LAHORE - The Lahore High Court has taken 12 years to decide an appeal moved by Income Tax Department holding that technical services of a foreign company in Pakistan are liable to tax.
A division bench headed by Justice Shahid Jamil Khan and comprising Justice Sardar Muhammad Sarfraz Dogar passed the order while hearing the appeal on Thursday. The bench disposed of the appeal and directed the tribunal to pass a speaking order and give reasoning that why the services of a company based in foreign country are not liable to tax.
As the hearing commenced, Income Tax Department’s Legal Advisor Imran Rasool appeared in the court and contended that tribunal judge relied upon the decision of the Commissioner Income Tax and did not give any reason in its order. The counsel pleaded the court to direct the company to pay taxes which were pending for the last many years.
The company’s counsel told the bench that technical services of a foreign company are exempted from the tax. However, he could not convince the bench which later disposed of the appeal.
Surprisingly, it took 12-year to the LHC to decide the above said case. Altern Energy Company filed an appeal against Income Tax Department for imposing tax on it for not paying taxes back in 2000.
The appellant company said that it had imported heavy machinery in 1996, 97 and 98 and hired the services of a foreign company namely ‘Haris Group’ based in the United States of America to install that machinery.
The appellant stated that the hired-company continued providing technical services to it till the final production. And it paid it dues on the finality of work. Later, the Income Tax Department approached it and demanded the tax against the technical services it had taken from a foreign country, said the appellant company. But it challenged the demand of the Tax Department before the Commissioner Income Tax which gave decision in its favour.
According to Tax Department, Altern Energy Sector Company, which is an electricity supply company, had to pay Rs. 41,31,741 in 1996 and 98 and Rs 11,1396 during 1996 and 97.
On August 1, 2002, The Income Tax Department challenged the order of the Commissioner Income Tax (CIT) before a tribunal. The tribunal, however, rejected the appeal of Income Tax Department and maintained the decision of CIT. In 2003, the Income Tax Department challenged the order of the tribunal before the Lahore High Court. Since then, the appeal was lying pending which speaks volumes of the performance of the both institutions: Lahore High Court and Income Tax Department.
Thousands of cases are still lying pending before the bench hearing appeals and writ petitions related to matters of income tax in the Lahore High Court and what are the reasons behind such delay best known to the authorities but neither of them is ready to redress them instead of making rhetoric and tall claims.