United Bank exempted from income tax till June 30

ISLAMABAD (May 17 2003) : United Bank Ltd, a large taxpayer under the large taxpayers unit, Karachi, has been exempted from income tax till June 30, 2003, in view of its huge accumulated losses.

The certificate of exemption from tax was issued on the intervention of the Federal Tax Ombudsman, Justice Saleem Akhtar (Retd) who was approached by the Bank in regard to difficulties faced by it in getting the exemption certificate.

The complainant submitted before the FTO that the income tax assessment has been finalised up to assessment year 2001-02 at huge loss.

The total accumulated loss up to the assessment year 2001-02 has been indicated at Rs 19.7 billion.

The complainant pleaded that its income for the financial year 2002-03 is not likely to be charged to tax due to availability of assessed brought forward losses.

Under section 159 of Income Tax Ordinance, 2001, the Commissioner of Income Tax is competent to issue exemption certificate.

Moreover, a certificate for deduction of tax at zero rate was issued to the complainant in the earlier year also. But in the current financial year, the complainant was issued a certificate for deduction of tax at 10 percent for the period ending March 31,2003.

The complainant spoke of the difficulties in securing the exemption certificate.

Eventually it was informed that “the bank was eligible for exemption certificate, but it will not be possible to issue such a certificate because issuance of the certificate is a policy matter, which is directly related to collection of taxes and meeting collection target and that if such a certificate is issued to the complainant, other banks may ask for it.”

The complainant further pleaded that the refusal to issue the certificate is based on self-interest and not on any legal right, which constitutes maladministration.

The respondent replied that since complainant's income is not exempt from tax, exemption certificate couldn't be issued.

However certificate for deduction of tax at lower rate ie 10 percent was issued to the complainant and other banks as a matter of policy.

But on conclusion of the hearing, the respondent was asked to reconsider the case as it was a policy matter and could affect a large number of assessees, particularly the banks. Then, Secretary CBR informed that the exemption certificate has been issued to the complainant on March 31,2003.

The exemption certificate reads: Certificate u/s 151/159 of Income tax Ordinance, 2001.

“In exercise of the powers conferred by sub section (1)(a) of Section 159 of the Income Tax Ordinance, 2001, it is hereby ordered that no tax under section 151 of the Income Tax Ordinance be deducted in the case of United Bank Ltd.

The certificate is valid up to June 30,2003.

The FTO order added: The grievance of the complainant seems to be removed. However, such cases may come up for consideration again.

The difficulty faced in granting such certificate u/s 159 of the Income Tax Ordinance, 2001, is quite clear.

However, in order to issue certificate reproduced above if it is the policy of the Government to widen the scope of Section 159 it is suggested that CBR may consider amendment in section 159 of the Income Tax Ordinance, 2001 in the light of sub section (2) of section 50 of the repealed Income Tax Ordinance, 1979.

Related Articles

Back to top button
Stay up to date
Don't miss out on the latest industry news and articles
Stay up to date
Don't miss out on the latest industry news and articles
You are Subscribed!
Your subscriptions means a lot to us.
Don't miss out on the latest Industry news
You are Subscribed!