ISLAMABAD, Oct 20 (APP):Supreme Court has ruled that payments made by the Universal Service Fund (USF) to telecom companies for providing services in underserved areas are not subject to tax deduction under Section 153(2)(b) of the Income Tax Ordinance.
Allowing the USF’s appeal, a three-member bench comprising Justice Munib Akhtar, Justice Jamal Khan Mandokhail and Justice Irfan Saadat Khan set aside the tax liability of approximately Rs4.79 billion. In its 38-page detailed judgment, the court also held that Section 21(c) of the ordinance did not apply to the payments.
The court further annulled the relevant portion of the revised assessment order issued by tax authorities and the decision of the Alternative Dispute Resolution Committee.
The dispute concerned payments of approximately Rs17.76 billion made by the USF to telecom companies for projects aimed at providing telecommunications facilities in areas where such services were unavailable or inadequate.
The Alternative Dispute Resolution Committee had reduced the tax liability to approximately Rs1.53 billion.
However, the Supreme Court allowed the USF’s appeal and set aside the relevant decisions imposing the tax.