ISLAMABAD, AUGUST 16; President Asif Ali Zardari has supported the Federal Tax Ombudsman’s (FTO) ruling in telecom operators’ cases, which found that the Federal Board of Revenue (FBR) had not engaged in maladministration in carrying out the recommendations of the Alternative Dispute Resolution Committee.
The Pakistani President has issued an order pertaining to the cases of telecom providers in this respect.
The complainant firm, according to the complaints, is primarily involved in providing cellular telecommunication services and has set up a cellular mobile network in Pakistan with licenses granted by the Pakistan Telecommunication Authority. These are the brief facts of the cases.
Changes made to the business’s income tax returns throughout time have led to a number of tax disputes covering the Tax Years 2006–2017.
As a result, the corporations experienced a decrease in their assessed tax losses while also having to challenge these disagreements before the Large Taxpayer Office (LTO). Weary of the legal proceedings, the companies chose to bring the following disputes before the ADRC for settlement (adjudicated before various appellate forums).
Section 134A of the Income Tax Ordinance, 2001 (the Ordinance) allows for the resolution of disputes outside the regular appellate process. The ADRC released a number of suggestions for the resolution of the relevant issues as a consequence of these discussions and the evidence.
The firms who filed the complaints claimed that the corporation had to spend Rs. 8.25 billion in order to implement the aforementioned suggestions. The committee also suggested that any tax year between 2009 and 2021 have an income tax demand or liability of Rs. 8.25 billion paid against it.
The complainant companies further stated that after fulfilling all the requirements as laid down in the ADRC order as well as Section 134A of the Income Tax Ordinance, the concerned commissioner was requested to give effect to the ADRC’s recommendations as stated in his order. However, the DCIR rejected the plea of the complainant which, according to the complainant, violated his legal rights and justice due to them under the ADRC ruling by unlawfully declaring ADRC recommendations as null and void.
However, the department noted in its remarks before the FTO that the taxpayer’s demand to implement the ADRC’s recommendations in its ruling dated 10.11.2021 is the primary focus of the subject complaint.
The FTO noted that the ADRC recommendations required the taxpayers to make contributions against their income tax liabilities for any year between 2010 and 2020 when it was wrapping up the subject investigations. On the other hand, the documentation shows that Rs 3.25 billion has been paid towards the tax year 2021 due.
The record further revealed that no tax arrears were outstanding for tax year 2021 on the date ADRC’s decision was made. Therefore, the stance of the department to the effect that no demand for tax year 2021 existed at the time of the decision of the ADRC on 10.11.2021 and that payment of tax was not permissible against tax year 2021 carries weight.
The payment of Rs. 3.25 billion was therefore made against future tax liability against the demand raised after the issuance of ADRC recommendation through an order passed on 23 December 2021 u/s 122 5(A) of the Ordinance.
