ISLAMABAD (August 28 2003) : Endorsing a major decision of Finance Minster Shaukat Aziz, the Central Board of Revenue (CBR) has restricted the application of section 111 (Taxation of Unexplained Investment) of the Income Tax Ordinance 2001 up to five years and not beyond, top economic manager Vakil Ahmed Khan said here on Wednesday.
Previously, the Commissioners of Income Tax (CITs) were empowered to tax undeclared asset in the year in which the said assets were discovered by the tax authorities.
Now, the CBR has decided that the provision of sub-section 2 of section 111 shall not be resorted to beyond five years preceding the tax year. In this regard, Income Tax Circular 8 of 2003 was issued on Wednesday.
The Member, Direct Taxes, said that on the suggestion of Lahore Tax Bar Association, Finance Minister Shaukat Aziz had ordered that the operation of section 111 of Income Tax Ordinance 2001 should be restricted to five years and not beyond that period curtailing the unlimited powers of income tax commissioners.
It is neither exemption nor amnesty, but the commissioners are restricted that provisions of section 111 of the Income Tax Ordinance 2001 would not be resorted to in respect of amount referred to in sub-section (1) of the said section beyond five preceding years from the tax year which is being looked into.
Vakil said that the Finance Minister visited Lahore to meet members of Lahore Tax Bar Association where it was demanded that the taxation of aforesaid amount in the year of discovery by the Commissioner is in fact allowing of unfettered powers to the commissioner on this account.
It should be limited by prescribing a time limit pertaining to investment made in acquisition of property or construction thereof for the purpose of said section.
Shaukat Aziz asked CBR to forthwith look into the matter and after taking viewpoint of tax managers the Finance Minister ordered CBR to notify the concession for all concerned, Vakil said.