COMMISSIONER INLAND REVENUE (LEGAL DIVISION), LTU, ISLAMABAD VS GEOFIZYKA KRAKOW PAKISTAN LTD., 2017 PTD-SUPREME-COURT 1526 (2016)

(Against the judgment dated 16.2.2015 of the Islamabad High Court, Islamabad passed in Tax Reference No.16 of 2005)

Income Tax Ordinance (XXXI of 1979) [since repealed]---

----Ss. 24(i) & 163(4)---Convention between the Islamic Republic of Pakistan and the Polish Peoples Republic for the Avoidance of Double Taxation of Income---Foreign company (resident of Poland)---Convention/Treaty for avoidance of double taxation---Preference over domestic income tax law---Respondent-company was a foreign entrepreneur (resident of Poland) and there was a Treaty for Avoidance of Double Taxation between Pakistan and Poland---According to the provisions of S. 24(i) of the Income Tax Ordinance, 1979 such treaties for the avoidance of double taxation had to be given preference and would prevail over the provisions of the income tax law---Non-obstante clause of S. 163(4) of the Income Tax Ordinance, 1979 clearly postulated that such treaties for the avoidance of double taxation would be awarded preference and any tax which could be levied and charged against the respondent-company under the income tax law would be subject thereto---High Court was correct in holding that the tax laws of Pakistan were not applicable to the case of the respondent-company in view of the provisions of the Treaty for Avoidance of Double Taxation for avoidance of double taxation---Petition for leave to appeal was dismissed accordingly.

Babar Bilal, Advocate Supreme Court for Petitioner.

Nemo for Respondent.

Date of hearing: 7th November, 2016.

ORDER

MIAN SAQIB NISAR, J.---As per the office objection, this petition is barred by 12 days. The impugned judgment in this case was pronounced on 16.2.2015. The petitioner applied for a copy on the same day which was prepared and delivered to the petitioner on 30.3.2015 and. the petition was filed on 25.5.2015, whereas the last date for filing the same was 29.5.2015. However, the record was incomplete, thus to cater to the situation two weeks' time was granted to the petitioner to do the needful i.e. till 9.6.2015. However the petitioner re-filed the case on 10.6.2015, which was still not complete and requested for further time; this was allowed by the office and the petition was filed within the extended time allowed; but the office has raised the objection that it is barred by 12 days. It is submitted that the instant situation has been dealt with in the order dated 19.3.2013 passed by this Court in C.R.P. No.156/2012 in C.As. No. 368-370/2011 titled "Pakistan Volleyball Federation and others v. Pakistan Sports Board, and others" in which the delay was condoned.

2.Having considered the contents of the application for condonation of delay (C.M.A. No.4181/2015) and the order (supra) upon which reliance has been placed and the judgment reported as Dr. Professor M.A. Cheema, Surgeon, PIC, Lahore v. Tariq Zia etc. (2016 SCMR 119), we are of the view that if by 10.6.2015 the initial two weeks' time had already passed, then further time should not have been granted to the petitioner, but once further two weeks were given, the petitioner was under a valid impression and had a legitimate expectation that it could file the petition within that time and it was also so done; the office thus could not turn around and cause prejudice to the petitioner. In light whereof, the delay in filing the instant petition is condoned and C.M.A. No.4181/2015 is accordingly allowed.

3.As far as the merits of the case are concerned, the two questions raised before the learned High Court which are also propounded before this Court are, whether in the facts and circumstances of the present case, the learned High Court was justified to: (i) hold that the tax laws of Pakistan are not applicable to the case of the respondent in view of the provisions of the Treaty for Avoidance of Double Taxation (the Treaty) for avoidance of double taxation, and (ii) delete the disallowance made under section 24(i) of the Income Tax Ordinance, 1979 (the Ordinance) with the observation that the Treaty would prevail and debars such disallowance.

4.The facts of the case are very simple. Admittedly, the respondent is a foreign entrepreneur (resident of Poland) and there is a Treaty for Avoidance of Double Taxation between Pakistan and Poland. According to the provisions of section 24(i) of the Ordinance, such treaties for the avoidance of double taxation have to be given preference and would prevail over the provisions of the income tax law. In this regard the important aspect of the matter is the non-obstante clause of section 163(4) of the Ordinance which clearly postulates that such treaties for the avoidance of double taxation would be awarded preference and any tax which could be levied and charged against the respondent under the income tax law would be subject thereto. In this context, a comprehensive discussion has been made by the learned High Court while answering the questions set forth before it. We do not find that such answer is either based upon any misconception of the facts or misapplication of the legal provisions. No case for interference has been made out. Dismissed accordingly.

MWA/C-14/SC Petition dismissed.