Income Tax SRO No. 351 of 2004

Government of Pakistan

Revenue Division

Central Board of Revenue

. .

Islamabad, 26^th May, 2004.

N o t i f i c a t i o n

(Income Tax)

S. R. O. 351(I)/2004.- The following draft amendments in the Income Tax Rules, 2002, proposed to be made in exercise of the powers conferred by section 237 of the Income Tax Ordinance, 2001 (XLIV of 2001), is hereby published for the information of all persons likely to be affected thereby, and notice is hereby given that the draft will be taken into consideration after fifteen days of its publication in the official Gazette.

2. Any objection or suggestion, which may be received from any person, in respect of the said draft amendments before the expiry of the aforesaid period, shall be considered by the Central Board of Revenue.

Draft Amendments

In the aforesaid Rules, after rule 231A, the following new rule shall be inserted, namely: -

“231B. Authorization of certification agencies. – (1) Whereas rules 211 to 220A, both inclusive, provide for performance evaluation of non-profit organizations with regard to their aims and objectives during the last three years by authorized independent certification agencies, the procedure given the following sub-rules shall apply in respect of authorization of such certification agencies.

(2) The Chairman, Central Board of Revenue, shall, in his discretion, constitute a Committee for authorization of certification agencies, hereinafter referred to as the Committee, comprising of not less than three members. The Chairman, Central Board of Revenue shall also designate a member of the Committee to serve as its Chairman. All nominations to the Committee shall be ex-officio. One third of the membership or two members of the Committee, whichever is larger, shall constitute the quorum for meetings of the Committee.

(3) An application from a non-profit organization for authorization as a certification agency shall be placed before the Committee.

(4) The Committee shall consider the application on its own merit and decide through a majority vote. The Chairman of the Committee shall caste a vote only in case of a tie.

(5) In its deliberations on the application, the Committee shall consider, inter alia, all or some of the following criteria, for authorization of certification agency, namely:-

(a) Demonstrated and established eminence, credibility and stature of the governing body of such organization that brings respect and credibility to the organization and its work;

(b) understanding of the organization, essentially the senior management and programme staff, of the parameters of evaluation as approved by the Central Board of Revenue;

(c) human resource, quantity as well as quality, available with the organization to conduct professional, objective and transparent evaluations of non-profit organizations;

(d) financial resources available with the organization for meeting the costs incurred on such evaluations;

(e) organizational understanding and experience of working with the non-profit organizations;

(f) experience of evaluating non-profit organizations or social programs;

(g) systems put in place by the organization to conduct evaluation and award of certification; and

(h) monitoring mechanisms to ensure transparency and objectivity.

(6) The Committee may call for any document, report and statement from the organization concerned to assess the capacity of the organization to undertake professional, objective and transparent evaluation as per the criteria specified in sub-rule (5). The Committee may also interview the managerial and program staff of the organization to assess their level of experience, understanding and professionalism.

(7) In no case, however, the committee shall decide to authorize an organization which --

(a) is not registered in Pakistan under any of the relevant laws as a non-profit organization;

(b) does not specifically prohibit distribution of profit, if any, to its members or staff;

(d) in its other programmes create a conflict of interest in evaluating non-profit organisations.

Explanation: - A grant-making organization would have a conflict of interest if it undertakes evaluation and certification of its grant-recipient or potential-recipient organizations. Similarly, a capacity building organization, evaluating non-profit organizations whose capacity it has built or may build in future, would be in a conflict of interest situation.

(8) An application received by the Committee may be decided upon within a period of three months from the date of the receipt of such application.

(9) An applicant adversely affected by any decision of the Committee may file an appeal before the Member (Direct Taxes), Central Board of Revenue, within thirty days of the service of the decision upon the application.

(10) The authorization of an organization as a certification agency shall be notified in the official Gazette.

(11) An authorization granted under this rule shall be for a period of three years and thereafter the Committee shall re-assess the capacity and evaluate the performance of such organization to function as a certification agency. The Committee shall complete such re-evaluation and its decision within three months, during which the certification agency shall continue to function as a legitimate certification agency.

(12) In case of any change in the status of an authorized certification agency that may adversely affect its functioning as such an agency or in case of any gross violation of the standards of professionalism, transparency, integrity or objectivity coming to the knowledge of the Committee, the Committee may, after due inquiry and after providing proper opportunity of being heard to the agency, withdraw such authorization at any time.

[C. No.4(2)IT-Jud/02-Pt-I]

Sd/-

Vakil Ahmad Khan

Member (Direct Taxes)/

Additional Secretary