Nature and concept

Arbitration is that category of dispute resolution process where the parties make a voluntary choice to have their disputes resolved by an arbitrator rather than through the courts

Arbitration is the submission of a dispute to be decided by a third person

Mechanism for selection of the arbitrator is invariably mentioned in the arbitration clause

Either the parties agree to nominate and appoint an arbitrator or the arbitrator is named in the agreement

Parties may even agree to name an Authority or person from amongst their own officers/officials, and this would not render such an arbitration agreement illegal or against public policy.

Amount paid as advance tax was not the property of the Federal Government but remained vested in an assessee and was merely an amount which was paid in advance in respect of tax before it became due

Tax became due only after regular assessment and in case an amount was found to have been paid more than what was due, a refund to the assessee was in order

By such token, therefore, advance tax was an estimated amount of income tax to be paid by the taxpayer in four quarterly installments and concept underlying entire regime of advance tax was that estimate was to be made by the taxpayer and it was not for the tax authorities to question or object till the close of the tax year and it was then that the law empowered taxation officers to verify advance tax paid and to impose any liability in case it was found that an additional tax was due from the taxpayer

If more amount had been paid as advance tax, taxpayer was entitled to refund of excess amount

Per S. 147(4A) of the Income Tax Ordinance, 2001 it was clear that entire concept of advance tax was based on estimate of the tax payable for the relevant taxpayer and such estimate had to be made by the taxpayer which was the theme that ran through the entire length and breadth of S. 147 of the Income Tax Ordinance, 2001

Estimate had to be made by the taxpayer and on basis of such estimate, taxpayer made payment of advance tax in accordance with S.147(4) of the Income Tax Ordinance, 2001

Same concept permeated S.147(6) of the Income Tax Ordinance, 2001 where the taxpayer was required to make the payment of advance tax under S.147(1) of the Income Tax Ordinance, 2001 and where taxpayer estimated at any time before the last installment was due that tax payable by him for the relevant tax year was likely to be less than the amount he was required to pay, then under S.147(1) of the Income Tax Ordinance, 2001 taxpayer may furnish to the Commissioner Inland Revenue an estimate of the amount of the tax payable by him and thereafter pay such estimated amount, as reduced by the amount, if any, already paid

Nowhere in S.147 of the Income Tax Ordinance, 2001 any discretion or authority been vested in an officer of the Income Tax to dispute or challenge the estimate made by the taxpayer during the course of the remittances made by the taxpayer for each quarter of a tax year.