SECRETARY, REVENUE DIVISION, ISLAMABAD VS, 2009 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2187 (2009)

Income Tax Ordinance (XLIX of 2001)---

---- Ss.9, 10, 11(1)(b)(2), 53(1)(c) & Second Sched.---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.10 & 11--- Exemption---Complainant had alleged that his request to make corrections in the assessment of income of his wife from property had remained unattended---Complainant had stated that his wife had declared income from property and while making assessment she was not given basic exemption of Rs.150,000 and deduction of expenses incurred on payment of Cantonment Taxes and senior citizen related tax benefit as provided in clause (1-A) of Part-III of Second Schedule of Income Tax Ordinance, 2001 and in circumstances tax on income from property had not been correctly charged---Section 53(1)(c) and clause (1-A) of Part-III of Second Schedule of Income Tax Ordinance, 2001, had shown that the relief in tax liability was provided in respect of tax payable by any person under the Ordinance and it was not restricted to salary or certain specific head of income or type of tax---Provisions of Ss.9, 10, 11(1)(b) & (2) of Income Tax Ordinance, 2001 had made it quite clear that relief in tax allowed under Income Tax Ordinance, 2001, could not be denied to a taxpayer whose income fell in Presumptive Tax Regime---Federal Tax Ombudsman recommended that F.B.R. to look into the claim of the complainant in the light of Ss.9, 10, 11(1)(b) & 11(2) read with clause (1-A) of Part-III of the Schedule of Income Tax Ordinance, 2001 and to decide same on merit within, specific period; to issue necessary clarification as per law to avoid that type of complaints/litigation; and also issue guidelines for senior citizens about that particular relief.

Mumtaz Ahmed, Advisor (Dealing Officer).

K.M. Hussain the Complainant in person.

Sikandar Sheikh, D.C.I.T. for Respondent.

FINDINGS/RECOMMENDATIONS

DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN.---Mr. K.M. Hussain, Commodore (Retd.) filed a complaint on 25-8-2008 which was transferred from FTO Head Office Islamabad to Regional Office, Karachi stating that his request and reminder to make corrections in the assessment of income of his wife from property had remained unattended. He stated that his wife, Mst. Asmat-Un-Nisa Begum had derived income from property. While making assessment she was not given basic exemption of Rs.150,000 and deduction of expenses incurred on payment of Cantonment taxes and Senior Citizen related tax benefit as provided in clause (1-A) of Part-III of the Second Schedule, and as such tax on the :income from property had not been correctly charged. It is also pleaded that the tax at 5% was incorrectly charged in the tax year, 2007 on the gross amount of income from property.

2. Mr. K.M. Hussain attended in response to notice, while the Department was represented by Mr. Sikandar Sheikh, DCIT.

3. Mr. Sikandar Sheikh, DCIT/D.R. stated that basic exemption of Rs.150,000 was not available in the tax year, 2007 as the tax paid on gross rent was to be taken as final discharge of tax liability. The basic exemption, in such a situation of the PTR was, however, provided by the amendment brought about by the Finance Act, 2008. He further stated that for the individuals, whether the rent was assessable under section 15 or section 155, tax rate at 5% was applicable to the income from property for the tax year, 2007, falling in this bracket of income. He further stated that specific tax relief as provided under clause (IA) of Part-III of Second Schedule for the Senior Citizens should be available in cases where tax was to be taken final discharge of tax liability.

4. Findings: Reading of section 53(1)(c) and clause (IA) of Part-III of the Second Schedule shows that the relief benefit in tax liability is provided in respect of tax payable by any person under the Ordinance. It is not restricted to salary or certain specific head of income or type of tax: Bare reading of sections 9 and 10 relating to "taxable income" and "total income" as well as sections 11(1)(b) and 11(2) dealing with heads of income, makes it quite clear that relief in tax allowed under the Ordinance cannot be denied to a taxpayer whose income falls in Presumptive Tax Regime.

5. Recommendations: In view of the foregoing discussion, It is recommended that FBR to:

(i) look into claim of the complainant in the light of sections 9, 10, 11(1)(b) and 11(2) read with clause (IA) of Part-III of the Schedule and decide it on merit within 30 days;

(ii) issue necessary clarification as per law to avoid this type of complaints /litigation;

(iii) also issue guidelines for Senior Citizens about this particular relief.

H.B.T./150/F.T.O.Order accordingly.