placed as those who have already been extended the benefit by the Hon’ble Supreme Court, he is entitled to the same treatment in the spirit of Article 25 of the Constitution.
The complainant further stated that he seeks parity in relief and prays that FBR may be directed to accept deposit of only 50 percent of the tax liability under section 7E for tax year(s) 2025/2026, pending final adjudication of the matter before the Hon’ble Supreme Court of Pakistan.
The complainant prayed to direct the Federal Board of Revenue FBR to extend the benefit of the interim relief granted by the Hon’ble Supreme Court to all taxpayer across Province of Punjab including the applicant, ensure that no coercive measures are taken against the applicant for recovery of the remaining 50% of the deemed income tax under section 7E until final decision of the pending appeals before the Supreme Court; and grant any other relief deemed just and proper in the circumstance of the case.
Therefore, in view of the above facts, no further investigation is required from this office. The case is therefore, closed, FTO order added.
Copyright Business Recorder, 2025
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