Karachi : Hub Power Company Limited HUBC on Wednesday said in order to restrict potential exposure, liability, HUBC decided to avail scheme offered by Federal Bureau of Revenue FBR vide SRO 547 dated 22 May 2012 and pay Rs 1,615,474,998 in connection with case of levy of tax by FBR on issuance of shares against project development costs.
In a communication to Karachi Stock Exchange, HUBC referred to information on this case available in note 11.2 to condensed interim unconsolidated financial statements for period ended March 31, 2012. Company strongly believes that it is not liable for this tax and will continue to vigorously defend itself before Supreme Court of Pakistan. HBCL, its tax and legal advisors strongly believe that Company has strong case and eventual outcome ought to be in its favor and tax paid will become refundable.
Note 11.2 extracted from condensed interim unconsolidated financial statements for period ended March 31, 2012. (i) In 1998, FBR made assessments under section 52/86 of Income Tax Ordinance, 1979 [ITO.79] amounting to Rs 1,896 million stating that Company did not withhold tax at time of issue of shares to sponsors against project development costs incurred by them. Company deposited tax amounting to Rs 297 million against above assessments in accordance with departmental procedures. Appeals flied by Company before Commissioner of income tax (Appeals) and thereafter with Income Tax Appellate Tribunal were decided against Company against which it filed appeals before High Court which were decided against Company in March 2012. After HC’s decision, FBR on 30 March issued notices to Company’s bankers, customers for direct recovery due to which HUBC has been unable to operate bank accounts freely. Against HC decision, HUBC filed appeals before Supreme Court of Pakistan along with stay application to restrain FBR from recovering any amount until matter is adjudicated by SCP.