I.T.R.A. No. 279 of 2010
Present
Mr. Justice Aqeel Ahmed Abbasi.
Mr. Justice Muhammad Junaid Ghaffar
Commissioner (Legal) Inland Revenue, LTU, Karachi………………………Applicant
Versus
M/s Skyroom (Private) Limited…………………………….…...…….Respondent
Date of hearing 07.08.2014
Date of order 07.08.2014
Mr. Jawaid Farooqui, advocate for the applicant.
Nemo for the respondent.
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Aqeel Ahmed Abbasi, J: Through instant reference application, following questions have been formulated by the applicant, which according to learned counsel for the applicant, are questions of law arising from the impugned order dated 25.11.2009 passed by the Appellate Tribunal Inland Revenue (Pakistan) Karachi, in ITA No.617/KB of 2007 (Tax Year 2005).
1. Whether under the facts and circumstances of the case, the learned Tribunal was justified in upholding the decision of the Commissioner (Appeals) deleting the addition made u/s 21(k) of the Income Tax Ordinance, 2001?
2. Whether under the facts and circumstances of the case, the learned Tribunal erred in not taking cognizance of the settled position of law enunciated in the case reported 67 Tax 222 (S.C.Pak) under which the terms “perquisites” and “other benefits” carry a wide connotation?
3. Whether under the facts and circumstances of the case, the learned Tribunal erred in not taking notice of the fact that the taxpayer had admittedly not charged interest on loans paid to the employees, which brought them under the ambit of section 21(k) of the Income Tax Ordinance, 2001”
4. Whether under the facts and circumstances of the case, the learned Tribunal was justified to uphold the estimation of sale proceeds by the Commissioner (Appeals), who had reduced the estimate of the Taxation Officer without any basis?
2. Learned counsel for the applicant has readout the order of the Appellate Tribunal as well as the order of the two forums below and submits that since the respondent has claimed excess perquisites beyond the prescribed limit of 50%, therefore, the same were rightly added by the Taxation Officer under Section 21(k) of the Income Tax Ordinance, 2001, therefore, the Appellate Tribunal was not justified to confirm the order of the CIT (Appeals), whereby such addition has been deleted.
3. We have heard the learned counsel for the applicant and perused the impugned order passed by the Appellate Tribunal as well as the order of the CIT (Appeals) and the Taxation Officer in the instant case.
4. From perusal of the order of the Taxation Officer passed under Section 122(I) of the Income Tax Ordinance, 2001, it has been noted that pursuant to query of the Taxation Officer with regard to providing detail of the salary and the perquisites paid by the respondent to its employees, the employee-wise detail was provided by the respondent to the Taxation Officer. However, inspite of such information having been provided to the department, the Taxation Officer has made addition on the basis of entire salary and the amount of lump sum perquisites without specifying the employee-wise amount, which according to Taxation Officer, was paid in excess of the permissible threshed hold of 50% of the salary. From perusal of the express provisions of Section 21(k) of the Income Tax Ordinance, 2001, it is clear that any expenditure paid or payable by an employer on the provision of perquisites and allowances to an employee where the sum of the value of the perquisites computed under Section 13 and the amount of the allowances exceeds fifty per cent of the employee’s salary for a tax year (excluding the value of the perquisites or amount of the allowances) can be disallowed, whereas, there is no concept of calculating such amount on the basis of total salary and lump sum amount of perquisites paid to its employees without pointing out employee-wise details of the excess perquisites paid by an employer to its employee. While confronted with such legal position, learned counsel for the applicant could not controvert the same. It has been further observed that the estimate made by the Taxation Officer with regard to the sale proceeds was also without any basis, whereas, its reduction by CIT (Appeals) does not call for any interference under the facts and circumstances of this case. Moreover, the questions proposed by the applicant in this regard does not refer to any substantial question of law, hence does not require any decision by this Court.
5. We are of the opinion that there is no substance in the instant reference application, whereas, the concurrent finding recorded by the two forums below, otherwise, depicts correct legal position, hence the impugned order passed by the Appellate Tribunal in the instant case does not require any interference by this Court under its reference jurisdiction in terms of Section 133 of the Income Tax Ordinance, 2001. Accordingly, instant reference application, being devoid of any merits, is hereby dismissed in limine alongwith listed application.
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