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68. Registration of firms.- (1) An application may be made to the Deputy Commissioner on behalf of a firm for registration of the firm for the purposes of this Ordinance.

(2) No application shall be made under sub-section (1) unless, before the end of the income year relevant to the year for which assessment is to be made,-
(a) the firm had been constituted by an instrument of partnership;
(b) the said instrument specifies, among other things, the shares of the partners; and
(c) the said firm had been registered under the Partnership Act, 1932 (IX of 1932), or an application for registration under the said Act had been made.

(3) An application under sub-section (1) shall be in such form, be accompanied by such documents, be verified in such manner and be made on or before such date as may be prescribed.

(4) Where the Deputy Commissioner, after making such enquiry or requiring the firm to furnish such particulars, documents or evidence as he may think fit, is satisfied that the requirements of sub-sections (2) and (3) have been fulfilled and that there is, or was, a genuine firm in existence in the relevant income year constituted as shown in the instrument of partnership, he may, by an order in writing, made within three months of the date on which the return of total income was filed under section 55 or six months of the end of the income year, whichever is the earlier, register the firm for the purposes of this Ordinance and, subject to the provisions of sub-section (5), such form shall be treated as a registered firm for the income year for which it is first registered and for all subsequent income years for so long as there is no change in the constitution of the firm; and if he is not so satisfied, he may, by an order in writing made within the aforesaid period, refuse to register the firm:

Provided that, where no such order is made within the aforesaid period, the firm shall be treated as a registered firm and all the provisions of this Ordinance shall, so far as may be, apply as they apply in the case of a firm registered under this sub-section.

(5) If, at any time after a firm has been registered or treated as a registered firm under sub-section (4) for any income year, the Deputy Commissioner has reason to believe that-
(a) there was no genuine firm in existence in such income year constituted as shown in the instrument of partnership; or
(b) the requirements of sub-sections (2) and (3) had not been fulfilled in respect of the said income year,

he may cancel the registration after giving a reasonable opportunity to the firm of being heard.

69. Assessment of firms and partners.- (1) Notwithstanding anything contained in this Ordinance, where the assessee is a firm and the total income of the firm has been determined or assessed under sections 59, 59A, 60, 62, 63 and 65, as the case may be,-
(a) in the case of a registered firm,-
(i) the tax payable by the firm itself shall be determined;
(ii) the total income of each partner of the firm, including therein his share of its income, profits and gains of the income year shall be assessed and the sum payable by him on the basis of such assessment shall be determined;
(iii) if such share of any partner is a loss,. it shall be set off against his other income or carried forward and set off in accordance with the provisions of sections 34, 35, 36, 37 and 38;
(iv) where any of such partners is a non-resident, his share of the income, profits and gains of the firm shall be assessed on the firm at the rates which would be applicable if it were assessed on him personally, and the sum so determined as payable shall be paid by the firm; and

(b) in the case of an unregistered firm, the Deputy Commissioner-
(i) may determine the tax payable by the firm on the basis of the total income of the firm; or
(ii) may proceed in the manner laid down in clause (a) as applicable to a registered firm, if, in his opinion, the aggregate amount of tax (including the tax payable under sub-clause (i) of that clause) would be greater than the aggregate amount which would be payable by the firm and the partners individually if the firm were assessed as an unregistered firm [:]

Provided that this sub-clause shall not apply in respect of any assessment year commencing on or after the first day of July, 1986.

(2) Whenever the Deputy Commissioner makes a determination in accordance with the provisions of sub-section (1), he shall notify to the firm, by an order in writing, the amount of tax payable by it, if any, and the amount of the total income on which the determination has been based and the apportionment thereof between the several partners.

(3) Notwithstanding anything contained in sub-section (1) of this section or sub-section (4) of section 83, there shall be included in the total income of an assessee, being a partner in a firm,-

(a) share income of the spouse or a minor child of the assessee from the firm in which the assessee is a partner; and

(b) share income of the spouse of the assessee from a firm in which the assessee is not a partner unless the capital contribution, in any form, of the spouse in such firm is not provided, directly or indirectly, by the assessee [ * ]; and

(c) share income of a minor child of the assessee from a firm in which the assessee is not a partner unless the capital contribution, in any form, of the minor child in such firm is derived from inheritance passed on to him [ * ]:

Provided that nothing in this sub-section shall apply unless the assessee, in the cases referred to in clauses (b) and (c), and the spouse in the case referred to in clause (b), has been given a reasonable opportunity of being heard.

(4) For the purposes of this section, the share of a partner in the income of any firm means the aggregate of-
(a) the proportionate share in the total income of the firm as reduced by the tax, if any, payable by the firm and any sum referred to in clause (b); and
(b) any salary, brokerage, interest or commission receivable by the partner from the firm.

70. Change in the constitution of a firm.- (1) Where, at the time of making an assessment on a firm under section 62, 63 or 65 it is found that a change has occurred in the constitution of the firm, the assessment shall be made on the firm as constituted at the time of making the assessment, but the income of the firm shall be apportioned among the partners who were entitled to receive it and, where the tax assessed upon a partner cannot be recovered from him, it shall be recovered from the firm as constituted at the time of making the assessment.

(2) The provisions of sub-section (1) shall, so far as may be, apply to the determination of total income and the tax payable under section 59 or section 59A as they apply to an assessment under section 62, 63 or 65.

71. Discontinuance of business or dissolution of a firm or associat-ion of persons.- (1) Subject to the provisions of section 72, 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, all the provisions of this Ordinance, shall, so far as may be, apply as if no such discontinuance or dissolution had taken place.

(2) Every person, who was, at the time of such discontinuance or dissolution, a partner of such firm or a member of such association and the legal representative of any such person who is deceased, shall be jointly and severally liable for the amount of tax payable by the firm or the association, as the case may be.

72. Assessment in the case of discontinued business or profession.-(1) Where, in any year, any business or profession is discontinued, the person discontinuing such business or profession shall give to the Deputy Commissioner a notice of such discontinuance within fifteen days of the date of such discontinuance (hereinafter referred to as the "said date").

(2) The person discontinuing such business or profession shall, under the provisions of this Ordinance or upon being required by the Deputy Commissioner by a notice in writing, furnish] a return or returns of total income in respect of the period commencing from the end of the latest income year for which an order has been made under sub-section (1) of section 59, section 59A, 62, 63 or 65, or, where no such order has been

made, a return has been made under section 55, 56 or 57, as the case may be, and ending on the said date, or where no such order or return has been made, the income year or years comprising the period ending on the said date; and the period commencing from the end of the latest income year to the said date shall, for purposes of this section, be deemed to be an income year (distinct and separate from any other income year) for the assessment year in which the said date falls.

(3) Notwithstanding anything contained in sub-sections (1) and (2), the Deputy Commissioner may serve a notice on any person who, in his opinion, has discontinued, or is likely to discontinue, in any year, any business or profession, to furnish, within such time as may be specified in such notice, a return or returns of total income for the income year or years for which the assessee is required to furnish such return or returns under sub-section (2).

(4) The assessment shall be made at the rates applicable to the relevant assessment year and all the provisions of this Ordinance shall, so far as may be, apply accordingly.

73. Succession to business, otherwise than on death.- (1) Where a person carrying on any business or profession has been succeeded in any income year by any other person (hereafter in this section referred to as the "predecessor" and "successor" respectively), otherwise than on the death of the predecessor, and the successor continues to carry on that business or profession,-

(a) the predecessor shall be assessed in respect of the income of the income year in which the succession took place up to the date of succession and of the income year or years preceding that year; and

(b) the successor shall be assessed in respect of the income of such income year after the date of succession.

(2) Notwithstanding anything contained in sub-section (1), where the predecessor cannot be found, the assessment of the income of the income year in which the succession took place up to the date of succession and of the income year or years preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Ordinance shall, so far as may be, apply accordingly.

(3) Where any tax payable under this section in respect of such business or profession cannot be recovered from the predecessor, it shall be recoverable from the successor, who shall be entitled to recover it from the predecessor.

74. Liability in the case of a deceased person.- (1) Where a person dies, his legal representative shall be liable to pay any tax which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased.

(2) For the purpose of making an assessment of the income of the deceased and recovery of tax,-
(a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased; and
(b) any proceeding which could have been taken against the deceased if he had survived may be taken against the legal representative,

and all the provisions of this Ordinance shall, so far as may be, apply accordingly.

(3) The legal representative of the deceased shall, for the purposes of this Ordinance, be deemed to be an assessee.

(4) The liability of a legal representative under this section or section 71 shall be limited to the extent to which the estate of the deceased person is capable of meeting the liability.

(5) For the purposes of this section and sections 71 and 97, "legal representative" includes an executor, administrator and any person administering the estate of a deceased person.

75. Partition of a Hindu undivided family.- (1) Where it is claimed by, or on behalf of, any member of a Hindu family, hitherto assessed as undivided, that a partition has taken place among the members of such family, the Deputy Commissioner shall, after giving a notice to all the members of the family and making such enquiry as he thinks fit, make an order holding either that a partition has taken place with effect from a date specified in such order or that no partition has taken place.

(2) Where, according to an order under sub-section (1), the partition has taken place, the total income of the joint family in respect of the income year or years comprising the period up to the date of partition shall be assessed as if no partition had taken place and each member or group of members shall, in addition to any tax for which he or it may be separately liable, be jointly and severally liable for the tax on the income so assessed.

76. Liability in the case of a private company going into liquidation.- (1) Every person who is a liquidator of a private company which is wound up, or who has been appointed the receiver of any assets of such company (hereinafter referred to as the "liquidator"), shall, within thirty days of his having become such liquidator, give notice of his appointment to the Deputy Commissioner who has jurisdiction to assess the company.

(2) The Deputy Commissioner shall, after making such enquiries or calling for such information as he may deem fit, notify to the liquidator, within three months of the date of receipt of the notice referred to in sub-section (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.

(3) On being notified by the Deputy Commissioner under sub-section (2), the liquidator shall set aside an amount equal to the amount so notified and until he sets aside such amount, he shall not part with any of the assets of the company, except for the purpose aforesaid or for making any payment to secured creditors whose debts are entitled under the law to priority of payment over debts due to Government.

(4) If the liquidator fails to comply with or contravenes any provision of sub-section (1) or sub-section (3), he shall be personally liable for the payment of the tax payable by the company, not exceeding the amount, if any, notified under sub-section (2), and all the provisions of this Ordinance shall, so far as may be, apply as if he were an assessee in default.

(5) The provisions of this section shall have effect notwithstanding anything contained in any other law for the time being in force.

77. Liability for payment of tax in the case of private companies, firms and associations of persons.-
(1) Notwithstanding anything contained in the Companies Act, 1913 (VII of 1913), where any tax payable by a private company (including a private company which is wound up or has gone into liquidation) in respect of any income year (whether ending before or after the date of commencement of the winding-up or liquidation proceedings) cannot be recovered, every person who is, or was at any time during the said income year, a director of the company and every share-holder owning not less than ten percent of its paid-up share capital at any time during the said income year shall be jointly and severally liable for the payment of such tax, and such person shall be entitled to recover the amount so paid by him from the company on whose behalf it is paid or any other director or share-holder of the company in proportion to the shares owned by him.

(2) No proceedings under sub-section (1) shall be commenced except with the prior approval in writing of the Commissioner.

(3) Where any tax payable by a partner of a firm or a member of an association of persons in respect of his share of income from the firm or the association, as the case may be, cannot be recovered from him, the Deputy Commissioner may notify the amount of such tax to the firm or association and thereupon, notwithstanding anything contained in any law for the time being in force, the tax shall be payable by the firm or the association, as the case may be, and such firm or association shall, for purposes of recovery of such tax, be treated as an assessee; and in the case of default in making the payment of such tax, the provisions of sections 91, 92, 93, 94 and 95 shall, so far as may be, apply accordingly.

78. Liability of agents representing assessee.- (1) Every agent shall, in respect of the income for which he is, or is declared to be, or is treated as, an agent, be deemed to be an assessee for the purposes of this Ordinance and be subject to the same obligations and liabilities as if he were the assessee, and shall be liable to assessment in his own name in respect of that income.

(2) Every agent who pays any tax under this Ordinance, shall be entitled to recover the tax so paid from the person on whose behalf it is paid, or to retain an equivalent amount out of any moneys due or belonging to the said person which may be in his possession or come into his possession at any time.

(3) Any agent, or any person who apprehends that he may be assessed as an agent, may retain out of any money payable by him to the person on whose behalf he is liable to pay tax (hereinafter in this section referred to as the 'principal'), a sum equal to his estimated liability under this Ordinance, and in the event of any disagreement between the principal and such agent or person as to the amount to be so retained, such agent or person may secure from the Deputy Commissioner a certificate stating the amount to be so retained pending final determination of the tax liability, and the certificate so obtained shall be his authority for retaining that amount.

Explanation.-For the purposes of this section and section 80, "agent" includes-

(1) in respect of the income of a minor, lunatic or idiot, the guardian or manager who is entitled to receive, or is in receipt of, such income on behalf of such minor, lunatic or idiot;

(2) in respect of income which the Court of Wards, the Administrator-General, the Official Trustee or any receiver or manager appointed by, or under, any order of a court receives or is entitled to receive on behalf of, or for the benefit of, any person, such Court of Wards, Administrator-General, Official Trustee, receiver or manager;

(3) in respect of income which a trustee, appointed under a trust declared by a duly executed instrument in writing whether testamentary or otherwise (including any Wakf deed which is valid under the Mussalman Wakf Validating Act, 1913) (VI of 1913), receives or is entitled to receive on behalf, or for the benefit, of any person, such trustee or trustees; and

(4) in respect of the income of a non-resident-
(a) any person in Pakistan-
(i) who is employed by, or on behalf of, the non-resident; or
(ii) who has any business connection with the non-resident; or
(iii) from or through whom the non-resident is in receipt of any income, whether directly or indirectly; or
(iv) who holds, or controls the receipt or disposal of any money belonging to the non-resident; or
(v) who is the trustee of the non-resident; or

(b) any person, whether a resident or a non-resident, who has acquired, by means of a transfer, a capital asset in Pakistan; or

(c) any person, who is declared or treated as an agent of the non-resident:

Provided that-
(a) a bona fide independent broker in Pakistan who, in respect of any transactions, 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 under this section in respect of such transactions, if-
(i) the transactions are carried on in the ordinary course of business through the first-mentioned broker; and
(ii) the non-resident broker is carrying on such transactions in the ordinary course of his business and not as a principal; and

(b) no person shall be declared or treated as the agent of a non-resident unless he has been given an opportunity, by the Deputy Commissioner, of being heard.

(4) Nothing in this section shall prevent either the direct assessment of the person on whose behalf, or for whose benefit, any such income is receivable, or the recovery from such person of the tax payable in respect of such income.

79. Income from transactions with non-residents.- Where business is carried on between a resident and a non-resident and it appears to the Deputy Commissioner that conditions are made or imposed

between them in their commercial or financial transactions which differ from those which would be made between independent persons, the Deputy Commissioner shall determine the amount of profits which would have accrued to the resident but, by reason of those conditions, have not so accrued, and include such amount in the total income of the resident.

80. Shipping business of non-residents.- (1) Notwithstanding anything contained in this Ordinance, where a non-resident carries on :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.

(2) Before the departure from any port in Pakistan of any ship, the master of the ship shall prepare and furnish to the Deputy Commissioner a return showing (a) the amount paid or payable (whether in or out of Pakistan) to the principal, or to any person on his behalf, on account of the carriage of passengers, livestock, mail or goods shipped at that port since the last arrival of the ship and (b) the amount received, or deemed to be received, in Pakistan by, or on behalf of, the principal on account of the carriage of passengers, livestock, mail or goods at any port outside Pakistan.

(3) On receipt of the return, the Deputy Commissioner 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 Pakistan 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.

(4) Where the Deputy Commissioner is satisfied that it is not possible for the master of the ship or the principal to furnish the return required under sub-section (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 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).

(5) No port clearance shall be granted to the ship until the Collector of Customs, or 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.

(6) Nothing contained in this Ordinance shall be so construed as to allow any expense against the aggregate amount of receipts as determined under sub-section(3).

(7) 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 55 nor shall he be entitled to claim any refund or adjustment on the basis of such return.

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