Commission Agent

2021 PTD 2078 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss.113(1), 133(3) & 236GCommission agentDistribution agreement, non-considering ofTaxpayer was distributor of two companies and claimed to receive only commission against the sale

Authorities were aggrieved of order passed by Appellate Authority wherein it was held that taxpayer produced sales tax/commercial invoice showing 'distribution margin' allowed to distributor/taxpayer on sale of their products by the company

Validity

Taxpayer, in orders of assessment, was shown as distributor of products of one company but he was also distributor of the products of another company

Authorities failed to explain as to whether the issue was common to the products of both principals / suppliers alone as the order did not give any such indication about the same

Appellate Tribunal Inland Revenue directed the Appellate Authority to look at entire facts and circumstances of the case, go through the stipulations of the agreement actually entered into between two parties and remanded the matter for decision of appeal afresh

Appeal was allowed accordingly.

2010 PTD 1209 INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN Judicial Precedent

Ss.80-C, 59 & 61Constitution of Pakistan (1973), Art.23, 4 & 8C.B.R. Circular No.15 of 1980, dated 26-6-1980C.B.R. Circular No.26 of 1980 dated 12-10-1980Tax on income of certain contractors and importersSelf-assessmentCommission agentFranchisee

Assessing Officer OUSTED the case from Self-Assessment Scheme due to reason that the notices claiming for short documents had not been complied with within the prescribed time limit and commission receipts fell under the ambit of S.80-C of the Income Tax Ordinance, 1979 as provided under subsection (2)(a)(ia) of the Self-Assessment Scheme

Assessments were finalized under S.62 of the Income Tax Ordinance, 1979

Assessee contended that nature of business had not been properly appreciated as the assessee was not a commission agent but as a Franchisee rendering services to his company as was running a Franchise to solicit customers for company's customers subject to the terms and conditions set out in the agreement and was merely a franchisee not an agent of the company and as such his relationship with the company was not that of a commission agent

Validity

Assessee placed on record a copy of invoices raised to company to support his contention that the nature of receipts were services rather than commission, which revealed that assessee was generating revenue line rent, retention, upgradation, international roaming etc., and all such transactions were out of purview of definition of `commission' as revenue in this regard had not been generated from the sale of goods but by providing services

Transactions of the assessee fell out of the definition of `commission'

Order of First Appellate Authority was vacated and assessments were set aside with the directions for fresh consideration.

2008 PTD 1751 INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN Judicial Precedent

Ss.233, 170(4), 169, 120, 115(4) & 114Brokerage and commissionFranchiseeCommission agent

Claim of refund was rejected on the ground that the tax had been deducted under S.233 of the Income Tax Ordinance, 2001 which fell under the ambit of S.169 of the Income Tax Ordinance, 2001 and was the final tax liability under Presumptive Tax Regime

Assessee was required to furnish statement under S.115(4) of the Income Tax Ordinance, 2001 instead of return of income under S.114 of the Income Tax Ordinance, 2001

Assessee contended that he was merely a franchisee and not an agent of the company and as such his relationship with the company/deducting agent was not that of a commission agent

Appeal was allowed by the First Appellate Authority and Taxation Officer was directed to issue refund

Validity

According to the agreement, assessee was also appointed sub-dealer for the business

Definition of "Franchised dealer" showed that even a `franchisee' had a similar role as that of an `agent' in its wider perspective

Fact as to whether the return filed under S.114 of the Income Tax Ordinance, 2001 was a valid return or not and the fact that S.120 of the Income Tax Ordinance, 2001 stipulated that only such return was to be taken to be an assessment which needed to be reexamined

Emphasis in S.120 of the Income Tax Ordinance, 2001 was on the "furnishing of a complete return of income"

Whether return filed under S.114 of the Income Tax Ordinance, 2001 was a complete and correct return of income needed to be examined

Matter needed to be re-examined in detail with original scheme and spirit of law by the framer of Universal Self-Assessment Scheme and procedure adopted accordingly

Order of First Appellate Authority was set aside and case was remanded for re-adjudication on the basis of guidelines given by the Appellate Tribunal.

1956 PLD 66 SINDH-CHIEF-COURT Judicial Precedent

Commission Agent -Entitled to brokerage if sale brought about as result of his introduction of buyer and seller even though buyer at last stage entered direct into the sale transaction.