221 (Order to grant / refuse rectification against issued appeal Order)
Name: MUHAMMAD RIZWAN KHAN Registration No 3640208169833
Address: House No. 91/1, Main Khayaban-e-Bukhari, Tax Year : 2015
Phase VI, DHA, Karachi South Period : 01-Jul-2014 - 30-Jun-2015
Medium : Online
Contact No: 00923008286602 Due Date : 31-Jan-2023
Document Date 31-Jan-2023
APPELLATE ORDER U/S 129 / 221 OF THE INCOME TAX ORDINANCE, 2001
In this case appellate order vide Bar Code No. 100000103943723 dated September 17, 2021 was passed
by my predecessor under section 129 of the Ordinance against order u/s 122(1) of the Ordinance by the
Assistant Commissioner Inland Revenue (ACIR) Unit-04, Zone-I, RTO-II, Karachi for Tax Year 2015 vide Bar
Code No.100000098801657 dated 17-06-2021. The appellant noted apparent mistake in the appellate
order and filed an application for rectification under section 221 of the Ordinance, which is being
adjudicated through this order.
2. Brief facts of the case are that the appellant is an individual who filed return of income for the Tax
Year 2015 declaring income at Rs.9,262,619/- which was accepted as ‘deemed assessment’ under section
120 of the Ordinance. Subsequently, the case of the taxpayer was selected for audit by the Federal Board
of Revenue u/s 214C of Income Tax Ord. 2001, however proceedings were initiated u/s 177 of Income Tax
Ord. 2001 and culminated vide order u/s 122(1) and income was amended at Rs.11,973,751/-, creating a
tax liability of Rs.1,535,764/-. Appeal against the amended order was decided by my predecessor by
deleting the addition u/s 111(1)(b) of Rs 2,711,132 and maintaining the disallowance of teaching rebate of
Rs 814,514 claimed under clause 1(2) of Part III of the Second Schedule to the Ordinance.
3. The appellant filed an application for rectification on the matter of teaching rebate maintained by
my predecessor, the contents of which are reproduced as under:
“MUHAMMAD RIZWAN KHAN – CNIC 36402-0816983-3
[DOCTOR EMPLOYED BY AGA KHAN UNIVERSITY]
TAX YEAR 2015
APPLICATION FOR RECTIFICATION UNDER SECTION 221 OF THE INCOME TAX
ORDINANCE, 2001 [ORDINANCE] IN APPELLATE ORDER DATED SEPTEMBER 17, 2021
We refer to the appellate order dated September 17, 2021 on IRIS of the subject appellant. On review of
the order we have noted certain mistakes which are apparent from record and thus rectifiable under
section 221 of the Ordinance. These are discussed in the following paragraphs.
ADJUDICATION BASED ON LAW NOT APPLICABLE FOR THIS PERIOD
2. On page 4 of the Order, the disallowance of teaching rebate has been confirmed by referring to the
amended provisions not applicable for Tax Year 2015. The extracts are as under:
“5.2 Regarding claiming of Tax Reduction being full time teacher under Clause (2) Part-III of 2nd
Schedule is not applicable in instant case, the said provisions is depicted below:
Page 1 of 5 Printed on Tue, 31 Jan 2023 17:58:58
RTO-II KARACHI
221 (Order to grant / refuse rectification against issued appeal Order)
Name: MUHAMMAD RIZWAN KHAN Registration No 3640208169833
Address: House No. 91/1, Main Khayaban-e-Bukhari, Tax Year : 2015
Phase VI, DHA, Karachi South Period : 01-Jul-2014 - 30-Jun-2015
Medium : Online
Contact No: 00923008286602 Due Date : 31-Jan-2023
Document Date 31-Jan-2023
[(2) The tax payable by a full time teacher or a researcher, employed in a non profit education or research
institution duly recognized by Higher Education Commission, a Board of Education or a University
recognized by the Higher Education Commission, including government [ ] research institution, shall be
reduced by an amount equal to [25]% of tax payable on his income from salary [:]
[Provided that this clause shall not apply to teacher of medical profession who derive income from
private medical practice or who receive share of consideration received from patients.]
As in said clause it is clearly mentioned that this clause is not applicable to the teacher of medical
profession, appellant is involved in providing professional services to Agha Khan Hospital, therefore the
reduction claimed by the appellant has rightly been curtailed, order is confirmed to this extent.”
3. The proviso quoted above restricting the benefit to certain teachers of medical profession was
added vide Finance Act 2019 whereas the subject case relates to Tax Tear 2015. The correct provision
along with differences thereto underlined is as under:
Correct Clause 1(2) for
Tax Year 2015 Incorrect Clause 1(2) quoted in the Order applicable for Tax Year 2020 and onwards
The tax payable by a full time teacher or a researcher, employed in a non profit education or research
institution duly recognized by Higher Education Commission, a Board of Education or a University
recognized by the Higher Education Commission, including government training and research institution,
shall be reduced by an amount equal to 40% of tax payable on his income from salary. The
tax payable by a full time teacher or a researcher, employed in a non profit education or research
institution duly recognized by Higher Education Commission, a Board of Education or a University
recognized by the Higher Education Commission, including government research institution, shall be
reduced by an amount equal to [25]% of tax payable on his income from salary.
[Provided that this clause shall not apply to teacher of medical profession who derive income from private
medical practice or who receive share of consideration received from patients.]
4. Thus, it is clear from above that the decision on page 4 of the Order is erroneous in not taking into
consideration the applicable law for the tax year.
NON-ADJUDICATION OF GROUND OF APPEAL NO. 10
5. Ground of appeal No. 10 reproduced on page 2 of the Order has not been adjudicated. It is
reproduced as under:
“10) As to why the teaching rebate Rs 814,514/- has been disallowed as full teacher/ researcher
allowance, which is applicable to claim tax reduction under the Judgement of High Court of Sindh Order
No. ITRA No. 276 of 2018 (Copy attached).”
6. The decision of the Sindh High Court decides a legal issue in the appellants own’s case for the tax
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RTO-II KARACHI
221 (Order to grant / refuse rectification against issued appeal Order)
Name: MUHAMMAD RIZWAN KHAN Registration No 3640208169833
Address: House No. 91/1, Main Khayaban-e-Bukhari, Tax Year : 2015
Phase VI, DHA, Karachi South Period : 01-Jul-2014 - 30-Jun-2015
Medium : Online
Contact No: 00923008286602 Due Date : 31-Jan-2023
Document Date 31-Jan-2023
years 2010 and 2011 which has not been discussed / considered in the appellate order.
7. This was required to be followed by the Officer under section 124A of the Ordinance and is also
binding unto your Office. This requires reconsideration under section 221 of the Ordinance.
8. In view of the above, it is requested to kindly rectify the mistakes in the order apparent from record
under section 221 of the Ordinance.”
4. Call notice were issued for hearing on January 26, 2023. The AR of the appellant, Syed Umair Itrat
from A. F. Ferguson & Co. appeared on the date of hearing and argued on the basis of the application for
rectification already reproduced above and written submissions.
5. I have considered the submissions of the appellant and perused the appellate order of my
predecessor as well as the amended order u/s 122(1). The issue of claim of rebate by the
doctors/employees of AKUH, including in appellant’s own case for tax years 2010 and 2011, has been
decided by the Hon’ble High Court of Sindh in the case reported as 2022 SLD 14 (ITRA No. 276 of 2018)
wherein the Hon’ble Sindh High Court has decided the instant matter in favor of petitioners. The relevant
part of the judgment is reproduced as under:-
“16. Finally, it appears that pending these proceedings before us, and after passing of the impugned order
by the Tribunal, through Finance Act, 2019, a proviso has been inserted in sub-clause (2) of clause (1) of
Part-III of the Second Schedule to the Ordinance which now provides that this clause shall not apply to
teachers of medical profession who derive income from private medical practice or who receive share of
consideration received from patients. On a plain reading, it clearly shows that now the intention of the
legislature is that from 2019 onwards such income of the Applicants has been excluded from the purview
of admissible rebate; and further shows that the earlier it was not excluded. If it had not been admissible
earlier, there would have been no need for inserting this proviso for exclusion of this particular income.
The legislative intent by not giving retrospective effect to this proviso shows that what was not excluded
earlier has now been excluded; however, with effect from Finance Act, 2019. A legislature is deemed to be
aware of the previous state of the law and if knowing this it makes a change when repealing it and
reenacting some of its provisions the intention is clearly to effect a change [12]. The proviso therefore,
(though not under consideration for the present purposes), clearly shows by the intent of the legislature
itself that even otherwise, the benefit / rebate was admissible at least prior to Finance Act, 2019.
17. In view of hereinabove facts and circumstances of the case, it appears that the authorities below have
failed to appreciate the correct proposition of law and the Ordinance to conclude that the two heads of
income as above do not fall within the definition of salary in terms of Section 12 of the Ordinance.
Accordingly, the question is answered in the affirmative; in favour of the Applicants and against the
respondents. All these Reference Applications are allowed, and as consequence thereof, the Petitions are
also allowed to such extent. The notices impugned or pertinent constituents thereof are hereby quashed
set- aside.”
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RTO-II KARACHI
221 (Order to grant / refuse rectification against issued appeal Order)
Name: MUHAMMAD RIZWAN KHAN Registration No 3640208169833
Address: House No. 91/1, Main Khayaban-e-Bukhari, Tax Year : 2015
Phase VI, DHA, Karachi South Period : 01-Jul-2014 - 30-Jun-2015
Medium : Online
Contact No: 00923008286602 Due Date : 31-Jan-2023
Document Date 31-Jan-2023
6. This matter was taken up in ground no. 10 of the appeal, which is apparent from the record.
However, it has not been considered in the appellate order by my predecessor, who has maintained the
disallowance of teaching rebate by considering it as inapplicable for teachers of medical profession as
under:
“5.2 Regarding claiming of Tax Reduction being full time teacher under Clause (2) Part-III of 2nd
Schedule is not applicable in instant case, the said provisions is depicted below:
[(2) The tax payable by a full time teacher or a researcher, employed in a non profit education or research
institution duly recognized by Higher Education Commission, a Board of Education or a University
recognized by the Higher Education Commission, including government [ ] research institution, shall be
reduced by an amount equal to [25]% of tax payable on his income from salary [:]
[Provided that this clause shall not apply to teacher of medical profession who derive income from private
medical practice or who receive share of consideration received from patients.]
As in said clause it is clearly mentioned that this clause is not applicable to the teacher of medical
profession, appellant is involved in providing professional services to Agha Khan Hospital, therefore the
reduction claimed by the appellant has rightly been curtailed, order is confirmed to this extent.”
7. As pointed out by the AR of the appellant that the proviso to clause 1(2) was inserted by Finance
Act 2019 which my predecessor has reproduced in the order and applied to the case of tax year 2015.
Thus, the error is apparent from the record and floating on the surface of the appellate order dated
September 17, 2021.
8. In view of the above apparent mistake of applying incorrect proviso and not adjudicating the
ground relating to decision of the Hon’ble Sindh High Court wherein it was held that the rebate was
admissible at least prior to Finance Act, 2019, which being decision of the Hon’ble High Court on the same
issue and applicable to the facts of the case is binding on the undersigned as well, the appellate order of
my predecessor is rectified by deleting / annulling the disallowance of rebate under clause 1(2) of Part III
of Second Schedule.
9. Consequently, the impugned order dated 17-06-2021 passed u/s 221(1) of the Ordinance stands
annulled.
The appeal stands decided in the manner and to the extent indicated above.
Attributes
Attribute Value
Decision Confirmed
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RTO-II KARACHI
221 (Order to grant / refuse rectification against issued appeal Order)
Name: MUHAMMAD RIZWAN KHAN Registration No 3640208169833
Address: House No. 91/1, Main Khayaban-e-Bukhari, Tax Year : 2015
Phase VI, DHA, Karachi South Period : 01-Jul-2014 - 30-Jun-2015
Medium : Online
Contact No: 00923008286602 Due Date : 31-Jan-2023
Document Date 31-Jan-2023
Abdul Aziz Narejo
Commissioner (Appeal-V)
Inland Revenue, Karachi
RTO-II
KARACHI
For Registration and filing of your return of income electronically, please visit
https://iris.fbr.gov.pk/infosys/public/txplogin.xhtml For assistance, please visit https://efbr.gov.pk/SOP/IRIS/help/index.html
or call FBR help line at 051-111772772.
This is a computer-generated notice and does not require signature under Income Tax Ordinance, 2001.
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RTO-II KARACHI
