VS, 2010 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 504 (2009)

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss.161,205(2), 152(2) & 107---Income Tax Ordinance (XXXI of 1979), Ss.52/86---Agreement for the Avoidance of Double Taxation between Pakistan and Belarus---Wet Lease Agreement between the parties---Failure to pay tax collected or. deducted---Payment to non residents---Assessee was treated as "assessee in default" for not withholding tax on allowances paid in Pakistan to employees of foreign Airline---Assessee contended that payment of monthly allowance was not paid to the crew members but it was paid to the Airline for onward disbursement to their crew members as salaries; since, monthly allowance was part of salaries of non-resident crew members, income tax on salary and allowance of such employees of the Airline shall be paid by such employees or personnel in their home country and income tax was neither deductible nor payable in Pakistan---Validity---Relevant-clause of the Wet Lease Agreement showed that the assessee was not required to deduct income tax on payment of compensation and as the income tax had actually been paid by these employees, the tax authorities had neither disputed the payment of income tax nor had raised any such queries---Taxation Officer had misdirected himself and the orders passed under Ss.161/205 of the Income Tax Ordinance, 2001 were not maintainable and the First Appellate Authority upheld the treatment meted out by the Taxation Officer without any justification.

1999 PTD 3357 and 2003 PTD 1571 ref.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 161 & 205---Failure to pay tax collected or deducted---Assessment year 2002-2003 and tax years 2003 to 2005---Agreement for the Avoidance of Double Taxation between Pakistan and Belarus--Retrospective effect---Agreement for Avoidance of Double Taxation between Pakistan and Belarus was executed. on 23-7-2004 and was notified in the official Gazette on 30th August, 2006---Proceedings under Ss.161/205 of the Income Tax Ordinance, 2001 for three years had been initiated after August, 2008 and the orders in this respect had been passed on 31-10-2008---Prior to the .said dates, the Treaty for Avoidance of Double Taxation had already come into existence and had acquired the force and status of law under S.107 of the Income Tax Ordinance, 2001-Being beneficial law, it was applicable retrospectively for the reason that the proceedings had commenced at much later date.

1993 SCMR 73 rel.

(c) Income Tax Ordinance (XLIX of 2001)---

----Ss. 107, 161 & 205---Assessment year 2002-2003 and tax years 2003 to 2005---Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion, Art. 15---Retrospective effect of beneficial provision---Provisions of treaty for the avoidance of double taxation were applicable to the facts of the case for the reason that both the countries had executed a Convention for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to taxes and income on 23rd of July, 2004 and according to S.107 of the Income Tax Ordinance, 2001, it had acquired the status and force of law---Since the proceedings under S.161/205 of the Income Tax Ordinance, 2001 were initiated in the year 2008, the benefit of that treaty was available to the assessee---In view of the specific terms agreed by both the parties, as per Cl. 8.1. (v) of Wet Lease Agreement, the assessee had not committed any default by not deducting tax on payment of compensation to the non-resident personnel of the foreign Airline (Belarus) during their service period in Pakistan which was much less than 183 days and did not come under the ambit of Para 2(a) of Article 15 of the Agreement---Provisions of Ss.161/205 of the Income Tax Ordinance, 2001 had wrongly been invoked as there was no violation of law---Treatment meted out by the Taxation Officer was upheld by the First Appellate Authority without any justification---Order of First Appellate Authority for all the three years was vacated and three orders passed by the Taxation Officer were cancelled by the Appellate Tribunal.

1991 PTD 488 SC Pak. ref. 1993 SCMR 73 rel.

Salman Pasha and Nadeem Dawoodi for Appellant.

Rehmatullah Wazir, D.R. and Dr. Farrukh Ansari, D.R. for Respondent.

ORDER

The appellant through these three appeals has objected to the consolidated impugned order of learned CIT(A) dated 28-3-2009 for the assessment years 2002 and tax years 2003 to 2005 to the extent of tax years 20p3 to 2005 on the following common grounds:---

(1) That the Commissioner of Income Tax (Appeals) has erred in confirming the application of section 161/205 of Income Tax Ordinance, 2001 to the case of the appellant although the said provision is not applicable.

(2) That the Commissioner of Income Tax (Appeals) has erred in confirming the application of provisions of section 1.52(2) of the Income Tax Ordinance, 2001 and confirming the levy of Tax @ 30% amounting to Rs.2,718,576 on estimated payment of Rs.9,061,920 (As against actual payment of Rs.888,120 for the tax year 2003. Rs.2,671.704 on estimated payment of Rs.8,905,680 (as against actual payment of Rs.1,581.361) for the tax year 2004 and Rs.2,765,448 on estimated payment of Rs.9,218,160 for the tax, year 2005 whereby the provision of section 152(3) of the Income Tax Ordinance, 2001 was ignored although the payments have not been made to individual Crew but to National Airlines Belavia, a registered Income Taxpayer enrolled on National Tax Number in Pakistan.

The quantum of payment estimated and the tax rate confirmed in appeal besides being unjustified are not only excessive and exorbitant but also without any basis, hence liable to be deleted.

(3) That the Commissioner of Income Tax (Appeals) has misdirected himself in law and on facts in confirming the levy tax @ 30 under sections 161/152(2) of the Income Tax Ordinance, 2001 in spite of the fact that no payment to Individual Crew was made but to NAB and its representative and Tax in accordance to section 153(1) and other sections of Income Tax Ordinance, 2001 had been deducted and deposited in Government Treasury on behalf of Non-resident having Permanent Establishment in Pakistan.

(4) That the Commissioner of Income Tax (Appeals) was not justified in ignoring the clauses 8 and 8.1 of Wet Lease Agreement.

(5) That the Commissioner of income Tax (Appeals) has erred in ignoring the fact and terms of Clause 8.1 of Wet Lease Agreement as the daily compensation paid to Crew through NAB were part of salary of Crew and tax on their respective income were paid by the Crew in their Home Country as per the terms of Clause 8.1 of Wet Lease Agreement. The Commissioner of Income Tax (Appeals) has erred in ignoring the contentions and evidences produced before Taxation Officer and in appeal while confirming the order passed under sections 161/205 of the Income Tax Ordinance, 2001.

(6) That the Commissioner of Income Tax (Appeals) has erred in confirming the provision of section 205(3) of the Income Tax Ordinance, 2001 and has further erred in confirming the levy of additional tax @ 18% aggregating to Rs.2,126,634 for the tax year 2003, Rs.1,628,534 for the tax year 2004 and Rs.1,284,683 for the tax year 2005 to the case of the appellant.

The quantum of Additional, Tax confirmed in appeal besides being unjustified, incorrect and illegal are liable to be cancelled and annulled as there is no violation of any of the provisions of law and the additional Tax levied is liable to be deleted.

For the tax year 2003, the following ground has also been framed by the appellant:

(3) That the Commissioner of Income Tax (appeals) has erred in confirming the applicability of section 152(2) on estimated payment of Rs.9,061,920 as against the actual .payment of Rs.888,120 in the Tax Year 2003.

2. We have heard the learned representatives from both the sides and have also perused the consolidated impugned order of learned CIT(A) and the assessment orders passed under sections 161/205 of the Income Tax Ordinance, 2001 for all the three years under review.

3. Brief facts leading to these appeals are that the taxpayer in this case is a public limited company deriving income through carrying on the business of airline within and outside Pakistan. The appellant are treated as assessee in default under sections 52/86 for the repealed Income Tax Ordinance, 1979 and sections 161/205 of the Income Tax Ordinance, 2001 for the assessment year 2002-2003 and tax years 2003 to 2005 respectively for not withholding tax on allowances paid in Pakistan to the employees of National Airlines Belavia. The appellant agitated the issue before the learned CIT(A) who has cancelled the order passed under sections 52/86 of the repealed Ordinance read with sections 161/205 of the Income Tax Ordinance, 2001 for the assessment year 2002-2003 for the reason that the original assessment for this year was completed under section 62 on 30-6-2003 whereas the order under sections 52/86 has been passed on 3-11-2008 which is after more than five years, therefore, placing reliance on the decision of this Tribunal reported as 1999 PTD 3357 and the reported decision of the Honourable High Court reported as 2003 PTD 1571 has cancelled the order being barred by limitation. He has however upheld the treatment invoking the provision of sections 161/205 of the Income Tax Ordinance, 2001 for the tax years 2003 to 2005, hence these three appeals by the appellant.

4. Mr. Salman Pasha, Advocate, has appeared along with Mr. Nadeem Dawoodi, Advocate and has argued that as per Wet Lease Agreement executed on 2nd December, 2001 with National Airlines Belavia, the said airline as a lessor had provided aircraft along with 31 crew members for operation of aircraft. As. per terms of the agreement, Messrs Shaheen International/appellant-Company, as a lessee, had agreed to bear the entire income tax on lease rental payable to National Airlines Belavia. He has in this respect, referred to Clause 8.1 of the agreement wherein it has been stated that the income tax payable by the crew members working in Pakistan shall be borne by respective crew in their home country. He has submitted that similarly it was further agreed that a fixed allowance for meeting certain expenses in Pakistan will be paid by the lessee the appellant in Pakistan to the crew members of non-resident lessor. However, these persons were liable to pay income tax in their home country which according to learned counsel, is evident from the relevant clause 8.1 of Wet Lease Agreement. The learned counsel in this regard has also placed before us the copy of the lease agreement and has pointed out following clauses of the agreement:---

CLAUSE 7SETTLEMENT ORDER

Clause 7.1 "In addition to lease payments the LESSEE will pay to the LESSOR'S personnel, through General Representative not later than on the 5th Day of the month following the accounting month at a rate of 15 (fifteen) US dollars per day for each member of the LESSOR'S personnel" since the first day of the stay in Pakistan for the work in the special zone.

Clause 7.17 "All taxes and payments connected with this contract in Pakistan will be paid by the LESSEE and in the Republic of Belarus by the LESSOR.

CLAUSE 8OBLIGATION OF THE PARTIES

Clause 8.1The lessee shall:

"pay all state and local taxes and taxes of any character connected with the performance of this contract except for those taxes and charges subject to payment in the Republic of Belarus including income tax to be paid by the lessor's personnel".

The learned counsel for the assessee has contended that Messrs National Airline Belania had provided 31 crew members for performing various duties on the aircraft. As per above referred Clause 7.13 of the agreement the appellant-Company had reimbursed monthly allowance @ US$ 15 per crew member and the said amount was collected by the general representative of National Airlines Belavia for onward payment and disbursement as advance salary to the respective crew members. This payment was part of salaries which was payable to the crew by National Airlines Belavia in their home country, but in order to meet emergency expenses in Pakistan, a nominal allowance was mentioned in the agreement. However, as per Clause 8.1 referred to above, it was agreed that the Income-tax will be paid by the respective personnel or employees of lessor in their home country and not by the lessee/appellant, hence income tax on nominal monthly allowance paid to crew members as employees of the lessor were not deducted in Pakistan. The learned counsel has contended that in view of above terms and conditions the appellant while making payment to Messrs National Airlines Belavia in respect of allowance of their employees and as income tax was to be paid by the respective employees in their home country, the appellant did not deduct income tax on the payments made for onward disbursement to their respective employees/crew members. He has contended that the Taxation Officer has initiated proceedings under sections 161/205 of the Income Tax Ordinance,2001 for the years under review' through show-cause notice dated 4-6-2008 confronting the taxpayer that why income tax was not deducted under section 152(2) on payments made to the crew members of Messrs National Airlines Belavia. The appellant filed explanation vide letters dated 10th, 20th, 30th of June, 2008 and 31-7-2008 explaining the factual as well as legal position submitting documentary evidence along with their replies. But the Taxation Officer, without considering the explanation and the documentary evidence has rejected the version of the assessee treating the appellant as an assessee in default and has charged tax @ 30% without considering the fact that above referred sections 161/205 are not applicable. The Taxation Officer has also charged the additional tax which is also not applicable. The learned counsel has contended that Messrs National Airlines Belavia, the non-resident lessor of aircraft is a non-resident income tax assessee in Pakistan and copies of income returns along with assessment records etc. were produced which are on the record of the assessment. The payment of monthly allowance was not paid to the respective crew members of the appellant but it was paid to representative of M/s National Airlines Belavia for onward disbursement to their respective crew members as salaries. Since the monthly allowance was part of salaries of non-resident crew members, therefore as per Clause 8.1 reproduced above the income tax on salary and allowance of the respective employees of Messrs .National Airlines Belavia shall be paid by the respective employees or personnel in their home country, hence income tax was neither deductible nor payable in Pakistan. The learned counsel for the assessee has contended that since 31 crew members have been working in Pakistan on temporary basis the individual payment to each employee was about Rs.5,483 to crew members for the years under review, thus in all the years under appeal the individual allowance paid to each crew member was below the taxable limit. There is thus no violation of section 152(3) of the Income Tax Ordinance, 2001. The individual allowance paid to each crew member per month was below the taxable limit thus the persons were not chargeable to tax in respect of the amount received in Pakistan hence in view of Clause (d) of subsection (3) of section 152 the income tax was not deductible as section 152(2) was not applicable. The learned counsel has further contended that it is" an admitted fact that all the crew members of non-resident lessor have paid income tax on their total salary including allowance received in Pakistan in their home country as per Clause 8.1 of Wet Lease Agreement, thus the provisions of sections 161/ 205 of the Income Tax Ordinance, 2001 are not applicable. According to learned counsel in view of specific terms of agreement the appellant was specifically debarred from deduction of income tax on allowance paid to employees/crew members as they were required to pay income in their home country and the appellant had honoured the terms of the agreement and therefore there is no violation of sections 161/205. He has contended that as per Clause 1(B) of section 161, the income tax has been paid by the respective employees in their home country hence the provisions of sections 161/205 are not applicable. According to learned counsel the month-wise break-up of allowance on behalf of the crew members paid to general representative of National Airlines Belavia for onward disbursement as salaries were also enclosed with the reply of the assessee which was submitted before the Taxation Officer for all the tax years under review which shows that all the payments made are below the taxable limit, hence even if the payments are considered as salaries in Pakistan the amount paid to individual crew members were below the taxable limit. He is of the view that section 152(2) is not applicable as the appellant had paid the allowance on which income was deducted and paid in their home country. Thus, there is no violation of section 152/(2) as alleged by the Taxation Officer. The learned counsel has submitted that there is no dispute that the amount paid as allowance as per terms of the Wet Lease Agreement to 31 non-resident crew members were also part of their salaries which was taxable in their home country, therefore, section 152(2) is not applicable. The learned counsel in view of these submissions has requested for the cancellation of the order passed by the Taxation Officer.

6. The learned counsel has contended that the Taxation Officer has not only ignored the relevant clause of the agreement but has also not considered the explanation filed by the appellant. Since the entire Wet Lease Agreement with all its specific terms and conditions was binding on the lessor and lessee according to which the liability relating to payment of income tax on salaries along with compensation received by the crew members was on the personnel of lessor, the relevant clauses of the agreement are binding and can neither be ignored nor can be modified by a third party including Income Tax Department. The learned counsel for the assessee in this respect has referred the decision of the Honourable Supreme Court of Pakistan reported as 1991 PTD 488(SC Pak). He has contended that since both the parties had agreed that the personnel of lessor will pay income tax in their home country and the appellant had correctly not deducted tax on compensation reimbursed in Pakistan. He has contended that the department has initiated proceedings under sections 161/205 on the basis of information communicated by the Ministry of Taxes and Duties Republic of Belarus through Revenue Division. F.B.R. vide letter dated 4-2-2008 which was sent in accordance with Article 25 which is regarding exchange of information of Double Taxation Convention between Belarus and Pakistan signed on 23-7-2004. The learned counsel has submitted that as per the contents of the letter dated 4-2-2008, there was neither any dispute in respect of payment of income by the personnel of National Airline Belarus nor any such query was raised for the reason that the employees of that airline had already paid income tax in their home country on total salary including compensation. The only verification which the tax authorities had requested was to verify and confirm whether the appellant-Company had actually paid US$ 15 to each member of the Belavia personnel and secondly to specify the date of payments. Therefore, the information which was required to be confirmed does not relate to deduction of income tax. The learned counsel has contended that as per terms and conditions of the agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income within the meaning of section 107 of the Income Tax Ordinance, 2001 which was executed and signed on 23rd July,2004 between the Islamic Republic of Pakistan and the Republic of Belarus. The learned counsel has asserted that although that agreement was notified subsequently on 30-8-2006 is a binding force in both the countries as it overrides the provisions of Income Tax Ordinance, 2001 in accordance with section 107 of the Income Tax Ordinance, 2001 and being beneficial in nature it is applicable with retrospective effect from 23-7-2004 the date on which it was signed and executed. The learned counsel in this regard has placed reliance on the decision of the Honourable Supreme Court of Pakistan reported as 1993 SCMR 73. The learned counsel has argued that even if that retrospective application is considered from the date of notification even then the case of the appellant is squarely covered and the provisions of double taxation agreement will be applicable as the Taxation Officer in this case for all the three years under review has initiated the proceedings under sections 161/205 on the basis of show-cause notices issued on 4-6-2008 and 19-8-2008 while the order in this respect has been passed on 31-10-2008. He is therefore, of the view that the double taxation agreement in accordance with section 107 of the Income Tax Ordinance, 2001 had been signed executed and notified on dates much earlier whereas the proceedings had been initiated in June and August, 2008. Therefore, according to him the decision of the Honourable Supreme Court of Pakistan wherein it has been held that concession allowed is applicable to the case of the appellant. He has argued that as per Article 15 of the Double Taxation Agreement the personnel of National Airlines Belavia being the citizens and `residents of the Republic of Belarus are liable to pay income tax on their salaries including compensation in their home country as they are residents of contracting state and their presence in any other state vis-a-vis in Pakistan was for a period not exceeding in an aggregate to 183 days in any year, hence according to terms of Wet Lease Agreement in view of the double taxation agreement read with section 107 of the Income Tax Ordinance, 2001 overrides the provisions of Income Tax Ordinance, 2001. He has submitted that the taxpayer has not committed any default by not deducting tax on compensation reimbursed to the employees of lessor as they have paid income tax in their home country. He has in respect also referred to the provisions of section 161 of the Income Tax Ordinance, 2001 which according to learned counsel is not applicable for the reason that as per clause (a), the failure to collect tax refers to Division II of Part V which relates to deduction of tax under section 148 and Chapter XII which relates to deduction of tax under sections 231(a) to 236 but there is no reference to Division III of Part V relating to tax deduction under sections 149 to 158. He has submitted that this portion of clause (a) is not applicable to the case of the appellant.

7. On the other hand the learned DR has contended that there is no dispute that the appellant and the non-resident Messrs National Airlines Belavia as per Clause 7.17 had agreed to pay all taxes in Pakistan on lease rental. He has contended that the appellant had agreed to pay monthly allowance @ US$ 15 per crew member and such payments were made through general representative of Messrs National Airlines. Belavia to the crew members. The learned DR has contended that as per Clause 8.1 the lessor is responsible for payment of all state and local taxes in connection with the performance of the contract whereas the lessor Messrs National Airlines Belavia and its employees are responsible for all taxes subject to payment in their home country. Therefore, according to this clause the salary of personnel and employees of the lessor Messrs National Airlines Belavia may be liable to tax in their home country but the compensation/allowance paid to them by the appellant in Pakistan through general representative of Messrs National Airlines Belavia is liable to withholding tax in Pakistan and the above referred provision of Clause 8.1 of the agreement is not relevant in this case as the entire salary income of the crew members is not taxed in Pakistan. According to learned DR since this amount was paid to crew members through general representative, therefore, the same Was liable to withholding tax and the appellant has failed to effect the same, therefore, the Taxation Officer has rightly .rendered his liability for action under sections 161/205 of the Income Tax Ordinance, 2001.

8. The learned DR supporting the impugned orders of the officers below has contended that the appellant should have deducted tax but has violated the provisions of section 52. He has contended that Clause 8.1(v) of the Vet Lease Agreement cannot override the provisions of Income Tax Ordinance,2001 and as the income tax has been paid on behalf of the National Airline Belarus on lease rental the appellant should have deducted tax on compensation paid to the non-resident employees as the above referred clause of the agreement does not give any exemption from deduction of tax. The learned DR has submitted that the appellant should have filed an application to the Commissioner of Income Tax in accordance with subsection (5) of section 152 for exemption and since no such application has been filed the taxpayer is not entitled to any exemption. He has argued that the appellant was not entitled to any compensation nor can claim any benefit under the double Taxation agreement which although was signed on 23rd July,2004 but was notified on 30-8-2006 but the order under review refers to tax years 2003 to 2005 and since the double taxation agreement was notified at a much later date the appellant cannot get the benefit of that treaty.

9. Regarding the letter of the Ministry of Tax and Duties, Belarus dated 4-2-2008, the learned DR has submitted that through that letter, certain information were communicated and it has no concern whatsoever regarding the tax deduction by the Taxpayer. He is of the view that the learned CIT (A) has rightly upheld the treatment meted out by the Taxation Officer.

10. We have considered the arguments from both the sides and have also perused the various clauses of Wet Lease Agreement, double taxation agreement between the two countries, case law referred by both the sides and other- documents placed before us by the learned counsel for the Taxpayer. We have found that the proceedings against the appellant were initiated after receiving the communication as per letter dated 4-2-2008 which was forwarded by the Federal Board of Revenue to the Taxation Officer and through which the Ministry of Taxes and Duties Belarus under Article 25 of the double taxation agreement dated 23-7-2004 has sought certain information. On perusal of the copies of the notices issued by the Taxation Officer dated 4-6-2008 and 19-9-2008. We have confirmed this fact. We have further noted that the similar payments have been made by the appellant company in the previous assessment years and both the learned representatives have confirmed that prior to the assessment years 2002-2003. No such proceedings were initiated nor any order in this respect were passed by the Taxation Officer. The proceedings initiated for the assessment years 2002-2003 have been cancelled by the learned CIT (A) through the impugned order which is also subject-matter of these appeals for the reason that the proceedings were time-barred. From perusal of the letter dated 4-2-2008 it is clear that the tax authorities of Belarus had only requested the Tax Authorities in Pakistan to confirm that whether the Pakistani company had actually paid US$ 15 per day during their stay in Pakistan to each member of Belavia personal and they have acquired the information regarding the mode of payment. Moreover, as the employees of the lessor had already deposited income tax in their home country on the amount of compensation, it is clear from the queries received by the concerned authorities that they neither disputed the payment of income tax nor there was any query in this respect. This factual issue has also been examined with reference to the arguments advanced by the learned counsel for the assessee. We find force in the contentions of the learned counsel in this respect for the reason that as' per Clause 8.1(v) of Wet Lease Agreement, the appellant was not required to deduct income tax on the payment of compensation and as the income tax has actually been paid by these employees, the Tax Authorities have neither disputed the payment of income tax nor have raised any such queries in this letter, otherwise the factual position would have also been communicated to the F.B.R. in Pakistan. In view of the factual position discussed above, we are of the considered opinion that the Taxation Officer has misdirected himself and the order passed under sections 161/205 of the Income Tax Ordinance, 2001 of the above three years are not maintainable and the Commissioner of Income Tax has upheld the treatment meted out by the Taxation Officer without any justification. We have noted that the agreement for avoidance of double taxation between Pakistan and Belarus was executed on 23-7-2004 and was notified in the official Gazette on 30th August, 2006. But the proceedings in this case under sections 161/205 for all the three years under review have been initiated after August, 2008 and the orders in this respect have been passed on 31-10-2008 for all the three years. We are of the view that prior to the above dates, the treaty for avoidance of double taxation had already come into existence and had acquired the force and status of law under section 107 of Income Tax Ordinance, 2001, therefore, being beneficial law, it was applicable retrospectively for the reason that the proceedings in the case of the appellant had commenced at much later date. In this regard, we have also perused the decision of the Honourable Supreme Court of Pakistan reported as 1993 SCMR 73 wherein the Honourable apex Court had given liberal interpretation to remedial laws. From perusal of the facts of the case, we are of the considered opinion that the provisions of treaty of the avoidance of double taxation are applicable to the facts of the case for the reason that both the countries had executed a Convention for the Avoidance of Double Taxation and the prevention of fiscal evasion with respect to taxes and income on 23rd of July, 2004 and according to section 107 of the Income Tax Ordinance, 2001, it had acquired the status and force of law. Since the proceedings under sections 161/205 were initiated in the year 2008, the benefit of that document is available to the appellant and in view of the specific terms agreed by both the parties, as per Clause 8.1'.(v) of Wet Lease Agreement which has also been approved and supported by Article 15 of the above referred treaty, the appellant in this case has not committed any default by not deducting tax on payment of compensation to the non-resident personnel of National Airlines Belavia during their service period in Pakistan which was much less than 183 days and does not come under the ambit of para. 2(a) of Article 15 of the said agreement. Accordingly, we hold that on factual aspects of the case as well as the legal plane, the provisions of sections 161/205 of the Income Tax Ordinance, 2001 have wrongly been invoked as there is no violation of law in the present case. The learned CIT(A) had upheld the treatment meted out in this respect by the Taxation Officer without any justification. The impugned order of the learned CIT(A) for all the three years under review is, therefore; vacated and all the three orders passed by the Taxation Officer for these years in this respect are cancelled.

11. All the appeals filed by the assessee are allowed.

C.M.A./122/Tax(Trib.) Appeals accepted.