2002 PLP 1861 (PTD)

5. The assessee went in second appeal before the Income Tax Tribunal. After carefully considering the arguments of both the contesting parties, the Tribunal came to the conclusion that section 80C clearly excludes a receipt on account of services rendered as in the case presently and the issue whether there was a contract involved or not was an extraneous matter. The Tribunal further directed the Assessing Officer to recompute the income from receipts on account of airtime revenue and ancillary charges like monthly access fee, connection fee and line rentals under the normal law.

6. As regards the taxability of imported equipment and sale thereof, the order of the learned CIT (Appeals), was upheld that it was covered under section 80C(2)(a)(ii).

7. While taking up the application of section 80C of the sales of all imported equipments, it was held that sale of telephone sets to the subscriber cannot be treated as "supply". However, if the company has made any supply of telephone sets, which are liable to deduction of tax under section 50(4), the provisions of section 80C of the Ordinance, would be attracted. The Tribunal accepted the contention of the complainant‑Company that receipts from airtime revenue and ancillary charges are on account of services rendered and as such outside the presumptive tax regime under section 80C. Additions on account of P&L expenses were ordered to be done de novo.

8. The department feeling aggrieved of the judgment of the learned Tribunal filed a reference to High Court under section 136 of the Ordinance. It reads as under: "Whether on the facts and circumstances of the case the learned Tribunal was justified in holding that the receipts on account of air time revenue and ancillary charges like access fee, connection fee, line rentals are for services rendered and as such not liable to be taxed under the provision of section 80C of the Income Tax Ordinance, 1979?"

9. On the date of hearing fixed today on 18‑10‑2001, for 10‑00 a.m. Mr. Mian Tauqir Aslam, DCIT Circle‑II, Company Zone, Islamabad, appeared for the department. None appeared for the complainant at the time fixed ,for hearing. It was, therefore, decided to proceed in the matter on the basis of record available.

10. The complainant‑Company has pleaded that section 66(1)(c) provides a period of limitation for making fresh assessment in case, where assessment has been set aside. The order passed by the Tribunal partially setting aside the assessment was received by the Deputy Commissioner in April 1999, and as such, fresh assessments on these issues involved was to be made before. 1‑7‑2000. As no reference has been filed in High Court in respect of issues set aside, the limitation would not stand extended.

11. The Department has submitted that since appeal is pending before the Lahore High Court, decision on set aside issues could not be taken. Further limitation prescribed under section 66(1)(c) would not be applicable, as partial assessment cannot be made.

12. After perusal of the record and hearing the parties to the dispute it is evident that the following issues are involved:‑‑ (i) Whether receipts from sale of airtime charges and other ancillary receipts fall within the ambit of section 80C or is to be treated under the normal law? (ii) Whether a partly set aside assessment can be completed within limitation period prescribed under section 66(1)(c), irrespective of the fact whether an appeal has been filed covering the same issues?

13. The first issue was under reference before the High Court on the date this complaint was filed and further as there is no other allegation of maladministration independent of the issue before the High Court, the complaint cannot be entertained.

14. With regard to the second issue it is clear that where an appeal is filed in respect of a particular year or years and an assessment has been partly set aside, the provisions of section 66(1)(c) are not attracted. An assessment is to be made for the whole income year and not in piece meal. Fresh assessments would be made after the verdict is announced by the High Court.

15. For reasons recorded above, there is no substance in the complaint and the same is rejected. S.A.K./248/FTO Complaint rejected.