It is reliably learnt that in the month of May 2016 and June 2016 officials representing Presidency, who are responsible to look after the representations/appeals preferred against the orders passed by the FTO, issued four orders on the similar issue of minimum tax under Section 153(1)(b) of the Ordinance. In two cases, the President's orders have endorsed the viewpoint of FBR against the orders of the FTO. In other two cases, President, while working as an appeal authority, have rejected the representations against the order of the FTO. All four orders are dealing in the similar issues of Minimum Taxation under Section 153(1)(b) of the Income Tax Ordinance, 2001. President's Order No 1/FTO/2015 dated 30 May 2016 and Order No 15/FTO/2015 dated 30 May 2016 have accepted the representation of the FBR against the findings of the FTO. On the other hand, President's orders ie Order No 02/FTO/2015 dated 01.06.2016 and Order No 22/FTO/2015 dated 6th May 2016 have dismissed representations against FTO's order.
Earlier, in some cases FTO issued recommendations to the FBR to: initiate appropriate disciplinary action against the officials found responsible for issuing Circular No 6/2009 and inserting Clause 79 in the Second Schedule of Ordinance and take immediate measures either to delete the Clause 79 from the Second Schedule of the Ordinance or to get it approved retrospectively by the Parliament.
While rejecting the representation preferred against the FTO order, lawful stance regarding minimum tax under Section 153(1)(b) has been accepted by the office of President vide Order No 02/FTO/2015 dated 01.06.2016. Earlier on similar issue ie, Minimum tax chargeability and action against FBR officials, President vide his Order No 22/FTO/2015 dated 6th May 2016 dismissed the FBR representation against FTO's order.
Sources further added that in two other cases of similar nature, ie, minimum tax and action against officials, the office of President has issued orders in favour of the FBR rejecting the findings of the FTO. In these two orders the viewpoint of the FBR has been endorsed by the President. Thus, orders have been issued under Order No 1/FTO/2015 dated 30 May 2016 and Order No 15/FTO/2015 dated 30 May 2016. President's order No 1/FTO/2015 dated 30 May 2016 said that the FTO has gone beyond the scope and powers and its findings are not sustainable. Accordingly, the President has accepted the representation of the FBR, it added. Moreover, President's order dated Order No 15/FTO/2015 dated 30 May 2016 stated that the FTO has no jurisdiction to entertain or inquire into the matter and President has set aside findings of the FTO, second order added.
All four representations have been decided by the office of President in terms of Section 32 of the FTO Ordinance, 2000.
Through Finance Act 2015, Parliament of Pakistan, in supersession of all earlier enactments on the subject of minimum tax, deleted Clause 79 to the Second Schedule earlier inserted through SRO 1003/2011. On directions issued by Prime Minister the Finance Minister withdrew the proposed amendment, as a result thereof, law amended by the Parliament in Finance Act, 2009 to impose minimum tax on all service provider taxpayers, prevailed till the year 2015.
President order states "Representation has been filed against the findings of the FTO. Brief facts of the case are that the complainant filed refund applications. The refund arose on account of excess deduction of income tax at source u/s 153(1)(b) of the Ordinance. The Agency FBR replied that complainant's views were misconceived and as a result of insertion of sub clause (iii) in sub section (6) of Section 153 of the ordinance through Finance Act, 2009 minimum tax at the rate of 6% was liable to be deducted at source as explained in paragraph 34 of Circular No 3 of 2009 dated 17.7.2009. The views expressed in Circular No 6 were misinterpretation of the applicable law and on 26.4.2011 the same circular was withdrawn vide C. No 1(25)WHT/2009 dated 26.4.2009.
The FTO after hearing both the parties issued the recommendations "FBR to (i) initiate appropriate disciplinary action against the officials found responsible for issuing Circular No 6/2009 and inserting clause 79 in the Second Schedule (ii) take immediate measures either to delete the clause 79 or to get it approved retrospectively by the Parliament.
The perusal of record indicates that matter of tax deduction at source u/s 153(1)(b) streamlined as explained paragraph 34 of Circular No 3 of 2009 dated 17.7.2009 wherein Minimum Tax @ 6% was liable to be deducted at source, which the complainant could not perceived. At this point of time, it is a settled matter for tax year 2010.
In such circumstances, the Representation is devoid of any merit and praying for undue interference into a already settled matter. Hence the representation is liable to be rejected and FTO findings are upheld being sustainable and in-exceptional. Accordingly, the President has been pleased to reject the Representation and upheld the recommendations of the learned FTO, President order stated.