ORDER SHEET

IN THE HIGH COURT OF SINDH AT KARACHI

C.P. No.D-6587 of 2021

___________________________________________________________________ Date Order with signature of Judge

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FRESH CASE:

1. For order on CMA No.28194/2022 (Urgent).

2. For order on CMA No.28195/2022 (Exemption).

3. For order on CMA No.28196/2022 (Stay).

4. For hearing of main case.

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31^st January 2022

Mr. Hyder Ali Khan, Advocate for Appellant.

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1. Urgency granted.

2. Exemption granted, but subject to all just exceptions.

3&4. Through instant Petition, the petitioner has impugned an order dated 23.02.2021 passed by the Chief Commissioner, Inland Revenue, LTU, Karachi under section 122B(2) of Income Tax Ordinance, 2001 for the tax year 2021, whereby, according to learned counsel for petitioner, while setting aside the order passed by the Commissioner rejecting the claim of petitioner seeking exemption from making payment of taxes to a non-resident person towards payment receipt as Fees for Technical Services and having acknowledged the fact that the said amount does not fall within the definition of “Royalty”, has been pleased to remand back the matter to the Commissioner with certain directions, which are contrary to the facts as well as settled legal position pursuant to the judgment of the Superior Courts, including in the cases of (1) ALLAH DITTA AND OTHERS v. MEMBER (JUDICIAL), BOARD OF REVENUE, AND OTHERS [2018 SCMR 1177], (2) SH. ZULFIQAR AHMAD v. AFTAB-UL-HAQ AND OTHERS [2005 SCMR 861], (3) COMMISSIONER OF INCOME-TAX, KARACHI v. Messrs ABBOTT FINANCE CO., S.A.R.L. [1982 PTD 31] and (4) GLAXO LABORATORIES LTD. v. COMMISSIONER OF INCOME-TAX, KARACHI [1991 PTD 195], wherein, it has been held that in case of double treaty the agreement between Pakistan and the other country the receipt in respect of Fees for Technical Services has to be treated as business income, if not specifically dealt with under the treaty, whereas, in such situation, reference has to be made to the terms of the Treaty and not to the provisions of Income Tax Ordinance, 2001, as has been held by the Chief Commissioner while remanding back the matter to the Commissioner for consideration. According to learned counsel for the petitioner, if the learned Commissioner in the first instance was not justified to remand back the matter after having held that receipts do not fall within the definition of Royalty, therefore, could have decided revision in favour of the petitioner keeping in view the settled legal position pursuant to the afore-cited judgments and secondly, while remanding back the matter to the Commissioner, such directions would not have been issued, as the same has prejudiced the case of the appellant on merits.

Let pre-admission notice be issued to the respondents as well as D.A.G. for 16.02.2022, when comments, if any, shall be filed with advance copy to the learned counsel for petitioner.

J U D G E