a ISLAMABAD, April 12: President General Pervez Musharraf has rejected a representation of the Central Board of Revenue seeking an approval for the recovery of outstanding dues from a shareholder company.

The representation was filed against the orders of Federal Tax Ombudsman Justice Saleem Akhtar in the case of the complainant, the National Engineering Services Pakistan (Pvt) Ltd (Nespak) — a company which held 25 per cent shares in another company viz the Corporation House (Pvt) Ltd, Lahore.

Official decision annouced here on Saturday said the Ombudsman in his decision ordered that the CBR had acted in an illegal manner by recovering an amount of Rs4.1 million as wealth tax from the shareholder Nespak under section 31A of the Wealth Tax Act against the wealth tax demand outstanding against the Corporation House.

The Ombudsman observed that the Corporation House owned a very valuable piece of property to which the wealth tax demand actually pertained and it could not, therefore, be said that recovery of wealth tax was not possible from the said company itself, which was a necessary condition before a company’s wealth tax could be recovered from a shareholder.

The CBR made a representation against the findings/recommendation of the Ombudsman on the grounds that the FTO did not have the jurisdiction to investigate or inquire into the matter because it was sub-judice before tahe High Court and it related to determination of liability of tax.

According to the president order, the tax officials have failed to bring on record any material to show that Nespak and the tax officials were litigating the matter inquired into by the FTO before the High Court.

The plea that the action of recovery of tax from Nespak related to determination of tax liability was also not well founded. If the tax officials could not recover tax from the complainant, it was un-understandable how the complainant’s cause of grievance abated, said the order.

Following the rejection of the CBR complaint, the tax officials were bound to repay the amount of Rs4.1 million recovered from Nespak as wealth tax.