Rs 5.5 billion tax credit: legal battle between RTO, power utility intensifies

Legal battle between Regional Tax Office (RTO-II), Karachi and the power utility intensified as the tax office started rejecting claims of taxpayers for income tax credit worth around Rs 5.5 billion; it is learnt here on Friday. Sources said as per section 235 of Income Tax Ordinance, 2001, advance tax at specified rates shall be collected by the power utility on the amount of electricity bill of commercial or industrial consumers and deposited the same in the kitty within seven days.
However, RTO-II officials claimed that despite deducting advance tax - Rs 1.5 billion for 2013 and Rs 4 billion for 2014 from its commercial and industrial consumers on their electricity consumption, the power utility has failed to deposit the same in the kitty.
They said the power utility against the recovery notices of RTO-II got stay order from the court and added that although the case had been decided in favour of RTO-II in the light of section 227 of the ordinance, the company was still reluctant to accept it and got another stay order from the intra-court. Resultantly, the legal battle has caused enduring taxpayers, who failed to get income tax credit, despite paying advance tax worth Rs 5.5 billion through withholding agent.
Replying to a question, sources said that tax deducted by the power company was adjustable against tax liability of the taxpayers but the tax department had discontinued this tax adjustment facility with the rationale that tax credit was subjected on the deposition of deducted amount in the national kitty. Those taxpayers, who produce challan of deposited tax, can avail the tax credit as the claimants should attach copies of the challan of payment along with their income tax returns to avail tax credit under section 164(2) of the ordinance, official sources said.