2020 PLP 494 (SCMR)
Messrs ELITE ESTATE (PVT.) LTD. — Petitioner Versus FEDERATION OF PAKISTAN through Secretary and others — Respondents
| Citation | 2020 PLP 494 (SCMR) |
| Forum / Court | Supreme Court of Pakistan |
| Bench Members | Maqbool Baqar and Qazi Muhammad Amin Ahmed, JJ |
| Parties | Messrs ELITE ESTATE (PVT.) LTD. — Petitioner Versus FEDERATION OF PAKISTAN through Secretary and others — Respondents |
| Primary Law | Income Tax Ordinance (XLIX of 2001) |
Q1: What are the key laws and sections cited in 2020 PLP 494 (SCMR)?
This judgment primarily cites: Income Tax Ordinance (XLIX of 2001) as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2020 PLP 494 (SCMR)?
The case was heard and decided by the Supreme Court of Pakistan bench comprising: Maqbool Baqar and Qazi Muhammad Amin Ahmed, JJ.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2020 PLP 494 (SCMR) (Messrs ELITE ESTATE (PVT.) LTD. — Petitioner Versus FEDERATION OF PAKISTAN through Secretary and others — Respondents). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- Shahzad Butt, Advocate Supreme Court for Petitioner.
- Babar Bilal, Advocate Supreme Court for Respondents.
Headnotes / Summary
(Against the judgment dated 17.1.2019 of the Islamabad High Court, Islamabad passed in W.P. No. 671 of 2017)
S. 152
Convention for Avoidance of Double Taxation between Pakistan and Egypt, 1995, Arts. 7 & 12.2
Payment for consultancy/technical services provided by foreign non-resident company
Exemption from deduction of withholding tax
In terms of the consultancy agreement executed between the parties, the foreign company was to provide services of professional architects, urban/town planners and engineering consultant for development of infrastructure in Pakistan
Article 12.2 of the Convention for Avoidance of Double Taxation between Pakistan and Egypt, 1995 ('the Convention') provided that fee for technical services was to be taxed in the contracting State in which they arose and in accordance with the laws of that State
Tax payable in the present case was in respect of the consultancy services and not on any business profits, thus, tax-payer could not rely on Art. 7 of the Convention to avoid deduction of withholding tax
Request of the tax-payer for exemption from deduction of withholding tax in respect of the consultancy fee paid or to be paid by it to the foreign company was rightly rejected
Petition was dismissed.
Judgment & Decree
MAQBOOL BAQAR, J.
The petitioner engaged an Egyptian Company namely Medhat Abouzeid Egyptian Consulting House for providing services for preparation of Master Plan for a development scheme and infrastructure and for a Golf Course. The said Company being an Egyptian Company is a non-resident. The petitioner applied to the FBR for exemption from deduction of withholding tax under section 152 of the Income Tax Ordinance, 2001 ("ITO 2001") in respect of the consultancy fee to be paid by it to the Egyptian company. The request was not acceded to. The revision filed against such ejection also was dismissed and the petition filed there against was dismissed through the impugned judgment.
2. The question to be resolved in the instant case is as to whether or not the petitioner is liable to deduct withholding tax at the rate of 15% from the payments made by it to the Egyptian Company. In terms of the Consultancy Agreement executed between the parties, the Egyptian Company is to provide services of professional architects, urban/ town planners and engineering consultant. Such consultancy is being provided by the Egyptian Company for development of infrastructure and Golf Course. Indeed there is a treaty between Pakistan and Egypt providing for avoidance of double taxation on income derived from technical services as covered under Article 12 thereof. Article 12.2 of the treaty provides that fee for technical services is to be taxed in the contracting State in which they arise and in accordance with the laws of that State. The petitioner however claims benefits of Article 7 of the treaty which deals with the business and provides that the business profits earned by an entity of a contracting State shall be taxable in the State to which the Company belongs, unless the enterprise carries on business in other contracting Slate through a permanent establishment situated therein. However, since admittedly the tax payable in the present case is in respect of the consultancy services and not on any business profits, reliance of the petitioner on Article 7 is wholly misplaced. The case, as noted above, squarely falls within the Article 12 of the treaty.
3. We do not find any justification for our interference with the impugned judgment whereby the request of the petitioner for exemption from deduction of withholding tax in respect of the consultancy fee paid or to be paid by them to the Egyptian Company was rejected. The petition is accordingly dismissed. MWA/E-1/SC Petition dismissed.