THE INCOME TAX ORDINANCE, 1984. ( PART 8 )

CHAPTER X

LIABILITY IN SPECIAL CASES

  1. Liability of representative in certain cases.- (1) Every person who is a representative of another person in respect of any income for the purpose of this section shall, in respect of such income,-
  • be subject to the same duties, responsibilities and liabilities as if such income were received by, or accruing to, or in favour of, him beneficially ;
  • be liable to assessment in his own name ; and
  • be deemed, subject to other provisions of this Chapter, to be the assessee for all purposes of this Ordinance.
  • A person, who is assessed in pursuance of this section as a representative in respect of any income, shall not, in respect of the same income, be assessed under any other provision of this Ordinance.
  • Nothing in this section shall prevent either the direct assessment of the person for whom, or on whose behalf or for whose benefit, the representative is entitled to receive any income or recovery from such person of the tax payable in respect of such income.
  • For the purposes of this section,-
  • the guardian, manager or trustee, who receives or is entitled to receive any income for, or on behalf or for the benefit, of any minor, lunatic or idiot, shall be the representative in respect of such income;
  • the Administrator-General, the Official Trustee, or any receiver, manager or other person, however designated, appointed by or under any order of a Court, who receives or is entitled to receive any income for, or on behalf or for the benefit, of any other person shall be the representative in respect of such income ;
  • the trustee or trustees appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise, including a legally valid deed of waqf, who receive or are entitled to receive any income for, or on behalf or for the benefit, of any person shall be the representative in respect of such income; and
  • a person who is treated under section 96 as an agent in relation to a non-resident, shall be the representative in respect of such income of the non-resident as is deemed to accrue or arise in Bangladesh under section 18.
  1. Persons to be treated as agent.- (1) For the purposes of this Ordinance, the following persons shall, subject to the provisions of sub-sections (2) and (3), be treated as agent in relation to a non-resident, namely:-
  • any person in Bangladesh-
  • who is employed by, or on behalf of, the non-resident;
  • who has any business connection with the non-resident;
  • who holds, or controls the receipt or disposal of, any money belonging to the non-resident;
  • who is a trustee of the non-resident ; or
  • from or through whom the non-resident is in receipt of any income, whether directly or indirectly ;
  • any person, whether a resident or non-resident, who has acquired, by means of transfer, a capital asset in Bangladesh from a person residing outside Bangladesh ; and
  • any person who, for any other reasonable cause, is declared or treated as an agent of the non-resident.
  • An independent broker in Bangladesh, who in respect of any transaction, does not deal directly with, or on behalf of, a non-resident principal but deals with, or through, a non-resident broker, shall not be treated as an agent in relation to a non-resident in respect of such transaction if-
  • the transaction is carried on in the ordinary course of business through the non-resident broker; and
  • the non-resident broker is carrying on such transaction in the ordinary course of business.
  • No person shall be treated under this Ordinance as an agent in relation to a non-resident unless he has been given by the Deputy Commissioner of Taxes an opportunity of being heard.
  1. Right of representative to recover tax paid.- (1) A representative who, on account of his liability under section 95, pays any sum, shall be entitled to recover the sum so paid from the person on whose behalf it is paid, or to retain out of any moneys that may be in his possession or may come to him in his possession or may come to him in his capacity as a representative, an amount equivalent to the sum so paid.
  • A representative, or any person who apprehends that he may be assessed as a representative, may retain, out of any money payable to the person (hereinafter referred to as “the beneficiary”) on whose behalf he is liable to tax under section 95, a sum not exceeding his estimated liability ;
  • In the event of any disagreement between the beneficiary and the representative or, as the case may be, the person apprehensive of being assessed as representative, as to the amount to be retained under sub-section (2), such representative or person may secure from the Deputy Commissioner of Taxes a certificate stating the amount to be so retained pending the settlement of the liability and the certificate so obtained shall be the warrant for retaining that amount.
  1. Liability of firm or association for unrecoverable tax due from partners or members.- (1) Where any tax payable by partner of a firm or a member of an association of persons in respect of his share of the income from the firm or association, as the case may be, cannot be recovered from him, the Deputy Commissioner of Taxes shall notify the amount of the tax to the firm or association.

(2) Upon notification of the amount of tax under sub-section-(1), the firm or association so notified shall, notwithstanding anything contained in any other law for the time being in force, be liable to pay the said tax and shall, for the purposes of recovery thereof, be deemed to be an assessee in respect of such tax; and the provisions of this Ordinance shall apply accordingly.

  1. Liability of partners, etc., for discontinued business of a firm, etc.- (1)

Where any business or profession carried on by a firm or an association of persons has been discontinued, or where a firm or an association of persons is dissolved, assessment of the total income of the firm or association may be made as if no such discontinuance or dissolution had taken place; and all the provisions of this Ordinance shall, so far as may be, apply accordingly.

(2) Where an assessment is made under sub-section (1) in respect of a firm or an association of persons, every person who was a partner of the firm or member of the association at the time of discontinuance of business, or as the case may be, dissolution of the firm or association, and the legal representative of any such person who is deceased, shall be jointly and severally liable for the amount of tax found payable by the firm or association upon such assessment and shall, for the purpose of recovery of such tax, including penalty and other sum payable, be deemed to be an assessee ; and the provisions of this ordinance shall apply accordingly.

  1. Liability of directors for unrecoverable tax of private companies.- (1)

Where any private company is wound up and any tax assessed on the company, whether before, or in the course of, or after its liquidation, in respect of any income of any income year cannot be recovered, every person who was, at any time during the relevant income year, a director of that company, shall, notwithstanding anything contained in [1][the Companies Act, 1913 (VII of 1913) or WMtbt ABb, 1998 (1998 mbi 18 bs AtBb)], be jointly and severally liable to pay the said tax and shall, for the purposes of recovery thereof, be deemed to be an assessee in respect of such tax ; and the provisions of this Ordinance shall apply accordingly.

(2) Notwithstanding the provisions of sub-section (1), the liability of any person thereunder in respect of the income of a private company shall cease if he proves to the Deputy Commissioner of Taxes that non-recovery of tax from the company cannot be attributed to any gross neglect, misfeasance or breach of any duty on his part in relation to affairs of the company.

  1. Liability of liquidator for tax of private companies under liquidation.-
  • A liquidator of a private company which is wound up, whether under the orders of a court or otherwise, shall, within thirty days after he has become such liquidator, give notice of his appointment as such to the Deputy Commissioner of Taxes having jurisdiction to assess the company.
  • The Deputy Commissioner of Taxes shall, after making such enquiries or, calling for such information as he may consider necessary, notify to the liquidator within three months of the date of receipt of the notice under sub­section (1), the amount which, in his opinion, would be sufficient to provide for any tax which is then, or is likely thereafter to become, payable by the company.
  • On being notified under sub-section (2), the liquidator shall set aside an amount equal to the amount so notified and shall not, before he sets aside such amount, part with any of the assets of the company except for the purpose of payment of tax payable by the company or for making payment to secure such creditors as are entitled under the law to priority of payment over debts due to the Government on the date of liquidation. [2]
  • The liquidator shall be personally liable for payment of the tax on behalf of the company to the extent of the amount notified, if any, under sub- section(2), if he-
  • fails to give notice as required by sub-section (1); or
  • contravenes the provisions of sub-section (3).
  • Where there are more liquidators than one, the obligations and liabilities of a liquidator under this section shall attach to all the liquidators jointly and severally.
  • This section shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force.

Explanation.-In this section, “liquidator” includes any person who has been appointed to be the receiver of the assets of the company under liquidation.

1[102. Liability to tax in case of shipping business of non-resident.- (1)

Notwithstanding anything contained in this Ordinance, where a non resident carries on the business of operation of ships as the owner or charterer thereof (hereinafter in this section referred to as the principal) tax shall be levied and collected in respect of such business in accordance with the provisions of this section.

  • Before the departure from any port in Bangladesh of any ship, the master of the ship shall prepare and furnish to the Deputy Commissioner of Taxes a return showing-
  • the amount paid or payable whether in or out of Bangladesh to the principal, or to any person on his behalf, on account of the carriage of passengers, livestock, mail or goods shipped at the port since the last arrival of the ship; and
  • the amount received, or deemed to be received in Bangladesh by, or on behalf of, the principal on account of the carriage of passengers, livestock, mail or goods at any port outside Bangladesh. 1
  • On receipt of the return, the Deputy Commissioner of Taxes shall determine the aggregate of the amounts referred to in sub-section (2) and, for this purpose, may call for such particulars, accounts or documents, as he may require and the aggregate of the said amounts so determined, shall be deemed to be income received in Bangladesh by the principal from the said business chargeable to tax under this Ordinance under the head “Income from business or profession”, and tax thereon shall be charged at the rate of eight per cent. of such income.
  • Where the Deputy Commissioner of Taxes is satisfied that it is not possible for the master of the ship or the principal to furnish the return required under subsection (2) before the departure of the ship from the port and the principal has made satisfactory arrangements for the filing of the return and payment of the tax by any other person on his behalf, the Deputy Commissioner of Taxes may, if the return is filed within thirty days of the departure of the ship, deem the filing of the return by the person so authorised by the principal as sufficient compliance with sub-section (2).
  • No port clearance shall be granted to the ship until the ^Commissioner of Customs] or any other officer duly authorised to grant the same, is satisfied that the tax payable under sub-section (3) has been duly paid or that satisfactory arrangements have been made for the payment thereof.
  • Nothing contained in this Ordinance shall be so construed as to allow any expense against the aggregate amount of receipts as determined under subsection (3).
  • The tax paid under this section shall be deemed to be the final discharge of the tax liability of the assessee under this Ordinance, and the assessee shall not be required to file the return of total income under section 75 nor shall he be entitled to claim any refund or adjustment on the basis of such return.]

2[(103.)***]

1[103A. Liability to tax in case of air transport business of non-residents.-

  • Notwithstanding anything contained in this Ordinance, where a non­resident person carries on the business of operation of aircraft, as the owner or charterer thereof (hereinafter in this section referred to as “the principal”), and any aircraft owned or chartered by him calls on any airport in Bangladesh, the aggregate of the receipts arising from the carriage of passengers, livestock, mail or goods loaded at the said airport into that aircraft shall be deemed to be income received in Bangladesh by the principal from the said business chargeable to tax under the head “Income from business or profession”, and tax thereon shall be charged at the rate of three percent of such income.
  • The principal or an agent authorised by him in this behalf shall prepare and furnish to the Deputy Commissioner of Taxes, within forty-five days from the last day of each quarter of every financial year, that is to say, the thirtieth day of September, the thirty-first day of December, the thirty-first day of March and the thirtieth day of June, respectively, return in respect of each quarter as aforesaid showing-
  • the amount paid or payable whether in or out of Bangladesh to the principal, or to any person on his behalf, on account of the carriage of passengers, livestock, mail or goods loaded at the said airport; and
  • the amount received, or deemed to be received, in Bangladesh by, or on behalf of, the principal on account of the carriage of passengers, livestock, mail or goods at any airport outside Bangladesh.
  • On receipt of the return, the Deputy Commissioner of Taxes may, after calling for such particulars, accounts or documents, as he may require, determine the aggregate of the amounts referred to in sub-section (2), and charge tax as laid down in sub-section (1).
  • Where, the principal fails to pay the tax payable under sub-section (1) for more than three months, the Commissioner of Taxes may issue to the authority by whom clearance may be granted to that aircraft, a certificate containing the name of the principal and the amount of tax payable by him; and on receipt of such certificate, the said authority shall refuse clearance from any airport in Bangladesh to any aircraft owned or chartered by such person until the tax payable has been paid.

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  • Nothing contained in this Ordinance shall be so construed as to allow any expense against the aggregate amount of receipts as determined under sub­section^).
  • The tax paid under this section shall be deemed to be the final discharge of the tax liability of the assessee under this Ordinance, and the assessee shall not be required to file the return of total income under section 75 nor shall he be entitled to claim any refund or adjustment on the basis of such return.

CHAPTER XI

SPECIAL PROVISIONS RELATING TO
AVOIDANCE OF TAX

  1. Avoidance of tax through transactions with non-residents.- Where any business is carried on between a resident and a non-resident and it appears to the Deputy Commissioner of Taxes that, owing to the close connection between them, the course of business is so arranged that the business transacted between them produces to the resident either no profits or profits less than the ordinary profits which might be expected to yield in that business, the Deputy Commissioner of Taxes shall determine the amount of income which may reasonably be considered to have accrued to the resident from such business and include such amount in the total income of the resident.
  2. Avoidance of tax through transfer of assets.- (1) Any income which becomes payable to a non-resident by virtue, or in consequence, of any transfer of assets, whether alone or in conjunction with associated operations, shall be deemed to be the income of the person who-
  • has acquired, by means of such transfer or associated operations, any right by virtue, or in consequence, of which he has power to enjoy, whether forthwith or in future, the income which becomes so payable to the non-resident, or
  • has received or is entitled to receive at any time, for reasons attributable to such transactions or associated operations, any sum paid or payable by way of loan or repayment of loan or any other sum, not being a sum paid or payable as income or for full consideration of money or money’s worth.
  • The income which becomes payable to a non-resident and is deemed under sub-section (1), to be the income of the person referred to therein shall be so deemed for all purposes of this Ordinance, whether such income would or would not have been chargeable to tax apart from the provisions of this section.
  • The provisions of this section shall not operate if it is shown to the satisfaction of the Deputy Commissioner of Taxes-

(a) that neither the transfer nor any associated operation had for its purpose, or for one of its purposes, the avoidance of liability to taxation; or

  • that the transfer and all associated operations were bona fide commercial transaction and were not designed for the purpose of avoiding liability to taxation.
  • Where any person has been charged to tax on any income which is deemed under sub-section (1) to be his income, that income shall not again be deemed to form part of his income for the purpose of this Ordinance if it is subsequently received by him whether as income or in any other form.
  • A person shall, for the purposes of this section, be deemed to have power to enjoy the income payable to a non-resident if-
  • such income is in fact so dealt with as to be calculated to ensure at any time for the benefit of such person in any form; or
  • the receipt or accrual of such income operates to increase the value of any assets held by such person or for his benefit; or
  • such person receives or is entitled to receive at any time any benefit provided or to be provided-
  • out of such income; or
  • out of money which is, or will be, available for the purpose by reason of the effect or successive effects of associated operations on such income and on any assets representing the income ; or
  • such person has, by means of the exercise of any power of appointment, revocation or otherwise, power to obtain for himself, with or without the consent of any other person, the beneficial enjoyment of such income; or
  • such person is able to control, directly or indirectly, the application of such income, in any manner whatsoever.
  • In determining whether a person has power to enjoy income, regard shall be had to the substantial result and effect of the transfer and any associated operations, and to all benefits which may at any time accrue to such person as a result of the transfer and associated operations irrespective of the nature or form of the benefit.

Explanation.- For the purposes of this section-

  • “assets” includes property or rights of any kind and “transfer”, in relation to assets being rights, includes creation of those rights;
  • “associated operation”, in relation to any transfer, means an operation of any kind effected by any person in relation to –
  • any of the assets transferred; or
  • any income arising from such assets; or
  • any assets representing, directly or indirectly, any of the assets transferred, or the accumulation of the income arising from such assets;
  • “benefit” includes a payment of any kind;
  • references to assets representing any assets transferred, or any income or accumulation of income arising there from, includes references to shares in or obligation of any company to which, or the obligation of any other person to whom, any such assets or that income or accumulation of income is or has been transferred; and
  • any body corporate incorporated outside Bangladesh shall be treated as if it were a non-resident.
  1. Avoidance of tax by transactions in securities.- (1) Where the owner of any securities sells or transfers those securities and buys them back or reacquires them, or buys or acquires similar securities, and the result of the transactions is that any interest becoming payable in respect of the original securities sold or transferred by the owner is not receivable by the owner, the interest payable as aforesaid shall be deemed, for all purposes of this Ordinance, to be the income of such owner and not of any other person, whether the interest payable as aforesaid would or would not have been chargeable to tax apart from the provisions of this sub-section.
  • Where any person has had for any period during an income year any beneficial interest in any securities and the result of any transactions within that year relating to such securities or the income thereof is that no income is received by him, or that the income received by him is less than the sum which the income would have amounted to had the income from such securities accrued from day to day, and been apportioned to the said period, then the income from such securities for the said period shall be deemed to be the income of such person.
  • Where, any person carrying on a business which consists wholly or partly in dealing in securities buys or acquires any securities from any other person and either sells back or re-transfers those securities, or sells or transfers similar securities, to such other person, and the result of the transactions is that the interest becoming payable in respect of the securities bought or acquired by him is receivable by him but is not deemed to be his income by reason of the provisions of sub-section (1), no account shall be taken of the transactions in computing for any of the purposes of this Ordinance any income arising from, or loss sustained, in the business.
  • The Deputy Commissioner of Taxes may, by notice in writing, require any person to furnish him, within such time, not being less than twenty-eight days, as may be specified in the notice, such particulars in respect of all securities of which such person was the owner, or in which he had beneficial interest at any time during the period specified in the notice, as the Deputy Commissioner of Taxes may consider necessary for the purpose of ascertaining whether tax has been borne in respect of the interest on all those securities and also for other purposes of this section.

Explanation.- For the purposes of this section,-

  • “interest” includes dividend;
  • “securities” includes stocks and shares; and
  • securities shall be deemed to be similar if they entitle their holders to the same right against the same persons as to capital and interest and the same remedies for the enforcement of these rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or in the manner in which they can be transferred.
  1. Tax clearance certificate required for persons leaving Bangladesh.-(l)

Subject to such exceptions as the Board may make in this behalf, a person who is not domiciled in Bangladesh, or a person who being domiciled in Bangladesh at the time of his departure is not, in the opinion of an income tax authority likely to return to Bangladesh, shall not leave Bangladesh without obtaining from the Deputy Commissioner of Taxes authorised in this behalf by the Board.-

  • a tax clearance certificate, or
  • if he has the intention of returning to Bangladesh, an exemption certificate which shall be issued only if the Deputy Commissioner of Taxes is satisfied that such person has such intention; and such exemption certificate may be either for a single journey or for all journeys within the period specified in the certificate.

(2) The owner or charterer of any ship or aircraft, who issues any authority to any person referred to in sub-section (1) for travel by such ship or aircraft from any place in Bangladesh to any place outside Bangladesh unless such person has a certificate required by that sub-section, shall-

  • be liable to pay the amount of tax, if any, which has or may become due and payable by such person and also to a penalty which may extend to two thousand taka; and
  • be deemed, for the purposes of recovery of such tax and penalty, to be an assessee in default, and all the provisions of this Ordinance shall apply accordingly.

Explanation.- For the purposes of this section-

(a) “exemption certificate”, in relation to any person, means a certificate to the effect that such person is exempt from the requirement of having a tax clearance certificate for the purpose of the journey or journeys specified therein;

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  • “owner” or “charterer” includes any representative, agent or employee, who may be empowered by the owner or charterer of a ship or aircraft to issue an authority to travel by the ship or aircraft; and
  • “tax clearance certificate”, in relation to a person, means a certificate to the effect that such person has no liability under this Ordinance, the Income-tax Act, 1922 (XI of 1922), the [Gift-tax Act, 1963 (XIV of 1963) or tbKi ABb, 199o (199o mbi 88 bS ABb) or the Wealth-tax Act, 1963 (XV of 1963)], or that satisfactory arrangements have been made for the payment of all or any of such taxes which are or may become payable by such person.

[1]Subs. by F.A. 1989

  • for “Collector of Customs” by F.A. 1999

2

omitted by F.A. 1989

Ins. by F.A. 1989 w.e.f the income year relating to the assessment year 1990-91 and thereafter

[2] Subs. for “the Companies Act. 1913 (VII of 1913)” by F.A. 1999