On a complaint filed by an Additional Session Judge,FTO has asked FBR to clarify the legal status of withholding tax on judicial and special judicial allowance admissible to district Judicial officers .
The instant complaint was referred for comments to the Secretary, Revenue Division in terms of Section 10(4) of the FTO Ordinance. Briefly, the complainant is an Additional Judge, his complaint before FTO was in consequence to the judgments of Hon’ble Sindh High Court and Hon’ble Peshawar High Court, the FBR vide letters dated 29.03.2021 , granted exemption of judicial and special judicial allowances from deduction of Income tax paid to the judicial officers of District Judiciary. The exemption granted under clause 39 part-I of the 2 Schedule of the Income Tax Ordinance, 2001 was circulated to and implemented by all field formations and AGPR. However, this exemption was withdrawn by FBR on 28.05.2021 on the plea of pendency of appeal before Hon’ble Supreme Court.
The complainant believed that in pursuance of a recent direction by Hon’ble Supreme Court of Pakistan , FBR’s letters withdrawing the exemption were no more in field and the letter allowing exemption of judicial and special judicial allowance of the concerned , which should be implemented. The Complainant filed an application before Chief Commissioner-IR, RTO seeking refund of tax from 2016 to 2020 the application was granted and he filed revised returns for 2016 to 2020 and return for 2021 claiming refund of Rs. 900,634/-. Despite repeated requests the amount has not been refunded.
FTO has observed that, FBR had withdrawn the exemption in the light of Hon’ble Supreme Court’s short order by which the order of Hon’ble Peshawar High Court was suspended. Board had also issued instructions to the AGPR and District Accounts Officers to withhold tax from judicial allowance as the Board’s letter of exemption had been withdrawn and the matter of exemption was still pending before the Hon’ble Supreme Court..
In view of the above, Tax ombudsman has directed FBR to treat the subject complaint as representation on behalf of the Complainant and issue necessary clarification within 30 days, after taking into consideration all legal aspects of the case .FTO further directed that the commissioner concerned is to dispose of the Complainant’s refund application, in light of the above referred clarification of FBR, on issuance , after providing the Complainant an adequate opportunity of hearing.
