MUHAMMAD SALEEM VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2003 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 132 (2002)

Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S.50(7B) & First Sched., Part I para. A, Cl. (iii), Part IV, Cl. (46)‑‑ S.R.O. 1130(I)/91, dated 7‑11‑1991‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑‑Deduction of tax at source‑‑‑Senior citizen allowance‑‑‑Rental income‑‑‑Complainant/assessee applied to curtail the deduction in view of the provision of law entitling him to 50% rebate as per sub‑clause (iii) to proviso in Para. A of Part I of the First Sched. to the Income Tax Ordinance, 1979‑‑‑As par S.R.O. 1130(I)/91, dated 7‑11‑1991 non‑deduction certificate could be issued by the Assistant Commissioner of Income‑tax to those (a) whose "income during the income year was exempted from tax" or (b) "income during the income year was not likely to exceed to minimum amount chargeable to tax..."‑‑‑Proviso to S.50(7B) of the Income Tax Ordinance, 1979 was deleted vide Finance Act, 1991, with the result that S.R.O. issued exercising power ‑conferred by the proviso stood deleted‑‑ Complainant was not entitled to the benefit of a certificate of non- deduction as provided in Cl. (46) of Part‑IV of the First Sched. to the Income Tax Ordinance, 1979 because that eligibility was available to those whose income during the income year was "exempt from tax"‑‑ Complainant did not fall under the category of those whose income was exempt because his income was taxable though it might be below the taxable limit‑‑‑Such tax liability was likely to be meagre and marginal considering the extent of monthly rent and the rebate admissible to a senior 'citizen‑‑‑Federal Tax Ombudsman recommended that the Commissioner of Income‑tax was to direct the Assessing Officer to complete the assessment for the year 2001‑2002 on priority basis and to issue refund voucher, as determined, alongwith the assessment order, IT‑30 and the Demand Notice.

Complainant in person.

Nemo for the Respondent.

DECISION/FINDINGS

The Complainant agitates against denial of 50% tax rebate admissible to him under the law for being a senior citizen of over 65 years of age.

2. The respondent has reported vide. No. RCIT/J‑85/FTO/SO‑I/7030, dated 23‑4‑2002 as under:‑‑‑

"The rebate in question is available only when Income‑tax Return is filed ‑and there is no provision under which the deducting authority may deduct 50% less tax under section 50(7B) on account of said rebate .... Since the complaint has not been filed against any maladministration of Income‑tax Department, no specific comments can be offered."

3. The complainant explained that he is an ex‑employee of WAPDA who rented out his 12 Marlas House No. 16/GF/G‑9/3 Islamabad to the Estate Officer at a monthly rent of Rs.8,625. On rent payments, tax is being deducted under section 50(7B) of the Income Tax Ordinance, at the prescribed rate of 7.5% which works out to Rs.7,763 on annual gross rent of Rs.103,500. The complainant requested the Estate Officer, Government of Pakistan, Islamabad vide letter dated 12‑10‑2001, to curtail the deduction in view of the provision of law entitling him to 50% rebate as per sub‑clause (iii) to proviso in paragraph A of Part I of the First Schedule to the Income Tax Ordinance. In the end request was made for a refund Rs.5,780 representing excess collection of tax.

4. The complainant's request for a non‑deduction certificate is based on sub‑clause (iii) to the proviso to subsection (7B) of section 50 of the Income Tax Ordinance. Such a certificate could be issued as per S.R.O. 1130(I)/91, dated 7‑11‑1991 by the A‑C.I.T. to those (a) whose "income during the income year is exempted for tax" or‑4b) "income during the income year 'is not likely to exceed to minimum amount chargeable to‑‑tax ...." However, the proviso to section 50(7B) was deleted vide Finance Act, 1994 with the result that, the S.R.O. issued exercising power conferred by the proviso stands deleted. Moreover, the complainant is not entitled to the benefit of a 'certificate of non‑deduction as provided in clause (46) of Part‑IV of the First Schedule to the Income Tax Order because that eligibility is to those whose income during the income year is "exempt from tax". Admittedly the complainant does not fall under the category of those whose income is exempt because his income is taxable though it may be below the taxable limit. Still his is a hardship case as tax liability is likely to be meagre and marginal considering the extent of monthly rent and the rebate admissible to a senior citizen. It is, therefore, recommended that the C.I.T. direct the Assessing Officer to complete the assessment for the year 2001‑2002 on priority basis and to issue refund voucher, as determined, alongwith the assessment order, IT‑30 and the Demand Notice.;

5. Compliance report be submitted within 30 days of the receipt of this order.

C.M.A./514/FTO Order accordingly.