Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑S. 50‑‑‑S. R. O. No.144(I)/2001, dated 18‑6‑2001‑‑‑S. R. O. No.593(I)/91, dated 30‑6‑1991‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9(1) & 11‑‑‑Exemption certificate‑‑Books imported by complainant/student for personal study‑‑ Authority insisted to charge income‑tax on such books‑‑‑Complainant applied to Commissioner Income Tax for issuance of exemption certificate under S.R.O. No.593(I)/91‑‑‑Such application was rejected on the ground that complainant was not borne on tax record, meaning thereby that in absence of any assessment record, relevant inquiries and verification, it was not possible to hold that complainant was not a commercial importer‑‑‑Validity‑‑‑Such issue could be resolved by Department by making inquiries/investigations as to whether complainant had been importing books for personal study or commercial purposes‑‑ Verification could also be made as to whether the conditions laid down under S.R.O. No. 593(1)/91 were fulfilled by complainant or not‑‑ Federal Tax Ombudsman recommended to Revenue Division to ask the complainant to file return of income suo motu in concerned Circle, and after getting such return processed through Commissioner Income‑tax of concerned Zone, if no tax liability was involved, then exemption certificate and refund of amount paid for clearance of such books be issued to the complainant within specified time.

Muhammad Farooq Khan for the Complainant.

Ghulam Rasool Malik for Respondent.

DECISION/FINDINGS

The complainant claims to be a student of accountancy and at present he is undergoing training with Mr. Abdul Majeed Chaudhri, FAC of Hameed Chaudhri & Co., Chartered Accountants, Lahore. It is further stated that he is registered with ICAP and a photocopy of Identity Card issued by the said institute has been furnished.

2. The complainant has further stated that to acquire further education in the field of accountancy he also got himself registered as candidate to appear in the examination of Chartered Financial Analysts (CFA)‑USA. Since the books for this course are not available in Pakistan, he has to import the same from the authorized USA publisher.

3. Some books were accordingly imported but the Custom Authorities insisted to charge income‑tax under section 50 of the Income Tax Ordinance, whereas the customs duty was exempt under the provisions of Board's S. R. O. 144(1)/2001, dated 18th June, 2001. In the alternate he was required to produce exemption certificate from the Commissioner of Income‑tax concerned.

4. It is alleged that being a student having no independent source of income, he applied for exemption certificate to the Commissioner of Income‑tax, Zone‑B, Lahore but the CIT declined to accede to his request with the observation that clause (vi)(b) of Board's S.R.O. 593(1)/91, dated 13‑6‑1991 was not applicable in his case

5. It is vehemently contended that he was entitled and eligible to get the exemption certificate under the aforesaid S.R.O. on the following grounds:‑‑

(a)The books were imported for personal use and not for commercial purposes.

(b)He was dependent on his father and has no other source of income.

(c)There is no likelihood to be taxed as he had to continue his education at least for a period of three years.

6. The complaint has, therefore, requested for issuance of exemption certificate and refund of Rs. 1,690 which has been paid for the clearance of the books.

7. The case was fixed for hearing and the above‑cited representatives of the complainant and the respondent appeared. The case has been discussed with them. The respondent has also filed para-wise comments vide Letter No.3869, dated 21‑1‑2002. It has been observed therein:

"The complainant applied for issuance of Exemption Certificate under section 50(5) with reference to clause (vi)(b) of Board's S.R.O. No.593(1)/91, dated 30‑6‑1991. The application for issuance of Exemption Certificate was rejected on merit as the complainant is not, borne on tax record."

8. The apprehension of the department is that in the absence of any assessment records, relevant inquiries and verification, it is not possible to hold that the applicant is not a commercial importer. The relevant clause under which exemption has been claimed is reproduced hereunder: ‑‑‑

"Persons, other than commercial importers, who produce a certificate from the Commissioner of Income‑tax con cerned."

9. This issue can be resolved by the Department by making inquiries/investigations as to whether the complainant was importing books for personal study or for commercial purposes. The verification can also be made as to whether the conditions laid down under clause (vi) of the aforesaid S.R.O. are fulfilled by the applicant or not.

10.It is, therefore, recommended:‑‑

(i)The complainant be asked to file the return of income suo motu in the concerned circle.

(ii)The CIT, Zone‑B, Lahore be directed to get the return of income processed on priority and if no tax liability is involved the exemption certificate and the refund of Rs.1,690 be issued within 30 days of the receipt of this order.

(iii)The compliance be reported within a week thereafter.

S.A.K./233/FTO

Order accordingly.