CBR's Ultra Vires Circular

Where the vires of a particular statute, notification or circular is challenged the only remedy is a writ petition under Article 199 or a suit before a Civil Court – 2002 PTD 679 (H.C.Kar.). Tax year 2006 has evidenced an enormous growth in the ultra vires circulars issued by the Central Board of Revenue and parts of circular 1 and 3 of 2006 are no exception and the appropriate remedy for the taxpayers is either a writ or suit before civil court.

Although, section 206 of the Income Tax Ordinance, 2001 has not only embraced the precedents of honorable courts whereby it was held that circulars are not binding on the taxpayers but has also gone a bit further by speaking about the fact that circulars are not binding on CIT appeals. However, this will serve little purpose when the common innocent taxpayers use the explanatory circulars as a primary means of guidance. This article is an endeavor to analysis how the certain aspects of circular 1 and 3 of 2006 are ultra vires!

PARA 6 OF CIRCULAR NUMBER 1 OF 2006

Para 6 of circular number 1 of 2006 relating to section 21(l) has not only increased the obligation over the taxpayers but has also gave explanation which was never the intention of law at the time of introduction of amendment in the said section. Following is an extract from Notes on Clauses of Finance Bill, 2006 for section 21(l).

Clause-17 (4) (ii)

Seeks to clarify allowability of expenditure made other than through normal banking channels.

It is crystal clear from the plain reading of clause 17(4)(ii) of the Finance Act, 2006 that the purpose of bringing the amendment in section 21(l) is to clarify allowability of expenditure made other than through normal banking channels. However, before moving further towards the intention we must first go through the amended section 21(l) which is read as follows.

“(l) any expenditure for a transaction, paid or payable under a single account head which, in aggregate, exceeds fifty thousand rupees, made other than by a crossed cheque drawn on a bank or by crossed bank draft or crossed pay order or any other crossed banking instrument showing transfer of amount from the business bank account of the taxpayer:

Provided that online transfer of payment from the business account of the payer to the business account of payee as well as payments through credit card shall be treated as transactions through the banking channel, subject to the condition that such transactions are verifiable from the bank statements of the respective payer and the payee:

Provided further that this clause shall not apply in the case of–

(a) expenditures not exceeding ten thousand rupees;

(b) expenditures on account of –

(i)  utility bills;

(ii) freight charges;

(iii) travel fare;

(iv) postage; and

(v) payment of taxes, duties, fee, fines or any other statutory obligation;”;

The plain reading of the amended section 21(l) would reveal the fact that the intention of law is to embody Para 5 of circular 11 of 1998 apart from rephrasing the said section. This conclusion can be deduced from the plain reading of section 24(l), before the amendment brought by Finance Act, 2006, and Para 5 of circular number 11 of 1998.

SECTION 21(l) – before amendment

any expenditure paid or payable under a single account head which, in aggregate, exceeds fifty thousand rupees made other than by a crossed bank cheque or crossed bank draft, except expenditures not exceeding ten thousand rupees or on account of freight charges, travel fare, postage, utilities or payment of taxes, duties, fee, fines or any other statutory obligation;

PARA 5 OF CIRCULAR NO. 11 OF 1998

Deductibility of expenditure incurred otherwise than through a crossed Cheque or a bank draft. [Section 24(ff)].

Any expenditure under a single account head exceeding Rs.50,000 in aggregate, shall not be deductible, if made otherwise than through a crossed cheque or a bank draft. However, this condition shall not apply to:

1. utility bills;
2. single transactions not exceeding Rs.5000;
3. Payments on account of freight charges or passenger fare/tickets to an airline or railways or a goods carriage company;
4. any amount credited by direct transfer of funds to an assessee\’s employee’s bank account for reimbursement of expenses incurred on behalf of the assessee; and
5. Payments made to discharge a statutory obligation like payment of duties, taxes, octroi, export tax, fines, fees, assesses and levies etc.

II) The expenditure on account of travel, hotel charges and entertainment and

Petrol/diesel is usually reimbursed to the employees on production of evidence of such expenditure. Such advance or reimbursements if exceeding Rs.5,000 would be excluded in computing single account head limit of Rs.50,000, if these are made through crossed cheques or transferred directly to the employees\’ bank account.

II) It is further clarified that clause (ff) applies to expenditure normally chargeable to profit and loss account. The expenditure which is chargeable to the trading and manufacturing accounts like wages and freight on purchases debatable to the said accounts, galls outside the ambit of the said clause.

Similarly, purchases of agricultural products and commodities like milk etc. being direct trading or manufacturing expenses, the provisions of clause (ff) shall not apply.

However, Para 6 of circular number 1 of 2006 has crossed all the boundaries and explained the amended section 21(l) in purely a self ordained way as follows.

RATIONALIZATION OF PROVISIONS RELATING TO DEDUCTIBILITY OF EXPENSE MADE THROUGH BANKING CHANNEL.

[Section 21(l)]

Any expenditure paid or payable under a single account head which, in aggregate, exceeds fifty thousand rupees made other than by a crossed bank cheque or crossed bank draft, except expenditures not exceeding ten thousand rupees or on account of freight charges, travel fare, postage, utilities or payment of taxes, duties, fee, fines or any other statutory obligation, was not be an allowable deduction up to tax year 2006.

This provision was originally introduced under section 24(ff) in the repealed Ordinance, 1979.  It was clarified through CBR’s Circular No.11 of 1998 dated July 25, 1998, stating that clause (ff) applies to expenditure normally chargeable to profit and loss account.  The expenditure chargeable to trading and manufacturing accounts (like wages and freight or purchases debitable to the said accounts) fell out side the ambit of the said clause. [Bold, Italics and underline for emphasis]

Now the language of the section 21(l) has appropriately been amended to include every expenditure whether debitable to trading or manufacturing accounts or profit and loss account will fall within the purview of said section [Bold, Italics and underline for emphasis].  Further, the scope of banking transactions has also been expanded to include online transfer of payment from the business account of the payer to the business account of the payee and payment through credit cards subject to the condition that such transactions are verifiable from the bank statement of the respective payer and payee.  This is an elaboration of the definition of banking transactions.  It is explicitly clarified that any expenditure paid or payable under a single account head which, in aggregate, exceeds fifty thousand rupees made other than by a crossed bank draft, shall not be an allowable deduction w.e.f. July 1, 2006.  The restriction under this provision will not apply (as before) in respect of expenditure which

(i) does not exceeding ten thousand rupees; or

(ii)is on account of freight charges, travel fare, postage, utilities or payment of taxes, duties, fee, fines or any other statutory obligation;

As a consequence, CBR’s Circular No.11 of 1998 dated 25th July, 1998 being contrary to the provision of law is withdrawn, henceforth [Bold, Italics and underline for emphasis].

In the light of notes to section 21(l), amended clause (l) of section 21 and Para 5 of circular 11 of 1998, let us analyze the each paragraph in bold, underlined and italic deduced from Para 6 of Circular 1 of 2006 one by one.

This provision was originally introduced under section 24(ff) in the repealed Ordinance, 1979.  It was clarified through CBR’s Circular No.11 of 1998 dated July 25, 1998, stating that clause (ff) applies to expenditure normally chargeable to profit and loss account.  The expenditure chargeable to trading and manufacturing accounts (like wages and freight or purchases debitable to the said accounts) fell out side the ambit of the said clause.

This Para of said circular has basically equated section 21 (l) of Income Tax Ordinance, 2001 with section 24(ff) of Income Tax Ordinance, 1979. It is worthwhile here to note that section 24(ff) of the Income Tax Ordinance, 1979 has originally been introduced through Finance Act, 1990. The said section was then explained by Central Board of Revenue in Para 4 of circular number 6 dated July 15, 1990 as follows.

PARA 4 OF CIRCULAR 6 OF 1990

A new clause (ff) has been inserted in section 24 of the ordinance which provides that any expenditure incurred by an assessee at any time in a sum exceeding Rs50, 000 will not be allowed as deductible unless the payment is made on or after July 1, 1990, through crossed cheque or crossed bank draft. This provision will have restricted application and will relate to profit and loss account expenses like rent, salary, repairs, traveling, advertisement and entertainment and would not affect purchases and other manufacturing or trading account expenses.

It is worthwhile here to note that all the beneficial circulars or extracts of circulars relating to section 24(ff) of Income Tax Ordinance, 1979 are available for the benefit of the taxpayers, that is, Para 5 of circular 11 of 1998 and Para 4 of Circular 6 of 1990. Before digging out some more facts, we must go through section 24(ff) of Income Tax Ordinance, 1979 which is read as follows.

SECTION 24(ff)

any payments, made on or after the first day July, 1998, on account of expenditure under a single account head which, in aggregate, exceed fifty thousand rupees made otherwise than through a crossed bank cheque or by a crossed bank draft except transactions not exceeding five hundred rupees or payment account of postage or utility bills:

Section 24(ff) prima facie reflects the fact that it is amended by Finance Act, 1998 owing to some practical limitations. These practical problems have been reflected in Para 5 of circular 11 of 1998 dated 25th July, 1998 reproduced above. The said Para of the circular is also meant for providing the relief to the taxpayers by considering the practical problems. It is also worthwhile here to note that circular 11 of 1998 was originally meant for explaining the important changes brought by Finance Act, 1998 in Income Tax Ordinance, 1979. Now, the two other paragraphs of Para 6 of circular number 1 of 2006 which require attention are read as follows.

Now the language of the section 21(l) has appropriately been amended to include every expenditure whether debitable to trading or manufacturing accounts or profit and loss account will fall within the purview of said section.

As a consequence, CBR’s Circular No.11 of 1998 dated 25th July, 1998 being contrary to the provision of law is withdrawn, henceforth.

As we know that circular number 11 of 1998 is basically an explanatory circular relating to the amendments brought by Finance Act, 1998. However, the material amendments brought in section 21(l) by Finance Act, 2006 necessitates withdrawal of whole circular number 11 of 1998 through Para 6 of Circular number 1 of 2006! Could some one call it ignorance/ mistake on the part of Central Board of Revenue or look at this action of blind public functionary crazy of meeting the revenue targets by hook or crook?

Central Board of Revenue must understand some most important facts about this self ordained explanation brought by Para 6 of circular 1 of 2006.

1. The explanation provided in Para 6 of Circular 1 of 2006 is self ordained and is neither based on the notes to the amendment nor was intended by amendment itself.
2. Although Central Board of Revenue has withdrawn circular number 11 of 1998 but Para 4 of circular number 6 of 1990 dated July 15, 1990 has not been withdrawn and remain intact. In the light of precedence enunciated in [2002] 85 TAX 354 (H.C.Pesh.) where it was held that Central Board of Revenue’s beneficial circulars relating to section 12(18) are held not ultra vires while in another case it was held that if any notification or circular were of benevolent nature, the same would go to the assistance of assessee – [2003] 87 TAX 362 (H.C.Pesh.).
3. Explanation provided in Para number 6 of circular number 1 of 2006 has deep rooted effect on assessments, amendments of assessments, revision by commissioner, records and audit, that is, section 120, 122, 122A, 174 and 177. In the light of Para 5 of circular number 11 of 1998 and Para 4 of circular 6 of 1990, the taxpayer is not obliged to produce the record in relation to the items relating to the manufacturing and trading account portion of profit and loss account while the commissioner will view this as obstruction under section 189 in the light of Para number 6 of circular number 1 of 2006.
4. No audit strategy under section 177 would be useful when the ambit of audit is not clear. Para 6 of circular number 1 of 2006 has created doubts about the working mechanism of Central Board of Revenue which includes its notifications, circulars and SRO’s, and
5. Last but not least, Central Board of Revenue must understand the fact that phrases like this provision will have restricted application and will relate to profit and loss account expenses like rent, salary, repairs, traveling, advertisement and entertainment and would not affect purchases and other manufacturing or trading account expenses as used in Para 4 of circular 6 of 1990 and it is further clarified that clause (ff) applies to expenditure normally chargeable to profit and loss account. The expenditure which is chargeable to the trading and manufacturing accounts like wages and freight on purchases debatable to the said accounts, galls outside the ambit of the said clause. Similarly, purchases of agricultural products and commodities like milk etc. being direct trading or manufacturing expenses, the provisions of clause (ff) shall not apply as used in Para 5 circular 11 of 1998 are not self ordained but are based on a concrete premise of admissibility of expenditure.

The premise of admissibility of expenditure is based on the simple fact that in case a taxpayer has not deducted the tax on all of its purchases then the commissioner can only recover the tax due that is, not deducted from purchases. The commissioner can not equate the sale with gross profit in the event of non-deduction of tax on account of purchases or supplies. This contention is backed by the concept of terms like services, contract and supplies as used in section 153 being broader to encompass the term expense.

CIRCULAR NUMBER 3

Section 4 – Tax on taxable income is known as charging section of the Income Tax Ordinance, 2001 which impose income tax under the Income Tax Ordinance, 2001 while Chapter II, Division I of Part V of Chapter X and Chapter XII oblige certain persons to deduct or collect income tax at source. These sections and chapter do not mention the rates at which these taxes are to be imposed, deducted or collected. Instead, these provisions state that such tax shall be levied, deducted or collected at the rates specified in First Schedule of Income Tax Ordinance, 2001.

The core function of First Schedule is to specify the rates at which tax is to be finally charged or is to be deducted or collected. However, the applicability of rates specified in First Schedule is self explanatory in nature and is apparent from the construction of language used. Almost every year changes are made in the First Schedule and Finance Act, 2006 is no exception. The only provision in this behalf is a sub-section of section 1 of the Finance Act which says that the Finance Act shall come into force at once.

It is an accepted principle of income tax law that the tax liability of a taxpayer is determined on the last day of the tax year. Thus, unless the Finance Act expressly so provides, an amendment in the substantive provisions enhancing the liability of the taxpayer is effective only prospectively. However, there is no such restriction on concessions.

As stated earlier, Finance Act, 2006 has changed the tax rates for the salaried persons by amending clause (1A) of Part I of First Schedule of Income Tax Ordinance, 2001 as follows.

(1A) Where the income of an individual chargeable under the head “salary” exceeds fifty percent of his taxable income, the rates of tax to be applied shall be as set out in the following table namely: –

TABLE

S. No.	Taxable income	Rate of tax.
(1)	(2)	(3)
1.	Where taxable income does not exceed Rs.150,000	0%
2.	Where the taxable income exceeds Rs.150,000 but does not exceed Rs.200,000	0.25%
3.	Where the taxable income exceeds Rs.200,000 but does not exceed Rs.250,000	0.50%
4.	Where the taxable income exceeds Rs.250,000 but does not exceed Rs.300,000	0.75%
5.	Where the taxable income exceeds Rs.300,000 but does not exceed Rs.350,000	1.50%
6.	Where the taxable income exceeds Rs.350,000 but does not exceed Rs.400,000	2.50%
7.	Where the taxable income exceeds Rs.400,000 but does not exceed Rs.500,000	3.50%
8.	Where the taxable income exceeds Rs.500,000 but does not exceed Rs.600,000,	4.50%
9.	Where the taxable income exceeds Rs.600,000 but does not exceed Rs.700,000,	6.00%
10.	Where the taxable income exceeds Rs.700,000 but does not exceed Rs.850,000,	7.50%
11.	Where the taxable income exceeds Rs.850,000 but does not exceed Rs.950,000,	9.00%
12.	Where the taxable income exceeds Rs.950,000 but does not exceed Rs.1,050,000,	10.00%
13.	Where the taxable income exceeds Rs.1,050,000 but does not exceed Rs.1,200,000,	11.00%
14.	Where the taxable income exceeds Rs.1,200,000 but does not exceed Rs.1,500,000,	12.50%
15.	Where the taxable income exceeds Rs.1,500,000 but does not exceed Rs.1,700,000,	14.00%
16.	Where the taxable income exceeds Rs.1,700,000 but does not exceed Rs.2,000,000,	15.00%
17.	Where the taxable income exceeds Rs.2,000,000 but does not exceed Rs.3,150,000,	16.00%
18.	Where the taxable income exceeds Rs.3,150,000 but does not exceed Rs.3,700,000,	17.50%
19.	Where the taxable income exceeds Rs.3,700,000 but does not exceed Rs.4,450,000,	18.50%
20.	Where the taxable income exceeds Rs.4,450,000 but does not exceed Rs.8,400,000,	19.00%
21.	Where the taxable income exceeds Rs.8,400,000.	20.00%

Provided that where income of a woman taxpayer is covered by this clause, no tax shall be charged if the taxable income does not exceed Rs.200,000/-.

However, circular 3 of 2006 relating to computation of income tax payable by the salaried taxpayers for tax year 2007 and deduction of advance tax from salary for the tax year commencing 1st July 2006 contains some inherent mistakes and has created a lot of confusion in the minds of innocent taxpayers who uses the Central Board of Revenue’s circular as primary means of guidance. The computational aspect is neither backed by notes to amendment contained in clause 17(30(i)(a) nor from the circular number 3 specially Para number 3. The notes to the finance bill and Para number 3 of circular number 3 requires attention and is read as follows.

Clause-17 (30) (i)(a)

Seeks to prescribe a new rate card for non-salaried taxpayers and salaried taxpayers.

INCREASE IN BASIC THRESHOLD.

The basic exemption for tax year 2006 is rupees 1,00,000/-.  This has been enhanced to Rs. 150,000/- for the tax year 2007. The tax slabs have also been revised through Finance Act, 2006. These slabs shall be applicable for tax year 2007. For withholding purposes, these shall apply to salary paid on or after first day of July, 2006.

Para 3 of circular 3 enunciate two basic facts. Firstly, basic exemption for the tax year has been enhanced to Rs. 150, 000.00 which is used for years as a means of deduction. Secondly, the slab rates mentioned in the table of clause (1A) of part I of First Schedule shall apply to salary paid on or after first day of July, 2006. The slab is understood in general sense and is meant to apply over a bracket of income. However, the tax calculation made in the examples of the said circular is contrary to these concepts and the plain language of the statute as has been practiced for years.

As stated earlier, The computational aspect is neither backed by notes to amendment contained in clause 17(30(i)(a) nor from the circular number 3 specially Para number 3. The computation of tax aspect in five examples out of seven examples is negating the concept enunciated in Para 3 of circular 3 of 2006. The tax calculated in the said circular and correct calculation of tax is given in the following comparative chart.

EX	Taxable Income as per circular	Taxable income as per ITO, 2001	Taxable liability as per circular	Taxable liability as per ITO, 2001
1	150,744.00	744.00	377.00	2
4	406,962.00	256,962.00	14,244.00	2,994
5	418,544.00	268,544.00	14,649.00	3,155
6	3,055,510.00	405,510.00	24,998.00	2,943
		2,500,000.00	62,500.00	62,500
	3,055,510.00	2,905,510.00	87,498.00	65,443.00
7	614,544.00	464,544.00	27,098.00	3,252

The material linguistic change in the new table contained in clause (1A) of Part I of First Schedule is removal of the phrase of the amount exceeding in column 3. The earlier Table is read as follows.

(1A) Where the income of an individual chargeable under the head “salary” exceeds fifty percent of his taxable income, the rates of tax to be applied shall be as set out in the following table namely: –

TABLE

S. No.	Taxable income.	Rate of tax.
(1)	(2)	(3)
1.	Where taxable income does not exceed Rs. 100,000	Nil
2.	Where taxable income exceeds Rs. 100,000 but does not exceed Rs. 200,000	3.5% of the amount exceeding Rs. 100,000
3.	Where taxable income exceeds Rs. 200,000 but does not exceed Rs. 400,000	Rs. 3,500 plus 12% of the amount exceeding Rs. 200,000
4.	Where taxable income exceeds Rs. 400,000 but does not exceed Rs. 700,000	Rs. 27,500 plus 25% of the amount exceeding Rs. 400,000
5.	Where taxable income exceeds Rs. 700,000	Rs. 102,500 plus 30% of the amount exceeding Rs.700,000.

However, any person would conclude, after the plain reading of new table read with clause 17(30)(i)(a) of Finance Act, 2006 and Para 3 of circular number 3, over the fact that slab rates of tax are applicable over a bracket of income after deducting the basic exemption. This fact is apparent from the phrase contained in the table, that is, Where the taxable income exceeds Rs.2,000,000 but does not exceed Rs.3,150,000. The self ordained computation of tax payable in the five examples of circular 3 of 2006 is against the precedence of 2002 PTD 804 (H.C.Kar.) whereby it was held that where the language of any statute or legal document is clear, then the same has to be followed.   

In furtherance, Central Board of Revenue’s self ordained computation of tax payable is not supported by the notes on amendment whereby it was specifically mentioned that this amendment seeks to prescribe a new rate card for non-salaried taxpayers and salaried taxpayers and not changing the mechanism of calculation.

CBR must understand the fact that where two divergent views emerging from reading a provision; one favoring the taxpayer is to be adopted – 2004 PTD 2479 (S.C.AJ&K) and where two equally acceptable interpretations of a provision of law are possible then the one favoring the subject/taxpayer needs to be adopted – 2005 PTD 147 (H.C.Lah.).

In furtherance, how would that be possible that a person earning income of Rs150, 000 paying no tax while a person earning Rs150,001 would be paying the tax @0.25% over its total income, that is, including basic exemption. Although the concept of basic exemption is arbitrary in nature in Pakistan, however, the level of basic exemption enunciates the fact that this is the quantum of money which is a pre-requisite for the necessary livelihood of a natural person.

The level of basic exemption is linked with the purchasing power of basic necessities of a person in developed countries. However, in Pakistan, this moves upward only either after a passage of time at the discretion of suggestions or after hue and cry from the taxpayers. In developed countries, apart from basic exemption, concept of children allowance, medical allowance, personal training allowance, books allowance and married couple allowance are also present.

On the contrary Central Board of Revenue has removed children allowance, medical allowance, only available for restricted application, and books allowance with the passage of time while married couple allowance was never given any thought. Now through self ordained explanation in circular 3 of 2006, Central Board of Revenue has tried to take away the only available concept of basic exemption.

PRECEDENTIAL ANALYSIS

It is a settled principle of law that the public functionaries are duty bound to decide the controversy in accordance with the law. The high ups of Central Board of Revenue should step in to this matter owing to the fact that tax calculation procedure specified in Para 6 of circular number 1 of 2006 is self ordained and against the plain reading of law. It was also held that where the language of any statute or legal document is clear, then the same has to be followed – 2002 PTD 804 (H.C.Kar.).

Similarly, the self ordained explanation given in Para 6 of circular number 1of 2006 is neither intended by the law nor was supported by the notes on the clause of this amendment. A whole circular 11 of 1998 has been withdrawn to back up the self ordained explanation of Para 6 of Circular 1 of 2006 instead of its Para 5. However, on the beneficial circular, namely Para 4 of circular number 6 of 1990, has not been withdrawn and is still valid in the light of precedence enunciated in [2002] 85 TAX 354 (H.C.Pesh.) where it was held that Central Board of Revenue’s beneficial circular relating to section 12(18) are held not ultra vires. In another case, it was held that if any notification or circular were of benevolent nature, the same would go to the assistance of assessee – [2003] 87 TAX 362 (H.C.Pesh.). This is the solitary principle of law.

Para 5 of circular 11 of 1998 and Para 4 of circular number 6 of 1990 are speaking in nature about the basis of the premise of admissibility of expenditure. Expenditure fall within the ambit of section 20 can only be disallowed under section 21. This concept is based on the simple fact that in case a taxpayer has not deducted the tax on all of its purchases then the commissioner can only recover the tax due that is, not deducted from purchases. The commissioner can not equate the sale with gross profit in the event of non-deduction of tax on account of purchases or supplies. This contention is backed by the concept of terms like services, contract and supplies as used in section 153 being broader to encompass the term expense. The whole scheme of Income Tax Ordinance, 2001 needs to be understood before placing any self ordained explanation through circulars to any section, sub-section, clause or sub-clause.

Central Board of Revenue must understand the fact that courts have ample jurisdiction to give direction to the public functionaries to act in accordance with law in view of Article 4 of the constitution, while exercising powers under Article 199 of the constitution as per principles laid down by the Honorable Supreme Court – PLD 1981 SC 612 and 2003 SCMR 325.

Central Board of Revenue must also understand the following facts.

1. Burdening a subject with heavy taxation on personal views of any official is not sustainable – (2004) 90 TAX 29 (Trib.)
2. Once intention of legislature is clear no extraneous principle of interpretation or construction of statute is to be employed – [2003] 87 TAX 49 (S.C.Pak.)
3. The rule making authority cannot clothe itself with powers which is not given to it under the statute; rule cannot go beyond the Act – 2003 PTD 505 (S.C.Pak.)

CONCLUSION

Nowadays, Central Board of Revenue is working hard to remove the backlog of cases pending in judicial and quasi judicial forums. It was also striving hard to avoid litigation and concentrating on alternate dispute resolution. The above referred two aspects of the Central Board of Revenue’s two circulars are ultra vires to law. Central Board of Revenue high ups should step in and show a practical example that how serious they are in avoiding unnecessary litigation and not meeting their revenue target by such self ordained explanations through their circulars!

A person contributing a single penny to the exchequer but contesting the remaining pound deserves more respect than a person who will be acquitted of killing a human being merely for some minor discrepancy in the evidence here and there – [2001] 84 TAX 471 (H.C.Lah.).

Finally, it is prayed from honorable court to take suo motto action against these two ultra vires circulars as such circulars are just meant for misguiding the innocent taxpayer by a public functionary, namely Central Board of Revenue, in order to meet its revenue targets. It is further prayed that honorable court must give direction to this public functionary so that it can act in accordance with law in view of Article 4 of the constitution of Islamic Republic of Pakistan.