I. BACKGROUND

1. We also refer to the related Important TLQCs in trail, blue, italic and double Line (a) 2643 of 15.2.24 about SST on Distributors: SCP order against Taxpayers & Recommendations (b) 2625 of 31.1.24 about SST on Distributors - SCP order against Taxpayers expected & KCV

3. We also refer to several Other TLQCs including (a) 2983 of 23.12.24 about No Minimum Tax on FATA / PATA - ATIR (b) 2865 of 6.8.24 about Manufacturers in Merged Districts of FATA & PATA are IT & ST exempt – SCP (c) 2526 of 26.10.23 about Minimum Tax u/s 113 on Freight Services Fee & not Gross Receipt - LHC

II. EXECUTIVE SUMMARY

Whether taxpayer ---------------- ( distributor of ---------------) qualifies for Commission deduction u/s 233 or faces minimum tax u/s 113 and Section 236G (as distributor vs. buyer)

Tribunal/CIR-Appeals correctly held taxpayers as Distributor (not seller), entitled to gross profit margin deduction per Distribution Agreement. No tax minimum tax u/s 113 on full gross sales. 

III. KASBATI & CO ViEWS

Owing to TLQC2463 & 2425 of 15.2.24 & 31.1.24 respectively, there can issue at the Supreme Court. Hence, we will share our Recommendations in the upcoming QC shortly, ISA.

IV. DETAILS

A. Reference & Issues

1. Further to KQU ----------------, being an important matter, we would inform you--------------------- (Attachment 3397.1 - not on LHC web but found from reliable resources) in ensuing paragraph, with emphasis ours in bold & Underline for quick reading.

B. Reference Application Details

This reference application under Section 133 of the Income Tax Ordinance, 2001 is directed against order dated ------------- passed by the Appellate Tribunal Inland Revenue---------------.

C. Question of Law Pressed

Although multiple questions of law have been framed, however, following question has been pressed during the course of arguments:

"Whether in the facts and circumstances of the case, the learned ATIR was justified to ignore that minimum tax under Section 113 of the Income Tax Ordinance, 2001 has rightly been charged as the taxpayer failed to substantiate his claim regarding profit margin/commission in the shape of deduction under Section 233 of the Income Tax Ordinance, 2001 rather the withholding agent/manufacturer deducted tax under Section 236G of the Income Tax Ordinance, 2001 by treating it distributor and not commission agent?"

D. Tribunal's Findings Affirmed

1 to 2

E. LHC Deliberations and Decision

1 to 3 

V. FURTHER DETAILS & SERVICES

Should you require any clarification or explanations in respect of the above or otherwise, or require Income Tax, Federal & Provincial Sales Tax or Withholding Tax Statement, Advisory, Return Filing or Review services, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com, asif.s.kasbati@professional-excellence.com.