Finance Ordinance 2002

An Ordinance to give effect to the financial proposals

of the Federal Government for the year beginning on the first day of July, 2002,

and to amend certain laws for the purposes and in a manner hereinafter appearing;

WHEREAS it is expedient to make provisions to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2002, and to amend certain laws for the purposes hereinafter appearing;

AND WHEREAS the President is satisfied that circumstances exist which render it necessary to take immediate action;

NOW, THERFORE, in pursuance of the Proclamation of Emergency of the fourteenth day of October, 1999, and the Provisional Constitutional Order No. 1 of 1999, read with the Provisional Constitution (Amendment) Order No. 9 of 1999, and in exercise of all powers enabling him in that behalf, the President of the Islamic Republic of Pakistan is pleased to make and promulgate the following Ordinance:-

1. Short title, extent and commencement.-

(1) This Ordinance may be called Finance Ordinance, 2002.

(2) It extends to the whole of Pakistan.

(3) It shall come into force at once except the provisions of section 3, section 5 and section 8 which shall come into force from the first day of July, 2002.

2. Amendment of Act I of 1944.-

The following amendments shall be made in the Central Excises Act, 1944 (I of 1944), namely:-

(1) in section 4, in sub-section (4), after the words “section 25B thereof”, the words “including customs-duties payable thereon” shall be inserted;

(2) in section 9,–

(a) in clause (a), the commas, words and figure “, or of section 8,” shall be omitted; and

(b) for the words “ten times the amount of value of goods and services”, the words “five times the amount of duty” shall be substituted;

(3) sections 31 and 32, shall be omitted;

(4) for section 33, the following shall be substituted, namely:-

“33. Power of adjudication.— (1) Subject to sub-section (2), the adjudication powers of different central excise officers shall be as follows:-

(i) Collector

Cases involving evasion of central excise duty (principal amount) or erroneous refund of central excise duty, without limit.

(ii) Additional Collector

Cases involving evasion of central excise duty (principal amount) or erroneous refund of central excise duty provided the amount of duty involved does not exceed ten million rupees.

(iii) Deputy Collector

(1) Cases involving evasion of central excise duty (principal amount) or erroneous refund of central excise duty provided the amount of duty involved does not exceed two and half million rupees.

(2) All cases of contravention of Act or rules where no evasion of duty is involved.

(2) The Board may, by notification in the official Gazette, vary the jurisdiction and powers of any Central Excise Officer or a class of Central Excise Officers.

(3) A Collector, an Additional Collector or a Deputy Collector shall decide the case within forty-five days of the issuance of show cause notice:

Provided that the Board shall have powers to regulate the system of adjudication including transfer of cases and extension of time limit in exceptional circumstances.

(5) after section 34A, the following new sections shall be inserted, namely:-

“34B. Appeals to Collector (Appeals).— (1) Any person or Central Excise Officer aggrieved by any decision or order passed under this Act or the rules made thereunder by a Central Excise Officer upto the rank of Deputy Collector of Central Excise, other than a decision or order or notice given or action taken under section 11, may prefer appeal therefrom to the Collector (Appeals) within thirty days of the date of the receipt of such order:

Provided that an appeal preferred after the expiry of thirty days may be admitted by the Collector (Appeals) if he is satisfied that the appellant had sufficient cause for not preferring the appeal within that period.

(2) An appeal under this section shall be accompanied by a fee of one thousand rupees and shall be in such form and shall be verified in such manner as may be prescribed.

(3) Any person desirous of appealing under sub-section (1) against any decision or order relating to any duty demanded in respect of goods which have ceased to be under central excise control, or to any penalty levied under the Act or the rules made thereunder, shall pending the appeal, deposit the duty demanded or the penalty levied or both such duty and such penalty:

Provided that where, in any particular case, the appellate authority is of the opinion that the deposit of duty demanded or penalty levied will cause undue hardship to the appellant, it may dispense with such deposit or may allow payment in installments spreading over a period not exceeding six months either unconditionally or on such conditions, as it may deem fit to impose:

Provided further that the order for such dispensation shall cease to have effect on the expiration of a period of six months following the date on which order for dispensation was passed or until the order of dispensation is withdrawn earlier or the case is finally decided earlier by the appellate authority.

34C. Procedure in appeal.— (1) The Collector (Appeals) shall give an opportunity to the appellant to be heard if he so desires.

(2) The Collector (Appeals) may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeals, if the Collector (Appeals) is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable.

(3) The Collector (Appeals) may, after making such further inquiry as may be necessary, pass such order as he thinks fit confirming, modifying or annulling the decision or order appealed against, or may refer the case back to the adjudicating authority with such directions as he may think fit for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary:

(4) The order of the Collector (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for the decision.

(5) On the disposal of appeal, the Collector (Appeals) shall communicate the order passed by him to the appellant, the adjudicating authority and the Collector of Central Excise. and

(6) in section 35B, in sub-section(1),—

(a) after clause (a), the following new clause shall be inserted, namely:-

“(b) an order passed by the Collector (Appeals) under section 34B.

(b) in clause (d),—

(i) for the colon, a full stop shall be substituted;

(ii) the first proviso shall be omitted; and

(iii) in the second

(iv) proviso, the word “further” shall be omitted; and

(7) in section 36C,–

(a) in sub-section (2), for the word “thirty” the word “sixty” shall be substituted; and

(b) in sub-section (3), for the words “two hundred” the words “one thousand” shall be substituted; and

(8) in section 37, in sub-section (2),–

(a) in clause (xii), the proviso shall be omitted; and

(b) clause (xviii) shall be omitted.

3. Amendment of Ordinance XXV of 1961.-

The following amendments shall be made in the Petroleum Products (Petroleum Development Levy) Ordinance, 1961 (XXV of 1961), namely:-

(1) in section 2, for clause (4), the following shall be substituted; namely:-

“(4) “fixed sale price” means such ex-refinery sale price or, as the case may be, ex-installation, ex-retail outlet or ex-depot sale price as –

(a) the Federal Government, by notification in the official Gazette.; or

(b) a company specified in the Second Schedule and authorised by the Federal Government, in respect of any petroleum product specified in the First Schedule, through electronic and press media, may declare to be the fixed sale price.

(2) in section 3A-

(a) in sub-section (2), in clause (b), the words “and Salt” shall be omitted; and

(b) in sub-section (3), the words “and Salt” shall be omitted; and

(3) the Third Schedule shall be omitted.

4. Amendment of Act IV of 1969.-

The following further amendments shall be made in the Customs Act, 1969 (IV of 1969), namely :-

(1) in section 2,-

(a) in clause (a) after the word and comma “Board,” the words and brackets “the Collector (Appeals)” shall be inserted;

(b) after clause (a), amended as aforesaid, the following new clause shall be inserted, namely:-

(ai) “advance ruling” means classification determined by the Board or any officer, or committee authorized by the Board for the assessment of the goods intended to be imported or exported.

“(ff) “Collector (Appeals)” means a person appointed to be a Collector of Customs (Appeals) under section 3. and

(d) for clause (ia) the following shall be substituted, namely :-

“(ia) “customs documents” include bill of entry, bill of export, applications for claim for refund, duty drawback and repayment of duty, baggage declaration form and documents such as bill of lading, commercial invoice and packing list or similar other forms or documents used for customs clearance and includes such documents electronically filed.

(2) in section 13, in sub-section (1), after the word “deposited” the words “without payment of customs-duty” shall be added;

(3) in section 24, the comma and wo1rds “,excise duty and sales tax” shall be omitted;

(4) in section 30, in clause (b), in the first proviso, after the word “delivered” the words “at the port of first entry” shall be inserted;

(5) in section 79, in first proviso, for the word “shall” the words “may subject to the conditions prescribed by the Collector” shall be substituted;

(6) in section 80, after sub-section(2), a new sub-section(3) shall be inserted, namely:-

“(3) The classification determined for the purpose of assessment of goods under sub-sections(1) and (2) may include classification given in an advance ruling in such manner as the Federal Government may by rule prescribe.”.

(7) for section 179, the following shall be substituted, namely:-

“179. Power of adjudication.- (1) Subject to sub-section (2), in cases involving confiscation of goods or imposition of penalty under this Act or the rules made thereunder, the jurisdiction and powers of adjudication of the Officers of Customs in terms of amount of duties and other taxes involved, excluding the conveyance, shall be as follows :-

(i) Collector Without limit.

(ii) Additional Collector not exceeding one million rupees.

(iii) Deputy Collector not exceeding four hundred thousand rupees.

(iv) Assistant Collector not exceeding fifty thousand rupees.

(v) Superintendent not exceeding ten thousand rupees.

(vi) Principal Appraiser not exceeding ten thousand rupees.

(2) The Board may, by notification in the official Gazette, fix or vary the jurisdiction and powers of any Officer of Customs or a class of officers.

(3) The cases shall be decided within ninety days of the receipt of the contravention report or within such period extended by the Collector for which reasons shall be recorded in writing, but such extended period shall in no case exceed ninety days.

(4) The Board shall have the powers to regulate the system of adjudication including transfer of cases and extension of time-limit in exceptional circumstances.

(8) in section 182, for the full stop, at the end, a colon shall be substituted and thereafter following proviso shall be added, namely:-

“Provided that the Board may authorise the use of confiscated vehicles for operational purposes by the Board or, with approval of the Board, its subordinate offices.

(9) in section 185G, in sub-section (2), before the word “shall” the words“or an advocate authorised by the Board or by an officer subordinate to it” shall be inserted;

(10) after section 192, the following new sections shall be added, namely :-

“193. Appeals to Collector (Appeals).- (1) Any person including an officer of customs aggrieved by any decision or order passed under section 179 of the Act by an officer of customs lower in rank than an Additional Collector of Customs may prefer appeal to the Collector(Appeals) within thirty days of the date of communication to him of such decision or order:

(2) An appeal under this section shall be in such form and shall be verified in such manner as may be prescribed by rules made in this behalf.

(3) An appeal made under this Act shall be accompanied by a fee of one thousand rupees to be paid in the manner that may be prescribed by the Board.

193A. Procedure in appeal. (1) The Collector (Appeals) shall give an opportunity to the appellant to be heard if he so desires.

(2) The Collector (Appeals) may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the ground of appeal, if the Collector (Appeals) is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable.

(3) The Collector (Appeals) may, after making such further inquiry as may be necessary, pass such order as he thinks fit, confirming, modifying or annulling the decision or order appealed against, or may refer the case back to the adjudicating authority with such direction as he may think fit for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary:

Provided that an order enhancing any penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order:

Provided further that, where the Collector (Appeals) is of opinion that any duty has not been levied or has been short-levied or erroneously refunded, no order requiring the appellant to pay any duty not levied, short-levied or erroneously refunded shall be passed unless the appellant is given notice within the time-limit specified in section 32 to show cause against the proposed order.

(4) The order of the Collector (Appeals) disposing of the appeal shall be in writing and shall state that points for determination, the decision thereon and the reasons for the decision.

(5) On the disposal of the appeal, the Collector (Appeals) shall communicate the order passed by him to the appellant, the adjudicating authority and the Collector of Customs.

(11) in section 194-A,-

(a) in sub-section (1).-

(i) after clause (a), the following new clause shall be inserted, namely:-

“(ab) an order passed by the Collector (Appeals) under section 193”;

(ii) the first proviso shall be omitted; and

(iii) in the second proviso the word “further” shall be omitted;

(b) after sub-section (1), amended as aforesaid, the following new sub-section shall be added, namely :-

“(2) The Board or the Collector of Customs may, if it or, as the case may be, he is of the opinion that an order passed by the Collector (Appeals) under section 193 is not legal or proper, direct the appropriate officer to appeal on its or, as the case may be, his behalf to the Appellate Tribunal against such order.

(12) in section 195-B, for the proviso, the following shall be substituted, namely:-

“Provided that where in any particular case the Collector (Appeals) or the Appellate Tribunal is of the opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Collector (Appeals) or, as the case may be, the Appellate Tribunal may dispense with such deposit subject to such conditions as he, or it, may deem fit to impose so as to safeguard the interest of revenue.

(13) in section 196,-

(a) in sub-section (2) for the words “thirty” the words “sixty” shall be substituted;

(14) in section 204 for the word “ten” the word “one hundred” shall be substituted;

(15) in section 205 for the word “five” the word “one hundred” shall be substituted; and

(16) for the First Schedule, the Schedule specified in the Schedule to this Ordinance shall be substituted.

5. Amendment of the Income Tax Ordinance XXXI of 1979.-

The following further amendments shall be made in the Income Tax Ordinance, 1979 (XXXI of 1979), namely:-

(1) in section 2,-

(a) in clause (20), in sub-clause (b), the comma and words “, and any distribution to its shareholders or modaraba certificate holders of shares by way of bonus or bonus shares” shall be omitted;

(b) in clause (24),-

(a) in sub-clause (c),-

(i) after the word “Ordinance” the word and commas “but does not include, in case of a shareholder of a domestic company, the amount representing the face value of any bonus share or the amount of any bonus declared, issued or paid by the company to its shareholders with a view to increasing its paid up share – capital” shall be added; and

(ii) for the semicolon and word “; and” a full stop shall be substituted; and

(b) clause (d) shall be omitted;

(2) in section 20, in sub-section (1), in clause (ee), after the word “income” occurring for the second time, the words “and share towards appreciation in the value of property” shall be inserted;

(3) in section 35, in the proviso, for the full stop, at the end, a colon shall be substituted and thereafter the following further proviso shall be added, namely:-

“Provided further that in respect of loss for any assessment year commencing on or after first day of July, 1995, and ending on the thirtieth day of June, 2001, sustained by an assessee, being a banking company wholly owned by the Federal Government as on the first day of June, 2002, and approved by the State Bank of Pakistan for the purpose of this proviso, this section shall have effect as if for the words “six assessment years”, the words “ten assessment years” were substituted.

(4) in section 44AA, in sub-section (2), for the word “fifty” the word “one hundred” shall be substituted;

(5) in section 44AAA, in sub-section (1),–

(a) after the words “mark up”, the words, brackets and comma “or share in rental income and share towards appreciation in the value of house (excluding return of capital, if any)” shall be inserted;

(b) the words “not exceeding six hundred thousand rupees” shall be omitted; and

(6) in section 50, in sub-section (6A), the commas and words “, and in case of bonus or bonus shares, collect,” shall be omitted;

(7) after section 62B, the following new sub-section shall be inserted, namely:-

“62BB. Powers of tax authorities to modify orders, etc.— (1) Where a question of law has been decided by a High Court or the Appellate Tribunal in the case of an assessee, on or after first day of July 2002, the Deputy Commissioner may, notwithstanding that the Commissioner has preferred an appeal against the decision of the High Court or made an application for reference against the order of the Appellate Tribunal, as the case may be, follow the said decision in the case of the said assessee in so far as it applies to said question of law arising in any assessment pending before the Deputy Commissioner until the decision of the High Court or of the Appellate Tribunal is reversed or modified.

(2) In case the decision of High Court or, as the case may be, the Appellate Tribunal referred to in sub-section (1), is reversed or modified, the Deputy Commissioner may, notwithstanding the expiry of period of limitation prescribed for making any assessment or order, within a period of one year from the date of receipt of decision, modify the assessment or order in which the said decision was applied so that it conforms to the final decision.

(8) in section 80C, in sub-section (2), for the proviso the following shall be substituted, namely:-

“Provided that nothing in this section shall apply to any amounts referred to in sub-clauses (ia), (iia) and (iii) of clause (a) in respect of any assessment year commencing on, or after, the first day of July, 2002:

Provided further that nothing in this section shall apply to any amounts referred to in sub-clause (iv) of clause (a) in respect of any assessment year commencing on, or after, the first day of July, 2003.

(9) in sections 92, 94 and 95, for the word “Collector”, wherever occurring, the words and brackets “District Officer (Revenue)” shall be substituted;

(10) in section 129, for sub-section (2), the following shall be substituted, namely:-

“(2) No appeal under sub-section (1) shall be made by a taxpayer against an order of assessment unless the taxpayer has paid,–

(a) the amount of tax due under section 54; and

(b) an amount equal to-

(i) fifteen percent of the amount of tax assessed as is in excess of the tax due under section 54, or

(ii) twenty percent of the amount of tax assessed for the immediately preceding assessment year and where a person has not been assessed to tax for that assessment year, thirty percent of the amount of tax mentioned in clause (a),

whichever is less. and

(11) in the First Schedule,-

(1) in Part-I, in paragraph A1,

(a) after the word “on”, the words “or after” shall be omitted;

(b) in the proviso,-

(i) after clause (e), the following new clause shall be inserted, namely:-

“(ea) notwithstanding anything contained in this Ordinance, the rebate for any allowance under section 47 shall be computed at the average rate of tax and allowed accordingly.

(ii) in clause (f), after the word “on”, the commas and words “, or after,” shall be omitted; and

(2) in Part-IV, in paragraph A, after sub-paragraph (2E), the following new sub-paragraph shall be added, namely:-

“(2F) the provisions of sub-paragraphs (2), (2C), (2D) and (2E) shall not to apply for any assessment year commencing on or after the first day of July, 2003. and

(12) in the Second Schedule,

(a) in Part-I —

(i) clauses (7C) and (16) shall be omitted;

(ii) in clause (29), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be inserted, namely:-

“Provided that exemption under this clause shall not apply in respect of entertainment allowance received on or after the first day of July, 2002.

(iii) in clause (29A), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause shall not apply in respect of entertainment allowance received on or after the first day of July, 2002.

(iv) in clause (30), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause shall not apply in respect of entertainment allowance received on or after the first day of July, 2002.

(v) in clause (31), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause shall not apply in respect of entertainment allowance received on or after the first day of July, 2002.

(vi) in clause (32), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause shall not apply in respect of senior post allowance received on or after the first day of July, 2002.

(vii) in clause (33), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause shall not apply in respect of senior post allowance received on or after the first day of July, 2002.

(viii) in clause (33B), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause shall not apply in respect of senior post allowance and entertainment allowance received on or after the first day of July, 2002.

(ix) clauses (38A), (41) and (47) shall be omitted;

(x) in clause (54A), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause in respect of the Federal and Provincial Ministers shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

(xi) in clause (54B), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause in respect of the Federal and Provincial Ministers shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

(xii) clauses (77C), (77D), (77E), (79A), (79B), (80A), (86A), (91A), (91B), (102C) and (102F) shall be omitted;

(xiii) in clause (109), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

(xiv) in clause (110), in the proviso, for the full stop, at the end, a colon shall be substituted and thereafter the following further proviso shall be added, namely:-

“Provided further that exemption under this clause shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

(xv) in clause (111), in the proviso, for the full stop, at the end, a colon shall be substituted and thereafter the following further proviso shall be added, namely:-

“Provided further that exemption under this clause shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

(xvi) in clause (111A), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

(xvii) clauses (116B) and (117A) shall be omitted;

(xviii) in clause (118), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

(xix) clauses (121A), (121B), (121C), (125D), (125E), (126), (126A), (126B), (126D), (128), (129B), (134) and (135) shall be omitted; and

(xx). in clause (140), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

(xxi) clauses (140A), (140B), (141), (167C) and (183) shall be omitted; and

(b) in Part-IV, clause (63) shall be omitted;

6. Amendment of the Sales Tax Act, 1990.—

The following further amendments shall be made in the Sales Tax Act, 1990, namely:—

In the said Act,—

(1) in section 2,—

(i) in clause (9a), for the full stop, at the end, a colon shall be substituted and the following proviso shall be added, namely:-

“Provided that a person liable to be enrolled but not enrolled under this Act shall remain liable to further tax under sub-section (1A) of section 3 and shall not be entitled to any benefit available to an enrolled person under any of the provisions of this Act or the rules made thereunder.

(ii) in clause (14), for sub-clause (c), the following shall be substituted, and shall be deemed to have been so substituted on the 18^th June, 2001, namely,

“(c) levied under the Sales Tax Act, 1990 of Pakistan as adapted in the State of Azad Jammu and Kashmir, on the supply of goods received by that person; and

(d) chargeable as duties of excise under section 3 of the Central Excises Act, 1944 (I of 1944), on such excisable services as are notified by the Federal Government under the third proviso to sub-section (1) thereof and on which such duties are charged, levied and paid as if it were a tax payable under section 3 of this Act.

(iii) for clause (25), the following shall be substituted, namely,—

“(25) “registered person” means a person who is registered or is liable to be registered under this Act:

Provided that a person liable to be registered but not registered under this Act shall remain liable to further tax under sub-section (1A) of section 3 and shall not be entitled to any benefit available to a registered person under any of the provisions of this Act or the rules made thereunder.

(2) in section 3,—

(a) in sub-section (1A), the words, bracket and a letter “clause (a) of” shall be omitted;

(b) in the proviso,—

(i) in clause (3),—

(a) in sub-clause (iv), the word “and” at the end shall be omitted; and

(b) in sub-clause (v), the word “and” at the end shall be omitted and thereafter, the following new entries shall be added, namely,—

“(vi) vegetable ghee and cooking oil; and

(vii) fertilizers;”

(3) in section 3A, in sub-section (3), for the colon, at the end, a full stop shall be substituted and the proviso shall be omitted;

(4) in section 3AA,—

a. in sub-section (4), for the colon, at the end, a full stop shall be substituted and the proviso shall be omitted; and

b. sub-section (5) shall be omitted;

(5) section 3AAA shall be omitted;

(6) in section 4, after clause (b), the following new clause shall be added, namely,—

“(c) such other goods as the Federal Government may, by Notification in the Official Gazette, specify:”;

(7) in section 7,—

(a) in sub-section (2), after clause (ii), the following new clause shall be added, namely:—

“(iii) in case of goods purchased in auction, he holds a treasury challan showing payment of sales tax. and

(b) after sub-section (2) amended as above, the following new sub-section shall be added, namely:—

“(3) Notwithstanding anything in sub-sections (1) and (2), the Federal Government may, by a special order, subject to such conditions, limitations or restrictions as may be specified therein allow a registered person to deduct input tax paid by him from the output tax determined or to be determined as due from him under this Act.

(8) after section 11, the following new section shall be inserted, namely:

“11A. Short-paid amounts recoverable without notice.– Notwithstanding any of the provisions of this Act, where a registered or enrolled person pays the amount of tax less than the due tax as indicated in his return, the short-paid amount of tax shall be recovered without giving a show cause notice to such person provided that no additional tax or penalty shall be charged unless a show cause notice is given to such person.

(9) in section 45,—

(a) against serial No.(iii), in entry (b), for the colon, at the end, a full stop shall be substituted;

(b) after serial No. (iii) and the entries relating thereto, the following new serial number and the entries relating thereto shall be added, namely:

“(iv) An officer of sales Such cases as may be

tax with any other notified by the Board.

designation

(10) in section 45A, in sub-section (2), for the figure “45” the figure “45B” shall be substituted;

(11) after section 45A, the following new section shall be inserted, namely:—

“45-B. Appeals.— (1) Any person, including the Sales Tax Department, aggrieved by any decision or order passed under sections 11, 36 or 45, by an officer of Sales Tax below in rank to Additional Collector may, within thirty days of the date of receipt of such decision or order, prefer appeal to the Collector of Sales Tax (Appeals):

Provided that an appeal preferred after the expiry of thirty days may be admitted by the Collector of Sales Tax (Appeals) if he is satisfied that the appellant has sufficient cause for not preferring the appeal within the specified period:

Provided further that the appeal shall be accompanied by a fee of one thousand rupees to be paid in such manner as the Board may prescribe.

(2) The Collector of Sales Tax (Appeals) may, after giving both parties to the appeal an opportunity of being heard, pass such order as he thinks fit, confirming, varying, altering, setting aside or annulling the decision or order appealed against.

(3) In deciding an appeal, the Collector of Sales Tax (Appeals) may make such further inquiry as may be necessary provided that he shall not remand the case for denovo consideration.

(4) Any person desirous of preferring an appeal under sub-section (1) against any decision or order relating to any tax demanded or any penalty imposed under this Act shall, before presenting the appeal, deposit the tax demanded and the penalty imposed under such decision or order:

Provided that, where in any case, the Collector of Sales Tax (Appeals) is satisfied that the deposit of tax demanded or the penalty as aforesaid is likely to cause undue hardship to the appellant, he may dispense with such deposit subject to such conditions or restrictions he may deem fit to impose:

Provided further that in any particular case, the Collector of Sales Tax (Appeals) may direct that pending decision of the appeal, the tax demanded or penalty imposed, shall be paid by the appellant in suitable instalments spreading over a period not exceeding six months from the date of such direction.

(12) in section 46,—

(a) for sub-section (1), the following shall be substituted, namely:—

“(1) Any person including the Sales Tax Department, aggrieved by—

(a) any decision or order passed by a Collector or an Additional Collector of Sales Tax under sections 11, 36 or 45;

(b) any order passed by the Collector of Sales Tax (Appeals) under section 45B; and

may, within sixty days of the receipt of such decision or order, prefer appeal to the Appellate Tribunal. and

(b) in sub-section (3) for the words “seven hundred and fifty” the words “one thousand” shall be substituted;

(13) in section 47, in sub-section (3) for the word “hundred” the word “thousand” shall be substituted;

(14) after section 47, the following new section shall be inserted, namely:—

“47A. Alternate dispute resolution.- (1) Notwithstanding any other provision of this Act, or the rules made thereunder, the Board may, of its own motion or on an application in writing by a registered person or a class of such persons, opting under this section for the resolution of any hardship relating to levy and payment of tax, may appoint a Committee consisting of —

(a) an officer of Sales Tax department not below the rank of Collector;

(b) one or two persons from among the notified panel of chartered accountants, advocates, representatives of trade bodies or associations, or any other reputable taxpayer; and

Provided that no Committee shall be constituted in cases where the matter has been decided by a High Court or the Supreme Court.

(2) The Board may constitute as many committees as may be required.

(3) A Dispute Resolution Committee constituted under sub-section (1) and (2), shall examine the questions of fact and law and may, if it deems necessary conduct inquiry, seek expert opinion, direct the Collector to conduct an audit or a special audit by chartered accountants or cost accountants and make recommendations in respect of the following, namely:—

(a) the liability of tax against the registered person, or admissibility of refunds, as the case may be;

(b) the extent of waiver of additional tax and penalty by stating reasons and circumstances leading to the recommendation;

(d) relaxation of any procedural or technical irregularities and condonation of any prescribed time limitation; and

(e) any other specific relief required to resolve the dispute.

(4) The Board may, on the recommendations of the Committee, pass such order as it may deem fit for the resolution of dispute.

(5) After the payment or the recovery of the tax liability determined and ordered by the Board under sub-section (4) all other decisions, orders and judgements made or passed shall stand modified to that extent and all proceedings under the Act or the rules made thereunder by any authority or forum shall abate.

(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.

(15) in section 48, in sub-section (1), the words and comma “levied, penalty imposed or demand raised under any bond or other instrument executed under this Act” shall be omitted;

(16) in section 61, the words “the importation of” shall be omitted;

(17) in section 66,—

(a) after the colon, the following new proviso shall be inserted, namely:

“Provided that in a case where a registered person did not deduct input tax within the relevant tax period, the Collector may, after satisfying himself that input tax adjustment is due and admissible, allow the registered person to take such adjustment in the tax period as specified by the Collector.and

(b) in the second proviso, after the word “Provided” the word “further” shall be inserted;

(18) after section 73, the following new section shall be added, namely:

“74. Condonation of time-limit.— Where any time or period has been specified under any of the provisions of the Act or rules made thereunder within which any application is to be made or any act or thing is to be done, the Central Board of Revenue may, in any case or class of cases, permit such application to be made or such act or thing to be done within such time or period as it may consider appropriate.

(19) in the Third Schedule,—

(a) for the word, brackets and letter “clause (c)” the word, brackets, and letter “clause (a)” shall be substituted; and

(b) in serial No. 6 in column (1), in column (2), after the brackets figures and word “(IV of 1969)” the words, comma and figures “excluding supplies made to government hospitals on or after the 21^st day of March, 2002” shall be added;

(20) in the Fifth Schedule, in serial No. 6, in column (1), in the entry relating thereto in column (2), after the word “Zones”, the words “and to petroleum and gas sector Exploration and Production companies, their contractors and sub-contractors” shall be inserted;

(21) in the Sixth Schedule,—

(a) in serial No. 3A in column (1), in column (3), for the figures “0407.0020” the figures “0407.0010” shall be substituted;

(b) in serial No. 4 in column (1),—

(i) in column (2), after the words “Canola seed” the words “for sowing” shall be omitted; and

(ii) in column (3),—

(a) for the figures “1207.9900” the figures “12.05” shall be substituted;

(b) for the figures “1211.9020” the figures “1211.9000” shall be substituted; and

(c) against serial No. 6, in column (1), for the entry relating thereto in column (2), the following shall be substituted, namely: –

“Desi Ghee derived from milk; butter not sold under brand name or trade mark and supply of locally produced crude vegetable oil, except cooking oil, without having undergone any process except the process of washing.

(d) against serial No. 11, in column (1), in column (3), for the existing entries the words “Respective headings” shall be substituted;

(e) against serial No. 26, in column (1), in column (3), for the entries the figures, comma and word “99.19, 99.20 and 99.21” shall be substituted;

(f) against serial No. 27, in column (1), in column (3), for the figures “9906.0010” the figures “99.18” shall be substituted;

(g) against serial No. 28, in column (1), in column (3), for the figures “9904.0010” the figures “99.16” shall be substituted;

(h) against serial No. 30, in column (1), in column (3), for the figures “9902.0060” the figures “99.09” shall be substituted;

(i) against serial No. 31 in column (1), in column (3), for the figures “9902.0070” the figures “99.10” shall be substituted;

(j) against serial No. 40 in column (1), in column (3), for the existing entries the figures commas and word “99.01, 99.02, 99.03 and 99.06” shall be substituted;

(k) against serial No. 40A in column (1), in columns (2) and column (3), for the figures “9901.0070”, occurring twice, the figure “99.05” shall be substituted;

(l) against serial No. 46 in column (1), in column (3), for the figures, commas and word “9903.0010, 9903.0020 and 9903.0030”, the figures commas and word “99.12, 99.13 and 99.14” shall be substituted;

(m) against serial No. 46A in column (1), in column (3), for the figures, commas and word “9903.0010, 9903.0030 and 9903.0040”, the figures commas and word “99.12, 99.14 and 99.15” shall be substituted;

(n) against serial No. 47 in column (1), in column (3), for the existing entries the figures, commas and word “99.07, 99.08, 99.09 and 99.11” shall be substituted;

(o) against serial No. 49 in column (1), in column (3), for the entries the words “Respective headings” shall be substituted;

(p) against serial No. 53 in column (1), in column (3), for the existing entries the words “Respective headings” shall be substituted; and

(q) against serial No. 59 in column (1), in column (3), for the existing entries the figures, commas and word “99.24 and 99.25” shall be substituted.

7. Amendment of (IV of 1999).-

In the Finance Act, 1999 (IV of 1999), section 18 shall be omitted.

8. Amendment of the Income Tax Ordinance XLIX of 2001.-

The following amendments shall be made in the Income Tax Ordinance, 2001 (XLIX of 2001), namely:-

(1) in section 2,-

(a) in clause (1),-

(i) in sub-clause (b), for the words, brackets, letters and figure, “clauses (a), (d) and (e) of sub-section (20)” the words, brackets, letters and figure “sub-clauses (a), (d) and (e) of clause (19)” shall be substituted;

(ii) in sub-clause (c), for the words, brackets, letters and figure “clause (c) of sub-section (20)”, the words, brackets, letter and figure “sub-clause (c) of clause (19)” shall be substituted;

(b) after clause (1), amended as aforesaid, the following new clause shall be inserted, namely:-

“(1A) “amalgamation” means the merger of one or more banking companies or non-banking financial institutions, in either case being a public company, or a company incorporated under any law, other than Companies Ordinance, 1984 (XLVII of 1984), for the time being in force, (the company or companies which so merge being referred to as the “amalgamating company” or companies and the company with which they merge or which is formed as a result of merger, as the “amalgamated company”) in such manner that —

(a) the assets of the amalgamating company or companies immediately before the amalgamation become the assets of the amalgamated company by virtue of the amalgamation, otherwise than by purchase of such assets by the amalgamated company or as a result of distribution of such assets to the amalgamated company after the winding up of the amalgamating company or companies;

(b) the liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgamation; and

(c) the scheme of amalgamation is approved by the State Bank of Pakistan or by the Securities and Exchange Commission of Pakistan.

“(5) “assessment” includes re-assessment and amended assessment and the cognate expressions shall be construed accordingly.

(d) after clause (5), amended as aforesaid, the following new clauses shall be inserted, namely:-

“(5A) “assessment year” means assessment year as defined in the repealed Ordinance.

“(5B) “assets management company” means a company registered under the Assets Management Companies Rules, 1995.

(e) after clause (11), the following new clause shall be inserted, namely:-

“(11A) “charitable purpose” includes relief of the poor, education, medical relief and the advancement of any other object of general public utility.

(f) for clause (13), the following shall be substituted, namely:-

“(13) “Commissioner” means a person appointed as a Commissioner of Income Tax under section 208, and includes a taxation officer vested with all or any of the powers and functions of the Commissioner;

(13A) “Commissioner (Appeals)” means a person appointed as a Commissioner of Income Tax (Appeals) under section 208.

(g) in clause (19),-

(i) in sub-clause (b), the comma and words “,and any distribution to its shareholders of shares by way of bonus or bonus shares” shall be omitted;

(ii) in sub-clause (c), in paragraphs (i) and (iii) for the word “clause”, the word “sub-clause” shall be substituted;

(h) in clause (24), for the figures, brackets and word “1980 (XXXI of 1980)” the figures, brackets and word “1984 (XLVII of 1984)” shall be substituted;

(i) for clause (29) the following shall be substituted, namely:-

“(29) “income” includes any amount chargeable to tax under this Ordinance, any amount subject to collection of tax under sections 148, 153, 154 and 156, sub-section (5) of section 234, and any loss of income but does not include, in case of a shareholder of a domestic company, the amount representing the face value of any bonus share or the amount of any bonus declared, issued or paid by the company to the shareholders with a view to increasing its paid up share capital.

(j) after clause (29), substituted as aforesaid, the following new clause shall be inserted, namely:-

“(29A) “income year” means income year as defined in the repealed Ordinance.

(k) after clause (30), the following new clauses shall be inserted, namely:-

“(30A) “investment company” means a company registered under the Investment Companies and Investment Advisors Rules, 1971;

(30B) “leasing company” means a company licensed under the Leasing Companies (Establishment and Regulation) Rules, 2000.

(l) after clause (35), the following new clause shall be inserted, namely:-

“(35A) “Mutual Fund” means a mutual fund set up by the Investment Corporation of Pakistan or by an investment company.

(m) for clause (36), the following shall be substituted, namely:-

“(36) “non-profit organization” means any person, other than an individual, which is —

(a) established for religious, educational, charitable, welfare or development purposes, or for the promotion of an amateur sport;

(b) formed and registered under any law as a non-profit organization;

(c) approved by the Commissioner for specified period, on an application made by such person in the prescribed form and manner, accompanied by the prescribed documents and, on requisition, such other documents as may be required by the Commissioner;

and none of the assets of such person confers, or may confer, a private benefit to any other person.

(n) in clause (41)-,

(i) in sub-clause (d), for the word “months” the word “days” shall be substituted;

(ii) in sub-clause (e), for the comma, occurring for the first time, the bracket and comma “),” shall be substituted;

(o) in clause (46), in sub-clause (a), after the word “amount” a comma shall be inserted;

(p) in clause (47), in sub-clause (b), commas and words “, and was on the Central Depository System,” shall be omitted;

(q) after clause (48), the following new clause shall be inserted, namely:-

“(48A) “Regional Commissioner” means a person appointed as a Regional Commissioner of Income Tax under section 208, and includes a Director-General of Income Tax and Sales Tax.

(r) after clause (49), the following new clause shall be inserted, namely:-

“(49A) “repealed Ordinance” means Income Tax Ordinance, 1979 (XXXI of 1979).

(s) in clause (54),-

(i) for the word “”royalties””, the word ““royalty”” shall be substituted; and

(ii) in sub-clauses (f) and (g), for the word “clauses” the word “sub-clauses” shall be substituted;

(t) in clause (59), after the word “holder”, the comma and words “, a unit holder of a unit trust” shall be inserted;

(u) in clause (65), for the words and comma “Deputy Commissioner of Income Tax, Additional Commissioner of Income Tax” the words and comma “Additional Commissioner of Income Tax, Deputy Commissioner of Income Tax” shall be substituted;

(v) in clause (66), in clause (b), after the figure “X”, the words and figure “and Chapter XII” shall be inserted; and

(w) after clause (73), the following new clause shall be added, namely:-

“(74) “Venture Capital Company” and “Venture Capital Fund” shall have the same meanings as are assigned to them under the Venture Capital Company and Venture Capital Funds Rules, 2001.

(2) in section 11, in sub-section (1), clauses (b) to (e) shall be substituted by the following namely;

“(b) Income from Property;

(d) Capital Gains; and

(e) Income from Other Sources.”

(3) in section 12, in sub-section (5), in clause (c), after the word “employee”, occurring for the second time, the words “or to a third party under an agreement with the employee or an associate of the employee” shall be added;

(4) in section 13,-

(a) for sub-section (3), the following shall be substituted, namely:-

“(3) Where, in a tax year, a motor vehicle is provided by an employer to an employee wholly or partly for the private use of the employee, the amount chargeable to tax to the employee under the head “Salary” for that year shall include an amount computed as may be prescribed.

(b) sub-section (4) shall be omitted;

(i) for the words “the domestic assistant” the words and commas “such housekeeper, driver, gardener or other domestic assistant” shall be substituted; and

(ii) after the words “by the employee”, the words “to the employer” shall be inserted;

(d) for sub-section (7), the following shall be substituted, namely:-

“(7) Where a loan is made, on or after the 1st day of July, 2002, by an employer to an employee and either no profit on loan is payable by the employee or the rate of profit on loan is less than the benchmark rate, the amount chargeable to tax to the employee under the head “Salary” for a tax year shall include an amount equal to-

(a) the profit on loan computed at the benchmark rate, where no profit on loan is payable by the employee, or

(b) the difference between the amount of profit on loan paid by the employee in that tax year and the amount of profit on loan computed at the benchmark rate,

as the case may be.

(e) in sub-section (8), for the word “property”, occurring twice, the words “any asset or property” shall be substituted;

(f) in sub-section (10), for the word “owed” the word “owing” shall be substituted;

(g) for sub-section (12), the following shall be substituted, namely:-

“(12) Where, in the tax year, accommodation or housing is provided by an employer to an employee, the amount chargeable to tax to the employee under the head “Salary” for that year shall include an amount computed as may be prescribed.

(h) in sub-section (13), after the word “perquisite”, occurring for the second time, the commas and words “, except where the rules, if any, provide otherwise” shall be inserted;

(i) for sub-section (14), the following shall be substituted, namely:-

“(14) In this section,-

(a) “benchmark rate” means —

(i) for the tax year commencing on the first day of July, 2002, a rate of five percent per annum; and

(ii) for the tax years next following the tax year referred to in sub-clause (i), the rate for each successive year taken at one percent above the rate applicable for the immediately preceding tax year, but not exceeding such rate, if any, as the Federal Government may, by notification, specify in respect of any tax year;

(b) “services” includes the provision of any facility; and

(5) in section 17, in sub-section (1), in clause (f), after the word “rent”, occurring for the second time, the words “and share towards appreciation in the value of property” shall be inserted;

(6) in section 18, in sub-section (1), in clause (e), after the word “modaraba”, the words “management company” shall be added;

(7) in section 19, in sub-section (1), in clause (a), after the word “on” the word “by” shall be inserted;

(8) in section 20, after sub-section (2), the following new sub-section shall be added, namely:-

“(3) Subject to this Ordinance, where any expenditure is incurred by an amalgamated company on legal and financial advisory services and other administrative cost relating to planning and implementation of amalgamation, a deduction shall be allowed for such expenditure.

(9) in section 21, in clause (l), for the words and comma “five hundred rupees or on account of postage or utility bills”, the words and commas “five thousand rupees or on account of freight charges, travel fare, postage, utilities or payment of taxes, duties, fees, fines or any other statutory obligation” shall be substituted;

(10) in section 22,-

(a) for sub-section (12), the following shall be substituted, namely:-

“(12) The depreciation deductions allowed to a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution and leased to another person shall be deductible only against the lease rental income derived in respect of such assets. and

(b) in sub-section (13),-

(i) in clause (a), for the words “seven hundred and fifty thousand” the words “one million” shall be substituted; and

(ii) for clause (c), the following shall be substituted, namely:-

“(c) any asset owned by a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution and leased to another person is treated as used in the leasing company or the investment bank or the modaraba or the scheduled bank or the development finance institution’s business; and”;

(11) in section 23, for sub-section (4), the following shall be substituted, namely:-

“(4) A deduction allowed under this section to a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or the investment bank or the modaraba or the scheduled bank or the development finance institution and leased to another person shall be deducted only against the leased rental income derived in respect of such assets.

(12) in section 24, in sub-section (6), for the word “depreciation” the word “amortization” shall be substituted;

(13) in section 26, in sub-section (2), for the word “activities”, the word “activity” shall be substituted;

(14) in section 35, in sub-section (4), for the words “fair market” the words “net realisable” shall be substituted;

(15) in section 37, in sub-section (5),-

(a) for clause (a) the following shall be substituted, namely:-

“(a) any stock-in-trade (not being stocks and shares), consumable stores or raw materials held for the purpose of business.

(b) in clause (c), after the semicolon, at the end, the word “or” shall be added;

(d) clause (e) shall be omitted;

(16) in section 39,-

(a) in sub-section (1),-

(i) after the comma, occurring for the first time, the words and comma “if it is not included in any other head,” shall be inserted;

(i) in clause (a), for the word “Dividends” the word “dividend” shall be substituted; and

(iii) in clause (b), for the word “royalties” the word “royalty” shall be substituted; and

(b) in sub-section (3), for the words “an income year” the words “a tax year” shall be substituted”; and

(17) in section 40, after sub-section (5), the following new sub-section shall be added, namely:-

“(6) Expenditure is of a capital nature if it has a normal useful life of more than one year.

(18) in section 43,-

(a) in clause (b), after semicolon, at the end, the word “and” shall be added;

(b) in clause (c), for the semicolon and word “; and”, at the end, a full stop shall be substituted; and

(19) in section 48, for the words “Any support payment received by a spouse under an agreement to live apart” the words “Any income received by a spouse as support payment under an agreement to live apart” shall be substituted;

(20) section 52 shall be omitted;

(21) in section 56, in sub-section (3), after the word “where”, the commas and words “, in a tax year,” shall be inserted;

(22) in section 57, after sub-section (2), the following new sub-section shall be inserted, namely:-

“(2A) Where a loss, referred to in sub-section (2), relating to any assessment year commencing on or after 1^st day of July, 1995, and ending on the 30^th day of June 2001, is sustained by a banking company wholly owned by the Federal Government as on first day of June, 2002, which is approved by the State Bank of Pakistan for the purpose of this sub-section, the said loss shall be carried forward for a period of ten years.

(23) after section 57, amended as aforesaid, the following new section shall be added, namely:-

“57A. Set off of business loss consequent to amalgamation. — (1) The accumulated loss under the head “Income from Business” (not being a loss to which section 58 applies) of an amalgamating company or companies shall be set off or carried forward against the business profits and gains of the amalgamated company up to a period of six tax years immediately succeeding the tax year in which the loss was first computed in the case of amalgamating company or companies.

(2) The provisions of sub-section (4) and (5) of section 57 shall, mutatis mutandis, apply for the purposes of allowing unabsorbed depreciation of amalgamating company or companies in the assessment of amalgamated company.

(3) Where any of the conditions as laid down by the State Bank of Pakistan or the Securities and Exchange Commission of Pakistan, as the case may be, in the scheme of amalgamation, are not fulfilled, the set off of loss or allowance for depreciation made in any tax year of the amalgamated company shall be deemed to be the income of that amalgamated company for the year in which such default is discovered by the Commissioner or taxation officer, and all the provisions of this 0rdinance shall apply accordingly.

(24) in section 61, in sub-section (4), after the letter “C” the word “of” shall be inserted;

(25) in section 63, –

(a) in sub-section (1) for the letters “SECP” the comma and words “, Securities and Exchange Commission of Pakistan” shall be substituted; and

in sub-section (2), in clause (c), for the word “fifty” the words “one hundred” shall be substituted.

(26) in section 64,-

(a) for sub-section (1), the following shall be substituted, namely:-

“(1) A person shall be entitled to a tax credit for a tax year in respect of any profit or share in rent and share in appreciation of value of house paid by the person in the year on a loan by a scheduled bank under a house finance scheme approved by the State Bank of Pakistan or advanced by Government, the local authority or House Building Finance Corporation where the person utilizes the loan for the construction of a new house or the acquisition of a house.

(b) in sub-section (2), in clause (c), for the word “fifty” the words “one hundred” shall be substituted; and

(27) in section 65, in sub-section (1), after the word “under” the word “this” shall be inserted;

(28) in section 67,-

(a) in sub-section (1), after clause (a), the following new clause shall be inserted, namely:-

“(ab) derivation of income comprising of taxable income and any class of income to which sub-sections (4) and (5) of section 4 apply, or”; and

(b) in sub-section (2), for the figure “232” the figure “237” shall be substituted;

(29) for section 74, the following shall be substituted, namely:-

“74. Tax year.– (1) For the purpose of this Ordinance and subject to this section , the tax year shall be a period of twelve months ending on the 30^th day of June (hereinafter referred to as ‘normal tax year’) and shall, subject to sub-section (3), be denoted by the calendar year in which the said date falls.

(2) Where a person’s income year, under the repealed Ordinance, is different from the normal tax year, or where a person is allowed, by an order under sub-section (3), to use a twelve months’ period different from normal tax year, such income year or such period shall be that person’s tax year (hereinafter referred to as ‘special tax year’) and shall, subject to sub-section (3), be denoted by the calendar year relevant to normal tax year in which the closing date of the special tax year falls.

(3) A person may apply, in writing, to the Commissioner to allow him to use a twelve months’ period, other than normal tax year, as special tax year and the Commissioner may, subject to sub-section (5), by an order, allow him to use such special tax year.

(4) A person using a special tax year, under sub-section (2), may apply in writing, to the Commissioner to allow him to use normal tax year and the Commissioner may, subject to sub-section (5), by an order, allow him to use normal tax year.

(5) The Commissioner shall grant permission under sub-section (3) or (4) only if the person has shown a compelling need to use special tax year or normal tax year, as the case may be, and the permission shall be subject to such conditions, if any, as the Commissioner may impose.

(6) An order under sub-section (3) or (4) shall be made after providing to the applicant an opportunity of being heard and where his application is rejected the Commissioner shall record in the order the reasons for rejection.

(7) The Commissioner may, after providing to the person concerned an opportunity of being heard, by an order, withdraw the permission granted under sub-section (3) or (4).

(8) An order under sub-section (3) or (4) shall take effect from such date, being the first day of the special tax year or the normal tax year, as the case may be, as may be specified in the order.

(9) Where the tax year of a person changes as a result of an order under sub-section (3) or sub-section (4), the period between the end of the last tax year prior to change and the date on which the changed tax year commences shall be treated as a separate tax year, to be known as the “transitional tax year”.

(10) In this Ordinance, a reference to a particular financial year shall, unless the context otherwise requires, include a special tax year or a transitional tax year commencing during the financial year.

(11) A person dissatisfied with an order under sub-section (3), (4) or (7) may file a review application to the Central Board of Revenue, and the decision by the Central Board of Revenue on such application shall be final.

(30) in section 80, in sub-section (2), in clause (b), in sub-clause (v), after the word “society” the words “or any other society established or constituted by or under any law for the time being in force” shall be inserted;

(31) in section 106,-

(a) in sub-section (1) after the word “institution” the words “or a banking company” shall be inserted; and

(b) in sub-section (2), in clause (a), for the words “corporate tax” the words “corporate rate” shall be substituted;

(32) in section 111,-

(a) in sub-sections (1) and (3), for the word “Business” the words “Other Sources” shall be substituted; and

(b) in sub-section (5), for the figure “232” the figure “237” shall be substituted;

(33) in section 113, in sub-section (3),-

(a) in clause (a), after the word “of” occurring for the first time, the words “sales tax and central excise duty or “ shall be inserted; and

(b) in clause (b), after the word “services” the words “or giving benefits” shall be inserted;

(34) in section 115,–

(a) in sub-section (1), in clause (b), before the word “section”, the word “in” shall be inserted;

(b) in sub-section (4), for the figures, brackets, commas and word “151(a)(b), 153, 154, 156, 157 or 234(5)” the figures, commas, brackets and words “5, 6, 7, 148, 153, 154, 156 or sub-section (5) of section 234” shall be substituted;

(35) in section 119,-

(a) in sub-section (2), the word “wealth” shall be omitted;

(b) in sub-section (3),-

(i) the word “wealth” shall be omitted; and

(ii) for the word “notice”, the word “order” shall be substituted;

(d) sub-section (5) shall be omitted; and

(e) in sub-section (6), after the word “not”, the commas and words “,for the purpose of charge of additional tax under sub-section (1) of section 205,” shall be inserted;

(36) in section 120, after the word “year”, occurring for the first time, the words, figures and commas “ending on or after the 1st day of July, 2002,” shall be inserted;

(37) In section 121,-

(a) in sub-section (1), after the word “Ordinance”, the commas and words “,or the repealed Ordinance,” shall be inserted; and

(b) in sub-section (3), after the words “tax year”, the commas and words “, or the income year,” shall be inserted;

(38) In section 122,-

(a) in sub-section (1), after the figure “121”, commas, words, figures and letter “,or issued under section 59, 59A, 62, 63 or 65 of the repealed Ordinance,” shall be inserted;

(b) in sub-section (4), after the word “amend”, the commas and words “,as many times as may be necessary,” shall be inserted; and

(c) in sub-section (5), in clause (a), for the words “to claim tax relief” the commas and words “,incorrect payment of tax with the return of income, an incorrect claim for tax relief or rebate,” shall be substituted;

(d) in sub-section (8), after the word and comma “taxpayer,” the words and comma “receipts of the taxpayer from services rendered or any other receipts that may be chargeable to tax under this Ordinance,” shall be inserted; and

(e) after sub-section (8), amended as aforesaid, the following new sub-section shall be added, namely:-

“(9) No assessment shall be amended, or further amended, under this section unless the taxpayer has been provided with an opportunity of being heard.

(39) in section 124, in sub-section (2), for the words “six months from the date” the words “one year from the end of the financial year in which” shall be substituted;

(40) after section 124, amended as aforesaid, the following new section shall be inserted, namely:-

“124A. Powers of tax authorities to modify orders, etc. (1) Where a question of law has been decided by a High Court or the Appellate Tribunal in the case of a taxpayer, on or after first day of July 2002, the Commissioner may, notwithstanding that he has preferred an appeal against the decision of the High Court or made an application for reference against the order of the Appellate Tribunal, as the case may be, follow the said decision in the case of the said assessee in so far as it applies to said question of law arising in any assessment pending before the Commissioner until the decision of the High Court or of the Appellate Tribunal is reversed or modified.

(2) In case the decision of High Court or the Appellate Tribunal, referred to in sub-section (1), is reversed or modified, the Commissioner may, notwithstanding the expiry of period of limitation prescribed for making any assessment or order, within a period of one year from the date of receipt of decision, modify the assessment or order in which the said decision was applied so that it conforms to the final decision.

(41) in section 127,-

(a) for sub-section (1), the following shall be substituted, namely:-

“(1) Any person dissatisfied with any order passed by a Commissioner or a taxation officer under section 121, 122, 143, 144, 170, 182, 183, 184, 185, 186, 187, 188, or 189, or an order under sub-section (1) of section 161 holding a person to be personally liable to pay an amount of tax, or an order under clause (f) of sub-section (3) of section 172 treating a person to be the representative of a non-resident person, or an order under section 221 refusing to rectify the mistake, either in full or in part, as claimed by the taxpayer or an order having the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the person, may prefer an appeal to the Commissioner (Appeals) against the order.

(b) for sub-section (2), the following shall be substituted, namely:-

“(2) No appeal under sub-section (1) shall be made by a taxpayer against an order of assessment unless the taxpayer has paid,-

(a) the amount of tax due under sub-section (1) of section 137, and

(b) an amount equal to-

(i) fifteen percent of the amount of tax assessed as is in excess of the tax due under sub-section (1) of section 137, or

(ii) twenty percent of the amount of tax assessed for the immediately preceding tax year, and where a person has not been assessed to tax for that tax year, thirty percent of the amount of tax mentioned in clause (a),

whichever is less. and

(d) for sub-section (5), the following shall be substituted, namely:-

“(5) An appeal shall be preferred to the Commissioner (Appeals) within thirty days of the following–

(a) where the appeal relates to any assessment or penalty, the date of service of the notice of demand relating to the said assessment or penalty, as the case may be; and

(b) in any other case, the date on which the order to be appealed against is served.

(42) in section 129, in sub-section (4), the words “notice of” shall be omitted;

(43) in section 130,-

(a) in sub-section (4), the words “of Income Tax” shall be omitted; and

(b) in sub-section (10), for the word “majority”, occurring for the first time, the word “Bench” shall be substituted;

(44) in section 131,-

(a) in sub-section (1), for the word “appellant”, occurring twice, the word “taxpayer” shall be substituted; and

(b) in sub-section (2),-

(i) in clause (c), after the word “accompanied”, the commas and words “,except in case of an appeal preferred by the Commissioner,” shall be inserted; and

(ii) for clause (d), the following shall be substituted, namely,-

“(d) preferred to the Appellate Tribunal within sixty days of the date of service of order of the Commissioner (Appeals) on the taxpayer or the Commissioner, as the case may be.

(45) in section 132,-

(a) for sub-section (2), the following shall be substituted, namely:-

“(2) The Appellate Tribunal shall afford an opportunity of being heard to the parties to the appeal and, in case of default by any of the party on the date of hearing, the Tribunal may, if it deems fit, dismiss the appeal in default, or may proceed ex parte to decide the appeal on the basis of the available record.

(b) in sub-section (3),-

(i) after the word “may”, commas, words, bracket and figure “,without prejudice to the powers specified in sub-section (2),” shall be inserted; and

(ii) in clause (b), for the full stop, at the end, the semicolon and word “; or” shall be substituted; and

(iii) after clause (b), amended as aforesaid, the following new clause shall be added, namely:-

“(c) remand the case to the Commissioner or the Commissioner (Appeals) for making such enquiry or taking such action as the Tribunal may direct.

“(7) The Appellate Tribunal shall communicate its order to the taxpayer and the Commissioner. and

(d) sub-sections (8) and (9) shall be omitted;

(46) in section 133,-

(a) for the word “appellant”, wherever occurring, the word “taxpayer” shall be substituted; and

(b) in sub-section (8), for the words “three months”, the words “ninety days” shall be substituted;

(47) section 135 shall be omitted.

(48) in section 137, sub-section (7) shall be omitted;

(49) for section 138, the following shall be substituted, namely:-

“138. Recovery of tax out of property and through arrest of taxpayer.- (1) For the purpose of recovering any tax due by a taxpayer, the Commissioner may serve upon the taxpayer a notice in the prescribed form requiring him to pay the said amount within such time as may be specified in the notice.

(2) If the amount referred to in the notice issued under sub-section (1) is not paid within the time specified therein or within the further time, if any, allowed by the Commissioner, the Commissioner may proceed to recover from the taxpayer the said amount by one or more of the following modes, namely:-

(a) attachment and sale of any movable or immovable property of the taxpayer;

(b) appointment of a receiver for the management of the movable or immovable property of the taxpayer; and

(3) For the purposes of recovery of tax under sub-section (2), the Commissioner shall have the same powers as a Civil Court has under the Code of Civil Procedure, 1908 (Act V of 1908), for the purposes of the recovery of any amount due under a decree.

(4) The Central Board of Revenue may make rules regulating the procedure for the recovery of tax under this section and any other matter connected with, or incidental to, the operation of this section.

(50) after section 138, the following new section shall be inserted, namely,-

“138A. Recovery of tax by District Officer (Revenue).- (1) The Commissioner may forward to the District Officer (Revenue) of the district in which the tax payer resides or carries on business or in which any property belonging to the tax payer is situated, a certificate specifying the amount of any tax due from the tax payer, and, on receipt of such certificate, the District Officer (Revenue) shall proceed to recover from the tax payer the amount so specified as if it were an arrear of land revenue.

(2) Without prejudice to any other power of the District Officer (Revenue) in this behalf, he shall have the same powers as a Civil Court has under the Code of Civil Procedure, 1908 (Act V of 1908), for the purpose of the recovery of the amount due under a decree.

(51) in section 143, in sub-section (2), after the word “shall”, the commas and words “,after calling for such particulars, accounts or documents as he may require,” shall be inserted;

(52) in section 144, in sub-section (2), after the word “shall”, the commas and words “,after calling for such particulars, accounts or documents as he may require,” shall be inserted;

(53) after section 146, the following new section shall be inserted, namely,-

“146A. Initiation, validity, etc., of recovery proceedings.- (1) Any proceedings for the recovery of tax under this Part may be initiated at any time.

(2) The Commissioner may, at any time, amend the certificate issued under section 138A, or recall such certificate and issue fresh certificate, as he thinks fit.

(3) It shall not be open to a taxpayer to question before the District Officer (Revenue) the validity or correctness of any certificate issued under section 138A, or any such certificate as amended, or any fresh certificate issued, under sub-section (2).

(4) The several modes of recovery provided in this Part shall be deemed to be neither mutually exclusive nor affect in any way any other law for the time being in force relating to the recovery of debts due to the Government and the Commissioner may have recourse to any such mode of recovery notwithstanding that the tax due is being recovered from a taxpayer by any other mode.

(54) in section 147, –

(a) in sub-section (1), after clause (b), the following new clause shall be inserted, namely:-

“(ba) income chargeable to tax under section 15. and

(b) in sub-section (2), after the comma, occurring for the second time, the brackets, letters and comma “(ba),” shall be inserted;

(55) in section 150, the commas and words “, or collect tax from the shareholder in the case of bonus shares, “ shall be omitted;

(56) in section 151, in sub-section (1),-

(a) in clause (b), the word “or”, at the end, shall be omitted;

(b) for clause (c), the following shall be substituted, namely:-

“(c) the Federal Government, a Provincial Government or a local authority pays to any person, other than a financial institution, profit on any security issued by such Government or authority; or”; and

“(d) a banking company, a financial institution, a company referred to in clauses (a) and (b) of sub-section (2) of section 80, or a finance society pays any profit on any bond, certificate, debenture, security or instrument of any kind (other than a loan agreement between a borrower and a banking company or a development finance institution) to any person other than financial institution,”;

(57) in section 152,-

(a) in sub-section (1), for the word “royalties” the word “royalty” shall be substituted;

(b) in sub-section (7), in clause (a), the word “the”, occurring for the second time, shall be omitted;

(58) in section 153,-

(a) in sub-section (1), in clause (b), the word “professional” shall be omitted;

(b) in sub-section (7), for the words and comma “under a construction, assembly or a like project in Pakistan” the words, brackets and figure “specified in sub-section (3)” shall be substituted;

(a) in clause (c), for the words “registered under” the words and commas “constituted by, or under,” shall be substituted; and

(b) the semicolon and word “;and”, at the end, shall be omitted;

(59) in section 154, in sub-section (4), after the word “export” the words “or sale to an exporter” shall be added;

(60) in section 156,-

(a) in section (1), after the word “paying” the words “prize on” shall be inserted;

(b) for sub-section (3), the following shall be substituted, namely:-

“(3) The tax deducted under sub-section (1) or collected under sub-section (2) shall be final tax on the income from prizes or winnings referred to in the said sub-sections.

(61) section 157 shall be omitted;

(62) for section 158, the following section shall be substituted, namely:-

“158. Time of deduction of tax.- A person required to deduct tax from an amount paid by the person shall deduct tax –

(a) in the case of deduction under section 151, at the time the amount is credited to the account of recipient; and

(b) in other cases, at the time the amount is actually paid.

(63) in section 159, in sub-section (1), after the word “Part”, the words and figure “or Chapter XII” shall be inserted;

(64) in section 160, after the word “Part”, occurring for the second time, the words, comma and figure “or deducted or collected, or purported to be deducted or collected under Chapter XII” shall be inserted;

(65) in section 161,-

(a) in sub-section (1),-

(i) after the word “Commissioner”, occurring for the second time, the words “who may proceed to recover the same” shall be inserted;

(ii) in clause (a), after the word “Part”, occurring for the second time, the words and figure “or Chapter XII” shall be inserted; and

(iii) in clause (b), after the word “Part”, occurring for the second time, the words and figure “or Chapter XII” shall be inserted;

(b) after sub-section (1), the following new sub-sections shall be inserted, namely:-

“(1A) No recovery under sub-section (1) shall be made unless the person referred to in sub-section (1) has been provided with an opportunity of being heard.

(1B) Where at the time of recovery of tax under sub-section (1) it is established that the tax that was to be deducted from the payment made to a person or collected from a person has meanwhile been paid by that person, no recovery shall be made from the person who had failed to collect or deduct the tax but the said person shall be liable to pay additional tax at the rate of eighteen per cent per annum from the date he failed to collect or deduct the tax to the date the tax was paid.

(66) in section 162,-

(a) in sub-section (1), after the word “Part”, occurring for the second time, the words and figure “or Chapter XII” shall be inserted; and

(b) in sub-section (2), after the word “Part”, the words and figure “or Chapter XII” shall be inserted;

(67) in section 164,-

(a) in sub-section (1), after the word “Part”, occurring for second time, the words and figure “or Chapter XII” shall be inserted; and

(b) in sub-section (2), after the word “year”, at the end, the words and figures “and such certificate shall be treated as sufficient evidence of the collection or deduction for the purposes of section 168” shall be added;

(68) in section 165,-

(a) in sub-section (1),-

(i) after the word “Part”, occurring for second time, the words and figure “or Chapter XII” shall be inserted;

(ii) in clause (a), after the word “Part”, occurring for the second time, the words and figure “or Chapter XII” shall be inserted;

(iii) in clause (b), after the word “Part”, the words and figure “or Chapter XII” shall be inserted; and

(iv) in clause (c), after the word “Part”, occurring for the second time, the words and figure “or Chapter XII” shall be inserted; and

(b) in sub-section (2), after the word “Part”, occurring for the second time, the words and figure “or Chapter XII” shall be inserted;

(69) in section 166,-

(a) in sub-section (1), after the word “Part”, the words and figure “or Chapter XII” shall be inserted; and

(b) in sub-section (2), after the word “Part”, occurring for the second time, the words and figure “or Chapter XII” shall be inserted;

(70) in section 167,-

(a) after the word “under”, the word and figure “Division II” shall be inserted; and

(b) after the word and figure “Division III”, the words and figure “or Chapter XII” shall be inserted;

(71) in section 168,-

(a) in sub-section (1),-

(i) in clause (a), after the word “Part”, the words and figure “or Chapter XII” shall be inserted; and

(ii) in clause (b), after the word “Part”, occurring for the second time, the words and figure “or Chapter XII” shall be inserted;

(b) in sub-section (2), after the word “Part”, occurring for the second time, the words and figure “or Chapter XII” shall be inserted; and

(c) in sub-section (3), for the words, brackets and figures “sub-section (2) of section 157” the words, brackets and figures “sub-section (5) of section 234” shall be substituted;

(72) in section 169,-

(a) in sub-section (1), in clause (b), the commas, words, brackets and figures “,or sub-section (2) of section 157”, shall be omitted;

(b) in sub-section (2), in clause (e), after word “deducted” the words “unless the tax so collected or deducted is in excess of the amount for which the taxpayer is chargeable under this Ordinance” shall be added;

(c) in sub-section (3), after the comma, occurring for the second time, the words and figures “an assessment shall be treated to have been made under section 120 and” shall be inserted; and

(d) after sub-section (3), amended as aforesaid, the following new sub-section shall be added, namely:-

“(4) Where a taxpayer, while explaining the nature and source of any amount, investment, money, valuable article, expenditure, referred to in section 111, takes into account any source of income which is subject to tax in accordance with the provisions of sections 148, 153, 154, 156 or sub-section (5) of section 234, he shall not be entitled to take credit of any sum as is in excess of an amount which if taxed at a rate or rates, other than the rate applicable to the income chargeable to tax under aforesaid sections 148, 153, 154, 156 or sub-section (5) of section 234 would have resulted in tax liability equal to the tax payable in respect of income under any of the aforesaid sections.

(73) in section 177,-

(a) after sub-section (1), the following new sub-section shall be inserted, namely:-

“(1A) After selection of a person for audit under sub-section (1), the Commissioner shall conduct an audit of the income tax affairs (including examination of accounts and records, enquiry into expenditure, assets and liabilities) of that person. and

(b) in sub-section (4), for the words “the conduct” the word “conducting” shall be substituted;

(74) in section 178, after the word “Excise”, occurring for the first time, the comma and words “,Sales Tax” shall be inserted;

(75) in section 182, in sub-section (1),-

(a) for the words “any return of income”, the words “return of income for any tax year” shall be substituted; and

(b) for the words “the return”, the words “that tax year” shall be substituted;

(76) in section 184, in sub-section (4), for the words “Commissioner or Tribunal”, the words and brackets “Commissioner (Appeals) or the Appellate Tribunal” shall be substituted;

(77) in section 187,-

(a) in sub-section (1), in clause (a), for the words “a taxation officer”, occurring twice, the words “an income tax authority” shall be substituted; and

(b) in sub-section (3),-

(i) for the words “a taxation officer”, wherever occurring, the words “an income tax authority” shall be substituted;

(ii) for the word “officer”, the word “authority” shall be substituted; and

(iii) for the word “officer’s”, the word “authority’s” shall be substituted;

(78) in section 195, in sub-section (1), for the words “a taxation officer”, occurring twice, the words “an income tax authority” shall be substituted;

(79) in section 196, for the words “a taxation officer”, occurring twice, the words “an income tax authority” shall be substituted;

(80) in section 206, in sub-section (3), after the word “not” the word “be” shall be inserted;

(81) for sections 207, 208, 209, 210, 211, 212, 213, 214 and 215, the following shall be substituted, namely:-

“207. Income tax authorities.- (1) There shall be the following income tax authorities for the purposes of this Ordinance, namely:-

(a) Central Board of Revenue;

(b) Regional Commissioners of Income Tax;

(d) Commissioners of Income Tax (Appeals); and

(e) taxation officers.

(2) The Central Board of Revenue shall exercise the general administration of this Ordinance.

(3) The Regional Commissioners of Income Tax and the Commissioners of Income Tax (Appeals) shall be subordinate to the Central Board of Revenue and the Commissioners of Income Tax shall be subordinate to the Regional Commissioners.

(4) Subject to sub-section (5), the taxation officers shall be subordinate to the Commissioners of Income Tax.

(5) A taxation officer invested with the powers and functions of the Commissioner, under sub-section (2) of section 209, shall be subordinate to the Regional Commissioner of Income Tax.

208. Appointment of income tax authorities.- (1) The Central Board of Revenue may appoint as many Regional Commissioners of Income Tax, Commissioners of Income Tax, Commissioners of Income Tax (Appeals), taxation officers and such other executive or ministerial officers and staff as may be necessary.

(2) Subject to such orders or directions as may be issued by the Central Board of Revenue, any income tax authority may appoint any income tax authority subordinate to it and such other executive or ministerial officers and staff as may be necessary.

(3) All appointments, other than of valuers, chartered accountants or experts, made under this Ordinance, shall be subject to rules and orders of the Federal Government regulating the terms and conditions of persons in public services and posts.

209. Jurisdiction of income tax authorities.- (1) Subject to this Ordinance, the Regional Commissioners, the Commissioners and the Commissioners (Appeals) shall perform all or such functions and exercise all or such powers, under this Ordinance, in respect of such persons or classes of persons or such areas, as may be assigned to them by orders or directions issued by the Central Board of Revenue.

(2) The Central Board of Revenue or the Regional Commissioner may, by an order, confer upon or assign to any taxation officer all or any of the powers and functions conferred upon or assigned to the Commissioner, under this Ordinance, in respect of any person or persons or classes of persons or areas.

(3) An order under sub-section (2) by the Regional Commissioner shall be made only with the approval of the Central Board of Revenue.

(4) The taxation officer referred to in sub-section (2) shall, for the purposes of this Ordinance, be treated to be the Commissioner.

(5) Within the area assigned to him, the Commissioner shall have jurisdiction,-

(a) in respect of any person carrying on business, if the person’s place of business is within such area, or where the business is carried on in more than one place, the person’s principal place of business is within such area; or

(b) in respect of any other person, if the person resides in such area.

(6) Where a question arises as to whether a Commissioner has jurisdiction over a person, the question shall be decided by the Regional Commissioner or Regional Commissioners concerned and, if they are not in agreement, by the Central Board of Revenue.

(7) No person shall call into question the jurisdiction of a Commissioner after that person has furnished a return of income to the Commissioner or, where the person has not furnished a return of income, after the time allowed by any notice served on the person for furnishing such return has expired.

(8) Notwithstanding anything contained in this section, every Commissioner shall have all the powers conferred by, or under, this Ordinance on him in respect of any income arising within the area assigned to him.

(9) Where, in respect of any proceedings under this Ordinance, an income tax authority is succeeded by another, the succeeding authority may continue the proceedings from the stage it was left by that authority’s predecessor.

210. Delegation.- (1) The Commissioner may, by an order in writing, delegate to any taxation officer all or any of the powers or functions conferred upon or assigned to the Commissioner under this Ordinance, other than the power of delegation.

(2) An order under sub-section (1) may be in respect of all or any of the persons, classes of persons or areas falling in the jurisdiction of the Commissioner.

(3) The Commissioner shall have the power to cancel, modify, alter or amend an order under sub-section (1).

211. Power or function exercised.- (1) Where, by virtue of an order under section 210, a taxation officer exercises a power or performs a function of the Commissioner, such power or function shall be treated as having been exercised or performed by the Commissioner.

(2) The exercise of a power, or the performance of a function, of the Commissioner by a taxation officer shall not prevent the exercise of the power, or the performance of the function, by the Commissioner.

212. Authority of approval.- The Central Board of Revenue may, by a general or special order, authorise the Regional Commissioner or the Commissioner to grant approval in any case where such approval is required from the Central Board of Revenue under any provision of this Ordinance.

213. Guidance to income tax authorities.- In the course of any proceedings under this Ordinance, the Commissioner or any taxation officer may be assisted, guided or instructed by any income tax authority to whom he is subordinate or any other person authorised in this behalf by the Central Board of Revenue.

214. Income tax authorities to follow orders of the Central Board of Revenue.- (1) Subject to sub-section (2), all income tax authorities and other persons employed in the execution of this Ordinance shall observe and follow the orders, instructions and directions issued by the Central Board of Revenue.

(2) No orders, instructions or directions shall be given by the Central Board of Revenue that will interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate function.

215. Furnishing of returns, documents etc.- (1) Where, by virtue of an order under section 210, the Commissioner has delegated to any taxation officer the function and power to receive, or to call for and receive, any returns of income, certificates, documents, accounts and statements from any person or persons or class of persons (hereinafter called ‘filer’), the filer shall furnish such returns, certificates, documents, accounts and statements to that taxation officer and, when furnished, shall be treated as having been furnished to the Commissioner.

(2) Where a person is allowed, under any provision of this Ordinance, to make an application to the Commissioner and the Commissioner has delegated to any taxation officer the function or power to receive the application, such application, when made, shall be treated as having been made to the Commissioner.

(82) in section 216,-

(a) in sub-section (3), in clause (g), for the words, commas, figures and brackets “the Central Excises and Salt Act, 1944 (I of 1944), the Estate Duty Act, 1950 (X of 1950)” the words, comma, figures and brackets “the Central Excises Act, 1944 (I of 1944)” shall be substituted; and

(b) in sub-section (6), for the words, comma, figures and brackets “Ehtesab Act, 1997(IX of 1997)” the words, comma, figures and brackets “National Accountability Bureau Ordinance, 1999 (XVIII of 1999)” shall be substituted;

(83) in section 218, in sub-section (3), after the word “was” the words “the principal officer or” shall be substituted;

(84) in section 223, in sub-section (10), for the figure “232” the figure “237” shall be substituted;

(85) in section 226, in clause (b), for the words, brackets and comma “the Commissioner (Appeals), the Tribunal or any Court”, the words and comma “any Court, Tribunal or any other authority” shall be substituted;

(86) section 232 shall be omitted.

(87) in section 234,-

(a) in sub-section (1), after the word “person”, the words “at the time of” shall be inserted;

(b) after sub-section (2), the following new sub-section shall be inserted, namely:

“(2A) In respect of motor cars used for more than ten years in Pakistan, no advance tax shall be collected after a period of ten years. and

(c) in sub-section (5), after the word “person”, at the end, the words and commas “from plying, or hiring out, of such vehicle” shall be inserted;

(88) in section 236,-

(a) in sub-section (1), in clause (b), the word “mobile” shall be omitted; and

(b) in sub-section (3), the word “mobile” shall be omitted;

(89) in section 239,-

(a) for sub-sections (1), (2) and (3), the following shall be substituted, namely:-

“(1) Subject to sub-section (2), in making any assessment in respect of any income year ending on or before the 30^th day of June, 2002, the provisions of the repealed Ordinance in so far as these relate to computation of total income and tax payable thereon shall apply as if this Ordinance had not come into force.

(2) The assessment, referred to in sub-section (1), shall be made by an income tax authority which is competent under this Ordinance to make an assessment in respect of a tax year ending on any date after the 30^th day of June, 2002, and in accordance with the procedure specified in section 59 or 59A or 62 or 63, as the case may be, of the repealed Ordinance.

(3) The provisions of sub-section (1) and (2) shall apply, in like manner, to the imposition or charge of any penalty, additional tax or any other amount, under the repealed Ordinance, as these apply to the assessment, so however that procedure for such imposition or charge shall be in accordance with the corresponding provisions of this Ordinance.

(b) in sub-section (6), the words “the imposition of penalty or” shall be omitted;

“(12) Any notification issued under section 50 of the repealed Ordinance and in force on the commencement of this Ordinance shall continue to remain in force, unless revoked, cancelled or repealed by, or under, this Ordinance.

(13) The authority which issued any notification, notice, direction or instruction, or made any rule, agreement or appointment, or granted any approval or recognition, referred to in sub-sections (10) and (12), shall have the power to revoke, cancel or repeal any such notification, notice, direction, instruction, rule, agreement, appointment, approval or recognition.

(14) Clause (77C) of Part I of the First Schedule of the repealed Ordinance shall continue to apply to the yield on National Savings Deposit Certificates issued before Ist July, 2001, and a person paying yield on such a Certificate shall not deduct tax under section 151 from the payment, and the holder of such Certificate shall not be required to acquire an exemption certificate under section 159 to give effect to the said exemption. ” ;

(d) in sub-section (16), for the word “until”, the words “in respect of any income year ending on or before“ shall be substituted; and

(e) for sub-section (18), the following shall be substituted, namely:-

“(18) In this section, “income tax authority” means an income tax authority as specified in section 3 of the repealed Ordinance.

(90) in section 240, in sub-section (1), for the word “no” the word “not” shall be substituted;

(91) In First Schedule,—

(A) in Part-I,—

(1) in Division-1, —

(a) in clause 1, —

(i) for the words and figures “clauses 2 and 3” the word and figure “clause 2” shall be substituted; and

(ii) for the Table, the following shall be substituted, namely:-

“TABLE

S.No.	Taxable income	Rate of tax
(1)	(2)	(3)
1.	Where taxable income does not exceed Rs.80,000	0%
2.	Where taxable income exceeds Rs.80,000 but does not exceed Rs.150,000	7.5% of the amount exceeding Rs.80,000.
3.	Where taxable income exceeds Rs.150,000 but does not exceed Rs.300,000	Rs.5,250 plus 12.5% of the amount exceeding Rs.150,000.
4.	Where taxable income exceeds Rs.300,000 but does not exceed Rs.400,000	Rs.24,000 plus 20% of the amount exceeding Rs.300,000.
5.	Where taxable income exceeds Rs.400,000 but does not exceed Rs.700,000	Rs.44,000 plus 25% of the amount exceeding Rs.400,000.
6.	Where taxable income exceeds Rs.700,000.	Rs.119,000 plus 35% of the amount exceeding Rs.700,000. and

(b) Clause 3 shall be omitted;

(2) for Division-II, the following shall be substituted, namely:-

“DIVISION II

Rates of Tax for Companies

The rates of tax imposed on the taxable income of a company shall be as set out in the following table, namely:-

TABLE

Tax Year	Banking company	Public company other than a banking company	Private company other than a banking company
(1)	(2)	(3)	(4)
2003	47%	35%	43%
2004	44%	35%	41%
2005	41%	35%	39%
2006	38%	35%	37%
2007	35%	35%	35%”;

(3) in Division III, for the word “dividends” wherever occurring the word “dividend” shall be substituted;

(B) In Part-III,-

(1) in Division I,-

(a) in clause (a), after the brackets and letter “(b)” the word, brackets and letter “or (d)” shall be inserted; and

(b) in clause (b), for the figure “30%” the figure “20%” shall be substituted;

(2) Division VII shall be omitted;

(1) Division I shall be omitted;

(2) in Division III, —

(a) in paragraph (1),-

(i) in sub-paragraph (d), after the word “kilograms”, occurring for the first time, the words “or more” shall be inserted; and

(ii) in sub-paragraph (e), for the word “ore” the word “or” shall be substituted; and

(b) in paragraph (3), after sub-paragraph (c), the following new sub-paragraph shall be inserted, namely:-

“(ca) 1600cc to 1999cc Rs. 2000.

(3) in Division IV, after the word, figure and comma “section 235,” the words “where the amount of electricity bill” shall be inserted; and

(4) in Division V,-

(i) in clause (a), after the word “subscriber” brackets and words “(other than mobile telephone subscriber)” shall be inserted; and

(ii) for clause (b) the following shall be substituted, namely:-

”(b) in the case of subscriber of mobile telephone and pre-paid telephone card

10% of the amount of bill or sale price of pre-paid telephone card.

(92) in Second Schedule,-

(a) in Part-I,-

(i) clause (7) shall be omitted.

(ii) clauses (27), (28), (29), (30), (31) and (32) shall be omitted;

(iii) in clause (34), the words and comma “Senior Post Allowance, Entertainment Allowance or” shall be omitted;

(iv) clauses (37) and (54) shall be omitted;

(v) in clause (57), in sub-clause (1)(ii), for the words “Controller of Capital Issues” the words “Securities and Exchange Commission of Pakistan” shall be substituted.

(vi) in clause (58),-

(a) in sub-clause (1), after the word “institution” the words “or non-profit organization” shall be inserted; and

(b) in sub-clause (3), after the word “institution” the words “or non-profit organization” shall be inserted;

(vii) in clause (59), after the word “Government” the commas and words “, profit on debt from financial institutions, grant received from Federal Government or Provincial Government or District Governments, foreign grants” shall be inserted;

(viii) clauses (63) and (64) shall be omitted;

(ix) in clause (83), in the proviso, after bracket and figure “(78)” the words, brackets and figure “and (80)” shall be inserted and shall be deemed to have been so inserted from 5^th August 1998;

(x) clauses (85), (86), (89) and (94) shall be omitted;

(xi) in clause (103), after the word “Pakistan”, the words and commas “or an investment company registered under the Investment Companies and Investment Advisor Rules, 1971 or a unit trust scheme constituted by an assets management company registered under the Assets Management Companies Rules, 1995“, shall be inserted;

(xii) clause (112) shall be omitted;

(xiii) in clause (115), for the full stop at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that exemption under this clause shall not apply in respect of any tax year commencing on or after the 1^st day of July, 2002.

(xiv) clauses (116), (118), (119), (121), (122), (123), (124) and (125) shall be omitted;

(xv) in clause (126),-

(a) in sub-clause (1), for the figures, words and comma “30^th day of June, 1999” the figure, words and commas “31^st day of December, 2002” shall be substituted; and

(b) in the proviso, for the full stop at the end, a colon shall be substituted and thereafter the following further proviso shall be added, namely:-

“Provided further that the extension in deadline from the 30^th June, 1999, to the 31^st December, 2002, shall not apply to those projects whose cases are sub judice and that the Federal Government shall decide such cases in accordance with the verdict of the apex Court.

(xvi) clauses (127), (128) and (130) shall be omitted;

(xvii) after clause (132), the following shall be inserted, namely:-

“(132A) Payments made on or after the first day of July, 1991, for the supply of plant, equipment and machinery to Hub Power Company Limited by a non-resident being a foreign individual, company, firm or association of persons.

(xviii) in clause (139), for sub-clause (a) the following shall be substituted; namely:-

“(a) Any benefit, reimbursement received by an employee on account of medical charges or hospital charges, or both, incurred by an employee, as provided for under the terms of the employee’s employment agreement; or where such benefit for reimbursement, medical charges or hospital charges, or both are not provided for under the terms of employment’s agreement, medical allowance upto maximum of 10% of the basic pay for the year:

Provided that National Tax Number of the hospital or clinic, as the case may be, is given and the employer also certifies and attests the medical or hospital bills to which this clause applies; or”

(b) in Part-II,–

(i) in clause (7), in the proviso, in sub-clause (a), for the words “three hundred” the words “one hundred and fifty” shall be substituted;

(ii) after clause (17), the following new clauses shall be added, namely:-

“(18) In the case of a modaraba the rate of income tax shall be 25% of total income excluding such part of total income to which Division III of Part I of the First Schedule or section 153 or section 154 applies.

(19) In respect of tax year commencing on or after the first day of July, 2002, the rate of income tax in respect of income of amalgamated company for its different businesses shall be the same as applicable to such businesses in the relevant tax year for the tax year in which amalgamation takes place and two tax years next following.

(20) The rates of tax as specified in clause (b) of Division-III of Part-I of First Schedule shall be reduced to 7.5% in case of dividend declared or distributed on shares of a company set up for power generation.

(21) In the case of any resident person engaged in the business of shipping, a presumptive income tax shall be charged in the following manner, namely:-

(a) ships and all floating crafts including tugs, dredgers, survey vessels and other specialized craft purchased or bare-boat chartered and flying Pakistan flag shall pay tonnage tax of an amount equivalent to one US $ per gross registered tonnage per annum; and

(b) ships, vessels and all floating crafts including tugs, dredgers, survey vessels and other specialized craft not registered in Pakistan and hired under any charter other than bare-boat charter shall pay tonnage tax of an amount equivalent to fifteen US cents per tonne of gross registered tonnage per chartered voyage provided that such tax shall not exceed one US $ per tonne of gross registered tonnage per annum:

Provided that the reduction under this clause shall not be available after the 30^th June, 2020.

Explanation.- For the purpose of this clause the expression “equivalent amount” means the rupee equivalent of a US dollar according to the exchange rate prevalent on the first day of December in the case of a company and the first day of September in other cases in the relevant assessment year.

(i) after clause (1), the following clause shall be inserted, namely:-

“(1A) Where the taxable income, in a tax year, of a taxpayer aged 65 years or more on the first day of that tax year does not exceed two hundred thousand rupees, his tax liability on such income shall be reduced by 50%.

(ii) in clause (3) for the word “eight” in the end, the word “eighty” shall be substituted;

(d) in Part-IV,

(i) for clause (10), the following shall be substituted, namely:-

“(10) The provisions of section 111, Part-X and Part-XI of Chapter X shall not apply in respect of any amount invested in the purchase of Special US Dollar Bonds issued under the Special U.S. Dollar Bond Rules, 1998:

Provided that the exemption under this clause shall not be available in respect of the amount invested in the said Bonds purchased out of incremental deposits made in the existing foreign currency accounts on or after 16^th day of December 1999, or out of foreign currency accounts opened on or after the said date, or on payment of the amount referred to in sub-rule (3) of rule 5 of Special U.S. Dollar Bond Rules, 1998 after the said date.

(ii) for clause (30) the following shall be substituted, namely:-

“(30) The provisions of section 148 shall not apply in respect of goods temporarily imported into Pakistan for subsequent exportation and which are exempt from customs-duty under Notification No.S.R.O.410(I)/2001, dated the 18^th June, 2001, and the goods specified at S. Nos. 22 and 23 in Table-II of the Notification No. S.R.O. 444(I)/2001, dated the 18^th June, 2001.

(iii) in clause (38), after the figure “151”, the commas, figures and words “, 153 and 233” shall be inserted.

(iv) in clause (40), for the word and figure “section 153” the words, brackets and figures “sub-section (6) of section 153” shall be substituted;

(v) in clause (41), for the word and figure “section 153” the words, brackets and figures “sub-section (7) of section 153” shall be substituted;

(vi) in clause (42), for the word and figure “section 153” the words, brackets and figures “sub-section (6) of section 153” shall be substituted;

(vii) in clause (43), for the word and figure “section 153” the words, brackets and figures “sub-section (1) of section 153” shall be substituted;

(viii) after clause (43), amended aforesaid, the following new clause shall be inserted, namely:-

“(43A) The provisions of section 153, shall not apply to payments received by M/s Total PARCO Pakistan Limited for the supply of petroleum products.”.

(ix) in clause (44), for the figure “153” the figure “148” shall be substituted;

(x) in clause (45), for the word and figure “section 153” the words, brackets and figures “sub-section (6) of section 153” shall be substituted;

(xi) in clause (46), for the word and figure “section 153” the words, brackets and figures “sub-section (1) of section 153” shall be substituted;

(xii) in clause (47), for the word and figure “section 153” the words and figures “sections 151 and 155” shall be substituted;

(xiii) after clause (47), amended aforesaid, the following new clauses shall be added, namely:-

“(47A) The provisions of section 153 shall not apply in respect of payments received by a resident person for supply of such goods as were imported by the same person and on which tax has been paid under section 148.

(47B) The provisions of sections 150, 151 and 233 shall not apply to any person making payment to National Investment (Unit) Trust or a mutual fund established by the Investment Corporation of Pakistan or an Investment Company registered under the Investment Companies and Investment Advisors Rules, 1971 or a Unit Trust Scheme constituted by an Asset Management Companies Rule, 1995, or a modaraba management company.

(93) In the Third Schedule, in Part II, for the figure “40%”, the figure “50%” shall be substituted;

(94) In the Fourth Schedule,—

(a) in rule 5, for the word “Commissioner” , occurring for the first time, the word “Commission” shall be substituted; and

(b) in rule 7,—

(i) in the second paragraph, after the semicolon, at the end, the word “and” shall be added;

(ii) in the third paragraph, for the semicolon and word “;and” at the end a full stop shall be substituted; and

(iii) the fourth paragraph shall be omitted;

(95) In the Sixth Schedule,-

(a) in Part I, in rule 3, in sub-rule (a), for the word “one-twelfth”, the words “one-tenth” shall be substituted; and

(b) in sub-rule (b), for the word “deemed” the word “treated” shall be substituted; and

(96) In the Seventh Schedule, in Part I, in the Table, after serial No.10, and the entry relating thereto in column (2), the following new serial number and the entry relating thereto, shall be added, namely:-

“11. Processed poultry meat”;

Finance Ordinance, 2002

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