Priniciples of Income Tax Law

Law Library Pakistan

HUZAIMA & IKRAM’S

PRINCIPLES of

INCOME TAX LAW

Fourth Edition (2005-06)

AAP/LLP

(ii)

© 2005. All rights with authors

All Rights Reserved. No part of this publication may be reproduced, stored in

retrieval system, or transmitted in any form or by any means, electronic,

mechanical, photocopying, recording or otherwise, without the written

permission of the publisher.

Case Law stated is up to May 2005

This book is constantly updated through website

http://www.huzaimaikram.com

International Tax Glossary is available on the above website.

Authors: Huzaima Bukhari Dr. Ikramul Haq

Web version of the book is available at

http://www.huzaimaikram.com & http://www.paktax.com.pk

Fourth Edition : November 2005

Third Edition : March 2003

Second Edition : January 2000

First Edition : June 1993

Price:

Rs.300 - US$ 15 - UK£ 10

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Disclaimer: No responsibility is taken for any error or omission. The material

contained in this publication is not intended to be advice in any particular matter.

No reader should act on the basis of any matter contained in this publication

without considering appropriate professional advice. The publisher, the authors

and the editor, expressly disclaim all and any liability to any person in respect of

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Pakistan without permission in writing of the Publisher.

For

our sons

Abbas Askar

&

Ammar Askar

their love

has always been

a source of

our creativity

(v)

Preface to the fourth edition The third edition, published in 2003, received tremendous

applause and appreciation. Since then sizeable case law has

emerged having significant implications for Income Tax practice

in Pakistan, especially after the promulgation of Income Tax

Ordinance, 2001 with effect from 1st July 2002. We have

therefore decided to bring out a thoroughly revised edition, with

the following new features:

Rearrangement keeping in view changes introduced in

conceptual characteristics of Income Tax Law through the

promulgation of Income Tax Ordinance, 2001.

A brief review of the new law has been included for quick

understanding and appreciation.

New “words and phrases” have been added to make the

book further comprehensive and useful.

Comprehensive tables have been included which give

comparative position of all the major Income Tax Laws in

the Sub-continent since 1918.

The law cited is confined mainly to Pakistani courts

including decisions pronounced by the courts in the

Subcontinent prior to partition, which are binding on the

Pakistani courts, if not overruled by any court of the

country after independence - Ramkola Sugar Mills Ltd. vs.

NWFP [1960] 2 Tax (Suppl.29).

A number of new chapters have been added to include

some basic principles and doctrines relevant for

interpretation of taxing statutes.

International Tax Glossary, which was part of Third

Edition, has now been provided at

http://www.huzaimaikram.com and

http://www.paktax.com.pk with continuous

updating for the benefit of readers to find without any

(vi)

hassle meanings and scope of different terms, phrases and

technical abbreviations.

Terminology of different forms of Islamic finance is included

in International Tax Glossary for the benefit of readers

[visit our websites http://www.huzaimaikram.com and

http://www.paktax.com.pk for accessing this book].

Case law from 1886 to May 2005 has been analysed to deduce

basic principles of taxation and interpretation of fiscal statutes.

The book is unique as it gives a full view of the development of

Income Tax Law since its inception in the Subcontinent. The

preparation of this work was tedious and arduous. It involved

intelligent scanning and careful perusal of thousands of

judgements contained in numerous bounded volumes. A

research work of this nature required strenuous efforts and long

hours of continuous sittings. It could have not been

accomplished without the cooperation of our sons, Abbas Askar

and Ammar Askar, who showed immense patience in giving us

the time that otherwise legitimately belonged to them.

We are specially thankful to all the staff members of AAP/LLP,

especially Mr. Mansoor Beg, Advocate, Mr. Naveed Iqbal, Mr. Abid

Javed and Mr. Khurram Rauf Khan, for extending their whole-

hearted cooperation.

We sincerely hope that advocates, chartered accountants, tax

practitioners, judges, researchers, tax officials and academicians

will find this work useful. We look forward to valuable

suggestions from our ardent readers for improving this work in

future.

Huzaima Bukhari

Lahore, November 1, 2005 Dr. Ikramul Haq

(vii)

C O N T E N T S

PART - I

Principles of Income Tax Law

Dedication (iii)

Preface (v)

Arrangement of Chapters (ix)

Table of Comparative Income Tax Laws (xxxix)

Table of cases cited (xciii)

Subject Index 515

Arrangement of Chapters

PART - I

Principles of Income Tax Law

Chapter I Introduction 1. Basic Features of Income Tax Law 1

2. Scheme of the Ordinance 2

3. Definitions 8

4. Role of certain expressions 16

5. Proviso, object of 17

6. Explanation, object of 20

7. Rules of interpretation or construction of statutes 21

8. “Deemed”, significance of 27

9. Deeming provisions in the Ordinance 30

10. Fiction upon fiction 33

11. Reconstruction of sections and rules 33

12. Technical words 33

13. Legal fiction in one act does not extend to the other 34

14. Income Tax does not apply to residents of non-taxable territories 35

Chapter II Basic Principles 1. Distinction between direct and indirect taxes 39

2. Income cannot be taxed twice 39

3. Principle of equality in fiscal laws 40

4. Statutory rules cannot enlarge the scope of the section under which the same has been framed 41

5. Theory of reading down as a rule of interpretation 42

6. Doctrine of unjustified enrichment is not attracted as incidence of indirect taxes is invariably transferred to consumers 42

7. Material supplied by the department cannot be part of gross receipts taxable u/s 80C 43

8. The Income Tax Law makes a distinction between actual liability in praesenti and a liability de futuro which, for the time being, is only contingent 44

(ix)

(x) Principles of Income Tax Law

9. Proviso cannot extend the meaning of the enacting part 45

10. Assessing officer to apply correct law even if assessee fails to make a claim 46

11. Rule cannot override the statutory law 46

12. Rules cannot be called in aid to interpret sections of the Act. In case of discrepancy in language of section and rules, section is to prevail 47

13. Exemptions can only be allowed if claimed 48

14. Words in a statutory instrument should be construed in their ordinary sense 48

15. In a Taxing Act there is no room for any intendment 48

16. If an action is deemed illegal, the whole superstructure built upon it is also illegal 48

17. “Resident” of taxable territories is liable to tax on total world income including any income accruing or arising in non-taxable territories of Pakistan 49

18. Charging section and subsequent provisions enable the liability only to be quantified 50

19. Principles governing interpretation of financial liabilities 51

20. Provisions of earlier Act incorporated in the later Act became part and parcel of the later Act 53

21. Department can go beyond a transaction 53

22. Application of tax rates through a Finance Act explained 53

23. Act is to be read as a whole 55

24. Statute should be read as a whole 55

25. Fiscal statutes should be interpreted according to their natural meanings 56

26. Equitable construction is inadmissible in a fiscal statute 56

27. Court cannot make up for any deficiency of Legislature 57

28. Courts are not to be influenced by doctrine of hardship 57

29. In dubio construction which imposes burden on taxpayer should be avoided 57

30. Out of ambiguity of the provisions of the Act cannot be extracted a new and added obligation not formerly cast upon the taxpayer 57

31. No taxation except by express words 58

32. Avoidance of tax in legal manner is not evasion or mala fide action 58

33. Fiscal statutes to be strained in favour of the subject, if at all 59

(xi) Arrangement of Chapters

34. Fair and reasonable construction for taxing statutes 60

35. No equitable construction in fiscal statutes 60

36. Charging section cannot be overlooked on hypothesis of history of exemption 60

37. Subsequent general enactment does not interfere with special provisions unless expressed clearly 61

38. Modification of exemption from taxation must be express and not in general terms or by implication 61

39. Long course of decisions determining construction of a repealed statute may be an aid in the construction of a new statute passed in the same terms as the former, but a single

decision not 61

40. Practice as a guide to construction 62

41. Practice of Revenue Authorities as contemporanea expositio 62

42. Principle of contemporary exposition 63

43. Practice not a guide where language of statute is clear 63

44. Practice under repealed Act as an aid for construction of later

Act 65

45. Presumption against double taxation 66

46. Vested rights such as rights to appeal and to demand a reference already accrued, cannot be taken away by repeal of Act 67

47. Non-revenue profit/losses are not covered in Income Tax unless specifically provided in statute 68

Chapter III Powers of Legislature 1. Powers of legislature while framing fiscal laws 71

2. Legislature, particularly in economic activities, enjoys wide latitude in the matter of selection of person, subject-matters, events etc., for taxation 71

3. Taxing rights of legislature are unlimited as long as these are not confiscatory 80

4. Parliament is competent to levy presumptive taxation; broad principles relating to fiscal laws explained 81

5. Levy of minimum tax held constitutional 83

6. Restriction on power to levy tax 86

7. When legislation is violative of fundamental rights 87

8. Past and closed transactions can be reopened by giving retroactive effect to an amending provision 88

9. Double Taxation is prerogative of legislature 89

(xii) Principles of Income Tax Law

10. The powers of legislature to tax non-residents 89

11. Levy of presumptive taxation 90

12. Levy of Corporate Asset Tax is constitutionally valid 90

13. Corporations created by provincial statutes are not “governments” 90

14. Personal interest must yield to larger interest 92

15. Powers of Federal Government to levy income tax on any property or income, including that of Provincial Government 95

16. Parliament can introduce a new change of tax either by incorporating that change in the Income Tax Act or by Finance Act 96

17. Words occurring in a constitutional provision relating to legislative power should be liberally construed 97

18. Levy of super tax on free reserves which had already suffered tax held not to be ultra-vires of the powers of legislature under the Constitution 97

19. Redundancy cannot be readily attributed to the legislature 97

20. Legislature has the power to enact curative legislation 98

21. Power to make and promulgate Ordinance includes the power to levy tax 99

22. Rules cannot be made by subordinate delegate authority unless expressly permitted 99

23. Subordinate legislation in the name of removing difficulties usurped the powers of legislature 99

Chapter IV Role of Deeming Provisions/Certain Expressions

1. Deeming provisions in respect of income 101

2. Widest amplitude of an entry in legislative list does not extend to tax something which is not a citizen‟s income 102

3. Scope of definition of „tax on income‟ under the Constitution 102

4. Deeming provisions in a statute cannot spill over to other provisions in a statute and are to be construed strictly within the four corners of their objects 103

5. Deeming provisions how to be construed 103

6. Word “may” sometimes be construed as “shall” 104

7. Scope of deemed income 104

(xiii) Arrangement of Chapters

8. “Include” and “shall be deemed to be included” - meaning of 104

9. Assessment and levy of super tax on total income of three months at the rate applicable to twelve months‟ notional income as a condition for permitting change of previous year by assessee was held without legal sanction 106

Chapter V Specific Words Explained 1. “Accrue” and “arise” 109

2. “Accrue” and “arise” vis-a-vis effect of book entries 110

3. „Adjudicate‟ necessarily implies settling a matter 110

4. Adjudication requires passing of a speaking order 111

5. “Agricultural Income” when remains to be such in the hands of recipient 112

6. “Agriculture” and “agricultural purposes” 112

7. “Annual value” 113

8. “Approval” and “permission” are not synonymous 113

9. “Artificial juridical person” 114

10. “Assess” 114

11. “Assessable income” 115

12. “Assessment” 115

13. “Agreed assessment” though framed outside the four comers of the Act is still an assessment at par with any other assessment 116

14. Agreed assessment violative of Contract Act will be voidable 117

15. “Assessment year”-- stable interpretation should be adopted 117

16. “Best judgment” must reflect fair and proper estimate 117

17. “Business” 118

18. “Business connection” 118

19. “Capital” and “dividend” - distinguished 118

20. “Case” 119

21. “Certified copy” 119

22. “Charitable purposes” 119

23. “Charity” and “charitable purposes” 120

24. “Commercial” and “commerce” 122

25. “Company” and “shareholders” relationship between 122

26. “Company limited by guarantee” 123

(xiv) Principles of Income Tax Law

27. “Complete” 124

28. “Consultancy fee” falls under the term “industrial and commercial profits” 125

29. “Debt”, “loan”, “owe” and “due” difference between 127

30. “Deemed order” 129

31. “Default” 129

32. “Definite Information” 130

33. “Discard” 133

34. “Dividend” 134

35. “Employee” 135

36. “Enduring benefit” 135

37. “Enemy”, “enemy territory” and “aggrieved party” 136

38. “Erroneous” 137

39. “Erroneous” – the scope of word explained 137

40. “Evasion” and “Avoidance” - the difference 138

41. “Evasion of Tax” 138

42. “Execution of Contract” 139

43. “Expenditure” & “reserves” 139

44. “Failed” and “default” are not synonymous 140

45. “Failure” 141

46. “Fixed capital” 141

47. “Fixed capital” and “circulating capital” 141

48. “General Public” 142

49. “Goods” do not include immovable property 142

50. “Goodwill” 143

51. “Guess work” vis-a-vis best judgement explained 144

52. “Hearing” 144

53. “Immunity” 145

54. “Includes” 145

55. “Including” 146

56. “Income” 146

57. “Income tax authority”-- ITAT is not covered in section 156(3) 149

58. “Individual” & “association of persons” 149

59. “Individual” and “such individual” 150

60. “Industrial undertaking” – meaning of 150

61. “Interest” 152

(xv) Arrangement of Chapters

62. “Liable” 153

63. “Life” 154

64. “Manufacture” 154

65. “Material” 156

66. “May” 156

67. “Merge” & “merger” 156

68. “Mistake apparent from record” Scope of section 156 157

69. “Notice”, “give notice” and “opportunity” 157

70. “Occupation” 159

71. “Opinion” 159

72. “Or” 159

73. “Owners”, “ownership” and “own” 159

74. “Paid” 160

75. “Pay” or “paid” 160

76. “Party in default” 161

77. “Pay” 162

78. “Penalty” 162

79. “Permanent establishment” 163

80. “Pending” vis-a-vis revision petition under repealed Income Tax Ordinance, 1979 164

81. “Pending” ordinarily means that the matter is not concluded 165

82. “Pending” not only means actually pending but what is proposed to be filed within an unexpired periphery of time 165

83. “Person” 165

84. “Presumptive Tax Regime” 166

85. “Previous year” 166

86. “Processing” 166

87. “Proceedings” and “pending proceedings” 167

88. “Profit” 169

89. “Property” 170

90. “Receivable” u/s 17 means actually received and not “due” 170

91. “Received” a person cannot receive a thing from himself 172

92. “Repeal” & “amendment” 172

93. “Reserve” 172

(xvi) Principles of Income Tax Law

94. Unlawful action/order does not force any law of limitation for filing of appeal 173

95. Law of limitation vis-à-vis rules of justice explained 174

96. “Sales” and “supplies” 175

97. “Shall” 175

98. “Specify” 175

99. “Supply” 176

100. “Tax” 177

101. “Tax” and “fee” 177

102. “Tax paid” and “tax payable” 177

103. “Turn-key project” 178

104. “Turnover” 181

105. “Working capital”, “current assets” and “current liability” 183

106. “Year” - How to be understood 185

Chapter VI Construction of Fiscal statutes 1. A fiscal statute has to be construed in its true perspective 187

2. Exemption clauses, rules of interpretation 187

3. Rule of interpretation regarding words and expressions used in fiscal statute 189

4. An equitable construction of a fiscal statute is not permissible 190

5. Fiscal rules are meant for good fiscal governance 191

6. Literal approach, unless it leads to a manifest absurdity, has to be followed 191

7. Machinery provision in a taxing statute to be liberally construed in order to effect recovery 193

8. Principle of strict construction meant for taxing provisions and does not apply to machinery provisions 194

9. When language is clear provisions are to be construed strictly 195

10. Benefit of ambiguity should be given to the assessee 195

11. Tax must be imposed by clear and unambiguous language 196

12. Exemption cannot be allowed if not claimed 197

13. In case of ambiguity/doubt, the benefit should be given to taxpayer and not the Revenue 197

14. Benefit of doubt is the right of taxpayer 198

(xvii) Arrangement of Chapters

15. Courts while interpreting a statute must adhere to the plain meaning of the words 198

16. Meaning of doubtful words to be gathered by reference to words associated with them 200

17. Fiscal statutes should be strictly construed and no addition or omission therefrom permissible 200

18. Construction of law should not lead to startling results 201

19. Tax can only be imposed by clear words of the Act 201

20. Strict rule of interpretation to tax a subject 202

21. Subject can only be taxed if statute expressly so provides 203

22. Subject taxable if within letter of law, not taxable if not within letter of law though within the spirit 203

23. Burdening a subject with heavy taxation on personal views of any official is not sustainable 204

24. Court must stick to the letter of the statute 205

Chapter VII Language of Statute 1. If two views are possible from reading a provision of law,

then one favouring the citizens is to be given preference 207

2. Rule of benefit to subject where two interpretations are possible 208

3. When two interpretations are possible in relation to any provision in the discipline of taxation, the one favourable to the assessee would prevail 208

4. Doctrine of favourable interpretation applies to charging and not to machinery provisions 210

5. Two equal possible interpretations of exemption clause one favouring the revenue to be adopted 210

6. Rule of interpretation of ambiguous words 211

7. If there was any doubt or ambiguity in language even then interpretation favourable to assessee had to be adopted 211

8. In case of ambiguity in language, statement of objects and reason, can be relied upon 212

9. Ambiguity in language should be resolved in the favour of taxpayer 212

10. Literal rule can only be deviated in case of ambiguity in language; otherwise courts should adhere to plain words 212

11. Plain words and patent meanings of law are to be applied and interpreted as they are and no latent meanings are to

(xviii) Principles of Income Tax Law

be attached to the patent words which convey the plain and obvious meaning 213

12. Liability of withholding agent is restricted to plain language of statute 213

13. Court must confine itself to language of law 215

14. Statutes should be interpreted strictly in accordance with letter of law 216

15. Inconsistencies are in-built in Income Tax 216

16. General Language not infrequently intended sub modo 216

17. It is inconceivable that a person can be saddled with responsibility/liability for non-compliance of law which is to be enacted somewhere in future 217

Chapter VIII Application of Statute 1. Application of rule generalibus specialia derogant 219

2. Interpretation of charging and machinery provisions of a fiscal statute 220

3. Interpretation of machinery provisions of a fiscal statute 220

4. Law applicable on the first day of assessment year will apply and not the one in existence during the next year 220

5. For the purposes of assessment of income the law applicable is that in force on the first day of the relevant assessment year 221

6. Right accrued cannot be taken away by implication 221

Chapter IX Interpretation of Statute 1. Statute must be intelligibly expressed and reasonably

definite and certain 223

2. While interpreting fiscal notifications the only guiding principle should be that no undue advantage could be taken on the basis of far-fetched or scholarly interpretation which the plain language does not imply nor intended to mean 224

3. Exemption clauses provided under industrial incentives should be construed liberally 225

4. Effect of non obstante clause 225

5. Non obstante provision overrides conflicting provision 226

6. Interpretation of statute is not CBR‟s domain 226

7. Proceedings of the Legislature can be resorted to when the words of a provision are ambiguous 226

(xix) Arrangement of Chapters

8. General and specific words 227

9. Words in statutes cannot be treated as surplusage or redundant 227

10. Every word used in a statute has to be given effect to and no word of provisions of a statute is to be treated as surplusage and redundant 227

11. Rule of harmonious construction of statutes 228

12. Cautious approach is necessary when adopting foreign case-law 229

13. Court cannot imply anything not expressed in statute 229

14. Person sought to be taxed must come within the letter of law 229

15. No words to be treated as surplusage 230

16. Exemption clauses vis-a-vis rules of interpretation 230

17. A fiscal statute should be construed strictly 230

18. Abrogation of International Law 230

19. While interpreting a fiscal statute, there is no room for any intendment, inference or presumption 231

20. Hypothetical construction/interpretation is not permissible 231

21. Fiction of law is restricted to the extent specified in statute and its scope is not to be extended 231

(xx) Principles of Income Tax Law

22. Definitions given in a particular statute are meant strictly for the said law unless adopted by other statutes through legislation or reference 232

23. Law is to be interpreted in the totality of the scheme contained in a particular statute and is not to be taken in isolation 233

24. It is not for the Courts to supply for deficiency in the language of law as framed 235

25. No provision of a statute should be considered in isolation, until and unless any section/provision thereof is a complete code in itself. Any Scheme contained in a statute or subordinate legislation should be considered in totality of the Scheme 235

26. Where language of any statute or legal document is clear, then the same has to be acted upon accordingly 236

27. If the words are not already defined in the statute, such words used in a section of the statute are to be given their ordinary meaning 236

28. Words, “tax payable on the basis of such return” are to be interpreted on a reading of return of total income as a whole including the claim of exemption if any, and the assessment order is not to be read as part of return of total income under any principle of the interpretation of statutes 236

29. Document is to be read as a whole and not in piece or in conjunction with any other material which is not be part of document 237

30. Principles for determining mandatory or directory provision of law 237

31. Correct interpretation of Rule 15 vis-a-vis right of appeal 238

32. “Assessment consciously completed”, meaning of 239

33. Parametric computer balloting held contrary to the law 240

34. Machinery provisions cannot be construed to go beyond the spirit of law 240

35. Claimant of an exemption has to prove the same without any ambiguity 241

36. Machinery provisions of fiscal law should be construed so as not to destroy recovery mechanism 241

37. Rule of liberal construction of machinery provisions 243

38. Things should be done as required by law 244

(xxi) Arrangement of Chapters

39. Redundancy should not be readily assigned by courts 244

40. Strict rule of fiscal statutes emphasized 244

41. Exemption clauses are to be construed strictly 245

42. The scope of “Explanation” and its impact explained 246

43. Explanation can be added to elaborate the meanings 247

44. Object of adding an “Explanation” to a statutory provision is only to facilitate its proper interpretation and to remove any possible confusion or misunderstanding about its true meaning 248

45. Harmonious construction is recommended 251

46. Basic rules to construe charging and machinery provisions 251

47. Speech of the Federal Minister has no legal consequences or effect 252

48. Role of history of legislation in interpreting a provision of law/statute 252

49. Inapt and inaccurate phraseology of draftsman cannot nullify a provision made by legislature 253

50. Departmental construction can be used in aid of interpretation 254

51. Interpretation leading to destructive ends should be avoided by Courts 255

52. Marginal notes to the section of an Act cannot be referred to for the purpose of construing the Act 257

53. Caution should be used while borrowing the meaning attached to terms and phrases used in one statute, while interpreting another statute 258

54. Inclusive definitions enlarge the scope of a term/word 258

55. Definitions given in a particular statute are restricted to the said statute unless any other statute adopts the same by incorporation or reference 259

56. Defining a provision in one enactment by the help from other laws is never safe 259

57. Terms and phrases used in a statute prima facie should be construed in their popular sense 260

(xxii) Principles of Income Tax Law

58. While interpreting a statute - nothing is to be read in and nothing is to be implied 260

59. Meaning of doubtful words should be interpreted by reference to meaning of words associated with it 260

60. Provisions should be interpreted in accordance with the plain meaning of the language used therein 261

61. Departmental instructions cannot be used in aid of interpretation 261

62. Statute should be given its ordinary meaning 261

63. Once intention of legislature is clear no extraneous principle of interpretation or construction of statute is to be employed 262

64. Punctuation marks and construction of statutes 262

Chapter X Retrospectivity 1. Fiscal laws and theory of retrospectivity 265

2. Scope of retrospective legislation 266

3. Retrospective application of law must be by explicit words 266

4. Rule to determine retrospective effect 267

5. Judgment of Supreme Court becomes operative from the date of announcement having no retroactive legal implication 269

6. Authority to legislate includes authority to legislate with retrospective effect 270

7. The authorities concerned can consider amendment brought in during the pendency of proceedings, and benefit if any can be provided to the assessee 270

8. If retrospective operation of a provision results in injustice it should not be so applied 272

9. Remedial and curative legislation has retrospective effect 272

10. All provisions which come to cure/redress or to allow relief to assessees will always have effect retrospectively. 273

11. Beneficial executive order/notification has retrospective effect 273

12. A notification purports to impose a new liability or obligation cannot operate retrospectively 276

(xxiii) Arrangement of Chapters

13. An amendment which is explanatory or clarificatory can be made to operate retrospectively 276

14. Declaratory statutes generally apply retrospectively 278

15. As a general principle the “Explanation” is clarificatory and declaratory in nature, therefore, it operates retrospectively. It reflects the true intent of the legislature 279

16. Explanatory amendment is always applicable retrospectively to all relevant cases pending at the relevant time 280

17. Explanation added to section 50(4) cannot be applied retrospectively 281

18. Charging provision cannot operate retrospectively unless explicitly provided so by the legislature 282

19. A penal provision cannot operate retrospectively 285

20. Subordinate legislation can be applied retrospectively only if expressly mentioned 285

21. Explanation inserted in section 52 of Income Tax Ordinance, 1979 has retrospective effect 286

22. Retroactivity of the law upheld 288

23. Retroactivity of the law upheld limitation period extended retrospectively by legislation held not valid 288

24. Amendment in sub-clause (a) of rule 5 of the 5th Schedule to the Income Tax Ordinance held not retrospective 288

25. Provisions of sub-clause (c) of section (2) of section 111 of the Income Tax Ordinance, 1979 are not retrospective in nature 290

26. Amendments in machinery section being procedural are applicable to pending proceedings 291

27. Retrospectivity even in a procedural law is to be avoided if it affects an existing right or causes injustice to anyone 292

28. Omission of provision from statutes held not to operate retrospectively 293

29. Any Act/Ordinance cannot cover any period prior to coming into force of the Act/Ordinance 294

30. Rights conferred under statutes cannot be taken away by later legislation except by express words or by necessary implication 294

31. No retrospectivity involving substantive right unless through explicit legislative intention 297

(xxiv) Principles of Income Tax Law

Chapter XI Powers of Courts/Administrative Jurisdiction

1. Provisions in the Civil Procedure Code relating to appeals to the Supreme Court are contained in sections 109 to 112 read with Order XLV, C.P.C. 299

2. Appeals rejected for want of non-observance of relevant provisions of law 300

3. In granting leave to appeal rule of consistency is to be followed 300

4. Judicial approach on constitutional issue should be dynamic 301

5. Conditions under which courts can strike down a law 302

6. High Court has only advisory jurisdiction under Income Tax Law 302

7. Persons who are equally placed cannot be treated discriminately 305

8. Two equally possible interpretation emerge leave to appeal granted 307

9. CBR and the Federal Government has no power to resort to judicial interpretation of law 307

10. CBR is not competent to issue instructions of judicial/quasi judicial nature 308

11. CBR or any other authority cannot enlarge the scope of a provision. 308

12. Transfer of jurisdiction 310

13. Only question of law which has substance in it be referred to the High Court 311

14. Constitutional petition dismissed as withdrawn second petition on the same issue is maintainable 311

15. Anomaly in question of law framed and referred by the Tribunal to the High Court; High Court should refer the case back to Tribunal for clarification 311

16. Effect of lack of jurisdiction 312

17. Only Supreme Court is competent to adjudicate between the governments 312

(xxv) Arrangement of Chapters

18. Appeal/Reference to Supreme Court governed by Income Tax Law 313

19. In tax matters Supreme Court jurisdiction is limited 313

20. Courts have to interpret the law as it stands and have no authority to add, delete or subtract any word in or from the language used in the statute 314

21. Court is not empowered to deviate from the definition given in the statute 314

22. Main function of the definition of a term is to remove vagueness, ambiguity or complication 315

23. Disputed questions of fact cannot be resolved in a writ petition 316

24. Question declined lacking substance and being academic in nature 317

25. High Court is competent to entertain writ where interpretation of law is involved 318

26. Every order increasing tax obligation of an assessee or reducing the refund is appealable u/s 129 318

27. Objections to jurisdiction are to be decided before proceeding in the matter by adjudicating authority 319

28. Ombudsman has no power to declare any legally issued notification as perverse, illegal, arbitrary or discriminatory 319

29. CBR has no authority to file presentation against the orders of Wafaqi Mohtasib 320

30. Objection as to jurisdiction can be raised at any stage 320

31. Courts/Tribunals have inherent powers to recall orders independent of any statutory provisions 320

32. Doctrine of exhaustion explained 321

33. Constitutional powers of levying taxes by Federation and provinces 321

34. CBR‟s circular holding compensation under Golden Handshake Scheme as taxable held unlawful 322

35. CBR has no authority to place judicial interpretation on any provision of law 322

36. Powers of Appellate Tribunal 324

37. Interim stay should be given once writ is admitted 325

38. CBR instructions are binding on tax authorities 325

(xxvi) Principles of Income Tax Law

39. CBR‟s beneficial circulars relating to section 12(18) are held not ultra vires 326

40. Courts cannot question the wisdom of legislature in enacting provision of any law 328

41. Presumption of irregularity with regard to official act cannot be challenge on vague allegation of mala fide 329

42. A question not raised before the Appellate Tribunal cannot be raised before the High Court 331

43. Provisions of the Income Tax Act can be challenged on Constitutional grounds 331

44. A legal plea going to the roots of the case was allowed to be raised at belated stage 332

45. Courts have inherent jurisdiction in the interest of orderly dispensation of justice 332

46. Courts have no concern with disputable questions of distributive justice 333

General Rules in respect of writ petition

47. Petition challenging order u/s 53 held to be maintainable 333

48. Conditions for maintainability of writ petitions explained 333

49. The assessee has other options like filing a complaint with Ombudsman 334

50. Order passed without giving opportunity of being heard is not sustainable 334

51. No time limitation for illegal orders 335

52. Remedies not availed disentitles the party from relief if constitutional petition also fails 335

53. Writ cannot be converted into appeal u/s 136 335

54. Where a finding of fact not based on evidence or where material evidence ignored, reference u/s 136 of repealed Ordinance, 1979 is maintainable 336

55. Interim relief in the form of release of goods on furnishing of indemnity bond held reasonable 336

56. Constitutional jurisdiction cannot be invoked to enforce the rights which were not in existence at the time when the offending enactments were passed 338

57. Writs disposed of by consent of parties to avoid delay in finalisation of cases as per law 338

(xxvii) Arrangement of Chapters

58. Respondent‟s contention that stay shall not be granted unless the prescribed Law Officer has been given notice of the application and an opportunity of being heard. Whether argument was without merit - Held yes 339

59. Extra-ordinary jurisdiction of the High Court could not be invoked without first availing the remedies available under the relevant law 340

60. Stay granted could not be given beyond six months 340

61. Exercise of jurisdiction of high Court is confined only to consideration whether authority had acted with or without jurisdiction 340

62. Where alternate and equally efficacious remedy is available, the petitioner is not entitled to invoke extraordinary jurisdiction of the High Court by way of writ petition 341

63. In writ court cannot assume jurisdiction of income tax department 341

64. Where there has been suppression of material/acts, writ of prohibition cannot be issued 342

Writs when held to be maintainable

65. Writs held maintainable and exhaustion being no bar 343

66. Writ is the appropriate remedy where order is void and without lawful authority 352

67. In case of writ, political victimization, petition is maintainable 354

68. In cases involving fiscal rights even alternate, adequate and effective remedies available to the petitioner, High Court can step in to prevent excess, if any, committed by public functionaries 356

69. Writ held maintainable even during the pendency of appeals when demand of taxes was huge and ran into millions and the department was pressing hard for its recovery but orders passed were against the law as held earlier by courts, though for different years 357

70. Writ maintainable provided order is unlawful even if an alternate remedy available to the petition 358

71. Reference application pending disposal before the High Court held not a bar to maintainability of constitutional petition challenging vires of law taxing “free reserve” to Income Tax 359

(xxviii) Principles of Income Tax Law

72. Constitutional petition before High Court challenging vires of taxing “free reserves” to Income Tax held cannot be dismissed on ground of latches in view of nature of relief claimed and the circumstances of the case 360

73. Where alternate remedy available but not efficacious and statutory functionary acting mala-fide or in a partial, unjust and oppressive manner, High Court in exercise of its writ jurisdiction has power to grant relief to the aggrieved party 361

74. Order passed without lawful authority, partial, unjust and mala-fide held assessee can invoke the extra-ordinary jurisdiction of the High Court even if alternate remedy is available by way of appeal, etc. 362

75. In the presence of assessee‟s objection to exercise of jurisdiction on ground of bias assessment was made without taking decision on the specific objection held that even existence of alternate remedy would not operate to debar the assessee from invoking extraordinary jurisdiction of High Court 362

76. Where fact for determination was whether receipts supported by payment certificates produced by assessee were genuine and correct and claim was rejected without application of mind to this aspect, held High Court competent to interfere in its constitutional jurisdiction 363

77. If impugned action is patently without jurisdiction, writ jurisdiction of the High Court can be invoked even if alternate remedy is available 364

78. If assessment is suffering from lack of jurisdiction, writ jurisdiction of the High Court can be invoked, without availing remedies available under the law 364

79. Writ admitted during the pendency of appeals held maintainable 365

Writs when held not maintainable

80. Writ when not maintainable 365

81. Writ petition is not maintainable in the presence of adequate alternate remedy under the statute 374

82. In presence of arbitration clause in the agreement executed between the parties, the writ petition is not maintainable 378

(xxix) Arrangement of Chapters

83. Writ held not maintainable where disputed question of fact involved 378

84. Writ is not maintainable where parties themselves agreed for arbitration in bilateral contracts 379

85. Writ not maintainable in case where no right to appeal or reference is provided in law itself 380

86. Selection of return for audit challenged through constitutional jurisdiction held not maintainable 380

87. Writ is not maintainable where facts are controversial 381

88. Legality and correctness of a factual controversy could not be resolved in the constitutional jurisdiction 381

89. High Court cannot go in the domain of factual controversy 382

90. Writ petition not maintainable where adequate and alternate remedy available 382

91. Factual inquiry involving controversial facts cannot be undertaken by the High Court in exercise of its constitutional jurisdiction 383

92. Writ cannot be entertained where adequate remedy is available 384

93. If Income Tax Officer‟s action is jurisdictional, writ jurisdiction of the High Court cannot be invoked 385

94. Issue being controversial involving inquiry into - held not a fit case to be determined under supervisory constitutional jurisdiction of High Court 385

95. Assessee cannot avail remedy of constitutional petition before High Court being dissatisfied with the notices 387

96. High Court cannot examine the question of controversial facts in constitutional jurisdiction 388

97. Remedies available under the law should be exhausted before invoking the extraordinary jurisdiction of the High Court 388

98. If question of jurisdiction of the assessing officer is not challenged, writ petition is not maintainable 389

99. Where appeal was dismissed by appellate authorities on ground of limitation and this order was in accordance with law, held writ petition against such order was not competent 390

(xxx) Principles of Income Tax Law

100. Writ not maintainable in the presence of adequate and efficacious alternate remedy 390

101. Constitutional petition does not become competent for the mere fact that order-in-original has become final 391

102. Writ is converted into appeal u/s 136 391

103. Constitutional jurisdiction cannot be invoked for mere fact that no further remedy by way of appeal/revision is available 392

Chapter XII Rule of Evidence 1. Income Tax Authorities to establish by positive evidence

that assessees accounts are unreliable 393

2. Standard of proof 393

3. Qanoon-e-Shahadat Ordinance is applicable to Income Tax Ordinance, 1979 394

4. A judge cannot be compelled to accept a piece of evidence 394

5. Provisions of Evidence Act not applicable to proceedings under Income Tax Act 394

6. Fresh evidence cannot be admitted in appeal unless requirements of section 131(4) are fulfilled 395

7. Statement in power of attorney not proof in itself 395

Chapter XIII Doctrine of Binding Precedent (Stare decisis)

1. Division Bench of a High Court cannot disagree with another Division Bench without reference to a larger bench or should leave the matter to be decided by Supreme Court 397

2. In case of difference of opinion between benches of equal strength, larger bench should be formed 398

3. All judges of a High Court sitting together much less to say of a Judge in Chambers cannot declare a judgment of the apex Court to be per incuriam 399

4. Pre-partition judgements are binding unless overruled by Pakistani courts 400

5. Where judgments of the Pakistani Courts are available they will prevail over the Indian judgments. 400

6. Per incuriam judgement of even the highest court is not binding 402

(xxxi) Arrangement of Chapters

7. Deviation from an earlier finding without reference to the same also makes a judgment per incuriam. 402

8. Reliance on foreign cases in the presence of contrary view taken by Pakistani courts is strongly disapproved 403

9. Principles of “stare decisis” 404

10. Binding judgements and conduct of different Benches 405

11. Controversy prevailing between two Division Benches resolved 406

12. “Stare decisis”, meaning of 406

13. Even obiter dictum of Supreme Court is binding on all courts in Pakistan 406

14. Decisions of Income Tax Appellate Tribunal are binding on all subordinate authorities 406

15. English decisions in pari materia and their binding value 407

16. Difference of opinion vis-à-vis controversy explained 408

17. A case is only an authority for what it actually decides and cannot be relied on for a proposition that may logically arise from it 408

Chapter XIV Doctrine of Merger 1. Doctrine of merger 411

2. On appeal original order ceases to exists and merges itself in the appellate order 412

Chapter XV Legal Maxims 1. Audi alteram partem 413

2. Approbate and reprobate 414

3. Casus Omissus 415

4. Ejusdem generic 415

5. “Expressio unius est exclusio alterius” 417

6. “Expressio unius est exclusio alterius” (express mention of one thing implies the exclusion of another) was neither absolute nor was of universal application 417

7. Ex abundanti cautela 418

8. Generalia specialibus non derogant 418

9. Mens rea 418

10. Noscitur a sociis 419

11. No one can be judge in his own cause 419

12. Things should be done as per law as not to be done at all 420

13. Ut res valeat quam pereat 420

(xxxii) Principles of Income Tax Law

Chapter XVI Doctrine of Res Judicata/Estoppel 1. Principle of res judicata - not applicable 421

2. Doctrine of res judicata not applicable to income tax proceedings 421

3. Income tax officer when not bound by res judicata 422

4. Doctrine of promissory estoppel and legitimate expectation applies to SAS 423

5. Principles of waiver or estoppel do not apply against a provision of law 424

6. Doctrine of promissory estoppel could not be invoked against the legislature and the laws framed by it 424

7. Executive actions are not excluded from the operation of promissory estoppel 426

8. Equitable doctrine of estoppel 426

9. Principle of res judicata and estoppel 426

10. “Res judicata” and “merger” explained 427

Chapter XVII Doctrine of mutuality 1. Five-point criteria for applying “doctrine of mutuality” 429

Chapter XVIII Natural Justice/Duties of Court 1. True meaning of statute vis-a-vis duty of court 431

2. Opportunity of being heard is a must even in quasi-judicial proceedings 432

3. Article 4 of Constitution of Pakistan 1973 vis-a-vis “due process of law” 432

4. Affording of an opportunity is a prerequisite for taking penal action 433

5. An order affecting the rights of a party cannot be passed without an opportunity of hearing to that party 433

6. Mere technicalities should not be allowed to defeat the ends of justice 433

(xxxiii) Arrangement of Chapters

7. If a person charged with a simple crime to felony can be the most favourite child of law then why an assessee should not be facilitated in his defence against revenue 434

8. Rules must not take away a right conferred by the relevant statute and should be struck down if found to be arbitrary or unreasonable 435

9. Departmental instructions in conflict with the statutory law or tends to undo any such law have no legal effect 436

10. In presence of a specific provision of law applicable to the situation, the Assessing Officer could not have resort to any other provision of law 437

11. Public power and administrative discretion ought to be exercised fairly 437

12. Duties of courts in administration of justice 437

13. Public functionaries are duty bound to decide controversies between parties after application of independent mind, supported with reasons 438

14. Public functionaries must act justly, fairly and honestly and cannot seek refuge in irrational and arbitrary classification 440

15. No adverse order should be passed against a party without affording an opportunity to meet the case 441

16. Justice should not only be done but must also appear to have been done 441

17. Principles of natural justice should be read in all statutes unless the same are expressly excluded 442

18. The court must consider the intention and not merely the form, while examining a document 442

19. Judicious exercise of discretion 442

20. Discretion in law exercised by competent authority is not open to any exception 442

21. Once an authority has jurisdiction, an irregularity in exercising it will not vitiate the decision 443

22. Principles of natural justice are part and parcel of every statute unless there is specific provision in a particular statute to the contrary 444

23. Principles of natural justice cannot be invoked in deciding a legal issue with reference to the statutory provision 445

Chapter XIX Rule of Limitation

(xxxiv) Principles of Income Tax Law

1. Where a judgment has not been conveyed to a party limitation starts running from the date of knowledge 447

2. Time limitation for filing appeal u/s 136 vis-a-vis section 5 of Limitation Act 447

3. The provisions of Limitation Act are mandatory and cannot be waived 448

4. Period of Limitation - factors to be considered while computing period of limitation 448

5. A reference application made beyond the prescribed time should be dismissed 449

6. Where a matter is barred by limitation each and every day‟s delay must be explained 449

7. Delay of each day must be explained 449

8. Time spent in obtaining a certified copy should be excluded while computing period of limitation 449

9. Application of provisions of Limitation Act to proceedings under Income Tax Law 450

10. Court holidays falling on the day of expiry of the prescribed period of limitation should be excluded in counting the period of limitation 450

11. Time required for obtaining certified copy should extend the period of limitation 450

Chapter XX Miscellaneous 1. Claim for refund of money paid under mistake is not

barred by time 451

2. Power to levy taxes is an attribute of sovereignty of a state 452

3. Legislature, particularly in economic activities, enjoys wide latitude in the matter of selection of person, subject-matters, events etc., for taxation 453

4. Assessment order passed by ITO can‟t be called a final order 462

5. IT-30 cannot be a substituted for an assessment order 463

6. Islamic jurisprudence and rules of law are equally applicable to fiscal laws 463

7. Remedy to be sought within four corners of Act 466

8. Realistic approach should be applied for determination of value of property 466

(xxxv) Arrangement of Chapters

9. Payments (golden handshake etc.) on termination of services held taxable 467

10. Scope of protection under the Economic Reforms Protection Act of 1992 - Special Law vs. Income Tax 468

11. Civil suit in the absence of mala fide order is not maintainable 469

12. Power to make rules is subject to certain limitations 470

13. Discrimination in rule-making is ultra vires 470

14. Civil suit does not lie against tax authorities unless order is mala fide or illegal 471

15. Basis of taxation in Islam 471

16. Provisions of Economic Reforms Act, 1992 overrides Income Tax Law to the extent protections are provided in the former enactment 472

17. If notice is prima facie defective and error is incurable, the entire proceedings are null and void 474

18. Powers of CBR - territorial & administrative jurisdiction 475

19. Budget speech has no legal sanctity 476

20. Duty of Government employees working in non-taxable territories to pay income tax 477

21. The de facto doctrine 478

22. Proceedings taken subsequent to grant of stay order are nullity in the eyes of law 478

23. Appeal is continuation of original proceedings 478

24. Only natural/legal persons have the vested rights and not the government/state 479

25. It is the duty of the legislature to save income from escaping assessment 479

26. Caption given to a particular provision of law would not change purport of the provision 479

27. Inordinate delay in seeking discretionary relief under Article 199 of the Constitution - hit by laches 480

28. Proceedings under the Income Tax Act are judicial proceedings 480

29. General Act - whether overrides the provisions of Specific Act - held no 480

30. Where a withholding agent fails to deposit tax in the Treasury, the department instead of penalizing the taxpayer should take action against the defaulting withholding agent 482

(xxxvi) Principles of Income Tax Law

31. Right of appeal is a creature of statute and there can be no right of appeal unless the statute confers it 482

32. Once the assessee had supported the claim on the basis of a receipt issued by the Postal Authorities burden of proof shifted on the Department to rebut 484

33. In the presumptive tax regime notice under section 61/62 of the Income Tax Ordinance, 1979 cannot be issued 485

34. Presumption as to service by post is available only where posting by registered post is proved 486

35. Legality of service through Postal Certificate cannot be challenged after compliance as section 154(6) 487

36. Legal formalities for proper services of notice are to be fulfilled 487

37. Issuance of a notice under postal certificate is neither illegal nor improper 488

38. SAS and maxim ubi jus ibi remendium explained 488

39. Selection of SAS cases for total audit remanded back to a three-member committee for de novo action 489

40. Compensation not for an injury to the capital asset is not capital receipt 490

41. Justice cannot be denied on technicalities 491

42. Prosecution proceedings can be taken under the repealed ITO 1979 in view of section 239(6) of ITO, 2001 493

43. Impositions of additional tax or prosecution for an offence are independent actions 494

44. Proper and regularly-employed method of accounting cannot be rejected on mere surmises and conjectures 495

45. Miscellaneous application can only be filed if the final order has been passed by the bench and there arises a mistake, which is apparent from the record 497

46. ITAT is fully competent to adjudicate upon the point or points stated by the dissenting members after having taken regard to the real controversy of the case 498

47. In the absence of final order by ITAT, provisions of section 135(2) read with section 156 do not come into play 498

(xxxvii) Arrangement of Chapters

48. Tribunal is competent to grant stay of demand created as a result of reassessment order provided the main appeal is pending before it 499

49. Order passed consequent to proceedings under section 66A unless reaches ITAT cannot be taken cognizance of for granting stay by the Tribunal 500

50. Agreement between parties cannot overrule the law 501

51. Statutory order must be speaking and judicial 501

Chapter XXI Workers’ Welfare Fund 1. Workers‟ Welfare Fund Ordinance authorises the Income

Tax officer to levy WWF 503

2. Appeal does lie against the WWF as if levy under the Income Tax 504

3. No Workers‟ Welfare Fund on income exempt under any provision of the Income Tax Ordinance 504

4. Assessees not required to file return relating to presumptive tax regime cannot be subjected to the charge/levy of Workers‟ Welfare Fund 505

5. Issue relating to non-levy or wrong levy of WWF fall within the ambit of mistakes apparent from record 505

6. WWF is not leviable on incomes covered under presumptive tax regime 508

Chapter XXII Income Tax Appellate Tribunal 1. Tribunal has powers and jurisdiction to remand the case

to assessing officer 511

2. Tribunal is not empowered to award damages decree against the assessing officer 511

3. Appeals and judicial process explained 512

4. Duty of the registrar to return appeal if deficient 513

5. Rule 11-Dispensation of justice 513

6. Rule 11 of ITAT Rules, 1981 – Scope of 513

7. Tribunal must pass speaking order 514

Comparative Table of Income Tax Ordinance, 2001, Income Tax Ordinance, 1979,

Income-tax Act, XI of 1922 and Income-tax Act, VII of 1918.

© Mrs. Huzaima Bukhari

I.T.Ord., 2001

I.T. Ord., 1979

I.T. Act, 1922

I.T.Act, 1918

1 1 1

1(1) 1(1) 1(1) 1

1(2) 1(2) 1(2) 1(2)

1(3) 1(3) 1(3) 1(3)

2(1) 2(20)Exp.

2(1A) ---

2(2) 2(3)

2(3) 2(4)

2(4) 2(5)

2(5) 2(7)

2(5A) 2(8) 2(17)

2(5B) ---

2(6) ---

2(7) 2(10)

2(8) ---

2(9) 2(11) 2(4)

2(10) 2(12) 2(4A)

2(11) 2(13) 2(4B)

2(11A) 2(14) 15D(4)

2(12) 2(16) 2(5A)

2(13) 2(15) 2(5) 2(3)

2(13A) ---

2(14) 2(17) 2(5B)

2(15) ---

2(16) ---

2(17) ---

2(18) ---

2(19) 2(20) 2(6A)

(xxxix)

(xl) Principles of Income Tax Law

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

2(20) 16(2)(e)

2(21) 16(2)(d)

2(22) ---

2(23) 12(5) Exp.

2(24) ---

2(25) 2(21A)

2(26) 2(22) 2(6B)

2(27) ---

2(28) ---

2(29) 2(24) 2(6C)

2(29A) 2(26) 2(11) 2(11)

2(30) ---

2(31) ---

2(31A) ---

2(32) ---

2(33) 83(5)(c) 16(3)(a)(iv)

2(34) 2(29A)

2(35) 2(29A)

2(35A) ---

2(36) ---

2(37) 2(30)

2(38) ---

2(39) 23(1)(viidd)

2(40) 12 4

2(41) ---

2(42) 2(32) 2(9) 2(9)

2(43) ---

2(44) 2(33) 2(10) 2(10)

2(45) ---

2(46) 2(29)

2(47) Para B(2), Pt-IV, 1st Sch.

2(48) 2(37)

2(48A) 2(37A)

2(49) ---

2(49A) ---

2(50) 2(40) 4A

(xli) Table of Comparative Income Tax Laws

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

2(51) 2(40) 4A

2(52) 2(40) 4A

2(53) 2(40) 4A

2(54) 12(4) Exp.

2(55) 16(1)(a)(b)

2(56) ---

2(57) 23(1)(viidd)

2(58) ---

2(59) 2(42)

2(60) 23(1)(viidd)Exp.

2(61) 36(2) Exp. 24(2) Exp. 1

2(62) ---

2(63) 2(43) 2(14)

2(64) ---

2(65) 2(17A)

2(66) 2(6) 2(2)

2(67) ---

2(68) 2(26) 2(11)

2(69) 2(44) 2(15)

2(70) ---

2(71) ---

2(72) ---

2(73) ---

2(74) ---

3 ---

4(1) 9(1) 3

4(2) 9(1) 3

4(3) ---

4(4) ---

4(5) ---

5(1) 80B(2)(a) read with 50(6A)

5(2) ---

5(3) ---

6(1) 80AA & 80AAA

6(2) 80AA & 80AAA

6(3) 80AA & 80AAA

(xlii) Principles of Income Tax Law

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

6(4) 80AA & 80AAA

7(1) 80 & 80A 7

7(2) 80 & 80A 7

7(3) 80 & 80A 7

8 80B(3)

9 2(44) 2(15)

10 2(44) 2(15)

11(1) 15 6 5

11(2) ---

11(3) ---

11(4) 34 56

11(5) 11(1)(a) 4

11(6) 11(1)(b) 4

12(1) 16(1) 7

12(2) 16(2) 7

12(3) ---

12(4) ---

12(5) ---

12(6) ---

12(7) 98(a) 60(2)

12(8) 98(a) 60(2)

13(1) R. 3 of 1982 Rules 39 of 1962Rules

13(2) ---

13(3) ---

13(4) ---

13(5) ---

13(6) ---

13(7) ---

13(8) ---

13(9) ---

13(10) ---

13(11) ---

13(12) ---

13(13) ---

13(14) ---

14 ---

15(1) 19(1) 9(1)

(xliii) Table of Comparative Income Tax Laws

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

15(2) 19(2) 9(1)

15(3) 30(2)(a)

15(4) 19(2)(b)

15(5) 19(3) Exp.

16(1) 12(13)

16(2) 12(14)

16(3) 12(15)

17(1) 20(1) 9(1)(i)

17(2) ---

17(3) 20(4)

17(4) ---

17(5) 20(2) 9(1)(vii) Pr.

17(6) 20(3)

18(1) 22 10(1), 10(6)

18(2) ---

19(1) 22 Exp.

19(2) 36 Exp.

20(1) 23 22 9

20(2) ---

20(3) ---

21 24 10(4)

22(1) 23(1)(v), read with Rule 1 of the 3rd Sch.

10(2)(iii)

22(2) 23(1)(v), read with Rule 1 of the 3rd Sch.

10(2)(iii)

22(3) ---

22(4) ---

22(5) 3rd Sch. Rule 8(7) 10(1)(vii)

22(6) ---

22(7) 3rd Sch. Rule 6


22(9) ---

22(10) 3rd Sch. 2nd Pro. to Rule 8(5)(j)

22(11) ---

22(12) 23(1)(v), 3rd Sch. 10(1)(vi)



(xliv) Principles of Income Tax Law

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918



23(2) ---

23(3) ---

23(4) ---

23(5) ---

24 ---

25 ---

26(1) 23(1)(xi) & (xii) 10(2)(xii), (iv)

26(2)

27 23(1)(xiii), (xiv) & (xv) 10(2)(xv)

28 23(1)(via), (vib), (viic), (viicc) & (viidd)

29 23(1)(x)

30 23(1)(xxi) & (xxii)

31 23(1)(xix)

32(1) 32(1) 13

32(2) ---

32(3) 32(2) 13 Pro.

32(4) ---

32(5) ---

33 ---

34(1) ---

34(2) ---

34(3) ---

34(4) ---

34(5) 25(c) 10(2A)

34(6) 25 Proviso 10(2A) Pro.

35 ---

36 ---

37(1) 27(1) 12B(1)

37(2) 28(1) 12B(2)

37(3) 1st Sch. Pt-IV Para A(4)

37(4) ---

37(5) 27(2)(b) 12B(1) Pro. 1

38(1) 37

38(2) 37

(xlv) Table of Comparative Income Tax Laws

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

38(3) 37

39(1) 30(1) 12(1) 11

39(2) 12(16)

39(3) 12(18)

39(4) 12(18)

39(5) 31(1)

39(6) ---

40(1) 31(1)

40(2) ---

40(3) 31(1)

40(4) 31(2)

40(5) 31(3)

41(1) 2nd Sch., Pt-I Cl. (1) 2(1)(a),

41(2) 2(1) 4(3)(viii)

42 2nd Sch., Pt-I Cl. (16)

43 2nd Sch., Pt-I Cl. (2)

44(1) 166

44(2) 2nd Sch. Pt-I Cl. (12)

44(3) 2nd Sch. Pt-I Cl. (12A)

45 2nd Sch. Pt-I Cl. (40)

46 ---


48 ---


50 ---

51 2nd Sch. Pt-I Cl. (130A)

52 [Omitted] 2nd Sch. Pt-I Cl. (141)

53(1) 14(1) 4(3)

53(2) 14(2)

53(3) Proviso to 14(2)

54 ---

55 151

56(1)(2)(3) 34 24(1), 24(2A)

57 35 24(2)

57A ---

58(1)(2)(3) 36 24(1) Pr. 1

(xlvi) Principles of Income Tax Law

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

59(1)(2)(3) 37 24(2B)

60(1) ---

60(2) ---

60(3) ---

61(1) 47 15D

61(2) 1st Sch. Pt-I Para A(e)

61(3) & (4) ---

62 41A

63 44 to 44AA 58W

64 44AAA

65 ---

66 21 9(3)

67 ---

68 29(3)

69 ---

70 25(a) 10(2)(xi) Pro. 3

71 ---

72 12(8) & 71 4(1) Exp. 7

72(b) 12(7) 4(1) Exp. 8

73(1) 11(2) 4(1) Pro. 1

73(2) ---

74 2(26) 2(11)

75 to 79 27(2), 3rd Sch. Rule 8(5)

80(1) 2(32) 2(9)

80(2)(a) 2(32) 2(9)

80(2)(b) 2(16) 2(5A)

80(2)(c) 2(22) 2(6B)

80(2)(d) 2(16)(bb)

80(2)(e) ---

81,82 & 83 2(40) & 2(30) 4A

84 2(40)(b)

85 ---

86 ---

87 74 24B

88 2nd Sch. Pt-I Cl. (110)

89 33 12AA

(xlvii) Table of Comparative Income Tax Laws

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

90(1) 83(1) 16(1)(c)

90(2) 83(2)

90(3) 83(3) 16(1)(c)

90(4) 83(4)

90(5)(6)&(7) 83(4)

90(8) 83(5) 16(1)(c) Pro.

91(1) 83A

91(2) ---

92(1) 2nd Sch. Pt-I Cl. (110)

92(2) 1st Sch. Pt-IV Para

A(2B)

92(3) 2nd Sch. Pt-I Cl. (110)

92(4) & (5) 55 & 80D 22 16

93 69

93(2) 38

93(6) 69(4)

94 38

95 ---

96 ---

97 ---

98 73 26(2)

99 26 read with 4th Sch. 10(7) to 10(9)

100 26 read with 5th Sch. 10(7) to 10(9)

101(1) 12(1) 4(1) Ex. 2

101(2) 12(2) 42(1)

101(3) 12(2) 42(1)

101(4) ---

101(5) 12(2) 42(1)

101(6) 12(10) 4(1) Ex. 3

101(7) ---

101(8) 12(4)

101(9) ---

101(10) ---

101(11) ---

101(12) 12(5)

101(13) ---

101(14) ---

(xlviii) Principles of Income Tax Law

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

101(15) ---

101(16) ---

102 & 103 164 read with Rules 209 & 210 of IT

Rules, 1982

49D(1)

104 ---

105 & 106 ---

107 163 49AA

108 79 42(2)

109 ---

110 ---

111(1) 13(1) 4(2A)

111(2) 1st Proviso to 13(1)

111(3) ---

111(4) 13(2A)

111(5) 13(3)

112 84 44E

113(1) 80D(1)

113(2) ---

114(1) 55(1) 22(1)

114(2) 55(1) 22(1)

114(3) 72, 74, 81 25(2), 24B, 24A

114(4) 56 22(2)

114(5) 56 Proviso

114(6) 57 22(3)

114(7) ---

115(1) 55(1) 1st Pro.

115(2) 58 Pro.

115(3) 55(1) 3rd Pro.

115(4) 55(1) 2nd Pro.

116(1) 58(1) 22(4A)

116(2) 55 2nd Pro.

117(1) 72(1) 25(2)

117(2) 72(2) 25(1)

117(3) 72(3) 25(6)

117(4) 72(2) 25(1)

118(1) 55(1) 22(1)

118(2) 55(2) 22(1A)

(xlix) Table of Comparative Income Tax Laws

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

118(3) 55(2) 22(1A)

118(4) 55(2) Exp.

118(5) 72(3) 25(6)

118(6) 55 4th Proviso

119(1) to (4) 55(3) 22(1A) Pro.1&2

119(5) ---

119(6) ---

120 59(1) 23(1) 17

121(1) 63 23(4) & 24 18

121(2) 63

121(3) 64(1) 34(2)

122(1) 65 read with 62 or 63 34(1)

122(2) 65(3) Pro. 34(1A)

122(3) ---

122(4) ---

122(5) 65(2) 34(1) Pro. 2

122(6) ---

122(7) ---

122(8) 65(2) Exp.

123 60A

124(1) 66(1) 34(2) Pr. (iv)

124(2) 66(1) 34(2) Pr. (iv)

124(3) 62A

124(4) ---

124(5) 66(2) 34(2) Ex. 1 & 2

124(6) ---

124A 62BB

125 66(3)

126(1) ---

126(2) 155 66B

127(1) 129(1) 30(1)

127(2) 129(2) 30(1) Pr. 1

127(3) 130(1) 30(3) 21

127(4) 130(1) 30(3)

127(5) 130(2) 30(2)

127(6) 130(3) 30(2)

128(1) 131(1) 31(1) 22

(l) Principles of Income Tax Law

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

128(2) 131(1) 31(1)

128(3) 131(2) 31(3)

128(4) 131(3) 31(2)

128(5) 131(4) 31(4)

129(1) 132(1) 31(6)

129(2) 132(2) 31(6)

129(3) 132(3) 31(7)

129(4) 132(4) 31(8)

129(5) 132(5)

129(6) 132(5) Pro.

129(7) 132(6)

130(1) 133(1) 5A

130(2) 133(2)

130(3) 133(3)

130(4) 133(3A)

130(5) 133(4)

130(6) 133(5)

130(7) 133(6)

130(8) 133(6) Pro.

130(9) 133(7)

130(10) 133(7)

130(11) 133(7) Pro.

130(12) 133(8)

131(1) 134(1) 33(1)(a) 24

131(2) 134(5) 33(3)

131(3) 134(5) 33(3)

131(4) 134(4) 33(2A)

132(1) 135(1) 33(3A)

132(2) 135(2) 33(4)(a),(b)

132(3) 135(4) 33(4)(c),(d),(e)

132(4) 135(6)

132(5) 135(7) 33(5)

132(6) 135(5) 33(4)(f)

132(7) 135(8) 33(4)(g)

132(8) 135(7A)

132(9) 135(7A) 1st Pro.

132(10) 135(9) 33(6)

(li) Table of Comparative Income Tax Laws

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

133(1) 136(1) 66(1) 51

133(2) 136(1) 66(1)

133(3) 136(1) 66(1)

133(4) 136(2) 66(2)

133(5) 136(2) 66(2)

133(6) ---

133(7) 136(3) 66(4)

133(8) 136(3) 66(4)

133(9) 136(4) 66A(1)

133(10) 136(5) 66(5)

133(11) 136(6) 66(6)

133(12) 136(6) 66(6)

133(13) 136(7) 66(7)

133(14) 136(8) 66(7A)

133(15) 136(9)

133(16) 136(10)

134(1) 137(1) 66A(2)

134(2) 137(2) 66A(3)

134(3) 137(3) 66A(4)

134(4) 137(4)

135(1) 138(1) 33A(1)

135(2) 138(1) 33A(1)

135(3) 138(1) 33A(1)

135(4) 138(2) 33A(2)

135(5) 138(3) 33A(2A)

135(6) 138(4) 33A(3)

135(7) 138(5)(a) 33A(2) Pr. 2

136 ---

137 54, 85 22A, 29, 45, 47 36, 37

137(1) 54 22A

137(2) 85(1) 29

137(3) ---

137(4) 85(2) 29

137(5) ---

137(6) 85(2) 29

137(7) ---

138 93(3) 46A(1)

(lii) Principles of Income Tax Law

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

138A 94 46(2)

139(1) 77(1) 43B

139(2) 77(1) 43B

139(3) 77(1) 43B

139(4) 77(3) 43A

139(5) ---

140(1) 92(1) 46(5A)

140(2) ---

140(3) 92(1)

140(4) ---

140(5) 92(1) & (2A)

140(6) 92(2)

140(7) ---

140(8) ---

140(9) ---

140(10) 92(3)

141(1) 76(1) 43C(1)

141(2) 76(2) 43C(2)

141(3) 76(3) 43C(3)

141(4) 76(3) 43C(3)

141(5) 76(4) 43C(4)

141(6) ---

141(7) 76(5) 43C(6)

141(8) ---

142 78 40 to 43 31 to 34

143(1) 80(2) 44B(1)

143(2) 80(3) 44B(2)

143(3) 80(1) 44A

143(4) 80(4)

143(5) 80(5) 44B(3)

143(6) ---

144(1) 80A(2)

144(2) 80A(3)

144(3) 80A(1)

144(4) 80A(4)

144(5) 80A(4)

145 81 & 82 24A, 44G

(liii) Table of Comparative Income Tax Laws

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

146 93A

146A 95 46C

147(1) ---

147(2) 53(1) 18A(1)

147(3) 53(1) 18A(1)

147(4) 53(1) 18A(1)

147(5) 53(2) 18A(2)

147(6) 53(2) 18A(2)

147(7) ---

147(8) 53(5)

147(9) ---

147(10) ---

147(11) ---

148(1) 50(5)(a) 18(3CC)

148(2) 50(5)(b)(i) 18(3CC)

148(3) 50(5)(b) Pro. 18(3CC)

148(4) 50(5)(b) Pro. 18(3CC)

148(5) 50(5)(b) 18(3CC)

148(6) 50(5)(b) 18(3CC)

148(7) 50(5)(b) Pro. 18(3CC)

148(8) 50(5)(a) 18(3CC)

148(9) 50(5) Exp. 18(3CC)

149(1) 50(1) 18 14

149(2) ---

150 50(6A)

151 50(2A)

152(1) 50(3A)

152(2) 50(3) 18(2B)

152(3) 50(3) 18(2B)

152(4) 50(3.1)

152(5) 50(3.2)

152(6) 50(3.3)

152(7) ---

153(1) 50(4)(a) 18(3BB)

153(2) ---

153(3) 50(4)(a) Pro.

153(4) 50(4)(b)

(liv) Principles of Income Tax Law

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

153(5) ---

153(6) 80C(1) read with

50(9)(b)

18(9) Ex.

153(7) 80C(1) read with 50(9)(b)

153(8) 50(4)(b) Pro (i)

153(9) 50(4)(a) Exp.

154(1) to (3) 50(5A), (5AA) & 80CC

155(1) 50(7B)

155(2) 50(7B)

155(3) 50(9)(a) 18(9) Ex.

156(1) 50(7C)

156(2) 50(7C)

156(3) 50(7C)

157(1) 50(7H)

157(2) 80C(2)(iv)

158 50(8)(c) 18(6)

159(1) & (2) ---

160 50(8)(c) 18(6)

161 52 18(7)

162 52A

163 ---

164 51 18(9)

165 139 to 143B 20A

166(1) ---

166(2) ---

166(3) ---

167 161 65 48

168(1)(a) 50(8)(a) 18(4)

168(1)(b) 50(8)(b) 18(5)

168(2) ---

168(3) ---

168(4) ---

168(5) ---

169(1) to (3) 80(6) &

(7),80B,80C,80CC

170(1) 96(1) 48(1)

(lv) Table of Comparative Income Tax Laws

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

170(2) 99(1) & (2) 50 39

170(3) 99(3) & 104

170(4) 99(3)

170(5) ---

171(1) 102(1) 49G

171(2) 102(2)

172 & 173 78, 107 40, 15GG 31

174 32 & 32A read with Rules 27 to 33 of RR,

1982

13A

175(1) 146(1) 38A(2)

175(2) 146(3) 38B(2)

175(3) ---

175(4) ---

175(5) ---

175(6) ---

175(7) ---

175(8) ---

176(1) 144(a) & 148 38 28

176(2) ---

176(3) ---

176(4) 148(1) 37(1)

176(5) ---

177 4A

178 147 66BB

179 ---

180 164A

181 143D

182 108 28 20

182(1) 108(a)(i)

182(2) 108(b)(ii)

182(3) ---

183 91 46

184(1) 111(1) 28(1A)

184(2) 111(2) 28(1A) Ex.

184(3) 111(2A)

184(4) 111(3) 28(5)

185 109 28(1A)

(lvi) Principles of Income Tax Law

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

186 110 28(1)(b)

187 ---

188 112 & 114 25(2)

189 115 51(3)

190(1) 116(b) 28(3)

190(2) 116

190(3) ---

190(4) ---

190(5) ---

190(6) ---

191(1) 117 51 40

191(2) ---

192 118 52 41

193 ---

194 ---

195 118 52 41

196 117(e)

197 121 51(4) 40

198 122 54(2)

199 120 52A

200 123

201 124 53(1A) 42

202 126 53(2)

203(1) 127(1) 54A(1)

203(2) 127(2) 54A(2)

204(1) 128(1)

204(2) 128(2)

204(3) 128(3)

205(1) 87, 88 & 89 18A(6), 45A(b) 45A Pr.1, 45A(a)

205(2) 87, 88 & 89

205(3) 86 18(7)

205(4) 86 18(7)

205(5) ---

205(6) ---

206(1) 8 5(8)

206(2) ---

(lvii) Table of Comparative Income Tax Laws

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

206(3) ---

207(1) 3(1) 5(1)

207(2) 3(1A)

208 4 5(1A)

209 5 5(1A)

210(1) 5(1)(c) 5(5)

211 ---

212 165A

213 7 5(7B)

214 8 5(8)

215 144 38 28

216(1) 150(1) 54(1)

216(2) 150(2) 54(1)

216(3) 150(3) 54(3)

216(4) 150(4) 54(4)

216(5) 150(5) 54(4A)

216(6) 150(5A)

216(7) 150(6)

216(8) 150(7) 54(5)

217 ---

218(1) 154(1) 63(1)

218(2) 154(2) 63(2)

218(3) 154(3)

218(4) 154(4)

218(5) 154(6) 63(3)

219 152 36

220 153 62 46

221(1) 156(1) 35 26

221(2) 156(2) 35(1) Pr.

221(3) 156(3)

221(4) 156(4) 35(1)

222 4A

223(1) 157(1)(a) 61(1) 45

223(2) 157(2) 61(2)

223(3) 157(3) 61(3)

223(4) 157(4) 61(3)

223(5) 157(5) 61(3)

(lviii) Principles of Income Tax Law

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

223(6) 157(6)

223(7) 157(7)

223(8) 157(8)

223(9) 157(9)

223(10) 157(10)

223(11) 157(1)(b)

224 158 37 27

225 159 67AA

226 160 67A

227 162 67

228(1) 138L(1)

228(2) 138L(2)

229 138N

230 138O

231 139P

232(1)[Omitted] 50(2B)

232(2)[Omitted] 50(2B) Pro.

233(1) 50(4A)

233(2) 50(4A) Pro.

234(1) 50(6) 18(3BBB)

234(2) 50(6) 1st Pro.

234(3) 50(6) 2nd Pro.

234(4) ---

234(5) ---

235(1) 50(7E)

235(2) 50(7E)

235(3) ---

236(1) 50(7F)

236(2) 50(7F)

236(3) 50(7F)

236(4) 50(7F) Pro.

237(1) 165(1) 44G(4)

237(2) 165(2)

237(3) 165(4)

237(4) ---

238 166(1)

239(1) ---

(lix) Table of Comparative Income Tax Laws

I.T.Ord.,

2001

I.T. Ord.,

1979

I.T. Act,

1922

I.T.Act,

1918

239(2) 61 & 166(2)(a)

239(3) 166(2)(b)

239(4) 166(2)(i)

239(5) 166(2)(j)

239(6) 166(2)(g)

239(7) 166(2)(k)

239(8) 166(2)(n)

239(9) 166(2)(o)

239(10) 166(2)(p)

239(11) 166(2)(q)

239(12) ---

239(13) ---

239(14) ---

239(15) ---

239(16) ---

239(17) ---

239(18) ---

240(1) 167(1)

240(2) 167(2)

(lxii)

Comparative Table of exemption clauses in Second Schedule to the

Income Tax Ordinances, 2001 & 1979

© Mrs. Huzaima Bukhari

I.T. Ord., 2001

I.T. Ord., 1979

Part I (1) [Omitted] (7B)

(2) (7D)

(3) (7E)

(4) (7F)

(5) (9)

(6) (13)

(7) [Omitted] (Omitted)

(8) (17)

(9) (17A)

(10) (18)

(11) (19)

(12) (26)

(13) (27)

(14) (48)

(15) (49)

(16) (50)

(17) (51)

(18) (51A)

(19) (17AA)

(20) (22)

(21) (22A)

(22) (23)

(23) (24)

(24) (23A)

(25) (25)

[Sub-clauses (i) to (iv) are incorrectly included as these relate to gratuity and not

superannuation fund.]

(26) (28)

(27) [Omitted] ---

I.T.

Ord., 2001

I.T.

Ord., 1979

(28) [Omitted] ---

(29) [Omitted] ---

(30) [Omitted] ---

(31) [Omitted] ---

(32) [Omitted] ---

(33) [Omitted] (33A)

(34) [Omitted] (33B)

(35) (37)

(36) [Omitted] (38)

(37) [Omitted] ---

(38) (54A)(b),(54B)(b)

(39) (39)

(40) (39A)

(41) [Omitted] (42)

(42) (39B)

(43) (42A)

(44) (42B)

(45) (42D)

(46) (42C)

(47) (43)

(48) (44)

(49) (45)

(50) [Omitted] (46)

(51) (52)

(52) (53)

(53) (54)

(53A) ---

(54) [Omitted] ---

(55) (55)

(56) (55A)

(57) (56) Shaukat

I.T. Ord., 2001

I.T. Ord., 1979

Khanum & Overseas Pakistani‟s Pension Trusts have been removed.

(58) (62)

(59) (93)

(60) (94)

(61) (91)

(lxiii)

Table of Comparative Income Tax Laws

(62) (147B)

(63) ---

(64) [Omitted] ---

(65) (93A)

(66) (133A)

(67) (135B)

(68) (135C)

(69) (135D)

(70) (135E)

(71) ---

(71A) ---

(72) (75)

(73) (75A)

(74) (76A)

(75) (77)

(76) (77A)

(77) (77B)

(78) (78)

(79) (78A)

(80) (78B)

(81) [Omitted] (78C)

(81A) ---

(82) (78D)

(83) (78E)

(84) [Omitted] (79)

(85) [Omitted] ---

(86) [Omitted] ---


(88) [Omitted] (80)

(88A) ---

I.T.

Ord., 2001

I.T.

Ord., 1979

(89)[Omitted] ---

(90) (76)

(91) (85A)

(92) (86)

(93) (86B)

(93A) ---

(94) [Omitted] ---

(95) (154)

(96) (168)

(97) (133)

(98) (90)

(99) (102D)

(100) (102E)

(101) (102G)

(102) (107A)

(103) (112)

(104) (152)

(105) (153)

(106) (115A)

(106A) ---

(107) (148)

(108) [Omitted] (174)

(109) [Omitted] (183)

(110) (116)

(111) (116A)

(112) [Omitted] ---

(113) (116C)

(114) (117)

(115) [Omitted] (118)

(116) [Omitted] ---

(117) (115)

(118) [Omitted] ---

(119) [Omitted] ---

(120) (125C)

(121) [Omitted] ---

I.T.

Ord., 2001

I.T.

Ord., 1979

(122) [Omitted] ---

(123) [Omitted] ---

(124) [Omitted] ---

(125) [Omitted] ---

(126) (126C)

(127) [Omitted] ---

(128) [Omitted] ---

(129) [Omitted] (134A)

(130) [Omitted] ---

(131) (139)

(132) (176)

(132A) ---

(133) (179)

(133A) ---

(134) [Omitted] (171A)

(lxiv) Principles of Income Tax Law

(135) (171B)

(136) (184)

(137) (177)

(138) (182)

(139)(a) Rule 17

(139)(b) (129A)

The following exemptions, previously contained in the Second Schedule to the repealed Ordinance of 1979, have now

been included in Part VII of Chapter III of the Income Tax Ordinance, 2001.

S. 41 (1)

S. 43 (2)

S. 44(2) (12)

S. 44(3) (12A)

S. 42(3) (16)

S. 45 (40)

S. 47 (87)

S. 49(2) (88)

S. 51 (130A)

Part II (1) [Omitted] (1)

I.T. Ord., 2001

I.T. Ord., 1979

(2) (3)

(3) (2AB)

(4) [Omitted] (2)

(5) (2A)

(6) (4A)

(7) [Omitted] (5AA)

(8) [Omitted] (6)

(9) (6A)

(10) (9)

(11) (10)

(12) (13)

(13) (6AA)

(13A) ---

(13B) ---

(13C) ---

(13D) [Omitted]

(13E) ---

(13F) ---

(13G) ---

(14) (6AB)

(15) (6AC)

(16) (11)

(17) (12)

(18) 1st Sch., Pt V, Para B

(19) ---

(20) 1st Sch., Pt-V, Para D(c) Pro.

(21) (14)

(22) ---

(23) ---

(24) ---

Part III (1) [Omitted] (1B)

(1A) ---

(2) (2)

I.T.

Ord., 2001

I.T.

Ord., 1979

(3) (11)

(4) ---

Part IV (1) [Omitted] (3)

(2) (1)

(3) ---

(3A) ---

(4) [Omitted] (5)

(5) (6A)

(6) [Omitted] (6B)

(7) [Omitted] (6C)

(8) [Omitted] (6D)

(9) [Omitted] (6G)

(10) (6HA)

(11) ---

(12) [Omitted] (14)

(13) [Omitted] (14)

(13A) [Omitted]

(14) (16)

(15) [Omitted] (20)

(16) (21)

(17) [Omitted] (27)

(lxv)

Table of Comparative Income Tax Laws

(18) [Omitted] (29)

(19) (30)




(22A) [Omitted] ---

(23) [Omitted] (32E)

(24) [Omitted] (32F)

(25) [Omitted] (32G)

(26) [Omitted] (17)



(29) (38)

I.T.

Ord., 2001

I.T.

Ord., 1979

(30) [Omitted] (54)


(31A) [Omitted] ---

(31B) [Omitted] ---

(32) [Omitted] (50)

(33) (2A)


(35) [Omitted] (10D)

(36) (39)

(36A) ---

(37) [Omitted] (40)

(38) (32)

(38A) ---

(38B) ---

(39) [Omitted] (47)

(40) [Omitted] (9)

(41) (9A)

(42) (9C)


(43A) (33B)

(43B) [Omitted] ---

(43C) [Omitted] ---

(43D) [Omitted] ---

(43E) [Omitted] ---

(44) [Omitted] (37)

(45) (9B)

(46) (56)

(46A) [Omitted] ---

(46B) [Omitted] ---

(46C) [Omitted] ---

(47) ---

(47A) ---

(47B) ---

(47C) ---

(48) [Omitted] (49)

I.T.

Ord., 2001

I.T.

Ord., 1979


(50) [Omitted] (45)

(51) [Omitted] (48)

(52) ---

(53) [Omitted] ---

(54) [Omitted] ---

(55) [Omitted] ---

(56) ---

(57) ---

I.T. Ord., 2001

I.T. Ord., 1979

(58) ---

(59) ---

Third Sch

Part I Rule 2(1)

Part II Rule 5 & 5A

Fourth Sch Fourth Sch

Fifth Sch. Fifth Sch.

Sixth Sch. Sixth Sch.

Seventh Sch. Eighth Sch.

(lxvii)

Comparative Table of Income-tax Act, VII of 1918, Income-tax Act, XI of 1922,

Income Tax Ordinance, 1979 and Income Tax Ordinance, 2001

Following is a comparative list of sections and provisions of Income Tax Act, 1918, Income Tax Act, 1922, Income Tax Ordinance, 1979 and Income Tax Ordinance, 2001.

I.T. Act, 1918 I.T. Act, 1922 I.T. Ord., 1979 I.T. Ord., 2001

1 1

1(1) 1(1) 1(1)

1(2) 1(2) 1(2)

1(3) 1(3) 1(3)

2(1) 2(1) 41(2)

2(3) 2(2)

2(4) 2(3)

2(5) 2(4)

2(1)(2) 2(1)(2)

2(2) 2(6) 2(66)

2(3) 2(2)

2(3A) Omitted

2(7) 2(5)

2(8) 2, (5A), 2(68) read with

2(26)

2(10) 2(7)

2(4) 2(11) 2(9)

2(4A) 2(12) 2(10) read with 37(5)

2(4B) 2(13) 2(11)

2(14) 2(11A)

2(3) 2(5) 2(15) 2(13) read with 209

2(5A) 2(16) 2(12) read with 80

2(5B) 2(17) 2(14)

2(17A) 2(65)

2(18) 2(22)(a)

2(4) 2(6) 2(19)

2(6A) 2(20) 2(19)

2(20) Exp. 2(1)

2(6AA) Omitted

(lxviii) Principles of Income Tax Law

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001

2(6AAA) Otiose

2(21A) 2(25)

2(6B) 2(22) 2(26) read with 80

2(6BB) Otiose

2(6C) 2(24), 12(12) 2(29)

2(26) 2, (29A), 2(68) & 74

2(6D) 2(27)

2(6E) 2(28)

2(5) 2(3) and 63(1) &

(2)

2(6) 2(4)

2(7) to (13) 2(7) to (13)

2(7) 2(25)

2(29) 2(46)

2(29A) 2(34), (35)

2(30) 2(37) read with 81

2(9) 2(32) 2(42) read with 80

2(10) 2(33) 2(44)

2(11) 2(26) Rev.

2(12) 2(34) 2(44A)

2(13) 2(36)

2(37) 2(48)

2(37A) 2(48A)

2(13A) 2(38)

2(13AA) Omitted

2(40) 2(50) to (53) read with

81, 82 & 83

2(42) 2(59)

2(14) 2(43) 2(63)

2(14A) Omitted

2(15) 2(44) 2(69), 9, 10

2(16) 2(45)

2(16A) 2(46)

2(17) 2(8) Rev.

3(1A) 207(2)

4A 177, 222

(lxix) Comparative Index

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001 [

5 209

5(3) 210(3)

3 9(1) Rev.

3 Pr. (a) Omitted

3 Pr. (b) 9(2)

3A Otiose

3B(1) 10(1)

3B(2) 10(3)

3 4

4(1) 11(1) 11(5) & (6)

4(1) Pr. 1 11(2), 16(1) Pr. 11(5), (6), 73(1)

4(1) Pr. 2 Omitted

4(1) Ex. 1 Omitted

12 2(40)

4(1) Ex. 2 12(1) 101(1)

12(4) 101(8)

12(4) Exp. 2(54)

12(5) 101(12)

12(5) Exp. 2(23)

4(1) Ex. 3 12(10) 101(6)

4(1) Ex. 4 12(9)

4(1) Ex. 6 Otiose

4(1) Ex. 7 12(8) 72

4(1) Ex. 8 12(7) 72(b)

12(13) 16(1)

12(14) 16(2)

12(15) 16(3)

12(16) 39(2)

12(18) 39(3), (4)

4(2A) 13(1)(a) 111(1), (2)

4(2B) 13(1)(b) 111(1), (2)

4(2C) 13(1)(c) 111(1), (2)

4(2D) 13(1)(d) 111(1), (2)

4(2E) 13(1)(e) 111(1), (2)

4(2F) 13(2)

13(2A) 111(4)

(lxx) Principles of Income Tax Law

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001

13(3) 111(5)

4(3) 14(1) & II Sch. 53(1)

4 4(3)(viii)

4A 2(40)

4B Omitted

5(1) 3(1) 207(1)

5(1A) 4(1), 5(1)(a)

5(2) 4(1), 5(1)(b)

5(3) 4(1) 208(1)

5(3A) 4(2), 4(4) 208(2)

5(4) 5(1)(b) Rev.

5(5) 5(1)(c), 5(2) 210(2)

5(5A) 5(1)(c), (d) & 3(3),

(4)

5(6) 5(1)(b), (c)

5(7) 3(2), 3(3)

5(7A) 5(1) 210(1)

5(7B) 7 213

5(7C) Omitted

5(7D) Omitted

5(8) 8 206(1), 214

5(8) Pr. 8 Pr.

5A 133 130

5 6 15 11(1)

6 7

7(1) 16(1) 12(1)

16(1)(a), (b) 2(55)

7(1) Pr. 1 40(a)

7(1) Pr. 2 Otiose

7(1) Pr. 3 46

7(1) Pr. 4 Omitted

7(1) Ex. 1 16(2)(b)(i) 12(2)

7(1) Ex. 2 16(2)(c) 12(2)

16(2)(e) 2(21)

16(2)(e) 2(20)

7(1) Ex. 2 Pr. 2nd Sch

(lxxi) Comparative Index

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001 [

7 8 17(1)

8 Pr. 1 18(1)

8 Pr. 2 17(2)(a)

8 Pr. 3 17(2)(b)

8 9

9(1) 19(1), (2)(a) 4(1) & 15(1),(2)

9(1)(i) 20(1)(a) 17(1), 23

9(1)(ii) Omitted

9(1)(iii) 20(1)(b) 17(1), 23

9(1)(iv) 20(1)(c), (d), (f) 17(1), 23

9(1)(iv) Pr. Omitted

9(1)(iv) Ex. 20(1)(c) 17(1), 23

9(1)(v) 20(1)(e) 17(1), 23

9(1)(vi) 20(1)(g) 17(1), 23

9(1)(vii) 20(1)(h) 17(1), 23

9(1)(vii) Pr. 20(2) 17(5)

20(3) 17(6)

20(4) 17(3)

9(2) 19(2)(b) 15(4)

19(3) Exp. 15(5)

9(2) Pr. 1 Omitted

9(2) Pr. 2 Omitted

9(3) 21 66

9 10

10(1) 22(a)

22(1) 18(1)

22 Exp. 19(1)

10(2)(i) 23(1)(i)

10(2)(ii) 23(1)(iii)

10(2)(iii) 23(1)(v) 22(1), (2), (11)

10(2)(iii) Pr. 1 Omitted

10(2)(iii) Pr. 2 Omitted

10(2)(iiia) 23(1)(ix)

10(2)(iiia) Pr. 23(1)(vii) Pr.

10(2)(iv) 23(1)(iv)

10(2)(v) 23(1)(iii)

(lxxii) Principles of Income Tax Law

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001

10(2)(va) Omitted

10(2)(vi) 23(1)(v) & 3rd Sch.

10(2)(via) Otiose

10(2)(vii) 3rd Sch.

10(2)(viii) 23(1)(vi) 28

10(2)(ix) 23(1)(ii)

10(2)(x) 23(1)(viii)

10(2)(xi) Pr. 1 Omitted

10(2)(xi) Pr. 2 Omitted

10(2)(xi) Pr. 3 25(a) 34(5A) & 70

25(b) 34(5A)

25(c) 34(5)

25 proviso 34(6)

23(1)(x) 29

10(2)(xii) 23(1)(xii) 26(1)

10(2)(xiii) 23(1)(xi)

10(2)(xiv) 23(1)(xii)

23(1)(xiii), (xiv) 27

10(2)(xiv) Pr. 1 Omitted

10(2)(xiv) Pr. 2 Omitted

10(2)(xiv) Ex. Omitted

10(2)(xiva) 23(1)(xvii)

23(1)(xxi), (xxii) 30

23(1)(xix) 31

10(2)(xivb) Pr. 1-4 Omitted

10(2)(xv) 23(1)(xv) 27

10(2)(xvi) 23(1)(vii)

23(1)(viidd) 2(39), (57)

23(1)(viidd) Exp. 2(60)

10(2)(xviii) 23(1)(xvi)

23 20

10(2A) 25

10(2A) Pr. 25 Pr.

10(3) 23(2)

10(3A) 3rd Sch.

10(3B) Omitted

(lxxiii) Comparative Index

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001 [

10(3BB) 3rd Sch, Rule 8(8)(b)

10(4) 24(a) 21

10(4)(a) 24(c) 21

10(4)(b) 24(d) 21

10(4)(bb) 24(b) 21

10(4)(c) 24(h) 21

10(4)(d) 24(i) 21

10(4)(d) Ex. 1 24(1) Ex. (i) 21

10(4)(d) Ex. 2 24(1) Ex. (ii) 21

10(4)(e) 24(f) 21

10(5) 23(1) Ex. (b) and

3rd Sch. Rule 8(7)

10(5A) Omitted

10(6) 22(b)

10(7) 26(a) 99 & 100

10(8) 26(b) 99 & 100

10(8) Pr. 26(b) Pr. 99 & 100

10(9) 26(c) 99 & 100

10(9) Pr. Otiose

10(10) Omitted

10 11

11 12

12(1) 30(1) and (2) 39(1)

12(2) 30(1) and (2) 39

31(1) 39(5), 40(1),(3)

31(2) 40(4)

31(3) 40(5)

12(2A) Otiose

12(3) 3rd Sch.

12(4) 3rd Sch.

30(2)(a) 15(3)

12(5) 30(2)(e) 39

12(6) Omitted

12A Omitted

12AA 33 89

12B(1) 27(1) 37(1)

(lxxiv) Principles of Income Tax Law

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001

12B(1) Pr. 1 27(2)(b) 37(5), 75 to 79

12B(1) Pr. 2 Omitted

12B(2) 28(1) 37(2)

12B(2) Pr. 1 29(2) 37(4A)

12B(2) Pr. 2-4 Omitted

12B(3) 29(1) 37(4A)

29(3) 68

12B(4) Omitted

13 32(1)(Rev.) 32(1), 174

13 Pr. 32(3) 174

13 Pr. 2 32(2) 32(3), 174

13 Ex. Omitted

13A 32A 174, 177

14 2nd Sch. Cl. (103) &

(109) to (111)

12 14 and 15

15(1) 39(1)(a), 40(b)

15(1) Pr. 39(2)(b)

15(2A) 39(2)(a)

15(3) 45

15(3) Pr. 1 & 2 Omitted

15(5) 39(3)

15A Omitted

15AA(1) 41(1)(a), (b), (d)

15AA(3) 41(2)

15AA(3) Pr. 1 41(2) Rev.

15AA(3) Pr. 2 Omitted

15AA(4) 41(3)

41A 62

44 63

44A 63

44AA 63

44AAA 64

15B(1) 48(1)

15B(2) 48(2)

15B(3) 48(3)

(lxxv) Comparative Index

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001 [

15B(4) 48(5)

15B(5) 48(6)

15B(6) Omitted

15B(7) 48(7)

15BB Omitted

15C(1) 41(1)(f)

15C(2) Omitted

15C(2A) Omitted

15C(3) 41(1)(f) Ex.

15C(5) 41(5)

15CC(1) 41(1)(e)

15CC(2) Omitted

15CC(2) Ex. Omitted

15CCC 43

15D(1)(a) 47(1)(a) 61

15D(1)(b) 47(1)(b) 61

15D(1)(c) 47(1)(c) 61

15D(1)(d) 47(1)(d) 61

15D(1)(e) Omitted

15D(1) Pr. 1 Omitted

15D(2) 47(3) 61

15D(2) Pr. 47(4) Rev. 61

15D(4) 2(14)

15D(5) 47(4) 61

15E Omitted

15F 42

15FF 106

15G(1) to (5) 105(1) to (5)

15GG 107 Rev. 172 & 173

13 16

16(1)(a) 49

16(1)(b) 69(4) 93(6)

16(1)(b) Pr. Omitted

16(1)(c) 83(1) & (3) 90(1) & (3)

83(2) 90(2)

83(4) 90(4),(5),(6),(7)

(lxxvi) Principles of Income Tax Law

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001

16(1)(c) Pr. 1 83(5)(a) 90(8)

16(1)(c) Pr. 2 83(5)(b) 90(8)

83(5)(e) 2(33)

16(2) 12(11)

16(2) Pr. 1 & 2 Otiose

16(3)(a)(i) 69(3)(a)

16(3)(a)(ii) 69(3)(a)

16(3)(a)(iii) 83(4)(a)

16(3)(a)(iv) 83(4)(b) & 83(5)(c) 90(4)

16(3)(b) 83(4)(c) 90(4)

16(3)(b) Pr. 83(4)(a), (b) 90(4)

14 3 and 17

17(1) 1st Sch. Pt. IV(3)

17(2) 1st Sch. Pt I,

Para A. Pr. (d)

17(5) 1st Sch. Pt IV,

Para A. (4)

17(6) Otiose

14A 18

18(2) 50(1) 149(1)

18(2) Pr. 50(1) 149(1)

18(2A) Omitted

18(2B) 50(3) 152(2), (3)

18(2B) Pr. 50(3) 152(2), (3)

18(3) 50(2)

50(2A) 151

18(3) Pr. 50(3) Pr. 152(2), (3)

18(3A) 50(3) 152(2), (3)

18(3A) Pr. Omitted

18(3B) 50(3) 152(2), (3)

50(3.1) 152(4)

50(3.2) 152(5)

50(3.3) 152(6)

50(3A) 152(1)

18(3B) Pr. 1 Omitted

18(3B) Pr. 2 Omitted

(lxxvii) Comparative Index

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001 [

18(3BB) 50(4) 153

50(4A) 233

18(3BBB) 50(6) 234

18(3C) Otiose

18(3CC) 50(5) 148

50(5A), (5AA) 154(1) to (3)

50(6A) 150

18(3D) 50(7)

50(7B) 155(1), (2)

50(7C) 156

50(7E) 235(1), (2)

50(7F) 236

50(7H) 157(1)

18(3F) Otiose

18(4) 50(8)(a) 168(1)(a)

18(5) 50(8)(b) 168(1)(b)

18(5) Pr. 1 Omitted

18(5) Pr. 2 Omitted

18(6) 50(8)(c) 158, 160

18(7) 52, 86 161

18(8) Omitted

18(9) 51 164

18(9) Ex. 50(9) 155(3)

18(10) Omitted

52A 162

18A(1) 53(1) 147(2), (3) & (4)

18A(1) Pr. 1 to 3 Omitted

18A(2) 53(2) 147(5) & (6)

18A(2) Pr. Omitted

18A(3) & (4) Omitted

18A(5) 53(4)

53(5) 147(8), (9), (10) & (11)

18A(5A) Omitted

83A 91

86 205(3), (4)

18A(6) 87(2) 205(1) & (2)

(lxxviii) Principles of Income Tax Law

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001

18A(7) 87(1)(b) 205(1) & (2)

18A(7) Pr. Omitted

18A(8) 87(2) 205(1) & (2)

18A(9)(a) 87(1)(a), (b) 205(1) & (2)

18A(9)(b) 87(1)(a) 205(1) & (2)

18A(9) Pr. Omitted

18A(10) 53(3)

18A(11) 53(1) 147(2), (3) & (4)

15 19 and 20

19 Omitted

19A 140 165

20 Otiose

20A 139 165

21 Pr. Omitted

21A Omitted

16 22

22(1) 55(1) 114(1),(2) & 118(1)

55(1) 1st Pr. 115(1)

55(1) 3rd Pr. 115(3)

55(1) 2nd Pr. &

143B

115(4)

55 2nd Pr. 116(2)

55 4th Pr. 118(6)

22(1) Pr. Omitted

22(1A) 55(2) 118(2), (3)

55(2) Exp. 118(4)

22(1A) Pr. 1 & 2 55(3) 119(1) to (4)

55A 118

22(2) 56 114(5)

22(3) 57 114(6)

22(4) 61 176 & 239(2)

22(4) Pr. 61 Pr. 176 & 239(2)

22(4A) 58(1) 116(1)

22(4A) Pr. 58(2) 36

58 Proviso 115(2)

22(5) Omitted

(lxxix) Comparative Index

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001 [

22A 54 137(1)

17 23(1) 59(1), (2) 120

23(2) 61 176 & 239(2)

23(2A) 67(1)

23(3) 62

62A 124(3)

62BB 124A

18 23(4) and 24 63 121

23(4) Pr. 1 Otiose

23(4) Pr. 2 Otiose

23(5) 69(1)

23(6) 69(2)

23(7) 7

23B 60

60A 123

24(1) 34 11(4), 56

24(1) Pr. 1 36(1) 58

24(1) Pr. 2 38(4) 59A, 93(2), 94

24(2) 35, 36(2) 58

36(2) Exp. 2(61)

36 Exp. 19(2)

24(2) Pr. (b) 38(7) 59A, 93(2), 94

24(2) Pr. (c) 38(2) & (5)(a) 59A, 93(2), 94

24(2) Pr. (d) 38(3) 59A, 93(2), 94

24(2) Pr. (e) 38(5)(b)(c) 59A, 93(2), 94

24(2) Ex. 1 36(2) Ex. 58

24(2) Ex. 2 Omitted

24(2A) 34 56

24(2B) 37 38, 59

24(2B) Pr. 1 & 2 37 Pr. 1 & 2 59

24(2C) Otiose

24(3) Omitted

24A(1) 81(3) 114(3)(c)

24A(1) Pr. Omitted

24A(2) 81(2) 114(3), 145

24B(1) 74(1), (3), (4), (5) 87, 114(3)

(lxxx) Principles of Income Tax Law

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001

24B(2) 74(2)(b) 87, 114(3)

24B(3) 74(2)(a) 87, 114(3)

25(1) 72(2) 114(3), 117(2) & (4)

25(2) 72(1), 112 114(3), 117(1)

25(3) to (5) Omitted

25(6) 72(3) 114(3), 117(3), 118(5)

25A(1) 75(1)

25A(2) 75(2)

25A(3) Omitted

26(1) Pr. 1&2 70 98A

26(2) 73(1) 98C

26(2) Pr. 73(2), (3) 98C, 118(5)

26A(1) 68(1)

26A(2) 68(3)

26A(3) 68(4)

26A(4) 68(5)

26A(5) 68(2)

81(1), (4) 114(3), 145

26A(5) Pr. Omitted

19 Omitted

20 28

28(1)(a) 108(a), (b) 182(1), (2)

28(1)(b) 110 186

28(1)(c) Omitted

28(1) Pr. Omitted

28(1A) 109, 111(1)

109 185

28(1A) Pr. 1 Otiose

112 188

28(1A) Pr. 2 113

111(1) 184(1)

28(1A) Ex. 111(2) 184(2)

111(2A) 184(3)

28(1B), (2), (2A) Omitted

114 188

28(3) 116(b) 190(2)

(lxxxi) Comparative Index

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001 [

28(5) 111(3) 184(4)

28(6) 116(a) 190(1), (2)

29 85

21 29 and 30

30(1) 129(1) 127(1)

30(1) Pr. 1 129(2) 127(2)

30(1) Pr. 2&3 Omitted

30(1A) Omitted

30(2) 130(2), (3) 127(5), (6)

30(3) 130(1) 127(3), (4)

30A Omitted

22 31

31(1) 131(1) 128(1), (2)

31(2) 131(3) 128(4)

31(3) 131(2) 128(3)

31(4) 131(4) 128(5)

31(5) 132(1)(a)(ii) 129(1)

31(6) 132(1), (2) 129(1), (2)

31(7) 132(3) 129(3)

31(8) 132(4) 129(4)

132(5) 129(5), (6)

132(6) 129(7)

132(7) 130(1)

23 32

24 33

33(1)(a) 134(1), (3)

33(1)(b) & (c) Omitted

33(1) 134(1) 131(1)

33(2) 134(2), (3)

33(2A) 134(4) 131(4)

33(3) 134(5) 131(2), (3)

33(3A) 135(1) 132(1)

33(4)(a) 135(2) 132(2)

33(4)(b) 135(3)

33(4)(c) 135(4)(a) 132(3)

33(4)(d) 135(4)(b) 132(3)

(lxxxii) Principles of Income Tax Law

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001

33(4)(e) 135(4)(c) 132(3)

33(4)(f) 135(5) 132(6)

33(4)(g) 135(8) 132(4)

33(5) 135(7) 132(5)

135(7A) 132(8), (9)

135(8) 132(7)

33(6) 135(9) 132(10)

33(7) Otiose

33A(1) 138(1) 122A

33A(2) 138(2) 122A

33A(2) Pr. 1 138(2) 122A

33A(2) Pr. 2 138(5)(a) 122A

33A(2A) 138(3) 122A

33A(3) 138(4) 122A

138L 228

138N 229

138O 230

138P 231

33A(4) Omitted

25 34

34(1) 65(1) 122(1)

34(1) Pr. 1 65(1) Pr. 1 122(1)

34(1) Pr. 2 65(2) Rev. 122(5)

65(2) Exp. 122(8)

34(1A) 65(1) Pr., 65(3) 122(2)

34(2) 64, 65(3)

34(2) Pr. (i) Otiose

34(2) Pr. (ii) 64 Pr. Rev.

34(2) Pr. (iv) 66(1) Rev. 124(1) & (2)

34(2) Pr. (v) Omitted

34(2) Ex. 1 66(2)(i) 124(5)

34(2) Ex. 2 66(2)(ii) 124(5)

66(3) 125

34(2A) & (2B) Otiose

34(2C), (2D) Omitted

34A 66A 122(5)(a)

(lxxxiii) Comparative Index

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001 [

26 35

35(1), (2) 156(1), (4) 221(1), (4)

35(1) Pr. 156(2) 221(2)

156(3) 221(3)

35(3), (4) Otiose

35(5) Omitted

35(6) Otiose

35(8) Omitted

36 152 219

27 37

37(1) 148(1) & 158

148(1) 176(1) & (4)

37(1) Pr. Omitted

37(2) 149

28 38 144 215 & 176(1)

38A(1) 146(2)

38A(2) 146(1) 175(1)

38A(2) Pr. 144(c) Pr.

38B(1) 145

38B(2) 146(3) 175(2)

29 39 Omitted

30 Omitted.

31 40 78 Rev. 172 & 173

32 41

41(1) 78 Rev. 142

41(1) Pr. 1 & 2 Omitted

41(2) 78(4)

33 42

42(1) 12(2) 101(2), (3), (5)

42(1) Pr. 1 Omitted

42(1) Pr. 2 78(3)

42(1) Pr. 3 Omitted

42(2) 79 108

42(3) 12(2) Pr.

34 43 78(3) Ex.(4)(a)

43 Pr. 1 78(3) Pr. (a)

(lxxxiv) Principles of Income Tax Law

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001

43 Pr. 2 78(3) Pr. (b)

43 Ex. Otiose

43A 77(3) 139(4)

43B 77(1), (2) 139(1),(2) & (3)

43C(1) 76(1) 141(1)

43C(2) 76(2) 141(2)

43C(3) 76(3) 141(3)

43C(4) 76(4) 141(5)

43C(5) Omitted

43C(6) 76(5) 141(7)

35 44 71 98B

44A 80(1) 7, 143(3)

44B(1) 80(2) 7, 143(1)

44B(2) 80(3) 7, 143(2)

44B(3) 80(3), (5) 7, 143(3), (5)

80(4) 143(4)

44C 80(6) Rev. 7

80A(1) 144(3)

80A(2) 144(1)

80A(3) 144(2)

80A(4) 144(4), (5)

80AA 6

80AAA 6

80B 5, 8 & 169

80C 153(6),(7) 169

80C(2)(iv) 157(2)

80CC 154(1) to (3), 169

80D(1) 113(1)

44D Omitted

44E 84 Rev.

44F Omitted

44G 82(1) 145

44G(1) Pr. 82(2) 145

44G(2) 82(3) 145

44G(3) 82(3) 145

44G(4) 165

(lxxxv) Comparative Index

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001 [

44G(4) Ex. 82(4) 145

84(1) 112(1)

36 45 85

85(1) 137(2)

85(2) 137(4)

45 Pr. & Ex. Omitted

45A(a) 89 Rev. 205(1) & (2)

45A(b) 88 Rev. 205(1) & (2)

45A Pr. 1 89 205(1) & (2)

45A Pr. 2 90 205A

46(1) 91(1) 183, 205A

46(1A) 91(2) 183, 205A

46(2) 94

46(2) Pr. 94 Pr.

46(2A), (3) to (5) Omitted

46(5A) 92(1), (2), (3) 140(1), (3), (6) & (10)

92(4), (5) 55 & 80D

92(2A) 140(5)

46(5A) Ex. 1 & 2 Omitted

46(8) to (10) Omitted

46A(1) 93(1), (2), (5) 138

93A 146

46A(1A), (2) Omitted

46B Omitted

46C(1) 95(c) 146A

46C(2) 95(d) 146A

46C(3) Omitted

46D Omitted

37 47 85

48(1) 96 170(1)

48(2) 100

48(3) 97(1)

98(a), (b) 12(7), (8)

48(4) 101

38 49

142, 143, 143A & 115(4), 118 & 165

(lxxxvi) Principles of Income Tax Law

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001

143B

143D 181

49AA(1) 163(1) 107

49AA(2) 163(2) 107

49AA(3) 163(3) 107

49AA(4) Otiose

49AA(5) 163(4) 107

49B & C Otiose

49D(1) 164 102 & 103

49D(1) Pr. 1 Otiose

49D(1) Pr. 2 Omitted

49D Ex. Omitted

49E 104 170(3)

49F 97(2)

49G 102

102(1) 171(1)

102(2) 171(2)

39 50 99 170(2), (3), (4)

40 51

51(1)(a) 117(a) 191(1)

51(1)(aa) 117(b) 191(1)

51(1)(b) 117(c) 191(1)

51(1)(c) Omitted

51(1)(d) 117(d) 191(1)

117(e) 196

51(1A) Omitted

51(2) 119

51(3) 115 (Rev.) 189

51(4) 121 197

41 52 118 192, 195

52A 120 199

42 53

53(1) 125

53(1A) 124 (Rev.) 201

53(2) 126 202

53(3) Omitted

(lxxxvii) Comparative Index

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001 [

54(1) 150(1), (2) 216(1), (2)

54(2) 122 198

123 200

54(3) 150(3) 216(3)

54(4) 150(4) 216(4)

54(4A) 150(5) Rev. 216(5)

150(5A) 216(6)

150(6) 216(7)

54(5) 150(7) Rev. 216(8)

54A(1) 127(1) 203(1)

54A(2) 127(2) 203(2)

54A(3) Otiose

55(1) 10(1)

55(1) Pr. 1 & 2 Omitted

55(1) Pr. 3 1st Sch. Pt. IV, 2B

55(1) Pr. 4 Omitted

56 10(2)

43 58

44 58

58(1) 10(3)

58(2) Omitted

58A-58V 6th Sch.

58W 44 63

59(1) 165(1) 237(1)

59(2) 165(2) 237(2)

59(3) 165(3)

59(4) 165(4) 237(3)

59(5) Omitted

60(1) 14(2) 53(2)

14(2) Proviso 53(3)

60(2) 98

45 61

128(1) 204(1)

128(2) 204(2)

128(3) 204(3)

61(1) 157(1) 223(1), (11)

(lxxxviii) Principles of Income Tax Law

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001

61(2) 157(2) 223(2)

61(3) 157(3), (a), (b),

157(4), (5)

223(3), (4), (5)

61(4) 157(3)(b) 223(3)

157(6) 223(6)

157(7) 223(7)

157(8) 223(8)

157(9) 223(9)

157(10) 223(10)

46 62 153 220

63(1) 154(1) 218(1)

63(2) 154(2) 218(2)

47 63(3) 154(6) 218(3)

154(4) 218(4)

154(6) 218(5)

64(1) 5(3)(a)

64(2) 5(3)(b)

64(3) 5(4) 210(4)

64(3) Pr. 1 Omitted

64(3) Pr. 2 5(5) 210(5)

64(3) Pr. 3 Omitted

64(4) 5(6) 210(6)

64(5) Omitted

48 65 161 167

49 Omitted

50 Omitted

51 66

66(1) 136(1) 133(1),(2) & (3)

66(2) 136(2) 133(4), (5)

66(3) Omitted

66(4) 136(3) 133(7), (8)

66(5) 136(5) 133(10)

66(6) 136(6) 133(11), (12)

66(7) 136(7) 133(13)

66(7) Pr. Omitted

66(7A) 136(8) 133(14)

(lxxxix) Comparative Index

I.T.Act,

1918

I.T. Act,

1922

I.T.Ord.,

1979

I.T.Ord.,

2001 [

136(9) 133(15)

136(10) 133(16)

66(8) Otiose

66A(1) 136(4) 133(9)

66A(2) 137(1) 134(1)

66A(3) 137(2) 134(2)

66A(3) Pr. 1 & 2 Omitted

66A(4) 137(3) 134(3)

137(4) 134(4)

151 55

66B 155 126(2)

158 50(8), 224

66BB 147 178

52 67 162 227

67A 160 226

67AA 159 225

67B Otiose

53 68

164A 180

165A 212

166(1) 44(1), 238

166(2) 44(1), 239(2) to (11)

167 240

(xc) Principles of Income Tax Law

(xc)

Schedules

I.T.Act, 1922 I.T.Ord., 1979 I.T.Ord., 2001

1st Sch. 4th Sch. 4th Sch.

2nd Sch. 5th Sch. Pt. I 5th Sch.

3rd Sch. 5th Sch. Pt. II 5th Sch.

4th Sch. 7th Sch.

Following is a comparative list of rules of the Income Tax Rules,

1962, Income Tax Rules, 1982 and Income Tax Rules, 2002:

I.T.Rules, 1962 I.T.Rules, 1982 I.T.Rules, 2002

1-2 1-2 1-2

3-5 204

6-7 Omitted

8 Omitted[now S.20(I)(g)]

9 III Sch.

10 Otiose

11 27, 29, 31 & 32 28, 29 & 30

11A 34 30

12 Otiose

13 49 & 50 42

14 52

15 53 & 54 50

16 55 41

17 57

18 59

19 58

20 50 42

21 203

22 62 48-49

23 62 48-49

24 63 48-49

25 Otiose

26 199

27 Otiose

(xci) Comparative Index

I.T.Rules, 1962 I.T.Rules, 1982 I.T.Rules, 2002

28 200

29(1) 56(2) 43

29(2) 20(2) Sec.105(2) & (3)

29(3) 197 51A

29(4) 201 58

30 190 230

31 191 230

32 192 Pt.XI, of 1st Sch.

33 Otiose

34 194 76

35 195 77

36 196 78

37 25 11

38 Otiose

39 3-18 3-9

40 24 23

41 24 23

42 193 51A

43 & 44 209-210 Pt.I, of 1st Sch.-16

45 205(2) & 206 85-89

46 Otiose (Now S. 59)

47 & 48 Otiose

49 21 10

SRO 1041(K)/61,

dated 31.10.1961 19

Notif No. 36,

dated 22.6.1956 43

SRO 406

dated 22.8.1959 43

Notif. No. 4

dated 14.3.1952 37

SRO 884(I)/74

dated 1.7.1974 46

(xcii) Principles of Income Tax Law

I.T.Rules, 1962 I.T.Rules, 1982 I.T.Rules, 2002 [

SRO 714(I)/72

dated 12.9.1972 211-215 Pt.V-VI of 1st Sch.

SRO 57(R)/69

dated 7.4.1969

Income Tax

Recovery

Rules, 1961 99-189 122-210

Notif. No. 6

dated 10.3.1950 Otiose

SRO 353(K)/62 &

SRO 354(K)/62

dated 27.3.1962 69-84 91-107

SRO 982(I)/75

dated 12.9.1975 41 211-220

SRO 349(I)/76

dated 12.4.1976 39

(xciii) Table of Cases Cited

(xciii)

Table of cases cited

Sr.# Citation at page

A

1. A&B Food Industries Ltd. v. CIT/CST, Karachi –

[(1992) 65 Tax 281 (S.C.Pak)] .................................................................. 156, 226

2. A. Rehman alias Abdullah and another v. Federation

of Pakistan and others – 2002 PTD 804 (H.C.Kar.) .......................... 235, 236

3. A.J. Hartshorn v. CIT, (West) Karachi – [(1984) 49

Tax 198 (H.C.Kar)] ............................................................................................. 128

4. Abbas S. Sharoff and another v. Income Tax Officer

and others – [(1998) 78 Tax 119 (H.C.Kar.) = 1998

PTD 2884] ............................................................................................................. 471

5. Abdul Hameed Awan v. Tax Recovery Officer-04,

Coys Zone, Income Tax Building at Rawalpindi and

3 others – [1997] 76 Tax 238 (H.C.Lah.) = 1998

PCTLR 440 = 1998 PTD 874 .......................................................................... 335

6. Abdul Hamid & Others v. Deputy Collector Excise

& Taxation – [(1988) 57 Tax 14 (H.C.A.J&K)] ............................................ 350

7. Abdul Majeed Awan v. IAC of Income Tax – [1999]

80 Tax 115 (H.C.Lah.) = 1999 PTD 2910 = 2000

PCTLR 1046 ......................................................................................................... 319

8. Abdul Rashid (c/o Union Traders Gole Cloth,

Lyallpur) v. Special Judge (Central), Lahore and

another – [1976] 34 Tax 199 (H.C.Lah.) ........................................................ 330

9. Abdul Rashid v. Special Judge (Central) Lahore &

another – [(1976) 34 Tax 199 (H.C.Lah.)]...................................................... 119

10. Abdul Razzak v. The Collectors of Customs – [1995

CLC 1435 (Karachi High Court)] .................................................................... 402

11. Abdul Rehman & Another v. ITO Mirpur & Another

– [(1993) 68 Tax 132 (S.C.AJ&K)]................................................................... 367

12. Adamjee Insurance Co. Ltd. & Others v. Pakistan

through Secretary Ministry of Finance – [(1993) 68

Tax 176 (S.C.Pak)] ............................................................................................... 366

13. Adeel-ur-Rehman and others v. Federation of Pakistan

and others – 2005 PTR 1[S.C. Pak.] = 2005 PTD 172

(S.C. Pak.)] ............................................................................................................. 154

14. Aftab Medical Stores Dera Ghazi Khan v. CIT,

Lahore – [(1976) 34 Tax 10 (H.C.Lah.)] ......................................................... 285

(xciv) Principles of Income Tax Law


15. Afzal Construction Co. (Pvt.) Ltd. v. Chairman CBR

– [(1990) 62 Tax 91 (H.C.Lah.)] ....................................................................... 426

16. AG v. Aramago – [(1925) 9 TC 445 (HL) ..................................................... 418

17. Agha Ice Factory, Sheikhupura v. RCIT, Central

Region, Lahore and 4 Others – [1996] 74 Tax 215

(H.C.Lah.) .............................................................................................................. 380

18. Ahmed Maritime Breakers Ltd. v. Central Board of

Revenue etc. – [(1992) 65 Tax 268 (H.C.Kar.)] ............................................ 426

19. Al-Khair Gadoon Ltd. vs. Commissioner of Income

Tax – [(2004) 90 TAX 271 (H.C. Lah.) = 2004 PTD

2467(H.C. Lah.)] ..................................................................................................................... 176

20. Allied Bank of Pakistan Ltd., Azad Kashmir

Branches, Mirpur through Inam Elahi Azhar, EVP

and Provincial Chief, PHQ (Punjab) v. Income Tax

Appellate Tribunal, AJK Council, Muzaffarabad and

others – [2001] 83 Tax 404 (H.C.A&JK) = [2000] 82

Tax 417 ............................................................................................... 175, 209, 237,

(H.C.AJ&K) = 2000 PTD 2872 .............................................................. 238, 513

21. Allied Cans v. Income Tax Officer, Circle-8, Multan

and others – [1995] 71 Tax 216 (H.C.Lah.) ................................................... 384

22. Allied Motors Ltd. through Manager Finance v.

Commissioner of Income Tax and another – [2004

PTD 1173 (H.C. Kar.) = (2004) 90 Tax 24 (H.C. Kar.)] ........................ 55, 442

23. Alyani Cotton Ginning and Pressing Factory,

Rahimyar Khan v. Assistant Income Tax Officer and

another – [(1974) 29 Tax 238 (H.C.Lah.)]...................................................... 450

24. Amin Bricks Company v. CIT, (Revision) etc. –

[(1996) 74 Tax 227 (H.C.Lah)].......................................................................... 393

25. Amin Spinning Mills and another v. Deputy

Collector Central Excise and others – [(2004) 90

TAX 191 (S.C. AJ&K) = 2004 PTD 2479 (S.C.

AJ&K)] ................................................................................................................... 207

26. Amin Textile Mills (Pvt.) Ltd. v. CIT, and 2 others –

PTCL 2000 CL. 316 (S.C.Pak) .......................................................................... 374

27. Amir Nawaz Khan, etc. v. Government of Pakistan,

through Secretary Finance, Islamabad, etc. – [2001]

83 Tax 397 (H.C.Lah.) ........................................................................................ 378

28. Anisa Rehman v. PIAC – [1994 SCMR 2232] .............................................. 413

(xcv) Principles of Income Tax Law


29. Arafat Woollen Mills Ltd. v. Income Tax Officer,

Companies Circles E-1, Karachi – [1986] 54 Tax 1

(H.C.Kar.) = 1986 PTD 316 ............................................................................. 251

30. Associated Cement Companies Ltd. v. Pakistan –

[(1978) 38 Tax 132 (S.C.Pak)] ........................................................................... 136

31. Attock Cement Pakistan Ltd. v. Collector of

Customs, Collectorate of Customs and Central

Excise, Quetta and 4 others – [(1999) 80 Tax 30

(S.C.Pak.) = 1999 PTD 1892] ........................................................................... 343

32. Ayenbee (Pvt.) Ltd. v. Income Appellate Tribunal

and others – [2002] 86 TAX 117 (H.C.Kar.) = 2002

PTD 407 ....................................................................................................... 117, 144

33. Azmat Farooq v. RCIT, Central Region Lahore and

another – [1993] 68 Tax 74 (H.C.Lah.)........................................................... 384

B

34. B.P. Biscuit Factory Ltd., Karachi v. Wealth Tax

Officer, II-Circle, Karachi & another – [1982] 45 Tax

17 (H.C.Kar.) = 1981 PTD 217 ....................................................................... 388

35. Baby-own v. Income Tax Officer – [1997 PTD 47].................................... 474

36. Balkishan Nathani v. CIT – [1 ITC 248 (Nagpur)] ........................................ 59

37. Bank Al-Habib and another v. Central Board of

Revenue – [(2004) 90 TAX 9 (H.C. Lah.)] ............................................ 305, 440

38. Bank of Punjab v. Federation of Pakistan – [2000] 81

Tax 390 (H.C.Lah.) .............................................................................................. 318

39. Barnala Commission Shop, Chak-Jhumra v. Income

Tax Officer, B-Ward, Lyallpur – [1963] 7 Tax 153

(H.C.Lah.) = 1963 PTD 534 = 1963 PLD 311 ................................... 210, 365

40. Basharat Ali & Other v. Deputy Superintendent C&E

and Sales Tax – [(1995) 72 Tax 218 (H.C.Lah.)]........................................... 348

41. Bashir Ahmad v. State – [PLD 1960 Lahore 687]........................................ 405

42. Bashir Sons (Pvt.) Ltd. v. CBR – [(1993) 67 Tax 395

(H.C.Lah.)]............................................................................................................. 276

43. Batala Engineering Ltd. v. ITO Lahore – [(1974) 29

Tax 190 (S.C.Pak)] ............................................................................................... 466

(xcvi) Principles of Income Tax Law


44. Beach Luxury Hotel Ltd. v. CIT, (Central), Karachi –

[(1981) 44 Tax 40 (S.C.Pak.)] ............................................................................ 229

45. Begum Nusrat Bhutto v. ITO Circle V, Rawalpindi –

[(1980) 42 Tax 59 (H.C.Lah.)] ........................................................... 50, 165, 351

46. Beli Ram & Bros. v. CIT – [(1935) 3 ITR 103 (Lah) ................................... 418

47. Biafo Industries v. Federation of Pakistan – PTCL

2000 CL. 384......................................................................................................... 177

48. Board of Intermediate & Secondary Education v.

CBR, etc. – [1999] 79 Tax 28 (H.C.Lah.) ....................................................... 353

49. Board of Revenue v. Ramanathan Cheltian – [1 ITC

244 (Madras)] ........................................................................................................ 262

50. Brilliant Farbics & Silk Factory, Karachi v. Income

Tax Officer, West Zone, Karachi & others – [1987]

56 Tax 24 (H.C.Kar.) .......................................................................................... 385

51. Burma Railway Co. v. Secretary of State – [1 ITC 140

(Burma)] .......................................................................................................... 60, 159

C

52. Call Tell (Pvt.) Limited through Authorized

Representative and another v. Federation of Pakistan

through Secretary, Ministry of Law Justice and

Human Rights Division, Islamabad and others –

[2004 PTD 3032 (S.C. Pak.) = (2005) 91 TAX 1 (S.C.

Pak.)] ................................................................................................................ 71, 453

53. Car Tunes v. ITO etc. – [(1989) 59 Tax 115

(H.C.Kar)].............................................................................................................. 350

54. CBR & others v. Chanda Motors – [(1992) 66 Tax

132 (S.C.Pak.) = 1992 PTD 1681] ................................................................... 462

55. Cement Agencies Ltd. v. ITO, Central Circle II,

Karachi – [(1969) 20 Tax 33 (S.C.Pak)] .......................................................... 109

56. Central Insurance Co. & other v. CBR Islamabad –

[(1993) 68 Tax 86 (S.C.Pak)] ........................................................... 132, 226, 308

57. Central Insurance Co. Ltd. v. CIT – [(1999) 79 Tax 1

(S.C.Pak.)] .............................................................................................................. 300

58. Chairman, Central Board of Revenue v. Pak-Saudi

Fertilizer Ltd. – [2001] 83 Tax 119 (S.C.Pak.) ............................................... 333

59. Chanda Motors, Karachi v. CBR – [(1990) 62 Tax 67

(H.C.Kar.)]............................................................................................................. 478

(xcvii) Principles of Income Tax Law


60. Chemitex Industries Ltd. v. Superintendent of Sales

Tax and 3 others – [1999 PTD 1184] ............................................................. 469

61. Chief Secretary, Govt. of Punjab, Lahore v. CIT,

Lahore – [(1976) 33 Tax 176 (H.C.Lah.) = PLD 1976

Lah. 258] ................................................................................................................ 332

62. CIT v. Adamji Sons – [(1966) 14 Tax 174 (H.C.Kar.)] ................................. 99

63. CIT v. Dharamchand Dalchand – [1 ITC 264

(Nagpur)] ................................................................................................................. 67

64. CIT v. Farrokh Chemical Industries – [(1992) 65 Tax

239 (S.C.Pak) = 1992 SCMR 523 = 1992 PTD 523]................. 302, 411, 421

65. CIT v. Faysal Islamic Bank of Bahrain, Karachi –

[(2001) 83 Tax 376 (H.C.Kar.)=PTCL 2001 CL. 410] ................................ 147

66. CIT v. Hoosen Kasam Dada Karachi – 1960 PTD

574 (H.C.Dacca)..................................................................................................... 55

67. CIT v. Kathiawar Coopperative Housing Society –

[(1985) 51 Tax 5 (H.C.Kar)] .............................................................................. 113

68. CIT v. Kesar Sugar Works Ltd. – 2001 PTD 744 .......................................... 44

69. CIT v. Kamran Model Factory – [2002] 86 Tax 39 .................. 114, 115, 227,

(H.C.Kar.) = 2002 PTD 14 .................................................... 236, 503, 504, 505

70. CIT v. Mahaliram Ramjidas – [1940) 8 ITR 442 (PC)] ............................... 420

71. CIT v. Muhammad Kassim – [(2000) 81 Tax 229

(H.C.Kar.) = 2000 PTD 280] ........................................................... 212, 215,244

72. CIT v. Nagina Talkies (property) Karachi – [(1974)

29 Tax 115 (H.C.Kar.)] ....................................................................................... 260

73. CIT v. Nasir Ali and another – [(1999) 79 Tax 428

(S.C.Pak.)] ................................................................................................................ 45

74. CIT v. National Agriculture Ltd., Karachi – [2000] 82

Tax 73 (H.C.Kar.) = [2000] 81 Tax 249 (H.C.Kar.) =

2000 PTD 254 ...................................................................................................... 226

75. CIT v. Nishat Cinema, Lyallpur – [1979] 39 Tax 140

(H.C.Lah.) .............................................................................................................. 106

76. CIT v. Olympia – [(1988) 57 Tax 71* (H.C.Kar)]....................... 267, 268, 479

77. CIT v. Pakistan Industrial Engineering Agencies Ltd.

– [(1992) 65 Tax 84 (S.C.Pak.) = 1992 PTD 576 =

PLD 1992 SC 562]............................................................................................... 421

78. CIT v. Pakistan Insurance Corporation & Other –

[(1997) 75 Tax 113 (S.C.Pak)] ........................................................................... 118

* Wrongly appeared as “46” in the Journal.

(xcviii) Principles of Income Tax Law


79. CIT v. Pakistan Tobacco Company Ltd. – [(1988) 57

Tax 118 (H.C.Kar.) = 1988 PTD 66] ..................................................... 183, 220

80. CIT v. Paskin (Pvt.) Ltd. – 2003 PTD 2073

(H.C.Kar.) .............................................................................................................. 154

81. CIT v. Prasad Film Laboratories (P.) Ltd. – [1999

PTD 325] ................................................................................................................. 46

82. CIT v. Prime Dairies Ice Cream Limited – [(1999) 80

Tax 282 (H.C.Lah.)] ............................................................................................ 175

83. CIT, Sargodha v. Irshad Anwar & Co. Kamalia –

[2002] 85 TAX 470 (H.C.Lah.) = 2002 PTD 750 ............................... 116, 117

84. CIT v. Shahnawaz Ltd. and others – [1992] 66 Tax

125 (S.C.Pak.) ....................................................................................................... 272

85. CIT, Companies Zone-II, Karachi v. Sindh

Engineering (Pvt.) Limited, Karachi – [2002] 85 TAX

386 (S.C.Pak) = 2002 PTD 419 ........................................................................ 130

86. CIT v. Surridge & Beecham – [(1968) 18 Tax 72

(H.C.Kar.)].................................................................................................... 156, 445

87. CIT v. Syed Akhtar Ali – [1994] 69 Tax 38 (H.C.Kar.) .............................. 104

88. CIT v. Venkatachalapathi – [1 ITC 185 (Madras)]......................................... 61

89. CIT v. Zamindar of Singampalli – [1 ITC 181

(Madras)] .................................................................................................................. 61

90. CIT, (AJ&K Council), Muzaffarabad and another v.

Asian D. Enterprises through Eijaz Qureshi,

Managing Director and 5 others & CIT, (AJ&K

Council), Muzaffarabad and 2 others v. Messrs Cade

Creets Associates through Managing Partner, Diwan

Ali Khan Ghughtai and another – [2000] 81 Tax 371

(S.C.AJ&K.) = 2000 PTD SC 892;CIT, AJK and

another v. Asian D. Enterprises and other – [2000]

82 Tax 518 ((S.C.AJ&K.) ......................................................................... 265, 288

91. CIT, (Central) Karachi v. Habib Insurance Co. Ltd.

Karachi – [(1969) 19 Tax 222 (H.C.Kar.)] ..................................................... 148

92. CIT, (Central) Karachi v. New Jubilee Insurance Co.

Ltd. – [(1982) 46 Tax 125 (H.C.Kar)] ............................................................. 139

93. CIT, (East) Karachi v. Ebrahim D. Ahmad & others

– [(1982) 45 Tax 232 (H.C.Kar)] ........................................................................ 98

94. CIT, B-Zone, Lahore v. Lahore Cantonment

Cooperative Housing Society, Lahore – [2002] 85

Tax 25 (H.C.Lah.) = 2002 PTD 629 ............................................................... 195

95. CIT, Central Zone A Karachi v. S.M. Naseem

Allahwala – [(1991) 64 Tax 31 (H.C.Kar.)] .................................................... 449

(xcix) Principles of Income Tax Law


96. CIT, Central Zone B, Karachi v. Zakia Siddiqui –

[(1989) 59 Tax 79 (H.C.Kar)] ............................................................................ 210

97. CIT, Central Zone Karachi v. United Liner Agencies,

Karachi – [(1990) 62 Tax 31 (H.C.Kar)]......................................................... 172

98. CIT, Central Zone Lahore v. Gauher Ayub – [(1995)

71 Tax 271 (H.C.Lah)] ........................................................................................ 303

99. CIT, Central Zone, Lahore v. National Security

Insurance Co. Ltd., Lahore – [(2001) 84 Tax 500

(H.C. Lah.)] ........................................................................................................... 288

100. CIT, Companies II, Karachi v. Sultan Ali Jeoffery &

others – [(1993) 67 Tax 51 (S.C.Pak)] ............................................................. 138

101. CIT, Companies Zone Lahore v. Mst. Khursheed

Begum – [(1995) 71 Tax 280 (H.C.Kar.)]] ..................................................... 448

102. CIT, Companies Zone Lahore v. Naveed A. Sheikh –

[(1992) 65 Tax 80 (H.C.Lah)] .............................................................................. 48

103. CIT, Companies, Lahore v. Locus Traders Shan (Pvt.)

Ltd., Lahore – [(2001) 84 Tax 516 (H.C.Lah.)]................................................ 317

104. CIT, Companies-I, Karachi v. Messrs National

Investment Trust Ltd., Karachi – 2003 PTD 589

(H.C.Kar.) .............................................................................................................. 231

105. CIT, Companies-II, Karachi v. Messrs Muhammad

Usman Hajrabai Trust Imperial Courts, Karachi –

2003 PTD 577 (H.C.Kar.) ........................................................................ 232, 259

106. CIT, East Bengal v. Kumar Narayan Roy Choudhry

and others – [(1959) 1-TAX (III-207) (S.C.Pak.)] ...................... 112, 190, 230

107. CIT v. Eastern Federal Union Insurance Company –

[1982] 46 TAX 6 (S.C.Pak.) ................................................................................. 88

108. CIT, East Pakistan & 2 others v. Aswab Ali & others

– [(1975) 31 Tax 101 (S.C.Pak)]........................................................................ 433

109. CIT, East Pakistan Dacca v. Wahiduzzaman – [(1965)

11 Tax 296 (S.C.Pak.) = PLD 1965 SC 171] ................................................. 422

110. CIT, East Pakistan v. Aizuddin Gazi and others –

[1960] 2-TAX (III-474) (H.C.Dacca) = 1960 PTD

727 = 1960 PLD 535 ............................................................................................ 55

111. CIT, East Pakistan v. Fazlur Rahman & Saeedur

Rahman – [(1964) 10 Tax 49 (S.C.Pak)] ......................................................... 433

112. CIT, East Pakistan, Dacca v. Engineers Limited,

Dacca – [1967] 16 Tax 81 (S.C.Pak.) ...................................................... 219, 418

113. CIT, East Pakistan, Dacca v. Wahidur Rahman, ITO,

Companies Circle IV, Chittagong – [1961] 4 Tax 135

(H.C.Dacca) = 1961 PTD 1110 = 1962 PLD 104 ......................................... 53

(c) Principles of Income Tax Law


114. CIT, East Zone, Karachi v. Merchant Navy Club –

[2004 PTD 1304 (H.C. Kar.)] ........................................................................... 119

115. CIT, Faisalabad v. Chief Glass House – [(1992) 65

Tax 205 (H.C.Lah.)] ............................................................................................ 412

116. CIT, Karachi & other v. N.V. Philip‟s

Gloelampenfabriaken, Karachi – [1993] 68 Tax 35

(S.C.Pak.) ............................................................................................................... 333

117. CIT, Karachi (West), Karachi v. S. A. Rehman –

[1980] 42 Tax 147 (H.C.Kar.) = 1980 PTD 314........................................... 277

118. CIT, Karachi v. Ashfaq Ahmad Khan & 10 others –

[(1974) 29 Tax 149 (S.C.Pak.)] .......................................................................... 311

119. CIT, Karachi v. Khatija Begum, partner Shakil Impex

Karachi – [(1965) 12 Tax 95 (S.C.Pak)] .......................................................... 228

120. CIT, Karachi v. Messrs Civil Aviation Authority –

2002 PTD 388 (H.C.Lah.) ............................................................... 213, 236, 237

121. CIT, Karachi v. Nisar Ahmad – [(1984) 50 Tax 187

(H.C.Kar)].............................................................................................................. 285

122. CIT, Karachi v. Paracha Textile Mills Karachi –

[(1973) 28 Tax 155 (H.C.Kar.)]......................................................................... 169

123. CIT, Karachi v. Sadruddin – [(1985) 51 Tax 83

(H.C.Kar.)]............................................................................................................. 412

124. CIT, Lahore v. Aziz Din – [1976] 33 Tax 258

(H.C.Lah.) .............................................................................................................. 257

125. CIT, Lahore v. Govt. Jallo Rosin and Turpentine

Factory, Lahore – [(1976) 34 Tax 71 (H.C.Lah.)] ......................................... 313

126. CIT, Lahore v. Kohinoor Industries Ltd. Lahore –

[(1977) 35 Tax 42 (H.C.Lah.)] ............................................................................. 53

127. CIT, Lahore v. The Lyallpur Central Co-operative

Bank Ltd., Lyallpur – [1959] 1-TAX (III-150)

(H.C.West Pakistan, Lahore Bench) = 1959 PTD 639

= 1959 PLD 627 .................................................................................................. 429

128. CIT, Lahore v. Umar Saigal – [(1976) 33 Tax 245

(H.C.Lah.)]............................................................................................................. 305

129. CIT, Lahore Zone Lahore v. Malik & Co. Lahore –

[(1974) 29 Tax 165 (H.C.Lah)].......................................................................... 229

130. CIT, Lahore Zone v. Sh. Muhammad Ismail & Co.

Ltd. Lyallpur – [(1986) 53 Tax 122 (S.C.Pak)]............................................... 302

131. CIT, Lahore Zone, Lahore v. Badar Ice Factory,

Lahore – [1981] 43 Tax 100 (H.C.Lah.) ......................................................... 404

132. CIT, Lahore Zone, Lahore v. Muhammad Allah Bux

– [(1977) 35 Tax 74 (H.C.Lah)] ........................................................................ 118

(ci) Principles of Income Tax Law


133. CIT, Madras v. Sri Krishna Chandra Gajapathi

Narayan Deo, Raja of Parlakimedi – [2 ITC 104

(Madras)] ................................................................................................................ 159

134. CIT v. New China Glassware Company – [(1974) 30

Tax 158 (H.C.Kar.)] ............................................................................................ 118

135. CIT v. Unilever P.L.C., U.K. – 2002 PTD 44

(H.C.Kar.) ..................................................................................................... 125, 163

136. CIT, North Zone, Lahore v. Lahore Central Iron and

Hardware Machinery, Merchants – [(1973) 27 Tax 40

(H.C.Lah.)]............................................................................................................. 175

137. CIT, North Zone, Lahore v. Mst. Wazirunissa Begum

– [(1974) 29 Tax 188 (S.C.Pak.)].............................................................. 162, 229

138. CIT, North Zone, Lahore v. Owen Roberts & Co.

Ltd. Lahore – [(1973) 27 Tax 95 (H.C.Lah.)] ................................................ 135

139. CIT, North Zone, Lahore v. Waris Silk Weaving and

Knitting Mills, Gujranwala – [(1973) 28 Tax 181

(H.C.Lah.)]............................................................................................................. 141

140. CIT, Pakistan v. Fazlur Rehman & Sayeedur Rehman

– [(1964) 10 Tax 49 (S.C.Pak) ........................................................................... 413

141. CIT, Peshawar Zone, Peshawar v. Siemen A.G. –

[(1991) 63 Tax 130 (S.C.Pak.) = PLD 1991 SC 368] .......................... 134, 463

142. CIT Peshawar v. Gull Cooking Oil and Vegetable Ghee

(Pvt.) Ltd. through the Chief Executive and 6 others –

[2003 PTD 1913 (S.C. Pak).] ............................................................................... 35

143. CIT, Punjab, NWFP & Bahawalpur v. Mrs. E.V.

Miller – [(1959) 1 Tax (III-1) (S.C.Pak)] ....................................... 112, 122, 134

144. CIT, Rawalpindi v. K.K. & Co. Ltd. – [(1980) 42 Tax

81 (H.C.Lah)] ........................................................................................................ 160

145. CIT, Rawalpindi v. Noor Sugar Mills – [(1975) 32

Tax 273 (H.C.Lah.)] ................................................................................... 153, 258

146. CIT, Rawalpindi v. Wolf Gang Matzke – [(1975) 32

Tax 176 (H.C.Pesh.)] ........................................................................................... 332

147. CIT, Rawalpindi Zone, Rawalpindi v. Lyallpur Cold

Storage, Lyallpur – [1976] 34 Tax 14 (S.C.Pak.) ........................................... 266

148. CIT, Rawalpindi Zone, Rawalpindi v. New Afza

Hotel Rawalpindi – [(1973) 27 Tax 212 (H.C.Lah.)].................................... 442

149. Commissioner of Income-Tax v. Messrs Rehman

Traders – 2005 PTR 110 [H.C. Lah.] = 2005 PTD

116 (H.C. Lah.)] ................................................................................................... 513

(cii) Principles of Income Tax Law


150. CIT, South Zone, Karachi v. Radio Hotel, Karachi –

[1959] 1-TAX (III-407) (H.C.West Pakistan, Karachi)

= 1959 PTD 707 = 1959 PLD 539 ................................................................... 47

151. CIT, Sukkur Zone, Sukkur, through DCIT v. Gatron

(Industries) Ltd. – [(1999) 79 Tax 161 (H.C.Qut.)]...................................... 447

152. CIT, Zone-A, Lahore v. Sohaib Nasir – [PTCL 2001

CL. 405] ................................................................................................................. 437

153. CIT, Zone-B, Lahore v. Muhammad Sarwar Khan –

[PTCL 2001 CL. 383].......................................................................................... 290

154. CIT, Zone-B, Lahore v. Sardar Muhammad – [2001

PTD 2877] ............................................................................................................. 279

155. CIT/CST (Central Karachi) v. A.B. Food Industries

Ltd. Karachi – [(1984) 50 Tax 158 (H.C.Kar)] .............................................. 252

156. CIT/CST Rawalpindi v. Pakistan Television Corp.

Ltd. Rawalpindi – [(1978) 38 Tax 181 (H.C.Lah.)]..................... 119, 394, 449

157. CIT/WT, Companies Zone, Faisalabad v. Rana Asif

Tauseef C/o Rana Hosiery & Textile Mills (Pvt.)

Ltd., Faisalabad – [2000] 81 Tax 7 (H.C.Lah.) = 2000

PTD 497 ....................................................................................................... 244, 245

158. CIT/WT, Multan Zone, Multan v. Allah Yar Cotton

Ginning & Pressing Mills (Pvt.) Limited, Multan

Road, Vehari – [2000] 82 Tax 433 (H.C.Lah.) = 2000

PTD 2958 ............................................................................................ 210, 241, 417

159. CIT/WT, Sialkot Zone, Sialkot v. Messrs Thapur

(Pvt.), Sialkot – [2002] 86 Tax 274 (H.C.Lah.) = ...................... 103, 191, 193

2002 PTD 2112 ........................................................................................., 235, 508

160. CIT/WT, Zone-C, Lahore v. Haroon Medical Store,

Sheikhupura – [2003] 88 TAX 50 (H.C.Lah.) = 2003

PTD 1530 ....................................................................................................... 34, 463

161. Citi Bank N.A. Karachi v. CIT, Central Zone C

Karachi – [(1994) 70 Tax 159 (H.C.Kar)] ...................................................... 162

162. Collector of Central Excise and Sales Tax v. Rupali

Polyester Ltd. and others – [2003] 87 Tax 49

(S.C.Pak.) ...................................................................................................... 224, 262

163. Collector of Sales Tax and others v. Shabhbaz & Co.

and others – 2005 PTR 72 [S.C. Pak.] = (2005) 91

Tax 107 (S.C. Pak.)] ............................................................................................. 174

164. Collector of Customs, Lahore and others v. Universal

Gateway Trading Corporation and another – 2005

PTR 45 [S.C. Pak.] = 2005 PTD 123 (S.C. Pak.) =

PTCl 2005 CL. 270] ............................................................................................ 365

(ciii) Principles of Income Tax Law


165. Colony Textile Mills Ltd. Lahore v. Income Tax

Appellate Tribunal (Pak) & another – [(1972) 25 Tax

140 (H.C.Lah.)]..................................................................................................... 373

166. Colony Textile Mills Ltd. v. CST, Lahore Zone,

Lahore – [(1975) 32 Tax 282 (H.C.Lah.)] ....................................................... 105

167. Commissioner of Agricultural Income Tax v. BWM

Abdur Rehman – [(1974) 29 Tax 212 (S.C.Pak.)] ......................................... 109

168. Commissioner of Income-Tax, Karachi v. Messrs

Nazir Ahmed and Sons (Pvt.) Ltd., Karachi – [(2004)

89 TAX 385 (H.C. Kar.) = 2004 PTD 921 (H.C. Kar.)] ........... 198, 217, 246, 281

169. Commissioner of Sales Tax Lahore v. Lutfi & Co.

Lahore – [(1973) 28 Tax 168 (H.C.Lah.)] ....................................................... 196

170. Commissioner of Sales Tax Rawalpindi Zone,

Rawalpindi v. Rashid Burner, Sialkot – [(1974) 29 Tax

221 (H.C.Lah.)]..................................................................................................... 260

171. Commissioner Sales Tax v. Rizki Ink Company Ltd.

– [(1991) 64 Tax 34 (H.C.Kar)] ........................................................................ 210

172. Commr. Income Tax v. Anantapur Gold Mines – [1

ITC 133 (Madras)] ............................................................................................... 407

173. Continental Chemical Co. (Pvt.) Ltd. v. Pakistan and

others – [(2001) 83 Tax 305 (H.C.Kar.) = PTCL

2001 CL. 454] ....................................................................................... 90, 213, 286

174. Controller of Estate Duty, Lahore v. Muhammad

Bashir Muhammad Nazir & others – [(1974) 29 Tax

91 (H.C.Lah.)] ....................................................................................................... 143

175. Coronet Paints & Chemicals Ltd. Karachi v. CIT,

(West) Karachi – [(1984) 50 Tax 115 (H.C.Kar.)] ........................................ 305

176. Crescent Sugar Mill. v. ITO – [(1999) 80 Tax 273

(H.C.Lah.) = NLR 1999 Tax 170] ................................................................... 369

177. Crescent Sugar Mills & Distillery Ltd. Lahore v. CIT,

Lahore Zone, Lahore – [(1981) 43 Tax 1 (H.C.Lah)] ......................... 167, 200

178. Crown Bus Service Ltd. Lahore v. CBR & others –

[(1976) 34 Tax 54 (H.C.Lah.)] ......................................................... 201, 254, 442

179. CST v. Lever Brothers Pak Ltd. – [(1991) 64 Tax 124

(H.C.Kar)].............................................................................................................. 104

180. CST Zone A Lahore v. Chenab Textile Mills Ltd.,

Lahore – [(1980) 42 Tax 140 (S.C.Pak.)] ........................................................ 449

181. CST, Rawalpindi Zone, Rawalpindi v. Abdul Razaq

Zia-ul-Qamar – [(1973) 27 Tax 99 (H.C.Lah.)] ............................................. 146

182. CWT v. Noor Rai Ibrahim – [(1992) 65 Tax 262

(S.C.Pak)] ............................................................................................................... 127

(civ) Principles of Income Tax Law


183. CWT, Lahore Zone, Lahore v. Mst. Fozia Mughis,

Lahore – [(1975) 32 Tax 1 (H.C.Lah.)] ........................................................... 128

184. CWT, Southern Region, Karachi v. Abid Hussain –

[(1999) 80 Tax 89 (H.C.Kar.) = 1999 PTD 2895] ........................................ 424

D

185. Data Distribution Services v. DCIT, and another –

[2000] 82 Tax 156 (H.C.Lah.) ........................................................................... 375

186. Dawood Hercules Chemical Ltd. v. Collector of Sales

Tax Lahore – [(1997) 76 Tax 242 (H.C.Lah)]................................................ 348

187. Deans Associates (Pvt.) Limited v. IAC of Income

Tax – [2002] 86 Tax 138 (H.C.Kar.) = 2002 PTD 441 .... 194, 243, 316, 383

188. Dhanrajmal Mamnumal & Sons v. CIT, (West)

Karachi – [(1985) 52 Tax 77 (H.C.Kar.)]........................................................ 304

189. Dreamland Cinema, Multan v. CIT, Lahore – [(1977)

35 Tax 169 (H.C.Lah)] ............................................................. 190, 195, 278, 280

190. Dr.Najibullah Khan v. Federation of Pakistan

through the Secretary, Ministry of Finance,

Government of Pakistan, Islamabad and 4 others –

2003 PTD 2083 (H.C.Pesh.) ............................................................................... 36

E

191. E.F.U. General Insurance Company Ltd. and others

v. Federation of Pakistan & others – [(1997) 76 Tax

213 (S.C.Pak) = 1997 PTD 1693 = PLD 1997 SC

700 .................................................................................................................. 131, 225

192. Eastern Federal Union Insurance Co. v. CIT –

[(1966) 14 Tax 211 (H.C.Kar.)]......................................................................... 172

193. Eastern Poutry Services v. Govt. of Pakistan and

others – [1993] 68 Tax 171 (H.C.Kar.) .................................................. 339, 448

194. Eastern Textile Mills Ltd., Chittagong and

G.Merajuddin and another v. CIT, East Pakistan,

Dacca – [1966] 13 Tax 145 (H.C.Dacca) ........................................................ 261

195. Elahi Cotton Mills Ltd. & others v. .............................................. 39, 40, 42, 71,

Federation of Pakistan through Secretary ..........................................80, 81, 83,

Finance, Islamabad – [(1997) 76 Tax 5 ............................................ 86, 87, 101,

(cv) Principles of Income Tax Law


(S.C.Pak) = 1997 PTD 1555 = PTCL 1997 ............................... 102, 146, 273

CL 260 = PCTLR SC (Pak) 845] ................................................... 301, 302, 452

196. Emperor v. Probhat Chandra Barua – [1 ................................... 60, 62, 66, 216

ITC 284 (Calcutta)]............................................................................ 294, 333, 418

197. Eruch Maneckji & others v. ITO Central Circle III,

Karachi – [(1980) 41 Tax 25 (H.C.Kar.) = 1979 PTD

461] ......................................................................................................................... 351

198. Essential Industries, Dacca v. CIT, East Pakistan,

Dacca – [1969] 19 Tax 3 (H.C.Dacca) ............................................................ 480

F

199. First National City Bank, Karachi v. Income Tax

Officer, Karachi and another – [1976] 34 Tax 1

(H.C.Kar.) = PLD 1976 Kar. 552 .................................................................... 364

200. Frontier Ceramics v. Government of Pakistan &

others – [1999 PTD 4126 (H.C.Pesh.)] ................................................. 319, 320

G 201. Gatron (Industries) Ltd. v. Government of Pakistan

and others – [PTCL 1999 CL. 359 = 1999 SCMR

1072 (S.C.Pak.)] .................................................................................................... 343

202. GEC Avery (Pvt.) Ltd. v. Government of Pakistan

through CBR, Islamabad and 2 Others – [1995] 72

Tax 81 (H.C.Kar.) ................................................................................................ 356

203. General Bank of Netherlands Ltd. v. CIT, Central

Karachi – [(1991) 63 Tax 149 (S.C.Pak)] ........................................................ 118

204. Ghulam Rasool v. Income Tax Officer,

Rahimyarkhan and another – [1975] 31 Tax 153

(H.C.Lah.) .............................................................................................................. 390

205. Gillander Arbuthnot & Co. v. CIT – [(1966) 13 Tax

163 (H.C.Lah.)]..................................................................................................... 141

206. Glaxo Laboratories Ltd. v. IAC of Income Tax, &

others – [(1992) 66 Tax 74 (S.C.Pak.) = 1992 PTD

932 = PLD 1992 SC 549] .................................................................................. 411

207. Government Employees Cooperative Society, Lahore

v. Income Tax Officer, Circle-07, Lahore – [2004

PTD 62 (H.C. Lah.)] ........................................................................................... 398

208. Guarantee Engineers (Pvt.) Ltd. v. Federation of

Islamic Republic of Pakistan through Secretary,

(cvi) Principles of Income Tax Law


Ministry of Finance, Islamabad and another – [2000]

82 Tax 131 (H.C.Lah.) ............................................................................... 375, 414

209. Gulistan Khan Bhittani v. Government of Pakistan

and Others – [(2004) 89 TAX 70 (H.C. Pesh.)]............................................... 344

210. Gulistan Textile Ltd. v. CBR etc. – [(1994) 70 Tax

272 (H.C.Kar)] ...................................................................................................... 349

H

211. H.M. Abdullah v. ITO Circle-V Karachi – [(1993) 68

Tax 29 (S.C.Pak)] ................................................................................................. 367

212. Hafiz Mohammad Arif Dar v. ITO – [(1989) 60 Tax

52 (S.C.Pak)=PLD 1989 SC 109].............................................................. 334, 368

213. Haji Gula Khan v. Special Officer, Income Tax and

others – [(1997) 75 Tax 117 (H.C.Pesh.) = 1997 PTD

7] .............................................................................................................................. 372

214. Haji Ibrahim Ishaq Johri v. CIT, (West), Karachi –

[1982] 45 Tax 263 (H.C.Kar.) = 1982 PTD 46 =

1990 PTCL 954 = 1982 PLD 266 ..................................................................... 49

215. Haji Mehr Din, Lahore v. CIT, Zone-A, Lahore –

[(2001) 84 Tax 471 (H.C.Lah.)]....................................................... 433, 434, 435

216. Haji Muhammad Shafi & Others v. Wealth Tax Officer

& Others – [(1992) 65 Tax 315 (S.C.Pak)]........................................................ 89

217. Hamdard Dawakhana (Waqf) Pakistan v. CIT,

Central Zone, „B‟ Karachi and another – [1990] 62

Tax 98 (H.C.Kar.) ................................................................................................ 357

218. Hamdard Dawakhana (Waqf) v. CIT, etc. – [(1987)

56 Tax 78 (H.C.Kar)] .......................................................................................... 304

219. Hamdard Dawakhana v. CIT, Karachi – [(1980) 42

Tax 1 (S.C.Pak)] ................................................................................................... 170

220. Hansraj Gupta v. Dhera Dun Mussorai Electric &

Tramway Co. Ltd. – [AIR 1933 PC 63, 65] ................................................... 415

221. Hari Krishna Das v. CIT, UP – [5 ITC 275

(Allahabad)] ........................................................................................................... 197

222. Harjina & Company (Pak) Limited, Karachi v. CIT –

[1964] 8 Tax 1 (H.C.Kar.) = 1963 PTD 867 = 1963

PLD 996 ................................................................................................................ 221

223. Hatz Trust of Simla v. CIT, Punjab & NWFP – [5

ITC 8 (High Court Lahore)].............................................................................. 216

(cvii) Principles of Income Tax Law


224. Hazoor Bakhsh v. Senior Superintendent of Police,

Rahimyar Khan and 12 others – [PLD 1999 Lahore

417] ......................................................................................................................... 321

225. Highland Manufacturers (Pak) Ltd. v. CIT, (West),

Karachi – [(1985) 51 Tax 66 (H.C.Kar.)]............................................... 210, 479

226. Highway Petroleum Service (Regd.) Lahore v. Islamic

Republic of Pakistan & another – [(1977) 36 Tax 8

(H.C.Lah.) = 1977 PTD 183 = PLD 1977 Lah. 797] .................. 51, 253, 331

227. Hirjna & Co. (Pak) Ltd. Karachi v. Commissioner of

Sales Tax, Central Karachi – [(1975) 31 Tax 78

(S.C.Pak.)] .............................................................................................................. 229

228. Home Service Syndicate v. CIT – 2003 PTD 2109

(H.C.Lah.) ..................................................................................................... 164, 165

229. Hudabiya Engineering (Pvt.) Ltd., Lahore v. Pakistan

through Secretary, Ministry of Interior, Govt. of

Pakistan, Islamabad – [(1997) 76 Tax 302 (H.C.Lah.)] ............. 124, 145, 472

230. Hussain Sugar Mills v. Islamic Republic of Pakistan

and others – [1981] 44 Tax 93 (H.C.Kar.) ............................................ 350, 362

I

231. IAC & Another v. Pakistan Herald Ltd. – [(1997) 76

Tax 131 (S.C.Pak) = 1997 PTD 1485] ............................................................ 132

232. IAC of Income Tax and others v. Messrs Micro Pak

(Pvt.) Limited and others – 2002 PTD 877 (S.C.Pak) ................................. 208

233. ICC Textiles Limited v. Federation of Pakistan and

others – [(1999) 79 Tax 77 (H.C.Lah.)] ............................................................ 90

234. Iftikhar Ahmad Butt and 4 others v. Government of

Islamic Republic of Pakistan through Secretary,

Ministry of Finance, Economic Affairs and Statistics,

Islamabad and 5 others – 2002 PTD 562 (H.C.Lah.) .................................. 467

235. Iftikhar Hussain Alvi c/o Kaghan Ghee Mills (Pvt.)

Ltd., Gadoon Amazai Industrial Estate, Swabi v.

ITO/DC, Income Tax and others – PTCL 2003 CL.

213 (H.C.Pesh.) ........................................................................................... 270, 273

236. Ikhlaq Cloth House, Faisalabad v. ACIT, Circle-12,

Faisalabad Zone, Faisalabad and 3 others – [2001

PTD 3121] .................................................................................................... 240, 423

237. Imperial Tobacco Co. of India Ltd. v. CIT, South

Zone, Karachi – [(1959) 1-TAX (III-284) (S.C.Pak.)] ................................. 230

(cviii) Principles of Income Tax Law


238. Imperial Tobacco Company of India v. The Secretary

of State for India in Council – [1 ITC 169 (Calcutta)] .................................. 57

239. Income Tax Officer & another v. Chappal Builders –

[1993] 68 Tax 1 (S.C.Pak.) ................................................................................... 88

240. Income Tax Officer, Investigation Circle & others v.

Sulaiman Bhai Jiwa and others – [(1970) 21 Tax 62

(S.C.Pak)] ............................................................................................. 266, 267, 288

241. Indus Steel Pipes Ltd. v. CIT, Companies-II, Karachi

and others – [(1999) 79 Tax 410 (H.C.Kar.)] .................................................. 90

242. International Body Builders v. Sales Tax Officer,

Lahore – [(1980) 41 Tax 60 (H.C.Kar.)] ......................................................... 351

243. Irfan Gul Magsi v. Haji Abdul Khaliq Soomro and

others [1999 PTD 1302]..................................................................................... 129

244. Irum Ghee Mills Limited v. Income Tax Appellate

Tribunal and another – [2000] 82 Tax 3 (S.C.Pak)....................................... 225

245. Islamuddin and 3 others v. The Income Tax Officer

and 4 others – 2000 PTD 306 ................................................................. 335, 380

246. ITO, Mirpur & 2 others v. Ch. Muhammad Bashir –

[(1994) 69 Tax 109 (S.C.AJ&K)] ...................................................................... 478

J

247. J.A. Textile Mills Ltd. v. CBR – [(2000) 81 Tax 88

(H.C.Lah.)=1999 PTD 4138] ................................................................... 209, 216

248. J.L. Wei & Co. v. CIT – [1989] 59 Tax 108

(H.C.Kar.) .............................................................................................................. 104

249. Jamal v. The State – [PLD 1960 Lahore 1962] ............................................. 405

250. Jamat-i-Islami Pakistan through Syed Munawar

Hassan, Secretary General v. Federation of Pakistan

through Secretary, Law, Justice and Parliamentary

Affairs & Muttahida Qaumi Movement (MQM)

through Deputy Convener, Senator Aftab Ahmad

Sheikh v. Federation of Pakistan through Secretary,

Ministry of Interior, – PLD 2000 S.C. 111 ......................... 211, 223, 415, 431

251. Julian Hoshang Dinshaw Trust v. Income Tax

Officer, Circle XVIII, South Zone, Karachi and two

others – [1981] 43 Tax 92 (H.C.Kar.) = 1981 PTD 53 ............................... 341

K

(cix) Principles of Income Tax Law


252. Karachi Industrial Corporation & 3 others v. CIT –

[(1975) 32 Tax 170 (S.C.Pak)] ........................................................................... 310

253. Karachi Properties Investment Co (Pvt.) Ltd,

Karachi v. Income Tax Appellate Tribunal, Karachi

and another – [2004 PTD 948 (H.C. Kar.)] ................................. 374, 391, 427

254. Karachi, Textile Dyeing and Printing Works, Karachi

v. CIT, (Central), Karachi – [(1984) 49 Tax 18

(H.C.Kar.)]............................................................................................................. 441

255. Karim Aziz Industries Ltd. v. CIT, Rawalpindi Zone

– [(1997) 75 Tax 90 (H.C.Lah.)] .............................................................. 324, 511

256. Kashmir Feeds (Pvt.) Ltd. v. CBR, through

Chairman, Government of Pakistan, Islamabad and

another – [(1999) 80 Tax 24 (H.C.Kar.) = 1999 PTD

1655] ....................................................................................................................... 103

257. Kashmir Pottery Works, Sialkot v. CST, North Zone,

Lahore – [(1973) 28 Tax 172 (H.C.Lah.)] .............................................. 196, 260

258. Kassam Haji Abbas Patel v. Income Tax Officer,

Contractors Circle, Karachi & another – [1983] 47

Tax 162 (H.C.Kar.) .............................................................................................. 361

259. Kawther Grain (Pvt.) Ltd. v. DCIT, Gujranwala –

[(1999) 80 Tax 262 (H.C.Lah.)]................................................................ 142, 346

260. Khalid Cotton Factory, Multan v. ITO A Circle

Multan – [(1979) 40 Tax 60 (H.C.Kar.)] ......................................................... 449

261. Khawaja Textile Mills Ltd. v. DCIT & 2 others –

[(1998) 77 Tax 1 (H.C.AJ&K)] ......................................................................... 471

262. Khurram Saghir Industries, Lahore v. CIT, Zone-A,

Lahore – [(2001) 83 Tax 489 (H.C.Lah.) ........................................................ 211

263. Killing Valley Tea Company v. Secretary of State – [1

ITC 54 (Calcutta)] .................................................................................................. 63

264. Kohinoor Industries Ltd. v. Government of Pakistan

Etc. – [(1994) 70 Tax 11 (H.C.Lah)]................................................................ 419

265. Kohinoor Industries Ltd. v. Government of Pakistan

through CBR, Islamabad – [2001] 83 Tax 17

(H.C.Lah.) .............................................................................................................. 378

266. Kohinoor Textile Mills Ltd. v. CIT – [1974] 30 Tax

138 (S.C.Pak.) ....................................................................................................... 291

267. Kundan Bibi & others v. Walayat Hussain, Controller

Estate Duty, Karachi & another – [(1971) 23 Tax 295

(H.C.Lah.)]............................................................................................................. 351

(cx) Principles of Income Tax Law


268. Kundan Bibi and others v. Walayat Hussain,

Controller of Estate Duty – [(1976) 34 Tax 219

(H.C.Lah.)]............................................................................................................. 442

L

269. Leather Connections (Pvt) Limited v. The ................................. 240, 241, 244

CBR, Govt. of Pakistan, Islamabad through ................................................ 377

its Chairman – [2000] 82 Tax 42 (H.C.Lah.)

270. Lungla (Sylhat) Tea Co. Ltd. Sylhat v. CIT, Dacca

Circle Dacca – [(1975) 31 Tax 64 (S.C.Pak.)] ................................................ 311

M

271. M.Rehman, ITO & others v. Narayanganj Company

(Pvt.) Ltd. – [(1971) 23 Tax 223 (S.C.Pak)]...................................................... 39

272. M/s. Dawlance (Pvt.) Limited v. Collector of

Customs (Adjudication), Karachi-I – PTCL 2003 CL.

180 (CESTAT, Kar.) ............................................................................................. 46

273. M/s Kashmir Edible Oil Ltd. v. Federation of

Pakistan – 2005 PTR 70 [H.C. Lah.] ................................................................. 99

274. M/s. Tariq Sultan & Co. v. Government of Pakistan,

etc. – [(1999) 80 Tax 62 (H.C.Qta.)] .................................................................. 46

275. Maharaja of Darbhanga v. CIT – [1 ITC 303 (Patna)] .................................. 63

276. Maharani of Bardwan v. Krishna Kamini Dasi – [14

ILR PC 365] .......................................................................................................... 262

277. Mahmood Barni vs. Inspecting Additional

Commissioner of Income-Tax, Gujranwala and

another – 2005 PTR 134 [H.C. Lah.] = 2005 PTD

165 (H.C. Lah.)] ................................................................................................... 514

278. Mandviwalla Motors Limited, Karachi v. CIT, Central

Zone „B‟, Karachi – [1991] 64 Tax 19 (H.C.Kar.) ........................................ 293

279. Masood Textile Mills Ltd. v. Commissioner of

Income Tax, Companies Zone, Faisalabad and others

– [(2004) 89 TAX 51 (H.C. Lah.)].................................................................... 140

280. Mehran Associates Ltd. v. CIT, Karachi – [(1992) 66

Tax 246 (S.C.Pak)] ............................................................................................... 208

281. Mehtab Industries Ltd. Sahiwal v. DCIT/WT and 3

others – [2002] 86 TAX 65 (H.C.Lah.) = 2002 PTD

324 ........................................................................................................................... 392

(cxi) Principles of Income Tax Law


282. Meraj Sons, Contractors v. Income Tax Officer

Contractors Circle-Il, Lahore – [1982] 45 Tax 2

(H.C.Lah.) .............................................................................................................. 389

283. Messrs BILZ (Pvt.) Ltd. v. DCIT, Multan and

Another – 2002 PTD 1 (S.C.Pak) ........................................................... 187, 233

284. Messrs Essem Power (Ltd.), Escorts House though

Company Secretary Mr. Qaim Mehdi v. Federation of

Pakistan through Secretary, Ministry of Finance and 2

others – [(2004) 89 TAX 380 (H.C. Lah.) = 2004 PTD

811 (H.C. Lah.)] ............................................................................................................ 144, 161

285. Messrs Indus Basin & Co. v. CIT – [2002 PTD 2169

(H.C.Kar.)].................................................................................................... 234, 314

286. Messrs Innovative Trading Company Ltd. v.

Appellate Tribunal and 2 others – [2004 PTD 38

(H.C. Lah.)] ........................................................................................................... 297

287. Messrs International Tanners & Industries (Pvt.) Ltd.

Lahore v. Federation of Pakistan through Secretary

Finance, Government of Pakistan, Islamabad and 2

others – [2004 PTD 2180 (H.C. Lah.)] ........................................................... 399

288. Messrs Mahmood & Company v. Assistant Collector,

Sales Tax (Enforcement & Collection), Shalimar

Division, Lahore and 2 others – [2005 PTR 89 [H.C.

Lah.] = 2005 PTD 67 (H.S.C Lah.)] ......................................................... 87, 501

289. Messrs. Prime Chemicals through Member of

Association of Person v. Government of Pakistan

through Secretary Finance, Islamabad and 3 others –

[2004 PTD 1388 (H.C. Lah.)] .................................................................. 110, 111

290. Metro Shipbreakers and another v. Pakistan through

the Secretary, Ministry of Finance, Islamabad, etc. –

[1996] 73 Tax 85 (H.C.Queeta) ............................................................... 338, 476

291. Mian Anwar-ul-Haq Ramay v. Federation of Pakistan

– [(1993) 67 Tax 195 (H.C.Lah)] ...................................................................... 328

292. Mian Aziz A. Sheikh v. CIT, Investigation Lahore –

[(1989) 60 Tax 106 (S.C.Pak)] ........................................................................... 464

293. Mian Aziz Ahmad, Lahore v. CIT, Lahore – [(1979)

39 Tax 1 (H.C.Lah.)] ........................................................................................... 413

294. Mian Aziz S. Sheikh v. CIT, Investigation Lahore –

[(1981) 43 Tax 105 (S.C.Pak)] ........................................................................... 307

295. Mian Contractors, Lahore v. CIT, Zone-A, Lahore –

[(2001) 84 Tax 493 (H.C.Lah.)]........................................................................... 43

(cxii) Principles of Income Tax Law


296. Mian Muhammad Allah Buksh v. CIT – 1962 PTD

603 (H.C.Lah.) ........................................................................................................ 53

297. Mian Muhammad Khalil v. ITO, Company Circle,

Faisalabad – [(1979) 40 Tax 113 (H.C.Lah)] .................................................. 272

298. Micropak (Pvt.) Ltd., Lahore v. Income Tax

Appellate Tribunal, Lahore and 2 others – [(2001) 83

Tax 451 (H.C.Lah.) = 2001 PTD 1180] ....................................... 208, 276, 417

299. Miss Asia v. Income Tax Appellate Tribunal etc. –

[(1980) 41 Tax 1 (S.C.Pak)]................................................................................ 394

300. Mrs. Rani v. Commissioner of Wealth Tax Lahore –

[(1992) 68 Tax 89 (H.C.Lah.)] ........................................................................... 394

301. Modern Silk Mills Ltd. Lahore v. CIT, Lahore –

[(1979) 39 Tax 14 (H.C.Lah.)] ........................................................................... 331

302. Mohammad Sadiq v. University of Sindh – [PLD

1996 SC 182] ......................................................................................................... 104

(cxiii) Principles of Income Tax Law


303. Moin Sons (Pvt.). Ltd., Rawalpindi v. Capital

Development Authority, Islamabad – [1998] 78 Tax

168 (H.C.Lah.) ...................................................................................................... 424

304. Mrs. Tahmina Daultana v. Hafiz Naeem-ud-Din –

[(1997) 75 Tax 261 (H.C.Lah.) = 1997 PTD 821] ........................................ 347

305. Mst. Fatima Bibi C/o Crown Bus Service, Lahore v.

CIT, North Zone (West Pakistan), Lahore – [(1962) 6

Tax 1 (H.C.Lah.) = 1962 PTD 625 = 1962 PLD 809] ............................... 212

306. Mst. Fazal Be and 6 others v. CIT, – [1996] 74 Tax

141 (H.C.AJ&K) ......................................................................................... 303, 336

307. Mst. Saeeda Begum & others v. Govt. of Pakistan &

another – [(1977) 35 Tax 180 (H.C.Kar)] ................................................ 99, 270

308. Mst. Tasneem Kausar v. House Building Finance

Corporation – [PLD 1999 Lahore 462] .......................................................... 320

309. Mst. Zarina Yousaf v. Inspecting Additional

Commissioner of Income Tax/Wealth Tax, Sialkot

Range, Sialkot and another – [2005 PTR 102 [H.C.

Lah.] = 2005 PTD 108 (H.C. Lah.)] ......................................................... 97, 208

310. Muhammad Amjad v. CIT, Zone A Karachi – [(1992)

65 Tax 176 (H.C.Kar) = 1992 PTD 513] ....................................................... 115

311. Muhammad Ansar etc. v. Administrator Town

Committee Kabirwala District Khanewal and 4

others – [2000] 81 Tax 60 (H.C.Lah.) ............................................................. 379

312. Muhammad Azim v. CIT, East Zone Karachi –

[(1991) 63 Tax 143 (H.C.Kar.)]........................................................................... 48

313. Muhammad Hanif Monnoo v. ITO, Central Circle 1,

Lahore – [1984] 50 Tax 37 (H.C.Lah.) = PLJ 1984

Lah. 423 ........................................................................................................ 329, 340

314. Muhammad Hayat Haji Mohammad Sardar v. CIT,

Punjab & NWFP – [5 ITC 159 (High Court, Lahore)] ............................... 212

315. Muhammad Ismail v. Income Tax Officer, Mirpur

and 2 others – [1992] 66 Tax 226 (H.C.AJ&K) ............................................ 340

316. Muhammad Jameel v. Income Tax Officer – [1995]

72 Tax 1 (H.C.Lah.) ............................................................................................ 382

317. Muhammad Khan and Others v. Ghazanfar Ali &

Others – [AIR 1920 Lahore 247] ..................................................................... 414

318. Muhammad Khan v. Shamsuddin and others – [1975]

31 Tax 94 (S.C.Pak.) ............................................................................................ 334

319. Muhammad Saleem Chotia, Advocate v. Zafar Iqbal

Owasi, Advocate, Bahawalnagar and 4 others – [PLD

1999 Lahore 446] ................................................................................................. 420

(cxiv) Principles of Income Tax Law


320. Muhammad Saleem v. Deputy Director FIA/CBC,

Multan and another – PTCL 2000 CL. 465 ................................................... 244

321. Muhammad Younus v. Chairman Municipal

Committee, Sahiwal – [(1986) 53 Tax 93 (H.C.Lah)] ......................... 177, 199

322. Muhammadi Steamship Company Ltd. v. CIT,

(Central) Karachi – [(1966) 14 Tax 281 (S.C.Pak.) =

PLD 1966 S.C. 828] ................................................................................... 227, 230

323. Mujibur Rehman v. CIT – [(1966) 13 Tax 141] ............................................ 261

324. Multiline Associates v. Ardeshir Cowasjee – [PLD

1995 SC 423] ......................................................................................................... 397

325. Munir Ahmad & Others v. Federation of Pakistan –

[(1998) 78 Tax 217 (H.C.Lah) = 1998 PTD 3900]....................................... 470

326. Munir Mushtaq v. Collector of Customs (Exports),

Customs House, Karachi and another – [PLD 1999

S.C.1111] ................................................................................................................ 432

327. Murad Ali v. Collector of Central Excise & Land

Customs – [PLD 1963 W.P. Karachi 280] ..................................................... 405

328. Mustafa Prestressed R.C.C. Pipe Works Ltd. Karachi

v. CST, (Investigation), Karachi – [(1990) 62 Tax 119

(H.C.Kar.)].................................................................................. 228, 251, 387, 437

N

329. N.V. Philips Glocilin Peufabrikan v. ITO & Others –

[(1990) 61 Tax 159 (H.C.Kar)]............................................................................ 50

330. Nagina Dal Factory v. ITO and others – [(1968) 18

Tax 1 (S.C.Pak) = (1968 SCMR 1035)] ........................................................... 369

331. Nagina Silk Mills, Lyallpur v. Income Tax Officer, A-

Ward, Lyallpur and another – [1963] 7 Tax 442

(S.C.Pak.) = PLD 1963 SC 322 ...................................................... 117, 185, 312

332. Nasir Mahmood Dar, etc. v. Federation of Pakistan

and others – [(1998) 78 Tax 1 (H.C.Lah.) = 1998

PCLR 1382]........................................................................................................... 322

333. National Beverages (Pvt.) Ltd. v. Federation of

Pakistan and others – [(2001) 83 Tax 359 (H.C.Kar.)

= PTCL 2001 CL. 250] ...................................................................................... 239

334. National Electric Co. (Pvt.) Ltd. Gujranwala v. CIT,

Gujranwala Zone – [(1996) 74 Tax 89 (H.C.Lah.)] ...................................... 327

335. National Food v. CIT – [(1991) 64 Tax 60

(H.C.Kar.)]............................................................................................................... 48

(cxv) Principles of Income Tax Law


336. Navab Sons, Lahore v. The Assistant Commissioner

Tax etc. – [1999 P.C.T.L.R. 387] ...................................................................... 370

337. Nazir Ali M.H. Ganji v. CIT, Companies I, Karachi –

[(1994) 69 Tax 71 (H.C.Kar)] ............................................................................ 303

338. Neelam Textile Mills Ltd. v. State Bank of Pakistan

and 2 others – [PLD 1999 Karachi 433] ........................................................ 437

339. New Jubilee Insurance Company Ltd., Karachi v.

National Bank of Pakistan, Karachi – [PLD 1999 S.C.

1126] .............................................................................................................. 419, 432

340. Nishat Talkies Karachi v. CIT – [(1989) 60 Tax 45

(H.C.Kar.) = PTCL 1989 CL 660] ................................................................... 403

341. Noon Sugar Mills Ltd. v. CIT, Rawalpindi – [(1990)

62 Tax 74 (S.C.Pak)].......................................................................... 153, 189, 227

342. Noor Hussain, Dacca v. CIT, Dacca – [1963] 7 Tax

113 (H.C.Dacca) = 1963 PTD 161 = 1963 PLD 373 ................................. 261

P

343. Pak Industrial Development Corporation v. Pakistan,

through the Secretary, Ministry of Finance – [(1992)

65 Tax 84 (S.C.Pak.) = 1992 PTD 576 = PLD 1992

SC 562] ............................................................................................................ 89, 147

344. Pak Services Ltd. v. CIT, (Revision) Karachi –

[(1993) 68 Tax 49 (S.C.Pak)] ............................................................................. 133

345. Pak-Arab Fertilizers (Pvt.) Ltd. v. DCIT, and Others

– [2000] 81 Tax 224 (H.C.Lah.) = 2000 PTD 263 ....................................... 377

346. Pak-Saudi Fertilizer Ltd. through Managing Director

v. Federation of Pakistan through Secretary Finance,

Islamabad and 4 others – [(2000) 81 Tax 119

(H.C.Kar.) = 1999 PTD 4061] ................................................................ 318, 345

347. Pak. Educational Society Karachi v. Govt. of

Pakistan through Chairman & Secretary Revenue

Division Islamabad – [(1993) 67 Tax 311 (H.C.Kar)] ................................. 156

348. Pakistan Burma Shell Ltd., etc. v. Federation of

Pakistan through Secretary Ministry of Finance,

Government of Pakistan, Islamabad, etc. – [1998] 78

Tax 234 (H.C.Kar.) = PTCL 1998 CL. 690 ..................................................... 92

349. Pakistan Electric Fittings Manufacturing Co. Ltd.

through Directors v. CIT, and 2 others – [2000] 82

Tax 135 (H.C.Lah.) .............................................................................................. 335

(cxvi) Principles of Income Tax Law


350. Pakistan Hardcastle Wand (Pak) v. Federation of

Pakistan etc. – [PLD 1967 SC 1] ...................................................................... 418

351. Pakistan Industrial Development Corporation v. ................................ 97, 148,

Pakistan, through Secretary Ministry of................................................. 359, 360

Finance – [(1984) 49 Tax 76 (H.C.Kar)]......................................................... 388

352. Pakistan Lyallpur Samundri, Transport Co. Ltd. v.

CIT, Lahore Zone, Lahore – [(1982) 46 Tax 143

(H.C.Lah)]................................................................................................................ 98

353. Pakistan Oxygen Ltd, Karachi v. CBR, Islamabad and

2 others – [2003 88 TAX 108 (H.C.Kar.) = 2003

PTD 1301 ..................................................................................................... 343, 352

354. Pakistan Seamen Contributory Welfare Fund Karachi

v. Income Tax Appellate Tribunal & 2 Others –

[(1993) 67 Tax 400 (H.C.Kar)].......................................................................... 120

355. Pakistan Services Ltd., Karachi v. CIT, Central Zone-

C (COS-1) – [(1999) 80 Tax 106 (H.C.Kar.) = 1999

PTD 2901] ............................................................................................................. 159

356. Pakistan through CIT, Karachi v. Majestic Cinema –

[(1965) 12 Tax 15 (S.C.Pak.)] ............................................................................ 311

357. Pakistan through Secretary Finance, Islamabad & 5

others v. Aryan Petro Chemical Industries (Pvt.) Ltd.

Peshawar & others – 2003 PTD 505 (S.C.Pak.) ....................................... 41, 470

358. Pakistan Tourism Development Corporation Ltd.

and another v. Collector, Customs, Central Excise

and Sales Tax, Lahore and others – 2005 PTR 14

[S.C. Pak] = 2005 PTD 104 (S.C. Pak) = (2005) 91

Tax 105 (S.C. Pak)] .............................................................................................. 142

359. Pandit Pandurang v. CIT, Central Provinces – [2 ITC

69 (Nagpur)].......................................................................................................... 110

360. Pfizer Laboratories Ltd. v. Federation of Pakistan –

[(1998) 77 Tax 172 (S.C.Pak)] ........................................................................... 451

361. Prime Commercial Bank and others v. ACIT –

[(1997) 75 Tax 1 (H.C.Lah.) = 1997 PTD 605 =

PTCL 1997 CL 29] .............................................................................................. 416

362. Prime Dairies Ice Cream Ltd. Lahore v. CIT,

Companies Zone – [2002] 85 Tax 509 (S.C.Pak) =

2002 PTD 430 ............................................................................................. 299, 300

363. Punjab Small Industries Ltd. v. DCIT, Lahore –

[(1995) 71 Tax 220 (H.C.Lah)]............................................................................ 95

Q

(cxvii) Principles of Income Tax Law


364. Qureshi Vegetable Ghee Mills Ltd. v. CIT, and 3

others – [2002] 85 Tax 397 (S.C.AJ&K) = 2002 PTD

399 ........................................................................................................................... 447

R

365. Rafhan Maize Products Co. Ltd. v. CIT – [1988 PTD

571 (S.C.Pak)] ....................................................................................................... 166

366. Rahmatullah and Sons v. CST, Lahore – [(1973) 27

Tax 256 (H.C.Lah.)] ............................................................................................ 196

367. Raja Habib Ahmad Khan v. Income Tax Officer –

[(1974) 29 Tax 208 (S.C.Pak.)] .......................................................................... 368

368. Raleigh Investment Co. Ltd. v. CIT, (East) Karachi –

[(1983) 47 Tax 214 (H.C.Kar)].......................................................................... 122

369. Ramkola Sugar Mills Ltd. v. CIT, Punjab & NWFP –

[(1960) 2-Tax (Suppl.-29) (S.C.Pak)] ............................................................... 400

370. Rashid Akhtar & Sons v. CIT, Lahore – [(1980) 42

Tax 168 (H.C.Lah)] ............................................................................................. 150

371. Rathan Singh, Proprietor, Rathan Singh Motor

Service, Madura v. The CIT, Madras – [2 ITC 107

(Madras)] .................................................................................................................. 68

372. Rehmania Hospital v. Government of Pakistan etc. –

[(1997) 76 Tax 138 (H.C.Pesh) = 1997 PTD 1805] ..................................... 372

373. Republic Motors Ltd. v. ITO & others – [(1990) 62

Tax 8 (H.C.Kar.) = 1990 PTD 889] ................................................................ 349

374. Rijaz (Pvt.) Ltd. v. Wealth Tax Officer Circle III

Lahore – [(1996) 74 Tax 9 (H.C.Lah)] .......................................... 209, 247, 277

375. Roger Pyatt Shellac & Co., v. Secretary of State – [1

ITC 363 (Calcutta)]................................................................................................ 57

376. Rowe & Co. v. The Secretary of State for India – [1

ITC 161 (Burma)] ................................................................ 56, 57, 198, 203, 205

377. Rustam F. Cousjee & 2 others v. CBR & 2 others –

[(1985) 52 Tax 123 (H.C.Kar)]................................................................. 211, 268

S

378. S. Muhammad Din & Sons Ltd. v. STO, Special

Circle I, Lahore – [(1977) 36 Tax 74 (H.C.Lah.)] ......................................... 252

379. S.N.H. Industries (Pvt.) Ltd. v. Income Tax

Department and another – [(2004) 89 TAX 252

(H.C. Kar.) = 2004 PTD 330 (H.C. Kar.)]..................................................... 344

(cxviii) Principles of Income Tax Law


380. S.M. Abdullah v. CIT – [(1966) 14 Tax 161

(H.C.Kar.)]............................................................................................................. 426

381. Sadar Anjuman-i-Ahmedia, Rabwa v. CIT,

Rawalpindi – [(1977) 36 Tax 117 (H.C.Lah)] ................................................ 120

382. Saif Nadeem Electro Ltd. v. Collector of Customs

and Central Excise/CST, Peshawar and 3 Others –

[1995] 72 Tax 274 (H.C.Pesh.).......................................................................... 382

383. Sainrapt & Et. Brice, Karachi v. CIT, (West), Karachi

– [(1979) 40 Tax 116 (H.C.Kar.) = PLD 1979 591] .................................... 252

384. Saitex Spinning Mills, Lahore v. CIT, Zone-3, Lahore

– [2003 PTD 808 (H.C.Lah.)] ........................................................................... 133

385. Saleem and Co. v. Income Tax Authorities – [1993]

68 Tax 173 (H.C.Lah.) ........................................................................................ 338

386. Saleem Automotive Industries (Pvt.) Ltd. v. Central

Board of Revenue etc. – [(1999) 80 Tax 9 (H.C.Lah.)] ............................... 369

387. Sameer Electronics v. ACIT, Circle-B, Zone-A,

Lahore – [1996] 73 Tax 106 (H.C.Lah.) ......................................................... 381

388. Sanaullah Khan etc. v. Province of Balochistan etc. –

[(1995) 71 Tax 45 (H.C.Quetta)] ...................................................................... 477

389. Sante International (Pvt.) Ltd. and Another v. CIT,

Zone-B, Lahore and Another – [(1997) 75 Tax 1

(H.C.Lah.) = 1997 PTD 819] ............................................................................ 373

390. Sarwar & Co. v. CBR & others – [(1997) 76 Tax 1

(H.C.Lah)].............................................................................................................. 139

391. Searle Pakistan (Pvt.) Ltd. v. Government of Pakistan

through Secretary Ministry of Finance & Another –

[(1994) 69 Tax 79 (H.C.Kar)] ............................................................................ 195

392. Secretary of State v. Seth Khemchand Thaoomal – [1

ITC 26 (Sind)] ................................................................................................ 60, 196

393. Secretary to the Board of Revenue (Income Tax) v.

North Madras Mutual Befit & Co – [1 ITC 172

(Madras)] ................................................................................................................ 202

394. Secy. to Commr. Salt v. Ramanathan Chetti, minor

by guardian – [1 ITC 37 (Madras)] .............................................. 58, 62, 65, 203

395. Seth Gurmukh Singh v. CIT – [(1944) 12 ITR 393

(Lahore)] ................................................................................................................ 262

396. Sh. Abdul Hakeem v. Centeal Board of Revenue, etc.

– [1975] 31 Tax 105 (H.C.Lah.) ........................................................................ 390

397. Sh. Diwan Mohammad Mushtaq Ahmad, Karachi v.

CBR & others – [(1969) 19 Tax 198 (H.C.Kar.)] ................................ 444, 480

(cxix) Principles of Income Tax Law


398. Shagufta Begum v. ITO, Circle XI, Zone B Lahore –

[(1989) 60 Tax 83 (S.C.Pak.)] ............................................................................ 368

399. Shahid Hameed, Gulberg, Lahore v. Income Tax

Officer, Film Circle, Lahore and another – [1976] 34

Tax 31 (H.C.Lah.) ................................................................................................ 363

400. Shahtaj Sugar Mills Ltd. through Chief ......................................... 42, 191, 269

Executive v. G.A. Jahangir and 2 others – ................................. 391, 404, 408

[2004 PTD 1621 (H.C. Lah.)]

401. Shamim Ali and others v. Govt. of Pakistan and

another – [(1973) 27 Tax 51 (H.C.Lah.)] ........................................................ 373

402. Sheikh Akhtar Ali v. Federation of Pakistan and 4

others – [1980] 42 Tax 47 (H.C.Lah.) .................................................... 362, 441

403. Sheikh Miran Bux Karam Bux Ltd. Karachi v. ITO,

Company Circle 12, Karachi – [(1976) 33 Tax 99

(H.C.Kar.)]............................................................................................................. 166

404. Shoaib Bilal Corp. Faisalabad v. CIT, Faisalabad &

another – [(1993) 67 tax 233 (H.C.Lah.)] ....................................................... 478

405. Siddique Trust v. Income Tax Officer and another –

[(1987) 56 Tax 120 (H.C.Kar.)]......................................................................... 340

406. Siemens A.G. & Halske v. CIT – [(1983) 47 Tax 132

(H.C.Pesh)] .......................................................................................... 134, 145, 152

407. Siemens Pakistan Engineering Ltd. v. Federation of

Pakistan & other – [(1999) 79 Tax 605 (H.C.Kar.) =

1999 PTD 1358]................................................................................................... 413

408. Sind Industrial Trading Estate Ltd., Karachi v.

Central Board of Revenue and 3 others – [1975] 31

Tax 114 (H.C.Kar.) ..................................................................................... 123, 364

409. Sindh Trading Company v. CIT – [(1967) 15 Tax 53

(H.C.Kar.)]............................................................................................................. 135

(cxx) Principles of Income Tax Law


410. Singer Sewing Machine Co. v. CIT and others –

[1964] 9 Tax 273 (H.C.Kar.) = 1964 PTD 554 .................................... 197, 341

411. Sitex Spinning Mills, Lahore v. CIT, Zone-3, Lahore

– [2003 PTD 808 (H.C.Lah.)] .................................................................. 133, 466

412. Siva Pratab Bhattadua v. CIT – [1 ITC 323 (Madras)] ................................ 395

413. Star Rolling Mills v. CIT – [(1974) 30 Tax 27

(H.C.Kar.)]............................................................................................................. 159

414. State Cement Corporation of Pakistan (Pvt.) Ltd. v.

CIT – [(1997) 76 Tax 110 (H.C.Lah.) = 1997 PTD

1104 = 1998 PCTLR 520] ................................................................................. 371

415. State Cement of Corporation (Pvt.) Ltd. v. Collector

of Customs Karachi – [PTCL 1999 CL 1] ..................................................... 415

416. Steel Brothers and Company Ltd. v. CBR and others

– [(1969) 19 Tax 97 (S.C.Pak.)] ......................................................................... 369

417. Sundar Das v. Collector of Gujrat – [1 ITC 189

(Lahore)] ................................................................................................ 57, 172, 201

418. Syed Akhtar Ali v. CIT, Hyderabad – [(1994) 69 Tax

38 (H.C.Kar)] ........................................................................................................ 393

419. Syed Bhaies Pvt. Ltd. v. Government of Punjab –

[(NLR 1999 Tax 176] .......................................................................................... 321

420. Syed Ghulam Abbass Shah v. ITO, Mirpur and 3

others – [1985] 51 Tax 157 (H.C.AJ&K) ....................................................... 358

T

421. Taimur Shah v. CIT – [(1976) 34 Tax 151 (H.C.Kar.)

= PLD 1976 Kar. 1030] ............................................................................ 128, 200

422. Taj Din Maula Bux Lahore v. Sales Tax Officer D-

Circle Lahore – [(1972) 25 Tax 145 (H.C.Lah.)] ........................................... 374

423. Tapal Energy Ltd. v. Federation of Pakistan – [1999

PTD 4041 (H.C.Kar.)] ............................................................................... 320, 345

424. Tharparkar Sugar Mills Ltd. v. Federation of Pakistan

through Secretary, Revenue Division and Chairman,

CBR, Islamabad and another – [1996] 73 Tax 215

(H.C.Kar.) ............................................................................................ 325, 336, 354

425. The Bharat Insurance Company Ltd. v. CIT, Punjab

& NWFP – [5 ITC 288 (High Court Lahore)] .............................................. 169

(cxxi) Principles of Income Tax Law


426. The Bhikanpur Sugar Concern – [1 ITC 29 (Patna)]..................................... 61

427. The CBR, Islamabad and others v. Sheikh Spinning

Mills Limited, Lahore and others – [(1999) 80 Tax 79

(S.C.Pak) = 1999 PTD 2174] ............................................................................ 307

428. The CIT, Burma v. Messrs Steel Brothers and Co.,

Ltd. – [2 ITC 129 (Rangoon)] ........................................................................... 155

429. The Imperial Tobacco Company of India Ltd. v.

CIT, South Zone Karachi – [(1960) 2-Tax (Suppl.-

308) (S.C.Pak)] ........................................................................................................ 89

430. The Provincial Library & others v. CIT, East

Pakistan – [(1959) 1-Tax (III-290) (S.C.Pak)]................................................ 313

431. The Punjab National Bank Ltd. v. CIT, Punjab &

NWFP – [2 ITC 184 (Lahore)] ......................................................................... 141

432. The Punjab Province v. The Federation of Pakistan –

[(1960) 2-Tax (Suppl. 3) (S.C.Pak)] ......................................................... 149, 312

433. Tri Star Industries (Pvt.) Ltd. & 8 others v. CIT,

Companies-I, Karachi & 5 others – [(1999) 79 Tax

255 (H.C.Kar.) = 1998 PTD 3923].................................................................. 346

434. Trustees of the Port of Karachi v. CBR & another –

[(1990) 61 Tax 30 (H.C.Kar)] ............................................................................ 220

U

435. U.C. Rekhi v. First Income Tax Officer – [1950] 18

ITR 618 (Punj.) .................................................................................................... 342

436. Union Bank Ltd. v. Federation of Pakistan – [(1998)

77 Tax 127 (H.C.Lah.)] ....................................................................................... 322

437. Unique Enterprises, Lahore v. ACIT and 2 others –

[(1995) 71 Tax 139 (H.C.Lah)].......................................................................... 326

438. United Builders Corporation Mirpur v. CIT,

Muzzafarabad – [(1984) 49 Tax 34 (H.C.AJ&K)] ........................................ 137

439. United Liner Agencies Ltd. Kar. v. CIT, Karachi –

[(1988) 57 Tax (H.C.Kar)].................................................................................... 96

440. United Refrigeration Industries (Pvt.) Ltd. through

General Manager v. Federation of Pakistan through

Secretary, Ministry of Finance, Government of

Pakistan, Islamabad and another – [PTCL 2001 CL.

423] ......................................................................................................................... 436

441. Utman Ghee Industries v. CIT – [2002] 85 TAX 354

(H.C.Pesh.) = 2002 PTD 63 = PTCL 2002 CL. 146.......................... 325, 326

(cxxii) Principles of Income Tax Law


W

442. Wealth Tax Officer & Other v. Shaukat Afzal & 4

Others – [(1993) 68 Tax 145 (S.C.Pak)].......................................................... 367

443. World Trade Corporation v. The Excise & Sales Tax,

Appellate Tribunal (Lahore Bench), Lahore and 2

others – [1999 PTD 1179 = PCTLR (S.C.Pak) 524] ................................... 187

Z

444. Zafar Usman v. Income Tax Officer etc. – [1989] 59

Tax 86 (H.C.Kar.) ................................................................................................ 385

445. Zahur Textile Mills Limited v. CBR through

Chairman, Government of Pakistan, Islamabad and 2

others – [2000] 82 Tax 275 (H.C.Lah.) = 2000 PTD

303 ........................................................................................................................... 468

446. Zam Zam Traders v. Income Tax Officer – [1996] 74

Tax 21 (H.C.Lah.) ................................................................................................ 381

447. [2004 PTD (Trib.) 2300] .................................................................................... 408

448. [(2004) 90 TAX 128 (Trib.)] .............................................................................. 400

449. [2004 PTD (Trib.) 151]....................................................................................... 308

450. [2004 PTD (Trib.) 1655] ........................................................................... 282, 292

451. [(2004) 90 TAX 39 (Trib.)] ................................................................................ 273

452. [2004 PTD (Trib.) 1104] .................................................................................... 259

453. [2004 PTD (Trib.) 1029] ........................................................................... 258, 315

454. [2004 PTD (Trib.) 2749] ........................................................................... 231, 315

455. [(2004) 90 TAX 29 (Trib.)] ................................................................................ 204

456. [(2004) 89 TAX 480 (Trib.) = 2004 PTD (Trib.) 355] ................................ 181

457. [2004 PTD (Trib.) 2695] .................................................................................... 178

458. [2004 PTD (Trib.) 1543 = (2004) 89 Tax 546 (Trib.)] ................................ 174

459. [2004 PTD (Trib.) 838]....................................................................................... 173

460. [2004 PTD (Trib.) 2786] ........................................................................... 166, 406

461. [2004 PTD (Trib.) 2087 = (2004) 90 Tax 240 (Trib.)] ................................ 160

(cxxiii) Principles of Income Tax Law


462. [(2004) 89 TAX 365 (Trib.) = 2004 PTD (Trib.) 441] ....................... 157, 482

463. [(2004) 89 TAX 461 (Trib.)] .............................................................................. 150

464. [(2004) 89 TAX 316 (Trib.) = 2004 PTD (Trib.) 422] ................................ 137

465. [(2004) 89 TAX 418 (Trib.) = 2004 PTD (Trib.) 752] ....................... 129, 402

466. [2004 PTD (Trib.) 618]....................................................................................... 113

467. [2004 PTD (Trib.) 2494] ...................................................................................... 58

468. [2003] 87 TAX 156 (Trib.) = 2002 PTD (Trib.) 3006................................. 182

469. [2003] 87 TAX 136 (Trib.) = 2003 PTD (Trib.) 1222................................. 177

470. [2003] 87 TAX 148 (Trib.) = 2003 PTD (Trib.) 1146........................ 170, 495

471. [2003] 88 TAX 145 (Trib.) ................................................................................. 167

472. [2003] 88 TAX 9 (Trib.) = 2003 PTD (Trib.) 1708 ..................................... 149

473. [2003] 87 Tax 165 (Trib.) ................................................................................... 332

474. [2003] 87 Tax 183 (Trib.) .......................................................................... 202, 248

475. [2003 PTD (Trib.) 835]....................................................................................... 406

476. [2003 PTD (Trib.) 307].............................................................................. 395, 414

477. [2003] 88 TAX 121 (Trib.) ................................................................................. 105

478. [(1999) 80 TAX 7 (Trib.)] .................................................................................. 511

479. [(1999) 79 TAX 145 (Trib.)] .............................................................................. 512

480. [(1999) 79 Tax 100 (Trib.)] ................................................................................ 406

481. [(1999) 79 Tax 1 (Trib.)] ..................................................................................... 402

482. [(1999) 79 Tax 153 (Trib.)] ................................................................................ 402

483. [(1998) 77 Tax 151 (Trib.)] ................................................................................ 157

484. [1998 PTD (Trib.) 1379] .................................................................................... 114

485. [1998 PTD (Trib.) 44] ........................................................................................... 48

486. [(1996) 73 Tax 132 (Trib.)] ................................................................................ 406

487. [(1984) 49 Tax 34 (Trib.)]................................................................................... 294

488. [(1983) 47 Tax 5 (Trib.)] ..................................................................................... 479

489. [(1983) 47 Tax 1 (Trib.)] ..................................................................................... 252

(cxxiv) Principles of Income Tax Law


INTENTIONALLY PAGE LEFT BLANK

Chapter I

Introduction

1. Basic Features of Income Tax Law

―The basic feature of income tax law is that various

liabilities created by it arise only when the Finance Act/

Ordinance determines their extent. .... If there be no Finance

Act, the Income Tax Act remains a dormant statute, but with the

passing of the Finance Act it comes into activity and the

machinery created by it immediately gets into gear to enforce the

liabilities of different classes of assessees‖. Radhashyam Agarwala

vs. CIT, East Pakistan (1960) 2 Tax (III-211). The Income Tax

Law is a self-contained code exhaustive of the matters dealt with

therein, and its provisions show, an intention to depart from the common rule, qui facit per allum facit per se1.

Every enactment has a purpose for which the legislature

decides to promulgate and enforce it. The main purpose of the

Income Tax Ordinance, 2001 is to levy and collect tax on

income of a person. The words ―income‖ and ―person‖ have

been specifically defined in the Ordinance, though in respect of

―income‖ there always remains continuous battle between the

Tax Department and taxpayers for determination of its quantum

as well as scope of chargeability. Besides, the Ordinance has two

other important roles: firstly, the redistribution of wealth

through progressive taxation (the principle that the higher you

earn the higher you pay is at the core of the Ordinance) and

secondly, it serves as an instrument of fiscal policy, i.e., by

granting exemption to a particular income or class of income,

person or class of persons the intention is to promote a specific economic activity.

The Income Tax Ordinance, 2001 has, therefore, been enacted for the following three purposes:

1 CIT vs. Tribune Trust, Lahore (1948) 16 ITR 214 (PC).

1

2 Principles of Income Tax Law

(i) Levy and collection of tax on income of a person.

(ii) Redistribution of wealth.

(iii) As an instrument of fiscal policy.

It should be remembered that ―progressive taxation, i.e.

taxation at rates which rise with income, is a sound principle of

taxation so far as it corrects excessive economic inequality and

precludes inordinate enduring differences among families or

economic strata in wealth, power and opportunities. But it is not

a sound principle of taxation when it reaches the point where

initiative is hamstrung, work and ability are not allowed to earn

security and well-being, and endeavour and energy are wasted on

the slippery slope of tax avoidance invigorated and given a

momentum in the direction of constructive work and increase in national wealth‖2.

2. Scheme of the Ordinance:

A. Chapters & Schedules.

Like any other enactment, the Ordinance is divided into

chapters. Each chapter deals with a particular subject. The

Income Tax Ordinance, 2001 has 13 chapters and seven

schedules. The chapters and schedules are arranged as under:

Chapter I : Preliminary

Chapter II : Charge to Tax

Chapter III : Tax on Taxable Income

Part I : Computation of taxable income

Part II : Head of income: Salary

Part III : Head of income: Income from property

Part IV : Head of income: Income from business

Division I : Income from business

Division II : Deductions: General Principles

Division III : Deductions: Special Provisions

Division IV : Tax Accounting

Part V : Head of income: Capital Gains

Part VI : Head of income: Income from other sources

2 N.A. Palkivala & B.A. Palkivala, The Law & Practice of Income Tax, Eighth

Edition, Volume 1, N.M. Tripathi Private Limited, Bombay, 1990, page 16.

3 Introduction

Part VII : Exemptions and tax concessions

Part VIII : Losses

Part IX : Deductible allowances

Part X : Tax credits

Chapter IV : Common Rules

Part I : General

Part II : Tax Year

Part III : Assets

Chapter V : Provisions Governing Persons

Part I : Central concepts

Division I : Persons

Division II : Resident and non-resident persons

Division III : Associates

Part II : Individuals

Division I : Taxation of individuals

Division II : Provisions relating to averaging

Division III : Income splitting

Part III : Association of persons

Part IV : Companies

Part V : Common provisions applicable to association

of persons and companies

Part VA : Tax liability in certain cases

Chapter VI : Special Industries

Part I : Insurance business

Part II : Oil, natural gas and other mineral deposits

Chapter VII : International

Part I : Geographical source of income

Part II : Taxation of foreign-source income of residents

Part III : Taxation of non-residents

Part IV : Agreements for the avoidance of double

taxation and prevention of fiscal evasion

Chapter VIII : Anti-avoidance

Chapter IX : Minimum Tax

Chapter X : Procedure

Part I : Returns

Part II : Assessments

Part III : Appeals

Part IV : Collection and recovery of tax

Part V : Advance tax and deduction of tax at source


Division I : Advance tax paid by the taxpayer

Division II : Advance tax paid to a collection agent

Division III : Deduction of tax at source

Division IV : General provisions relating to the advance payment of

tax or the deduction of tax at source

Part VI : Refunds

Part VII : Representatives

Part VIII : Records, information, collection and audit

Part IX : National tax number card

Part X : Penalty

Part XI : Offences and prosecutions

Part XII : Additional tax

Part XIII : Circulars

Chapter XI : Administration

Part I : General

Part II : Directorate-general of inspection

Chapter XII : Transitional Advance Tax Provisions

Chapter XIII : Miscellaneous

FIRST SCHEDULE

Part I : Rates of Tax

Division I : Rates of tax for individuals and association of persons

Division IA : Rate of tax on certain persons

Division II : Rates of tax for companies

Division III : Rate of dividend tax

Division IV : Rate of tax on certain payments to non-residents

Division V : Rate of tax on shipping or air transport income of a

non-resident person

Part II : Rates of Advance Tax

Part III : Deduction of Tax at Source

Division I : Profit on debt

Division II : Payments to non-residents

Division III : Payments for goods or services

Division IV : Exports

Division V : Income from property

Division VI : Prizes and winnings

Division VIA : Petroleum products

Division VII : [omitted]

Part IV : Deduction or Collection of Advance Tax

Division I : [omitted]

5 Introduction

Division II : Brokerage commission

Division IIA : Rate for collection of tax by a stock exchange registered

in Pakistan

Division III : Transport business

Division IV : Electricity consumption

Division V : Telephone users

SECOND SCHEDULE

: Exemptions and Tax Concessions

Part I : Exemptions from total income

Part II : Reduction in Tax Rates

Part III : Reduction in Tax Liability

Part IV : Exemption from Specific Provisions

THIRD SCHEDULE

Part I : Depreciation

Part II : Initial allowance

Part III : Pre-commencement expenditure

FOURTH SCHEDULE

: Rules for the Computation of the Profits

and Gains of Insurance Business FIFTH SCHEDULE Part I : Rules for computation of the profits and gains

from the exploration and production of

petroleum

Part II : Rules for computation of profits and gains

from the exploration and extraction of mineral

deposits (other than petroleum) SIXTH SCHEDULE

Part I : Recognised provident funds

Part II : Approved superannuation funds

Part III : Approved gratuity funds

SEVENTH SCHEDULE

: Exported Goods

Part I : Specified goods manufactured in Pakistan

Part II : Goods manufactured in Pakistan

Part III : Goods not covered by Part I, II or IV

Part IV : Goods not covered by Part I, II and III

It must be remembered that schedules are part of the

Ordinance (these are as good statutory law as sections are) and

the view that if any schedule conflicts with the main enacting


part, the latter prevails, is not a sound one because one part of a

law does not abrogate the other. The principles of harmonious

construction of a statute vis-a-vis the effect of a particular non-

obstante provision are well-established3. The title given to a

chapter cannot legitimately be used to restrict the plain terms of

an enactment4 or to construe a section thereunder5. The title of a

statute is, however, an important part of the Ordinance and may

be referred to for the purpose of ascertaining its general scope

and of throwing light on its construction, although it cannot

override the clear meaning of the enactment6. However, it

should be remembered that statute must be read and construed

as a whole as Supreme Court of Pakistan held in PLD 1990 SC 827:

―Division of a statute into sections and chapters is a

mere matter of convenience but sometimes, it is

helpful in discovering the intention of the legislature

and giving extended meanings to the provisions of

statutes but there is no general rule that such division

itself would be a determining factor for the interpretation of a provision‖.

B. Sections, sub-sections, clauses.

Every chapter of the Ordinance deals with a specific

subject. The subject matter is usually arranged into further

segments. For each subject matter a section is devised. For

example Chapter II deals with the subject of ―Charge to Tax‖. It

has five sections (starting from section 4 to section 8). Section 4

which is charging section provides the authority and basis for

levy and collection of income tax. Section 5 deals with tax on

dividend. Section 6 takes care of certain payments to non-

residents. Section 7 relates to tax on shipping and air transport

business of non-residents. Section 8 caters for general provisions

3 Attorney General vs. Lamplugh, (1878) L.R. 3 Ex. D. 214.

4 CIT vs. Azizuddin Ghazi & Others (1960) 2-Tax (III-474).

5 Secretary of State vs. Mask SCO AIR (1940) PC 105.

6 Dreamland Cinema Multan vs. CIT (1977) 35 Tax 169 (H.C.Lah.)

7 Introduction

related to sections 5, 6 and 7. It is a well-settled law that each

section has to be interpreted as it is, a court cannot read it

as if its language was different from what it actually is. It is

not permissible for the Court to amend the section7.

Sections are further divided into sub-sections because most

of the time, it is not possible to narrate a subject in a single

paragraph. Secondly, one subject has too many facets which

need to be explained independently. For similar reasons, a sub-

section is then divided into clauses. For example section 11 deals

with heads of income. Sub-section (1) of section 11 classifies the

kinds of incomes that are chargeable under this Ordinance.

Clauses (a), (b), (c), (d) and (e) of sub-section (1) of section 11

enumerate different heads of income under which total income is to be computed.

It is clear from the above example that sections, sub-

sections, clauses and sub-clauses are various divisions, sub-

divisions and further sub-divisions of the subject matter. These

divisions, sub-divisions and further divisions of sub-divisions are

designed to make reference to various aspects of a subject matter systematic, easy and precise e.g.

(i) Section 14(2) - means sub-section (2) of section 14.

(ii) Section 14(4)(c)-means clause (c) of sub-section (4) of section 14.

(iii) Section 12(2)(e)(iv) - means sub-clause (iv) of clause

(e) of sub-section (2) of section 12.

The making of the various sections, sub-sections, clauses,

and sub-clauses usually (though not always) follow a uniform

pattern. Sections are denoted by ordinary numbers 1, 2, 3

.......240. Sub-sections are also denoted by ordinary numbers but

within brackets e.g. (1), (2), (3) ... (18). Clauses are denoted by

small alphabets a, b, c, d, and are always placed within brackets

like (a), (d), (g) and (i). Sub-clauses are denoted by small Roman

figures and are placed within brackets like (i), (iv), (xv) and (ix).

7 PLD 1956 FC 200.


There can be some deviation from the general scheme or

uniformity of devising sub-sections, clauses and sub-clauses. For

example, section 2 which deals with different definitions has no

sub-section. Different definitions appearing as sub-sections

thereunder are, in fact, clauses. Hence section 2(13) means clause (13) of section 2.

3. Definitions.

It is a settled rule of interpretation that when a word is

commonly used in various statutes, and has been the subject

matter of judicial interpretation, and the word is used in new

statute unless the context otherwise requires, the legislature

would be deemed to have accepted the meaning ascribed to it by judicial pronouncements8.

If a special definition of a word is given in any statute, it

should be adopted if not repugnant to the context; failing this,

the definition, if any, in the General Clauses Act of the same word would be adopted9.

It is also a well-established principle of interpretation that

the words which express a legal concept must have attributed to

them their legal meaning. Technical words, when we find them

in the Income Tax Ordinance, 2001, must have their technical sense ascribed and not their popular sense uti loquitor vulgus10.

It is permissible to look at the dictionary meaning of the

term in the absence of any definition thereof in the statute or

General Clauses Act. When a language is plain and unambiguous

and admits of only one meaning, no question of construing a

statute arises, for the statute speaks for itself. Hardship or

inconvenience cannot alter the meaning of the language

8 Hirijin Salt Chemicals Pak Ltd. vs. Union Council and Other PLJ 1982 SC

295. 9 Reg. vs. Govind, ILR 16 Bom. 283.

10 M/s. Hirjina & Co. (Pakistan) Ltd., Karachi vs. CST, Central Karachi 1971

SCMR 128; Noon Sugar Mills vs. CIT [1990] 62 TAX 74 (S.C.Pak.); CIT vs.

Gaekwar Foam & Rubber Co. Ltd. (1959) 35 ITR 622, 667, Estate of Khan

Sahib Mohammad Omar Sahib vs. CIT (1958) 33 ITR 767, 778 (Mad.).

9 Introduction

employed by the legislature if such meaning is clear on the face of statute11.

The role of definition clauses is, therefore, very vital in

interpreting the Ordinance. The words specifically defined in

section 2 are to be given the meanings assigned to them by the

Legislature unless the context otherwise requires. Hence,

wherever the word appears in the Ordinance, it will have the

same meaning as in section 2 unless the context requires

otherwise. The following words have been defined in the Ordinance.

1. Accumulated profits 2(1);

2. Amalgamation 2(1A);

3. Appellate Tribunal 2(2);

4. Approved gratuity fund 2(3);

5. Approved annuity plan 2(3A);

6. Approved income payment plan 2(3B);

7. Approved pension fund 2(3C);

8. Approved superannuation fund 2(4);

9. Assessment 2(5);

10. Assessment year 2(5A);

11. Asset Management Company 2(5B);

12. Association of persons 2(6);

13. Banking company 2(7);

14. Bonus shares 2(8);

15. Business 2(9);

16. Capital asset 2(10);

17. Central Board of Revenue 2(11);

18. Charitable purpose 2(11A);

19. Company 2(12);

11

PLD 1961 SC 119; C. Ag IT vs. Keshab Chandra Mandal AIR (1950) SC

265, 270; (1950) 18 ITR 569 (SC).


20. Commissioner 2(13);

21. Commissioner (Appeals) 2(13A);

22. Contribution to an Approved Pension Fund 2(13B);

23. Co-operative society 2(14);

24. Debt 2(15);

25. Deductible allowance 2(16);

26. Depreciable asset 2(17);

27. Disposal 2(18);

28. Dividend 2(19);

29. Eligible person 2(19A);

30. Employee 2(20);

31. Employer 2(21);

32. Employment 2(22);

33. Fee for technical services 2(23);

34. Financial institution 2(24);

35. Finance society 2(25);

36. Firm 2(26);

37. Foreign source income 2(27);

38. House Building Finance Corporation 2(28);

39. Income 2(29);

40. Income year 2(29A);

41. Individual pension account 2(29B);

42. Industrial undertaking 2(29C);

43. Intangible 2(30);

44. Leasing company 2(30A);

45. Liquidation 2(31);

46. Investment company 2(31A);

47. Member 2(32);

48. Minor child 2(33);

11 Introduction

49. Modaraba 2(34);

50. Modaraba certificate 2(35);

51. Mutual fund 2(35A);

52. Non-banking financial company 2(35B);

53. Non-profit organization 2(36);

54. Non-resident person 2(37);

55. Non-resident taxpayer 2(38);

56. Originator 2(39);

57. Pakistan source income 2(40);

58. Pension fund manager 2(40A);

59. Permanent establishment 2(41);

60. Person 2(42);

61. Pre-commencement expenditure 2(43);

62. Prescribed 2(44);

63. Principal officer 2(44A)

64. Private company 2(45);

65. Profit on a debt 2(46);

66. Public company 2(47);

67. Recognised provident fund 2(48);

68. Regional Commissioner 2(48A);

69. Rent 2(49);

70. Repealed Ordinance 2(49A);

71. Resident company 2(50);

72. Resident individual 2(51);

73. Resident person 2(52);

74. Resident taxpayer 2(53);

75. Royalties 2(54);

76. Salary 2(55);

77. Schedule 2(56);


78. Securitization 2(57);

79. Share 2(58);

80. Shareholder 2(59);

81. Small company 2(59A);

82. Special Purpose Vehicle 2(60);

83. Speculation business 2(61);

84. Stock-in-trade 2(62);

85. Tax 2(63);

86. Taxable income 2(64);

87. Taxation officer 2(65);

88. Taxpayer 2(66);

89. Tax treaty 2(67);

90. Tax year 2(68);

91. Total income 2(69);

92. Trust 2(70);

93. Underlying ownership 2(71);

94. Units 2(72);

95. Unit trust 2(73);

96. Venture capital company 2(74).

The Income Tax Ordinance, 2001, as amended by the

Finance Ordinance, 2002, contains 96 words that have been

defined vide clauses (1) to (74) of section 2. The Legislature may

keep on adding new expressions in section 2 as and when the

need so arises. These words and phrases have to be given the

specific meanings assigned to them unless the context otherwise requires.

The words ―unless there is anything repugnant in the subject or

context‖ are generally used in all the statutes in the beginning of

the definitional provisions. The normal rule is that whenever a

term is defined in the Ordinance, it will strictly govern the said

term wherever used in the statute. But sometimes the strict

compliance of this rule may create difficulties. Hence, in order to

13 Introduction

safeguard against any such eventuality, the above phrase,

generally precedes the definition clause. So where context

demands that the expression should be read in its ordinary

dictionary meanings, the definitive meanings of the said term will be ignored, although it is specifically defined.

The words defined in section 2 of the Ordinance, except as

discussed above, are applicable to the entire Ordinance. In

addition to these words [as defined in section 2] sometimes,

certain expressions are defined within a certain section, sub-

section or a clause. Such definitions indicate the area and scope

of their applicability. In such cases, the special meaning of the

word or term assigned to by virtue of that definition is restricted

to that particular clause or section in which it is defined or other

provisions specifically narrated therein. In other sections of the

Ordinance the same term shall have its ordinary dictionary

meanings. However, if the same expression is defined in another

section, the second definition will override the general definition

in respect of that section or sub-section for which that special

definition is made operative.

Thus the ordinary dictionary meanings of an expression are

overruled by the general definitions given in section 2 of the

Ordinance, and the general definitions are overruled by specific definitions.

However, it may be noted that certain expressions are

defined in such a manner in the Ordinance that they still retain

their ordinary dictionary meanings. For example the word

income is defined in section 2(29) in such a way that it only

includes certain items and yet its broad and wide meanings are kept intact. This is called an inclusive definition.

Definitions are of three types:

1. Exclusive or exhaustive;

2. Inclusive; and

3. Exclusive as well as inclusive definition.

1. Exclusive definition:


This type of definition gives definitive meaning to the

word or term and therefore excludes the ordinary

dictionary meaning of the said expression. For

example, in ordinary sense the word agricultural

income can be understood as income arising from all

sorts of agricultural operations. But this term has been

specifically defined in section 41(2) and by doing so

the legislature excluded the ordinary meaning of this

expression. In this definition land must be situated in

Pakistan from which income is derived. Hence it can

be seen that by assigning special meaning the ordinary

meanings of the term has been overruled. Another

example is that of the word resident. This expression

has been exclusively defined in section 2(52). The

precise and exclusive meaning assigned to it has

excluded ordinary dictionary meanings.

The exclusive definition starts with the expression‘ mean or means e.g. section 2(44) says:

―Prescribed means prescribed by rules made under the Ordinance‖.

2. Inclusive Definition:

The example of this type of definition is that of the

word ―business‖ in sub-section (9) of section 2 which reads as under:

―business includes any trade, commerce, manufacture,

profession, vocation or adventure or concern in the

nature of trade, commerce, manufacture, profession or vocation, but does not include employment‖.

A word thus defined retains its ordinary dictionary

meaning and also acquires the meaning assigned to it

by the definition given in the statute. This type of definition begins with the word ―includes‖.

3. Exclusive as well as inclusive definition:

Sometimes, a definition has both the elements. An

example of such a definition is available in section

15 Introduction

2(7), which defines the term ―banking company‖ as under:

―banking company means a banking company as

defined in the Banking Companies Ordinance, 1962

(LVII of 1962) and includes any body corporate which transacts the business of banking in Pakistan.‖

This definition is both exclusive and inclusive. All

banking companies [as defined in the Banking

Companies Ordinance, 1962 [(LVII of 1962] are

banking companies, but another category covering any

―body corporate that transacts the business of banking

in Pakistan‖ is included in the definition, thus making the definition both flexible as well as restrictive.

Another example of this type of definition is available in clause (15) of section 2 which says:

―debt means any amount owing, including accounts

payable and the amounts owing under promissory

notes, bills of exchange, debentures, securities, bonds or other financial instruments‖.

The first part of the definition represents an exclusive type,

but by adding the word including, the legislature added another

category which gives the expression greater flexibility; making it both exclusive and inclusive type.

In section 2 of the Ordinance, majority of the words have

been exclusively defined which, therefore, exclude their ordinary accepted meanings. A few examples are:

1. Appellate Tribunal;

2. approved gratuity fund;

3. assessment;

4. association of persons;

5. employee;

6. minor child etc.

4. Role of certain expressions:


i) “Subject to the provisions of.....”

Where the provisions of any section are likely to come in

conflict with that of another section, it is necessary to clarify

which section is going to prevail over the other. In such cases

the subordinate section starts with the expression subject to the

provision of this Ordinance or subject to the provision of

section.... For example section 4, which is known as the charging

section, starts with the wordings ―Subject to the provisions of

this Ordinance‖ meaning thereby that what is stated in this

section is subservient to all other provisions of the Ordinance.

Another example is that of sub-section (1) of 22 which has been

made subordinate to the provisions of all the 14 sub-sections of

section 22.

ii) “Notwithstanding anything contained in”

The role of the above expression is quite opposite to the

expression at (i) above. This expression occurring in a section

overrides the other provisions mentioned therein. Where a

section starts with the expression ―Notwithstanding anything

contained in this Ordinance‖, the expression enables the provision of

that law to override the whole Ordinance. These provisions of

law whenever in conflict with any other provision of Income

Tax Ordinance, 2001 are to overrule those provisions.

Sometimes the provisions of a section are made to override the

provisions of other enactments. In such cases the expression

usually is ―Notwithstanding anything contained in any law for the time

being in force‖ [see section 139]. The provisions of section 139

override the provisions of the Companies Ordinance, 1984.

Under the companies law, the liability of a shareholder is limited

to the extent of amount invested by him in the company‘s

capital. But section 139 overrules it by laying down that for

recovery of any arrears, the shareholders‘ other assets can also be

attached. Here the provisions of companies law stand overruled by section 139 of the Income Tax Ordinance, 2001.

5. Proviso, object of

17 Introduction

A proviso is generally something engrafted on the main

enactment12. The role and function of a proviso is to create an

exception out of a previous enactment in an earlier part of a

section, something which but for the proviso would have fallen

within the scope of enactment13. It must be considered only in

relation to and harmoniously with, the principal matter to which

it stands as a proviso and not as qualifying or modifying some other enactment14.

It is a cardinal rule of interpretation that a proviso to a

provision of a statute only embraces the field which is covered

by the main provision15. The proper canon of constructing a

section which has several provisos is to read the section and the

provisos as a whole, try to reconcile them and give a meaning to

the whole of the section along with the provisos with its comprehensive and logical meaning16.

The territory of a proviso is to carve out an exception to

the main enactment and to exclude that which otherwise would

have been within the section; a proviso is not normally

construed other than as a subtraction of the main section and as introducing a qualification or exception to the enacting part.

Provisos are often added to allay fears17. In no

circumstances, thereafter, can any proviso be construed in such a

manner as to obliterate and swallow up the main provision to

which it is a proviso. A proviso is inserted to guard against the

particular case of which a particular person is apprehensive,

although the enactment was never intended to apply to his case

12

CIT vs. Nasir Ali (1999) 79 Tax 428 (S.C.Pak); R. vs. Dibdini 1919 Probate

57, 125 (CA). 13

Local Government Board vs. South Stoneham Union 1909 AC 57, 63. 14

PLD 1971 SC (Pak) 252; Rijaz (Pvt.) Ltd. vs. Wealth Tax Officer (1996) 74

Tax 9 (H.C.Lah.); CIT vs. Indo Mercantile Bank Ltd. (1959) 36 ITR (SC). 15

1977 SCMR 371; Tahsildar Singh vs. State of UP AIR 1959 SC 1012, 1022. 16

1961 PLD SC 119; Ram Narani Sun Ltd. vs. Asstt. Commr. of Sales Tax

(1955) 6 STC 627 (SC); Combatta & Co. Ltd. vs. CIT (1952) 21 ITR 121,

126, 127. 17

Craies on Statutes Law, 6th Edition, page 221.


or to any other similar case at all18. A proviso cannot be

construed without attributing to it that effect19. Further, if the

language of the enacting part of the statute is plain and

unambiguous and does not contain the provisions which are said

to occur in it, one cannot derive those provisions by implication from a proviso20.

The Lahore High Court in PLD 1990 Lah 4 held that

proviso to any parent provision has to be read very cautiously

and the intended whittling effect therefore cannot be extended

so as to defeat the provision itself in as much as it is not to be

presumed that the legislature intended to take away by one hand

through a proviso what it has basically conferred through the

other hand by the parent provision. it is further held in PLD

1990 Lah 461 that if the object of a statute is defeated by treating

the provision as mandatory it must be construed as directory

especially when non- compliance with the proviso is not visited by any penalty.

The original Income Tax Ordinance, 2001 made negligible

use of provisos except in the Second Schedule. Wherever

deviation from the main subject was intended, a sub-section was

added. One could say that the proviso to section 25 of the

repealed Ordinance is pari materia to 34(6) of the new

Ordinance. Perhaps the aim was to reduce the complexity of

language. But in most instances the whole section (which in

many cases comprises ten or more sub-sections) has to be read

before the entire provision is properly comprehended. Hence, if

a facility is provided in one sub-section, its conditionality is

mentioned in another making the comprehension more tedious.

However, subsequent amendments have liberally made use of

provisos restoring the pre-2001 position to some extent.

As mentioned above, in section 25 of the repealed

Ordinance, the proviso annexed, immediately gave a remedial

18

CIT vs. Madurai Mills Co. Ltd. (1973) 89 ITR 45 (SC). 19

Maxwells Interpretation of Statutes, 12th Edition, page 65. 20

1998 PTD 1945; CIT vs. Madan Lal Bhargava (1980) 122 ITR 545, 549, see

also Maxwells Interpretation of Statutes, 12th Edition, page 217.

19 Introduction

situation where liability added under clause (c) of the sub-

section paid later, was to be deducted from the total income in

the year in which it was paid making the intention of the

legislature absolutely clear on the subject. Since it was in the

form of a proviso in the section it instantly attracted one‘s

attention. On the contrary, the new law lacks this perspective as

in the absence of provisos it has become imperative to read the entire section before understanding its substance.

6. Explanation, object of.

An Explanation is at times appended to a section to explain

the meaning of words contained in the section. It becomes a part

and parcel of the enactment21. If the language of the explanation

shows a purpose and a construction consistent with that purpose

can be reasonably placed upon it, that construction will be

preferred as against any other construction which does not fit in

with the description or the avowed purpose.

The main purpose of an Explanation is, therefore, to specify

the meaning of a word, term or a phrase used in any provision of

law which ordinarily is capable of signifying more than one

meaning or interpretation. An explanation is quite different in

nature from a proviso, the latter excludes, excepts and restricts;

which the former explains clarifies or subtracts or includes something by introducing a legal fiction22.

However, it must be kept in mind that there is no general

rule, nor there can be any, that an Explanation can, in no case,

enlarge the scope of the section to which it is appended.

Ordinarily, the purpose of an Explanation is not to limit the

scope of the main section. An Explanation enacting a legal

fiction, can add to the cases falling within the main provisions.

Even where the explanation is concluded in negative form and

21

PLD 1991 SC (Pak) 596; Bengal Immunity Co. Ltd. vs. State of Bihar (1955)

6 STC (446(SC)); CIT vs. Warngal Industries (P) Ltd. (1977) 110 ITR 756

(AP). 22

AIR 1931 Lahore 572; Sriramulu Naidu (G) vs. CTO (1975) 35 STC 531

(AP); Subhash Ganpatrao Buty vs. Maroti Krishany AIR 1975 Bom. 244.


excludes from its ambit a certain class or category for a certain

period or purpose23, it may imply within the scope of the

substantive provision that the same class or category may be

included outside the excepted periods or purposes. An

explanation cannot be so constructed as to widen the scope of

the substantive provision, but can only be so read as to best

harmonise with and clean up any ambiguity in the main provision24.

Again, the new Ordinance avoids Explanations, except in

the Second Schedule, as were widely available in the repealed

Ordinance. Each section and its sub-sections are self-explanatory

in a way that there appeared no need to add further explanations

to clarify or elaborate certain provisions.

7. Rules of interpretation or construction of statutes.

Acts and Rules are drafted by legal experts and it is

expected that the language used will leave little room for

interpretation or construction. But the experience of all dealing

with tax laws has been different. It is quite often that we find

courts and lawyers busy in unfolding meaning of ambiguous

words and expressions and resolving inconsistencies. The age

old process of application of the enacted law has led to

formulation of certain rules of interpretation or construction.

Besides, while interpreting or constructing a statute following two types of aids are available:

(a) Internal aids, and

(b) External aids.

(a) Internal Aids.-Which are available in the Act itself in

the form of Explanation to a section, marginal notes,

punctuation marks, preamble, title of a chapter, non-obstante clause or a proviso, etc.

23

1998 PTD 1250; ITO vs. Short Bros (P) Ltd. AIR (1967) SC 81; (1966) 60

ITR 83 (SC). 24

Elahi Cotton Mills Ltd. vs. Federation of Pakistan [1997] 76 TAX 5

(S.C.Pak.); Hiralal Ratan Lal vs. Sales Tax Officer AIR 1973 SC 1034;

(1973) 31 STC 178 (SC).

21 Introduction

(i) Explanation: As discussed earlier an

Explanation is at times appended to a section to

explain the meaning of words contained in the

section. It becomes a part and parcel of the enactment.

(ii) Marginal Notes: The marginal note to a

section cannot be referred to for the purpose of

construing the section, it can be certainly relied

upon as indicating the drift to the section and

though it cannot control the interpretation of

the section, it furnishes a clue to the meaning

and purposes of the section. The marginal note

or heading to a section is a relevant factor to be

taken into consideration in construing the ambit of the section.

(iii) Punctuation marks: The punctuation marks

used in statutory provisions very often play a

very important role and have to be taken careful

note of. Thus, where two clauses are separated

by a semicolon, they should be read distinctively.

However, while weight should undoubtedly be

given to punctuation when a statute is carefully

punctuated it cannot be certainly regarded as a

controlling element and allowed to control the plain meaning of a text.

(iv) Preamble: The preamble of an Act sheds useful

light as to what the statute intends to reach.

Although the statement of the objects and

reasons appended to a bill is not admissible as

an aid to the construction of the Act as passed,

yet it may be referred to only for the limited

purpose of ascertaining the conditions prevailing

at the time which necessitated the making of the law.

(v) Title of a chapter: The title given to a chapter

cannot legitimately be used to restrict the plain


terms of an enactment, or to construe a section

hereunder. The nomenclature of an Act is not

conclusive and for determining the true

character and nature of a particular tax, with

reference to legislative competence, the court

will look into its pith and substance. The title of

statute, however, is an important part of the Act

and may be referred to for the purpose of

ascertaining its general scope and of throwing

light on its construction, although it cannot override the clear meaning of the enactment.

(vi) Long title: Long title, however, has a different

implication. It is well settled that the long title of

legislation is an enacting part of the legislation

and is legitimately admissible to aid its

construction. It may not control, circumscribe or widen the scope of the legislation.

(vii) Non-obstante clause: A non-obstante clause is

usually used in a provision to indicate that the

provision should prevail despite anything to the

contrary in the provision mentioned in such

non-obstante clause. In case there is any

inconsistency or a departure between the non-

aobstante clause and another provision, one of

the object of such a clause is to indicate that it is

the non-obstante clause which would prevail over the other clause.

(viii) Proviso: As mentioned earlier a proviso is

generally something engrafted on the main

enactment. It cannot, normally, be so

interpreted as to set at naught the real object of

the main enactment. It must be considered only

with relation to, and harmoniously with, the

principal matter to which it stands as a proviso

and not as qualifying or modifying some other enactment.

23 Introduction

A proviso for exemption or relief should be

construed liberally or in favour of assessee. It is

a cardinal rule of interpretation that a proviso to

a provision of a statute only embraces the field which is covered by the main provision.

(ix) Context: In construing words in a statute one

must bear in mind the context in which they are

used. If they are capable of being understood in

two senses, that which accords with the context

should be adopted. This normally means that an

expression used in several sub-sections of the

same section should receive the same

interpretation in all those sub-sections normally,

unless it is shown that the context calls for a

different meaning to be given to the term used in the same section.

(x) Ambiguity in amending legislation: There is

no doubt that after a statute is amended, the

statute thereafter is to be read and construed

with reference to the new provisions, and not

with reference to the provisions that originally

existed. But when the terms of the enactment in

the new shape are not clear or are ambiguous, a

precise appreciation of its brief history

culminating in the enactment in its new form is justified as a proper and logical course.

(b) External Aids.-These are available in the form of

dictionary, memoranda prefaced to a bill, Ministers speech, etc.

(i) Dictionary: As discussed, the dictionary

meaning of a word cannot be looked at where

the word has been statutorily defined or

judicially interpreted. But where there is no such

definition or interpretation, the courts may take

aid of dictionaries to ascertain different senses

according to its context and a dictionary gives all


the meanings of a word and the court has,

therefore, to select the particular meaning which

is relevant to the context in which it has to

interpret that word.

(ii) Tax Committee Report: Reference to the

views of the Tax Committee delivered when

considering a clause of a bill is not a permissible consideration in interpreting a statute.

(iii) Statement of objects and reasons appended

to a Finance Bill: These may be referred to for

the limited purposes of ascertaining the

conditions prevailing at the time the bill was the

urgency of the evils which were sought to be

remedied. Where, however, the words in the

statute are clear, it is not open to a court of law

to fall back upon statement of objects and

reasons and to construe the provisions of the

Act in the light of the statement of objects and reasons.

The statement of objects and reasons cannot

control the plain and obvious meaning which

the sections, obviously convey; if provisions of the Act are clear and unambiguous.

(iv) Memoranda Prefixed to Bills: The

explanatory memorandum of a Finance Bill is

usually not an accurate guide of the final Act. In

the explanatory memorandum explaining the

provisions of the Bill, the headings are fairly

wide and matters collected under the same

heading may be diverse, not giving a true indication of the object of the legislation.

(v) Minister’s speech: In interpreting a section of

the Act, the speech of the Minister should not

be looked into, except for the limited purpose of

25 Introduction

ascertaining the mischief which the Act seeks to remedy.

The statement of the minister or parliament

debate, explanatory notes on clauses of a bill

cannot be used as aids to construction except in

cases where the language is vague and capable of

different interpretations. It is well settled that

consideration stemming from legislative history

must not be allowed to override the plain words of a statute.

(vi) Contemporanea exposition: This rule permits

the interpretation of a statute by reference to the

exposition it has received from contemporary

authority. CBR‘s circulars are not in the nature

of contemporanea exposition furnishing

legitimate aid in construction. The circular may

be binding on the revenue in executing the

provisions of the Act. But these are not binding

either on the Tribunal or on the court. Similarly,

instructions issued by the Ministry or

Department for guidance of its officers are of

no assistance in interpreting a tax statute.

The principle is generally applied in

interpreting ambiguous provisions in old

statutes where a particular interpretation has

gained practical adoption and application over a series of years and not to a modern statute.

(vii) Definition from other statutes: It is well

established that the words occurring in a statute

have to be understood with reference to the

objects of the Act and in the context in which

they occur, in the absence of any definition in

that statute. The definitions given for the terms

in one statute cannot automatically be imported

for the interpretation of the same words in another statute.


But where the provisions in one Act are

similar to the provisions in another Act, the

decisions interpreting the provisions in one Act

would apply to the corresponding provisions in the other Act.

(viii) Departmental manuals: The interpretation

placed by the Department in its Manuals has

been held not to be proper guide when the

construction of a statute is involved [PLD 1959 SC 29].

(ix) Legal opinions: It is not proper for an assessee

to produce legal opinions before an Assessing

Officer, nor is it proper for the officer to ask for

the same. Where such opinions are appended to petitions, they must be expunged.

8. “Deemed”, significance of

Sometimes (rather most of the times after the introduction of

presumptive taxation in income tax law in 1991) the Income Tax

Ordinance, 2001 artificially declares thing to be something which

it actually is not. It may give a certain meaning to a word or a

phrase which it ordinarily does not have. It may declare an event

to have taken place when actually it had not taken place and vice

versa. The term often used in bringing about this artificiality is

―deemed‖ or ―treated to be‖. The whole section 101 of the

Ordinance creates such legal fictions. Sub-section (1) of section

101 says that salary shall be deemed to accrue or arise Pakistan

source income, no matter wherever it is paid, if it is received

from any employment exercised in Pakistan or paid by

Government or a local authority of Pakistan to its employees.

This provision of law creates artificiality in respect of place.

Although a person is working abroad but since his salary is paid

by the Government of Pakistan, it has deemed to accrue or arise

to him in Pakistan, Usually these fictions fall into the following

four categories:

(a) fiction of income

27 Introduction

(b) fiction of person

(c) fiction of place

(d) fiction of time or period

―Deeming‖ has become increasingly common in modern

statutes; and the word ―deemed‖ is used a great deal in different

context25. Sometimes it is used to impose for the purposes of a

statute an artificial construction of a word or phrase that would not

otherwise prevail. Sometimes it is used to put beyond doubt a

particular construction that might otherwise be uncertain.

Sometimes, it is used to give a comprehensive description that

includes what is obvious, what is uncertain and what is, in the

ordinary sense, impossible26. It is, therefore, not possible to list

the purposes for which legal fiction may be created by statute27.

But the particular sense in which the word is employed has to be

judged in the light of the scheme of the section and the context

in which the ―deeming‖ is made28. It is not that a deeming

provision is every time made for the purpose of creating a

fiction: a deeming provision might be created to impose for the

purpose of Ordinance an artificial construction of a word or

phrase that would not otherwise prevail, but in each case it

would be a question as for what purpose or object the

Legislature made a deeming provision. It may be for the purpose

of formulating a principle of general applicability, and may create

no legal fiction29. The word ―deemed‖ may not always introduce

a legal, fiction or a legal presumption, but may in certain special

circumstances introduce a provision in the nature of glossary to

the main provision, that is ―glossary provision‖ in which even the word ―deemed‖ would be equivalent to means30.

25

Elahi Cotton Mills Ltd. vs. Federation of Pakistan (1997) 76 Tax 5 (S.C.Pak);

Consolidated Coffee Ltd. vs. Coffee Board (1980) 46 STC 164, 174 (SC). 26

St. Aubyn vs. Attorney General (1952) 2 All FR 473, 498 (HL). 27

New Shorroch Spg & Mfg Co. vs. ITO (1959) 37 ITR 41, 47 (Bom.). 28

New Shorroch Spg & Mfg Co. vs. ITO (1959) 37 ITR 41, 47 (Bom.). 29

Consolidated Coffee Ltd. vs. Coffee Board (1980) 46 STC 164, 174 (SC). 30

Maftalal Gagalbhai & Co. (P) Ltd. vs. CIT (1980) 122 ITR 382, 397;

Amrutanjan Ltd. vs. CIT (1961) ITR 21, 32, (Mad) affirmed by the Indian


As far as possible, a legal fiction should not be so

interpreted as to illicit injustice, as even when the court steps

into the world of large fantasy, the principle of equity and justice

cannot be lost sight of31. Even so, deeming has its limits. It

cannot, be stretched beyond imagination. The taxation officer

has no authority under the law to give his own version of

artificiality. The word ―deemed‖ wherever creates artificiality has

to be restricted to that extent alone. It does not give a free hand to use it for other places where reality prevails.

The Supreme Court of Pakistan in PLD 1970 SC 29

observed that while interpreting a deeming clause in a statute,

the courts are bound to ascertain for what purpose and object

that provision has been enacted.

9. Deeming provisions in the Ordinance

The Income Tax Ordinance, 2001 enacts, amongst others, the following important deeming provisions:

A. Fiction regarding the nature of receipt

(i) The definition of income in section 2(29) is inclusive

and not exhaustive. ―Income,‖ in this section, includes

certain things which may not possibly be regarded as

income but for the special definition assigned to it in

that provision. For example in section 169, imports,

and contractual receipts have been deemed to be

income. That, however, does not limit the generality of

its natural meaning except as qualified in the provision.

(ii) Where a person has been allowed a deduction for any

expenditure or loss incurred in a tax year in the

computation of the person‘s income chargeable to tax

under a head of income and, subsequently, the person

has received, in cash or in kind, any amount in respect

of such expenditure or loss, the amount so received

Supreme Court in (1964) 53 ITR 218 (SC).

31 CIT vs. Nathimal Gaya Lal (1973) 89 LTR, 170, 197, 198 (AU).

29 Introduction

shall be included in the income chargeable under that

head for the tax in which it is received [section 70].

B. Fiction regarding place of accrual

(i) Salary wherever paid shall be Pakistan source income it

is received from any employment exercised in

Pakistan or paid by Government or local authority of

Pakistan. [Section 101(1)]

(ii) Income by way of profit on debt paid by a resident

person, except where the profit is payable in respect

of any debt used for the purposes of a business

carried on by the resident outside Pakistan through a

permanent established or the same is borne by a

permanent establishment in Pakistan of a non-resident

person shall be Pakistan source income [section

101(7) and 101(7)(b)].

(iii) Income by way of royalty paid by a resident person,

except where the same is payable in respect of any

right, profit or information used, or services utilized

for the purposes of a business carried on by the

resident outside Pakistan through a permanent

established or the same is borne by a permanent

establishment in Pakistan of a non-resident person

shall be Pakistan source income [Section 101(8)(a) & 101(8)(b)].

C. Fiction regarding time in which the income should be deemed to have accrued or arisen

(i) Where in any tax year, the taxpayer has made

investments or is owner of money or valuable article

which are not recorded in the books of accounts or

declared in the wealth statement and the taxpayer

offers no explanation about the nature and source of

such investment, or explanation offered by him is

unsatisfactory, the value of the investment or the

money or valuable article shall be deemed to be the


income of the tax year in which such discovery is made [section 111].

(ii) That portion of the annual accretion in any year to the

balance of the credit of an employee participating in a recognised provident fund as consists of-

(a) Contributions made by the employer in excess

of ten per cent of the salary of the employee; and

(b) Interest credited on the balance to the credit of

the employee in so far as it exceeds one-third of

the salary of the employee or is allowed at a rate

exceeding such rate as may be fixed by the Federal

Government in this behalf by notification in the

official Gazette shall be deemed to have been

received by the employee in that year and shall

be included in his total income for that year and

shall be liable to income tax [clause (3) of Sixth Schedule].

D. Fiction regarding certain incomes deemed to be

income of the transferor, despite the transfer

(i) Where the owner of any securities sells or transfers

those securities, and buys back or reacquires the

securities, then the interest payable shall be deemed to

be the income of the transferor and not the transferee [Section 112].

(ii) All income arising to any persons by virtue of

revocable transfer of assets shall be chargeable to tax as the income of the transferor [Section 90]

E. Fictions - Miscellaneous

(i) Any income of a minor child chargeable under the

head ―Income from Business‖ for a tax year, except

from a business acquired through inheritance, shall be

chargeable to tax as the income of the parent of the

child with the highest taxable income for that year [section 91].

31 Introduction

(ii) Where no tax is payable by a company, resident

in Pakistan or tax payable is less than one-half

per cent of the amount representing its turnover

from all sources, the aggregate of the declared

turnover shall be deemed to be income of the

said company and tax thereon shall be charged

at the rate of one-half per cent of the declared turnover [section 113].

(iii) If any person who is required to deduct tax at

source fails to do so he shall be personally liable to pay that tax [section 161].

(iv) The legal representative of a deceased taxpayer

shall, for the purposes of the Ordinance, be deemed to be taxpayer [section 87].

10. Fiction upon fiction

Legal fictions are created only for a definite purpose and

they are limited to the purpose for which they are created and

should not be extended beyond their legitimate field32. Unless it is

already and expressly provided it is not permissible to impose

supposition on a supposition of law; it is not permissible to subjoin or tack a fiction upon fiction33.

When is income deemed to accrue on arise in Pakistan?

The only possibility is where it does not actually accrue or arise

in Pakistan but the law requires it to be treated as if it were. The

words, deem to accrue or arise, therefore, can only mean ―deem

to accrue or arise by law‖; they cannot be construed by the

stretch of imagination to mean anything else. The words must be restricted to situations specifically set out in the law itself.

11. Reconstruction of sections and rules

It is not permissible to substitute one expression used by the

legislature by another expression on the assumption that the

32

Elahi Cotton Mills Ltd. vs. Federation of Pakistan (1997) 76 Tax 5 (S.C.Pak);

CIT vs. Elphinstone Spg & Wvg Mills Co. (1960) 40 ITR 142 (SC). 33

Executor & Trustee of Sir Cawasji Jehangir vs. CIT (1959) 35 ITR 537

(Bom.).


legislation meant to use the other expression, and then to

construe the provisions of the section as if the substituted

expression has been used by the legislature. The proper way to

construe the provision of the state is to give full effect to all the

words of the relevant provisions to try to read them harmoniously, and then to give them a sensible meaning34.

12. Technical words

Technical words used in the Ordinance must have their technical

sense ascribed to them and not their popular sense uti loquitor

vulgus. The principle is of cogency when the words in question

represent legal conceptions35. Words having known legal import

should be construed in the sense which they had at the time of enactment36.

In the Income tax Ordinance, 2001 certain words have been

used which are of technical nature for example the word ―minor

child‖ which does not include married minor daughter. The

words minor child and major child are thus to be interpreted in

their technical sense as defined under the prevalent law of the land and not in the ordinary sense.

13. Legal fiction in one act does not extend to the other

In the case of Elahi Cotton Mills Ltd. & others vs. Federation of

Pakistan (1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 = PTCL

1997 CL 260 = PCTLR SC (Pak) 845, the Honourable Supreme

Court held that legal fictions are only for a definite purpose.

They are limited to the purpose for which they are created and

should not be extended beyond its legitimate field. A statutory

fiction introduced in one enactment cannot be incorporated in

all other Acts. Hence, a transaction treated as a gift by a legal

34

National Food vs. CIT (1991) 64 Tax 60 (H.C.Kar.) RC Mitter & Sons vs. CIT

(1959) 36 ITR 194, 200 (SC). 35

Abdul Hameed vs. Secretary, Government of Baluchistan PLD 1996 Quetta

21; CIT vs. Gaekwar Foam & Rubber Co. (1959) 35 ITR 662. 36

J.A. Textile Mills Ltd. vs. CBR 1999 PTD 4138 (Hahore High Court); State of

Madras vs. Gannon Dunkerley & Co. (1958) 9 STC 353 (SC) (Meaning well

accepted in law is to be preferred to natural meaning).

33 Introduction

fiction enacted under the repealed Gift-tax Act cannot be regarded as a gift for purposes of the Income Tax Ordinance.

CIT/WT, Zone-C, Lahore v. Haroon Medical Store, Sheikhupura

[2003] 88 TAX 50 (H.C.Lah.) = 2003 PTD 1530

―A deeming clause being necessarily a fiction of law cannot

be taken to be a part of another provision, unless same is

expressly so provided. The Legislature by employing legal fiction

can deem a thing to be in existence, although same does not

actually so exists. That fiction, however, cannot be transposed or

read into another provision, unless such transposition is expressly so provided in the main provision.‖

14. Income Tax does not apply to residents of non-taxable

territories.

Residents of non-table areas of Pakistan are not subjected to

Income Tax Law by virtue of Article 247(3) of the Constitution of

Pakistan. This has been elaborated in the following cases:

CIT Peshawar v. Gull Cooking Oil and Vegetable Ghee (Pvt.) Ltd. through

the Chief Executive and 6 others

2003 PTD 1913 (S.C. Pak)

―Undoubtedly, the Company is located in the Tribal Area

where Ordinance has not been extended by virtue of Article 247

of the Constitution and as such it is not a resident of taxable

area, hence it would not be amenable to the provisions of the

Ordinance. Section 9 of the Ordinance is a charging section

which provides that income tax shall be charged or levied for

every assessment year in respect of the total income of the

income year from every person at the rates specified in the First

Schedule. Term ―person‖ as defined under section 2(32) of the

Ordinance includes in its fold a Company besides an individual,

a firm, a Hindu undivided family, a local authority, an association

of person, and every other juridical person and its liability to pay

tax on the total income is laid down in section 11 of the

Ordinance, according to which a resident assessee had to declare

all his/its income from whatever source derived, which is

received or deemed to have been received in Pakistan or which


accrues or arises or is deemed to accrue or arise to him/it in

Pakistan or accrues or arises to him/it outside Pakistan during

the assessment year. Likewise it provides that in case of non-

resident, total income would include all income from whatever

source it is derived/received or deemed to have been received in

Pakistan or accrues or arises or is deemed to accrue or arise to

him/it in Pakistan during the assessment year. The income

which is deemed to accrue or arise in Pakistan has been

mentioned in section 12 of the Ordinance. It is thus manifest

and clear from section 11 of the Ordinance that if a person,

which includes a Company, is a non-resident and its income is

neither received nor accrued or arisen in taxable territory of

Pakistan during an income year, it would not be taxable as the same would not fall within the ambit of the Ordinance.

The Company in the instant case being situated in Tribal

Area where Ordinance has not been extended within the

meaning of Article 247(3) of the Constitution, as such, would

stand exempt from payment of income tax. The appellant

himself has conceded this fact by issuing Exemption Certificates

to the Company/respondent No. 1 from time to time, hence

issuance of notices under section 56 and 61 of the Ordinance

was without any lawful authority. Since the Ordinance has not

been extended to Tribal Area, therefore, none of its provisions

would apply thereto, and as such any action taken or purportedly

to be taken under any provision of the Ordinance with regard to

the business in the Tribal area would be without jurisdiction and

without any lawful authority and in such circumstances the

jurisdiction of the High Court under Art. 199 of the Constitution

could be invoked. In view of the above discussion, we find no

infirmity in the judgment of the learned High Court, hence no

except thereto is taken, this appeal as such, is dismissed with no order as to costs.

Dr.Najibullah Khan v. Federation of Pakistan through the Secretary,

Ministry of Finance, Government of Pakistan, Islamabad and 4 others

2003 PTD 2083 (H.C.Pesh.)

35 Introduction

―Deduction of Income Tax/Withholding tax cannot be

lawfully made by the National Saving Centre Mingora, on a mere

observation/interpretation of the provisions of Income Tax

Ordinance, 1979, by the Central Board of Revenue contained in

impugned Letter, C.No.1(19)/WHT/91, dated May 4, 2000. It

has been contended with justification that the petitioner is

exempt from payment of Income tax/withholding tax because

the very Income Tax Ordinance, 1979, is not at all applicable to

PATA where the income is derived by the petitioner who, is a

domiciled resident of PATA. In the instant case we find that

since Income Tax Ordinance, 1979 has not been extended to

PATA, none of the provisions of the said Ordinance can be

made applicable by any force of argument or any stretch of

imagination to the assessees in PATA. In other words no

provision of the Ordinance could be invoked by or against the

assessees thereat, and therefore, the question of availing alternate

remedy does not arise at all in the first place. Since the dispute

between the parties is fiscal in nature the aggrieved party could

directly approach the superior Courts by invoking Constitutional

jurisdiction as observed in Messrs Central Insurance Co. and others

vs. The Central Board of Revenue, Islamabad and others (1993 SCMR

1232). Resultantly, we accept the writ petition and declare the

impugned deduction, as against the provisions of the

Constitution and being without lawful authority, would have no

effect. The National Saving Centre Mingora, shall reverse the

entries of deduction of withholding tax and the amount so far

deducted shall be credited to the account of the customers. We

make no order as to costs.‖

15. Interest/profit on deposit/account – Pakistani banks

having branches in the tribal areas

Ghilaf Gull v. CIT/WT, Zone-B, Peshawar and 4 others

[1997] 75 TAX 298 (H.C. Pesh) = 1997 PTD 849 (H.C.Pesh.)

―Deduction of withholding tax by Pakistani banks having

branches in the Tribal areas is against the constitution and without lawful authority.‖


Chapter II

Basic Principles

1. Distinction between direct and indirect taxes

Elahi Cotton Mills Ltd. & others v. Federation of Pakistan through Secretary Finance, Islamabad

(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =

PTCL 1997 CL 260 = PCTLR SC (Pak) 845

―That a direct tax is one which is demanded from the very

person, who it is intended or desired should pay it, where as indirect taxes are those, which are demanded from one person in expectation and intention that he shall indemnify himself at the

expense of another like custom duties, excise taxes and sales tax, which are borne by the consumers.

That levying of building tax on the basis of covered area without taking into consideration, the class to which a particular building belongs, the nature of construction, the purpose for

which it is used, its situation and its capacity for profitable use and relevant circumstances bearing on the matters of taxation is not sustainable in law for want of reasonable classification.

That there is a clear distinction between the subject matter of a tax and the standard by which the amount of tax is

measured keeping in view the practical difficulties, which are encountered by the Revenue to locate the persons and to collect the tax due in certain trades, if the legislature in its wisdom

thought that it would facilitate the collection of tax due from specified traders on a presumptive basis, the same is not violative of the Fundamental Rights to equality.‖

2. Income cannot be taxed twice

M.Rehman, ITO & others v. Narayanganj Company (Pvt.) Ltd.

(1971) 23 Tax 223 (S.C.Pak)

―The learned judges in the High Court relied on the

following remarks of the Indian Supreme Court in the case

39


of Commissioners of Income Tax, U.P. vs. Kanpur Coal Syndication (1964) 10 Taxation 175:

―Section 3 imposes a tax upon a person in respect of

his total income. The person on whom such tax can be

imposed are particularised therein, namely, Hindu

undivided family, company, local authority, firm,

association of persons, partners of firm or members of

association individually. The section, therefore, does

not in term confer any power on any particular officer

to assess one of the person described therein, but is

only a charging section imposing the levying of tax on

the total income of an assessable entity described

therein. The section expressly treats as association of

persons and the individual members of an association

as two distinct and different assessable entities. On the

terms of the section the tax can be levied on either on

the said two entities according to the provisions of the Act.‖

The rule issued in the case was in this view made absolute

by the Division Bench of the High Court and the impugned

notice u/s 65 set aside, from which leave to appeal was

generated to consider whether it was a case of double assessment

or a case of rectification of assessment wrongly made upon

individual partners in respect of the income of an unregistered firm.‖

3. Principle of equality in fiscal laws

Elahi Cotton Mills Ltd. & others v. Federation of Pakistan

through Secretary Finance, Islamabad

(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―That the legislature is competent to classify persons or

properties into different categories subject to different rate of

tax. But if the same class of property similarly situated is

subjected to an incidence of taxation, which results in inequality

amongst, holders of the same kind of property, it is liable to be

41 Basic Principles

struck down on account of infringement of the fundamental right relating to equality.

That a state does not have to tax everything in order to tax

something. It is allowed to pick and choose districts, objects,

persons, methods and even rates for taxation if it does so reasonably.

That the tests of the vice of discrimination in a taxing law

are less rigorous. If there is equality and uniformity within each

group founded on intelligible differentia having a rational nexus

with the object sought to be achieved by the law, the

constitutional mandate that a law should not be discriminatory is fulfilled.‖

4. Statutory rules cannot enlarge the scope of the section

under which the same has been framed

Pakistan through Secretary Finance, Islamabad & 5 others v. Aryan

Petro Chemical Industries (Pvt.) Ltd. Peshawar & others

2003 PTD 505 (S.C.Pak.) = 2003 SCMR 370

―A statutory rule cannot enlarge the scope of the section

under which it is framed and if a rule goes beyond what the

section contemplates, the rule must yield to the statute. The

authority of executive to make rules and regulations in order to

effectuate the intention and policy of the Legislature, must be

exercised within the limits of mandate given to the rule making

authority and the rules framed under an enactment must be

consistent with the provisions of said enactment. The rules

framed under a statute, if are inconsistent with the provisions

of the statute and defeat the intention of Legislature expressed

in the main statute, same shall be invalid. The rule-making

authority cannot clothe itself with power which is not given to

it under the statute and thus the rules made under a statute,

neither enlarge the scope of the Act nor can go beyond the Act

and must not be in conflict with the provisions of statute or repugnant to any other law in force.‖


5. Theory of reading down as a rule of interpretation

Elahi Cotton Mills Ltd. & others v. Federation of Pakistan through

Secretary Finance, Islamabad

(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―That denial of reliefs provided by sections 28 to 43C of

the Indian Income Tax Act to the particular business or trades

covered by section 44AC thereof without showing some basis

fair and rational and without having nexus to the object sought

to be achieved by the Legislature, held unfair, arbitrary

disproportionate to the prevalent evil and constitutes denial of

equal treatment. Consequently, the Indian Supreme Court did

not press into service non-obstante clause of section 44AC by applying theory of reading down as a rule of interpretation.

That it is an accepted canon of taxation to levy tax on the

basis of ability to pay. The sections 115J and 115JA incorporated

in Indian Income Tax Act, 1961, were intended and designed to

bring within the tax net the companies, which though making

huge profits and also declaring substantial dividends, but have

been managing their affairs in such a way by availing of tax concessions etc. as to avoid payment of income tax.

That the theory of reading down is a rule of interpretation

which is resorted to by the Courts when they find a provision read

literally seems to offend a fundamental right or falls outside the competence of the particular legislature.‖

6. Doctrine of unjustified enrichment is not attracted as

incidence of indirect taxes is invariably transferred to

consumers

Shahtaj Sugar Mills Ltd. through Chief

Executive v. G.A. Jahangir and 2 others

2004 PTD 1621 (H.C. Lah.)

―The reliance of the learned counsel for the petitioner in

the first petition on a number of judgments of Indian

jurisdiction to support his proposition that doctrine of

unjustified enrichment will not be attracted in this case is not

43 Basic Principles

relevant. As rightly pointed out by the learned counsel for the

Revenue that these judgments cannot be accepted as a rule to be

followed because the excise duty as well as Sales Tax being in

direct levies their incidence is invariably transferred to the

consumer. The claim of the learned counsel that the price of

sugar manufactured by the petitioner is regulated by the

Government is also not a good reason to hold that incidence of

excise duty does not pass on to consumer. Obviously in fixing

consumer price the Government does take into consideration

the payment of excise duty by a manufacturer.‖

7. Material supplied by the department cannot be part of

gross receipts taxable u/s 80C

Mian Contractors, Lahore v. CIT, Zone-A, Lahore

(2001) 84 TAX 493 (H.C.Lah.)

―Having heard the learned counsel for the parties, we are

absolutely certain in our minds that the approach of the Revenue

was not only against the basic principles of accountancy but also

those of the Income tax Law, equity and justice. From whatever

angle seen, the inclusion of the value of the material supplied by

the department in total receipts of the assessee appears

absolutely illegal and un-lawful. The arguments of the assessee

that on the aforesaid amount which was deducted by the

Department out of total contract receipts, he did not earn any

profit and therefore the same was not includable in his gross

receipts was absolutely correct. Even otherwise, the amount

being price of the supply made by the Department was an

expense and therefore could not form part of the gross receipts.

If the Department had not supplied the aforesaid material to the

assessee, obviously he would have gone for its purchase from

the market and obtained it on payment of its price. The question

thus arises if that had happened could the assessing officer take

the expense so made as part of the gross receipts. The answer is

―No‖ in capital words. Since the Tribunal decided the issue with

reference to another decision we are not in a position to judge the soundness of the reasons assigned by them in that decision.


The concepts of gross receipts which are to be made

subject to a certain pre-determined rate of profit cannot include

a deduction made by the payer as price of a supply already made.

That amount having never reached the hands of the assessee, he

had all the justification in the world to reduce his receipts by that

sum. The Gauhati High Court in a case reported as (1978) 38

Tax 57 Re: CIT vs. J.S. Serwarey, in an identical situation

concluded ―that there was no element of profit so far as the

value of the materials supplied by the M.E.S. Department to the

assessee in performing the construction works were concerned‖.

Therefore the Tribunal was found justified in holding that the

cost of material supplied by the MES Department was not liable

to be included in the total receipts of the assessee for estimating

its net profit. We are in respectable agreement with this view adopted by the learned Division Bench.‖

8. The Income Tax Law makes a distinction between

actual liability in praesenti and a liability de futuro

which, for the time being, is only contingent

CIT v. Kesar Sugar Works Ltd.

2001 PTD 744

―The Income Tax Law makes a distinction between actual

liability in praesenti and a liability de futuro which, for the time

being, is only contingent. The former is deductible but not the

latter. The controversy to be decided in this case, therefore,

whether the present liability accrued against the assessee in the

assessment years under consideration. This has to be decided by

taking into account all the facts and circumstances of the case. If

the liability is an actual liability in praesenti in the year under

consideration, it is deductible. If it is a contingent liability, it

cannot be the subject-matter of deduction even under the

mercantile system of accounting. There is no dispute in the

present case that in the years under consideration the liability to

pay interest was an actual liability. It was no more contingent.

There is no dispute on this count. The only ground on which the

claim of the assessee for deduction was denied by the Income

Tax Officer was that the assessee was disputing the liability by

45 Basic Principles

filing an appeal to the Supreme Court. This view of the Income

Tax Officer did not find favour with the Commissioner

(Appeals) and the Tribunal. The law in this regard is well-settled

by the decision of the Supreme Court in Kedarnath Jute Mfg. Co.

Ltd. vs. CIT (1971) 82 ITR 363, that if there is actual liability in

praesenti, deduction cannot be denied on the ground that the

assessee is disputing the liability. As a result, in the case of an

assessee maintaining the mercantile system of accounting. The

amount payable by the assessee would be deductible as an

accrued liability even though the assessee objects to it and seeks

to get the order of the concerned authority reversed, subject,

however, to any statutory provision to the contrary (viz., section

43B of he Income Tax Act, 1961, as inserted by the Finance Act,

1983, with effect from April 1, 1984, which provides that certain liabilities can be deducted only on actual payment).‖

9. Proviso cannot extend the meaning of the enacting

part

CIT v. Nasir Ali and another

(1999) 79 Tax 428 (S.C.Pak.)

―It is a well-settled principle of interpretation that a proviso

deals with the subject, which is covered by the enacting part of

the provisions. The proviso only carves out an exception which,

but for the proviso, would fall within the language and meaning

of the enacting part. A proviso, therefore, has to be interpreted

strictly, and where the language of main enacting part is clear

and unambiguous, the proviso cannot by implication exclude

from its purview what clearly falls within the express terms of

the main enacting part. Accordingly, we hold that the export

rebate contemplated u/s 3(4)(a) of the Ordinance is admissible

both to the registered firm as well as its partners in respect of

super tax and income tax payable by them, respectively.‖

10. Assessing officer to apply correct law even if assessee

fails to make a claim

CIT v. Prasad Film Laboratories (P.) Ltd.

1999 PTD 325


―It is the duty of the assessing officer to correctly apply the

law notwithstanding the fact that assessee failed to make a claim.‖

11. Rule cannot override the statutory law

M/s. Tariq Sultan & Co. v. Government of Pakistan, etc.

(1999) 80 Tax 62 (H.C.Qta.)

―Rule 96ZZ [Central Excise Rules, 1944] being subordinate

legislation cannot supersede to the provisions of Section 3-C of

the Act; [Central Excise Act, 1944] secondly it mainly deals with

special procedure in respect of certain manufactured goods as

provided under Chapter-XV of the Central Excise Rules, 1944.

This Chapter deals with regard to filing of the application and

the revised procedure, maintenance of current account, deposit

of goods in the store room, clearance of goods on payment of

duty, clearance of goods exempted from duty etc. but does not

deal in respect of the event when determination of tariff value

and of rate of duty will be worked out, therefore, the argument put forth by the learned counsel has not substance.‖

M/s. Dawlance (Pvt.) Limited v.

Collector of Customs (Adjudication), Karachi-I

PTCL 2003 CL. 180 (CESTAT, Kar.)

―A rule cannot override the statutory requirement

therefore, the presumption under a deeming clause has to be

read within the parameters of subsection (1) of section 25 of the Customs Act, 1969.‖

12. Rules cannot be called in aid to interpret sections of

the Act. In case of discrepancy in language of section

and rules, section is to prevail

CIT, South Zone, Karachi v. Radio Hotel, Karachi

[1959] 1-TAX (III-407) (H.C.West Pakistan, Karachi) =

1959 PTD 707 = 1959 PLD 539

―Three references were simultaneously decided by a joint

order. In all these references the partnership deeds were

executed after the lapse of the relevant year of account and on

this ground the Income Tax Officer had refused to allow

47 Basic Principles

registration u/s 26A of the Income Tax Act. The Tribunal in all

these cases had allowed registration. At the instance of the

Department the Tribunal referred the following question of law

to the High Court

―Whether, in the facts and circumstances of the case,

the assessee firm which came into existence by verbal

agreement, long before the relevant year of account is

entitled to be registered u/s 26A of the Income Tax

Act, in respect of the assessment year 1951-52

relevant to the previous year ending the 31st March,

1951, when the instrument of partnership was drawn

up on the 16th April, 1951, that is to say, after the

expiry of the relevant ‗previous year‘.‖

Following the case of CIT vs. Rashid Motors [(1957) 32 ITR

101] it was held that it is not necessary to bring a partnership

into existence, that such an instrument may legitimately record

the previous history of the partnership and that what is being registered is not the instrument but the firm.

Judicial analyses : FOLLOWED BY - CIT vs. Rashid Motors [1957]

32 ITR 101, wherein it was held that it not necessary to bring a

partnership into existence, that such an instrument may legitimately

record the previous history of the partnership and that what is being

registered is not the instrument but the firm.”


13. Exemptions can only be allowed if claimed

1998 PTD (Trib.) 44

―Exemptions can only be allowed if claimed.‖

14. Words in a statutory instrument should be construed

in their ordinary sense

CIT, Companies Zone Lahore v. Naveed A. Sheikh

(1992) 65 Tax 80 (H.C.Lah)

―It is well settled and needs no authority that the words

used in a statutory instrument are to be construed in their

ordinary and natural sense and if different words are used by the

legislature, the object is to convey different meaning, unless the context otherwise requires.‖

15. In a Taxing Act there is no room for any intendment

National Food v. CIT

(1991) 64 Tax 60 (H.C.Kar.)

―No doubt, as has been observed by the learned Tribunal,

in a taxing act there is no room for any intendment and there is

no equity about a tax and there is no presumption as to a tax and

nothing is to be implied but one can only look fairly at the

language used. However, in case of a beneficial statute its

provisions cannot be interpreted so as to bring about a result

contrary to the object of the legislation. An interpretation likely

to advance the remedy and suppress the mischief must be

adopted in case of statutes which confer benefit on individuals or any class of persons.‖

16. If an action is deemed illegal, the whole superstructure

built upon it is also illegal

Muhammad Azim v. CIT, East Zone Karachi

(1991) 63 Tax 143 (H.C.Kar.)

―It is well settled principle that if the very foundation of an

action is illegal or without jurisdiction the whole superstructure

built upon it cannot validly and legally stand.‖

17. “Resident” of taxable territories is liable to tax on total

world income including any income accruing or

arising in non-taxable territories of Pakistan

49 Basic Principles

Haji Ibrahim Ishaq Johri v. CIT, (West), Karachi

[1982] 45 TAX 263 (H.C.Kar.) = 1982 PTD 46 =

1990 PTCL 954 = 1982 PLD 266

―We are not inclined to agree with this contention of learned

counsel as we are of the view that an assessee, who was ordinarily

resident in a place in Pakistan but outside Swat, would be subject to

tax not only in respect of income accruing to him in Pakistan

outside but Swat also income accruing to him from sources in Swat.

Such an assessee being a resident of an area, to which the Income

Tax Act applied would be subject to tax under the Income Tax Act

and his income from Swat would also be taxable. However, if the

assessee was not ordinarily resident of any in Pakistan but which

Income Tax Act applied, any income accruing to him from sources

in Swat would not be taxable as the Income Tax Act at that time

was not applicable to Swat. In this connection reference may be

made to section 4(1) of the Income Tax Act where under the total

income of a person ordinarily resident of a place in Pakistan to

which the Income Tax Act applies includes not only income

accruing to him iii Pakistan but also in respect of income accruing to

him from outside Pakistan. In the instant case, if instead of the

income accruing from Swat, the assessee had derived income from

sources outside Pakistan, for instance from Dubai or U.K., the

assessee, if ordinarily resident of Pakistan, would have been taxed in

respect of such income derived by him from sources in Dubai or

U.K. In such a case, it would not have been open to the assessee to

argue that as Income Tax Law is not applicable to Dubai or U.K.,

and admittedly the Pakistan Income Tax law is not applicable to

such countries, income accruing from sources in, Dubai or U.K. would not be liable to tax.

The appellant could not deny that at least the wife of the

assessee maintains a dwelling house where a telephone is

installed in the name of the appellant. This fact by itself shows

that a part of the wife‘s residence is reserved as a dwelling place

for the assessee appellant. Since this definitely gives him right to

live in Pakistan and, therefore, within the meaning of section

4A(a)(ii) a residence is maintained for him in Pakistan for more


than 120 days, he becomes a resident of Pakistan and as his

residence for the 9 years out of the 10 previous years is not

denied, he automatically becomes resident and ordinarily

resident of Pakistan. We would hold that the assessee was liable to tax for all his income in and outside Pakistan.‖

N.V. Philips Glocilin Peufabrikan v. ITO & Others (1990) 61 Tax 159 (H.C.Kar)

―Where any action is challenged as without jurisdiction and

if it is so declared then all orders and proceedings taken on the basis of such illegal action shall also be vitiated.

In 1970 Law Notes 28 (DB) Lah. it was held that if on the

basis of void order subsequent orders have been passed either by

the same authority or by other authorities, the whole services of

such order, together with the superstructure of rights and

obligations built upon them, must fall to the ground because

such orders have as little legal foundation as the void order on which they are grounded.‖

18. Charging section and subsequent provisions enable the

liability only to be quantified

Begum Nusrat Bhutto v. ITO, Circle V, Rawalpindi

(1980) 42 Tax 59 (H.C.Lah.)

―It has, therefore, been accepted as a true principle of

taxation that the liability imposed by the charging section and

subsequent provisions enable the liability only to be quantified

and when quantified to be enforced against the subject, but the

liability is definitely and finally created by the charging section

and all the materials for ascertaining it are available immediately.‖

19. Principles governing interpretation of financial

liabilities

Highway Petroleum Service (Regd.) Lahore v.

Islamic Republic of Pakistan & another

(1977) 36 Tax 8 (H.C.Lah.) = 1977 PTD 183 =

PLD 1977 Lah. 797

51 Basic Principles

―Before adverting to the contentions of the learned

counsel for the petitioners on merits which he canvassed very

ably, if I may say so with respect, it may be said straight-away,

that he is quite right when he made the submissions about the principles governing interpretation of financial liabilities.

The tax can be imposed on ―income‖ and not on any thing

else much less on expenditure or tax, which is not an ―income‖

but a liability. But all this does not solve the problem and help

the petitioners. They are not being imposed a tax. What is

happening to them is that for non-compliance of the relevant

provisions for paying the tax either in full or part they are being

asked to pay an additional amount. In other words, for

withholding the amount which they were liable to pay, they are

being told that for user of that amount or depravation of the use

of the same by the rightful owner i.e, the State, the person

concerned must pay an additional amount. Now, it is quite

common in Civil Law that a person withholding somebody else‘s

money and using the same or depriving the rightful owner of

used, the former may be liable to make good the gain derived by

him, or, suffer the loss which the rightful owner had undergone

for not getting his money. Therefore when the petitioners are

asked to pay additional amount of tax for non payment of the

tax contrary to law, they are not being imposed additional

amount of tax on their income but are being asked to defray the

liability for non-compliance of the law. The use of the phrase

―additional amount of tax‖ and since that is calculable with

reference to the non paid or underpaid amount of the tax, gives

an impression that the demand is of ―additional amount of tax‖

on the non paid or unpaid ―tax‖, and that, no additional amount

of tax can be levied on. tax, the latter being not an income but

an expenditure or liability, Though the phrase ―additional

amount of tax‖ as a whole is loose and it would have sufficed to

say that for non-payment or under payment. The defaulting

persons would be liable to pay additional amount‖ without

saying ―of tax‖, yet, for an inaccurate .r inapt phrase, the

provision cannot be rendered nugatory....................an inapt and


inaccurate phraseology of the draftsman cannot and should

not nullify a provision made by the Legislature which is consistent with existing legal norms.

On well based judgments, the proposition are stated in Maxwell, Rules of Interpretation, 12th Edition at page 257 as under:-

―It is well settled rule of law that all charge upon the

subject must be imposed by clear and unambiguous

language, because in some degree they operate as

penalties (as in penal laws) the subject is not to be

taxed unless the language of the statute clearly

imposes the objection(s) and language must not be

strained in order to tax a transaction which, had the

legislature thought of it, would have been covered by

appropriate words. In a taxing Act, said Rowlett, J.,

one has to look merely at what is clearly said.

There is no room or any intendment. There is no

equity about a tax. There is no presumption as to

a tax. Nothing is to be read in nothing is to be

implied. One can only look fairly at the language

used. But this strictness of interpretation may not

always ensure to the subjects benefit, for if the person

sought to be taxed comes within the latter of the law,

he must be taxed, however, great hardship may appear to the judicial mind to be.‖

20. Provisions of earlier Act incorporated in the later Act

became part and parcel of the later Act

CIT, Lahore v. Kohinoor Industries Ltd. Lahore

[(1977) 35 Tax 42 (H.C.Lah.)]

―The learned counsel for the petitioner did not dispute the

well established position of law that when some provisions of an

earlier Act are incorporated in a later Act, the incorporated

provisions, for all practical purposes, become part and parcel of

the later Act unless the same had been made applicable express or by necessary intendment.‖

21. Department can go beyond a transaction

53 Basic Principles

Mian Muhammad Allah Buksh v. CIT

1962 PTD 603 (H.C.Lah.)

―In case of splitting into four subsidiary firms of partners

of an existing firm. The deponent could make whether it

constitutes ‗transaction‘ designed to evade tax liability. Burden of

proof rests with the department, which can go behind

transaction to find affirmatively whether there was intention to evade tax.‖

22. Application of tax rates through a Finance Act

explained

CIT, East Pakistan, Dacca v. Wahidur Rahman, ITO, Companies

Circle IV, Chittagong

[1961] 4 TAX 135 (H.C.Dacca)=1961 PTD 1110

―The assessee, an Income Tax Officer, received a sum of

Rs.4,581 as his salary for the period from 1st April, 1956 to 3rd

March, 1957. Under section 18(2) of the Income Tax Act was

deducted at source from month to month at the rates laid down

by the Finance Act, 1956. In making the assessment for the

assessment year 1957-58 the assessing Income Tax Officer

worked out the total income at Rs.4,585, including his income

chargeable under the head ―salaries‖. The income was assessed

to tax at the rates laid down by the Finance Act, 1956 and after

giving credit for the tax deducted at source, provident fund

contributions, etc., a net amount of Rs.4/2/- was found payable

by the assessee. The assessee filed an appeal before the Appellate

Assistant Commissioner contending that for the assessment year

1957-58 the minimum taxable income was fixed at an amount

exceeding Rs.5,000 and as his income during the year 1956-57

was below the limit of Rs.5,000 he was not liable to be assessed

and pay any tax at all. The Appellate Assistant Commissioner

accepting the contention reversed the assessment order. The

Department filed a second appeal and contended before the

Tribunal that the proviso to the Schedule to the Finance Acts of

1956 and 1957, providing for exemption of income not

exceeding Rs.4,200 and Rs.5,000 respectively, are inseparable

parts of the rate structure and in the case of salary earner what


should be considered to be immune from taxation for the taxing

year 1957-58 is Rs.4,200 under the proviso to the Schedule to

the Finance Act, 1956 and not Rs.5,000 under the proviso to the

Schedule to the Finance Act, 1957. The Tribunal could not

accept the contention of the Department and affirmed the order

of the Appellate Assistant Commissioner. On a reference by the

Department the High Court upholding the order of the Tribunal:

Held, that:

(i) sub-section (3) of section 17 of the Finance Act, 1957

is only applicable to those cases where the assessee

himself is chargeable to Income Tax u/s 17 of the

Finance Act of 1957. If he is not chargeable, there is

no scope for application of sub-section (3) of section 17 of the Finance Act of 1957 ; and

(ii) in section 17(3) of the Finance Act, 1957 the reference

to the Finance Act, 1956 is only for the purpose of

calculation of Income Tax on the salaried portion of

the total income and in doing so it may be on the

basis of the exemption amount of Rs.4,200, provided

his total income is chargeable i.e., exceeding Rs.5,000.‖

23. Act is to be read as a whole

Allied Motors Ltd. through Manager Finance v.

Commissioner of Income Tax and another

[2004 PTD 1173 (H.C. Kar.) = (2004) 90 Tax 24 (H.C. Kar.)]

―From a bare perusal of the above provisions of law, we

find substance and force in the contention of Mr. Aqeel Ahmed

Abbasi. We agree with the proposition that, in order to arrive at

the correct conclusion, a scheme of law is to be examined in its totality and no provision of law is to be considered in isolation.‖

CIT, East Pakistan v. Aizuddin Gazi and others

[1960] 2-TAX (III-474) (H.C.Dacca) =

1960 PTD 727 = 1960 PLD 535

55 Basic Principles

―Act should be so construed as not to render other parts

superfluous, void or insignificant. It should be construed as a

whole. It is court‘s duty to reconcile different provision of law

especially in case of taxing statute.‖

24. Statute should be read as a whole

CIT v. Hoosen Kasam Dada Karachi

1960 PTD 574 (H.C.Dacca)

―One section in statute should not be read independently of all others and should be given unreasonable interpretation.

Judicial analyses : CONFIRMED by the Supreme Court of Pakistan

in CIT, East Pakistan Dacca vs. Hossen Kasam Dada, Karachi [1961]

4 TAX 96 (S.C.Pak.) with the following observations:

“Such a reading of the provisions of Business Profits Tax

Act appears to us not only to be reasonable but also the

one which produce a consistency with the various

provisions thereof. To hold otherwise would produce the

anomalous result that whilst a dishonest assessee would

be protected from harassment after the lapse of four year,

an hones assessee would remain exposed to the

harassment for even 10 to 50 years. It is difficult to impute

such an iniquitous intention to the Legislature.”

25. Fiscal statutes should be interpreted according to their

natural meanings

Rowe & Co. v. The Secretary of State for India

[1 ITC 161 (Burma)]

―I am not at all sure that in a case of this kind - a fiscal case

- form is not amply sufficient; because, as I understand the

principle of all fiscal legislation, it is this: If the person sought to

be taxed comes within the letter of the law he must be taxed,

however, great the hardship may appear to the judicial mind to

be. On the other hand, if the Crown seeking to recover the tax

cannot bring the subject within the letter of law the subject is

free, however apparently within the spirit of the law the case

might otherwise appear to be. In other words, if there be

admissible in any statute what is called an equitable construction,

certainly such a construction is not admissible in a taxing statute,

where you can simply adhere to the words of the statute.‖ These


observations were cited by Collins M.R. in Attorney General vs.

Selborne [(1902) 1 K.B. 388 at p. 396] and the learned judge proceeded to say:

“Therefore, the Crown fails, if the case is not-brought within the

words of the statute interpreted according to their natural

meaning; and if there is a case which is not covered by the

statute so interpreted, that can only be cured by legislation, and

not by an attempt to construe the statute benevolently in favour of the Crown.”

26. Equitable construction is inadmissible in a fiscal

statute


[1 ITC 161 (Burma)]

―The High Court of Calcutta relying on those and other

cases, in Killing Valley Tea Company, Limited vs. Secretary of State for

India (1 ITC 54; 48 Cal. 161; 32 CLJ 421; 61 Ind. Cas. 107) said

there is no room for controversy that the Crown seeking to

recover the tax, must bring the subject within the letter of the

law, otherwise the subject is free, however, much within the

spirit of the law the case might appear to be. There can be no

equitable construction admissible in a fiscal statute; the benefit

of the doubt is the right of the subject.‖

27. Court cannot make up for any deficiency of Legislature


[1 ITC 161 (Burma)]

―....if the legislature, from want of foresight or for any

other cause, has omitted to provide for a case, it is the province

of the legislature itself, and not of the Courts, to supply the

omission.‖

28. Courts are not to be influenced by doctrine of hardship

Imperial Tobacco Company of India v.

The Secretary of State for India in Council

[1 ITC 169 (Calcutta)]

57 Basic Principles

―It is a well-established rule that Courts ought not to be

influenced by any notion of hardship in exceptional or individual cases in interpreting a statute.‖

29. In dubio construction which imposes burden on

taxpayer should be avoided

Sundar Das v. Collector of Gujrat

[1 ITC 189 (Lahore)]

―It is a sound principle that the subject is not to be taxed

without clear words to that effect and that in dubio you are

always to lean against the construction which imposes a burden on the subject.‖

30. Out of ambiguity of the provisions of the Act cannot be

extracted a new and added obligation not formerly

cast upon the taxpayer

Roger Pyatt Shellac & Co., v. Secretary of State


―It is, I think, important to remember the rule, which the

Courts ought to obey, that, where it is desired to impose a new

burden by way of taxation, it is essential that this intention

should be stated in plain terms. The Courts cannot assent to the

view that if a section in a taxing statute is of doubtful and

ambiguous meaning, it is possible out of that ambiguity to

extract a new and added obligation not formerly cast upon the

taxpayer.‖

31. No taxation except by express words

Secy. to Commr. Salt v. Ramanathan Chetti, minor by guardian

[1 ITC 37 (Madras)]

―Unless the words are clear, a fiscal enactment should not be construed as imposing tax by implication.‖

32. Avoidance of tax in legal manner is not evasion or mala

fide action

[2004 PTD (Trib.) 2494]

―It was only w.e.f. assessment year, 1997-98 that the

assessee declared such interest income not from account

maintained with the company but from the demand pronotes on


account of loans given to the companies. It was with the sole

reason that due to the introduction of amendment in Finance

Act, 1996 that the interest earned from loan advanced to the

companies through account maintained with the Company were

taken out of the ambit of section 80-B and the tax rate was revised through Finance Act, 1997 on such interest income.

Learned counsel has also placed reliance on certain reported decision which are as under:–

―(1960) 20 Tax 51 (Trib.) In this case, it has been held

by this Tribunal that the prejudicial to the interest of

Revenue and erroneous are two independent

conditions and, to reopen the case under section 66A two conditions are to be simultaneously fulfilled.

(1984) 49 Tax 34 (H.C. AJ&K). In this case it has

been held that the provisions of section 66A are

supervisory in nature and it was incumbent upon IAC

to determine that an order sought to be interfered was

erroneous and prejudicial to the interest of the

Revenue. Through this decision it has been explained

that the erroneous means deviated from the law and it

was a condition precedent to declare the order

erroneous by reference to definite violation or deviation from law.

In a case reported as 1997 PTD (Trib.) 2014 it has

been held that merely on a change of opinion of the

Higher Authority assessment framed could not be

reopened. Learned counsel for the appellant in

support of his contention has placed before us for consideration the following reported decisions also:-

(1) 1965 Taxation 87 (Trib.);

(2) (1988) 75 Tax 50 (Trib.);

(3) (1993) 67 Tax 51 (SC Pak).

In these decisions it has been held that the legal avoidance

of tax is permissible and its avoidance of tax is not evasion and it

carries no ignominy with it. The avoidance of tax in legal manner

59 Basic Principles

is not evasion or mala fide, and that tax avoidance occurs when a

person in any legitimate manner as provided by law adopts a

course by which the tax liability is reduced or eliminated. In

doing so the assessee seeks his remedy and mechanism within

the provisions of law. In view of the above arguments, learned

A.R. has prayed that the order framed by the learned IAC is in fact erroneous and is liable to be vacated.‖

33. Fiscal statutes to be strained in favour of the subject, if

at all

Balkishan Nathani v. CIT

[1 ITC 248 (Nagpur)]

―Technicalities in a fiscal statute must be strained in favour

of the subject, if they are to be strained at all, and not against him‖.

34. Fair and reasonable construction for taxing statutes

Burma Railway Co. v. Secretary of State

[1 ITC 140 (Burma)]

―The rule for the interpretation of such statutes is laid

down by Cotton L.J., in Gilbertson vs. Fergusson [(1881) 7 Q.B.D.

562 at p. 572]:

I quite agree we ought not to put a strained construction

upon that section in order to make liable to taxation that

which would not otherwise be liable, but I think it is now

settled that in construing these Revenue Acts, as well as

other Acts, we ought to give a fair and reasonable

construction, and not to lean in favor of one side or the

other, on the ground that it is a tax imposed upon the

subject, and, therefore, ought not to be enforced unless it

comes clearly within the words. There is another rule of

interpretation, which must also be borne in mind. Where

the object and intention of the legislature is clear and

undoubted, that meaning should be given when possible

to the words used which will best carry out the clear object and intention.‖

35. No equitable construction in fiscal statutes


Secretary of State v. Seth Khemchand Thaoomal

[1 ITC 26 (Sind)]

―Again, the legislature may or may not be justified on

moral or political grounds in cancelling or modifying the rights

and privileges which were granted under the Permanent

Settlement. Such problems are matters of policy with which the Court has not concern‖.

36. Charging section cannot be overlooked on hypothesis

of history of exemption

Emperor v. Probhat Chandra Barua


―The fundamental fact for the purposes of construction is

that the hypothesis, that the statute may have been enacted

without attention to the broadest fact in Indian revenue history,

is quite incredible. Again the purport of the charging sections if

the express exemptions be disregarded as the reasoning requires

- is radically altered if an exemption of all permanently settled

estates is implied. Wide areas escape the purview of the charge.‖

37. Subsequent general enactment does not interfere with

special provisions unless expressed clearly

CIT v. Zamindar of Singampalli

[1 ITC 181 (Madras)]

―That this exemption applies to taxes which might be

imposed thereafter, as well as to taxes in force at the time of

sanad is clear from the judgment of the House of Lords in

Associated Newspapers, Ltd. vs. City of London Corporation [1916) 2

A.C. 429] and it is not less clear from the same judgment that

although it is competent to the legislature to withdraw or modify

such an exemption by subsequent enactment, this can only be

done expressly and not in general terms or by implication. For

the latter proposition we may also refer to Maxwell on Interpretation of Statutes (6th Edition) Chapter VII, section 3.‖

38. Modification of exemption from taxation must be

express and not in general terms or by implication

CIT v. Venkatachalapathi

61 Basic Principles


―In case of exemption from tax any modification made should

be through express words and not in general terms or by implications.‖

39. Long course of decisions determining construction of a

repealed statute may be an aid in the construction of a

new statute passed in the same terms as the former, but

a single decision is not

The Bhikanpur Sugar Concern

[1 ITC 29 (Patna)]

―The provisions of the previous Acts in practically identical

language and must, therefore, be taken to have concurred in the

interpretation placed upon the Act by the Commissioner of

Tirhut in 1912. It appears, however, that in 1914 the Board of

Revenue were not satisfied with this decision and placed the

matter before the Local Government and finally before the

Government of India, with the result that the Bhikanpur factory

was assessed on the whole of its profits for the year 1916-17.

This assessment has been paid under protest and a suit is still

pending in connection with it, which it has been agreed shall

abide the result of the present reference. I agree where there has

been a long course of decisions determining the construction of

a statute, this may be taken into consideration in construing a

new enactment passed in the same terms as pre-existing statutes,

but a single decision such as that referred to cannot, in my

opinion, from the basis of any presumption as to the intention

of the legislature in the present case.‖

40. Practice as a guide to construction


[1 ITC 37 (Madras)]

―We are justified in assuming that the legislature was aware

of this practice, and if with that knowledge they repeated in the

new enactment the same words on which the practice of the

Government was founded, it gives rise to the presumption that

they did not want to assess such incomes. If the legislature

intended to tax these incomes - and it would have been a very


substantial source of public revenue - they could have easily said,

as in the English statute, that income accruing to a person in

British India from any business wherever carried on is liable to

be assessed.‖

41. Practice of Revenue Authorities as contemporanea

expositio



―Some reference was made at the bar to the practice of the

Revenue Authorities since 1886 as regards fisheries in

permanently settled estates, but there is no agreement as to what

that practice - if there be a practice - has been. Assuming that it

would have been open to us to place some degree of reliance

upon an interpretation settled by practice as contemporanea expositio, we are in fact without any such assistance.‖

42. Principle of contemporary exposition

Maharaja of Darbhanga v. CIT

[1 ITC 303 (Patna)]

―Therefore, in the absence of any clear and unambiguous

declaration by the authors of the Permanent Settlement, I think

it is permissible to invoke the aid of the principle of

contemporary exposition. Here it is not a case of one or two

stray statutes in the administration of which the strict rule of

construction has been overlooked. On the contrary, a uniform

course of dealing is disclosed which shows that profits from

permanently settled estates have been taxed for the purposes of

the State without express words revoking the exemption alleged

to have been given by the Permanent Settlement Regulation; and

I have been unable to discover a single statute in which any such exemption has expressly or by implication been recognized.‖

43. Practice not a guide where language of statute is clear

Killing Valley Tea Company v. Secretary of State


―In great stress has naturally been laid by Sir Binod Mitter, who

appeared on behalf of the Company, on the important fact that

63 Basic Principles

no attempt was ever made to assess the Company to income tax

under the corresponding provisions of the Indian Income Tax

Act, 1886, which have been, so far as the present question is

concerned, reproduced with no substantial variation in the

Indian Income Tax Act, 1918. This is no doubt a circumstance

to be taken into consideration, for an interpretation which has

long been acted on, will not be disregarded by a Court of law

[Lancashir and Yorkshire Railway Co., vs. Sury Corporation [(1889) 14

App. Cas. 417 at p. 422], Tancred Arrol and Co., vs. Steel Co., of

Scotland [(1890) 15 App. Cas. 125 at p. 141]] and the Court

should have regard to the construction put upon a statute when

it first came into force; Morgan vs. Crawshay [(1871) L.R. 5 H. L.

304 at p. 315], Fermoy Peerage Claim [(1856) 5 H.L.C. 716 at p.

747], Goldsmith Co., vs. Wyatt [(1905) 2 K.B. 586 at p. 596]. But as

Channell J. observed in the case last mentioned, where the Court

is called upon to construe an Act of Parliament expressed in

unambiguous language, it ought to put its own construction

upon it, regardless of the construction that has been commonly

put upon it; the fact that a mistaken interpretation has been

generally put upon it cannot alter the law. To the same effect are

the observations in Baleshwar vs. Bhagirathi [(1908) I.L.R. 35 Cal.

701 at p. 713; 7 C.L.J. 563; 12 C.W.N. 657].

“It is a well-settled principle of interpretation that Courts, in

construing a statute, will give much weight to the interpretation

put upon it, at the time of its enactment and since, by those

whose duty it has been to construe, execute and apply it. I do not

suggest for a moment that such interpretation has by any means

a controlling effect upon the Courts; such interpretation may, if

occasion arises, have to be disregarded for cogent and persuasive

reasons and, in a clear case of error, a Court would without

hesitation refuse to follow such construction.”

This view is supported by the dictum of Sir Robert Phillimore in

Evanturel vs. Evanturel [(1869) L.R. 2 P.C 462 at p. 488] and has

been applied in the case of Corporation of Calcutta vs. Benony

Krishna Boos [(1919) 12 C.L.J. 476; 15 C.W.N. 84; 7 Ind. Cas. 890]

and Mathura Mohan Saha vs. Ramkumar Saha [(1915) L.L.R. 43


Cal. 790 at p. 816; 23 C.L.J. 26; 20 C.W.N. 370; 35 Ind. Cas.

305]. We may add that it was stated by the Advocate-General

that there has been some divergence of opinion among

successive legal advisers of the Crown and that the assessment

has been made in this instance with a view to obtain a judicial

determination of the true meaning of the legislative provisions

on the subject. Clearly, we cannot, in such circumstances, allow

our decision to be controlled by the conduct of the Revenue

Authorities in the past. We have finally been pressed to apply the

elementary rule that taxing statutes must be construed strictly;

Manindra Chandra vs. Secretary of State for India [(1907) I.L.R. 34

Cal. 257; 5 C.L.J. 148], Mylapore Hindu Permanent Fund, Limited vs.

Corporation of Madras [(1908) I.L.R. 31 Mad. 408; 3 M.L.T. 400; 18

M. L.J. 349], Tenant vs. Smith [(1892) A.C. 150 at 154], Lumsden

vs. Inland Revenue Commissioners [(1914) A.C. 877 at p. 897],

Attorney-General vs. Milne [(1914) A.C. 765].

Now, there is no room for controversy that the Crown, seeking

to recover the tax, must bring the subject within the letter of the

law, otherwise the subject is free, however much within the spirit

of the law the case might appear to be. There can be no

equitable construction admissible in a fiscal statute; the benefit

of the doubt is the right of the subject; Partington vs. Attorney-

General [(1869) 4 E. & I. App. H. L. 100 at p. 122], Pryce vs. Monmouthshire Canal Company [(1879) L.R 4 H.L. 197 at p. 202].‖

44. Practice under repealed Act as an aid for construction

of later Act


[1 ITC 37 (Madras)]

―.... The language employed by some of the noble Lords in that

case was very strongly relied on by the learned Advocate-

General. The observations of Lord Davey who subsequently

explained the position in Commissioners of Taxation vs. Kirk [(1900)

A.C. 588] do not support the view that by giving general

instructions the business is carried on in the country from which

these instructions issue. Moreover, the facts in De Beers

Consolidated Mines, Limited vs. Howe [(1906) A.C. 455] and in

65 Basic Principles

Cesena Sulphur Company vs. Nicholson [(1876) I Fx. D., 428] and in

Mitchell vs. Egyptian Hotels, Limited [(1915) A.C. 1022] were

different from the facts on which we have been asked to give

our opinion. I do not therefore think any good will be served by discussing these cases.

In my opinion the facts to which our attention has been

drawn are not specific enough to enable us to say that the

business was really carried on in British India. There is only one

other remark that need be made. It was elicited in the course of

the argument that until the year 1914 or 1915 no income tax was

levied in respect of foreign trades of principals residing in British

India. The old Act of 1886 was repealed in 1918. So, for about

30 years at least, the executive Government in India did not levy

income tax upon business of this kind. Mr. Krishnaswami Ayyar

relied on this practice and quoted Commissioner for Special

Purposes of Income Tax vs. Pemsel [(1891) A.C. 531] and Yewens vs.

Noakes [(1880) 6 Q.B.D. 530] as enunciating that the practice

under a repealed enactment can be looked into for construing

the later enactment. Whatever may be the weight we may attach

to it, it seems to me that Courts will not acting wrongly in

referring to the practice in construing the Act. However, I do

not invoke the aid of this practice as in my opinion there is

nothing in the Act, which on the face of it imposes a duty upon

income of this kind. As I started by saying, unless the words are

clear, a fiscal enactment should not be construed as imposing a

tax by implication. For these reasons I am of opinion that the assessee is not taxable.‖

45. Presumption against double taxation



―Some reference was also made to what has been called a

presumption against double taxation. In Manindra Chandra Nandi

vs. Secretary of State [(1907) I.L.R. 34 Cal. 257 at p. 287; 5 C.L.J.

148], royalties from a coal mine were held liable both to cess

under the Cess Act, 1880 and to income tax under the Act of

1886, but it was said that it may be conceded that Courts always


look with disfavour upon double taxation and statutes will be

construed, if possible, to avoid double taxes. Reference was

made to certain dicta of American Courts and to the English

case of Carr vs. Fowle [(1893) I.Q.B. 251]. But the only

observation in this case was to the effect that the statute

presumably did not intend that a vicar should in effect pay the

same tax (land tax) twice on the same hereditament. This is plain

enough. Thus the income tax is one tax, and income assessed

under one Schedule cannot be assessed all over again under

another. That there is any legal presumption of a general

character against double taxation in any wider sense is a

proposition to which I respectfully demur as a principle for the

construction of a modern statute. In Maninra Chandra Nandi vs.

Secretary of State [(1907) I.L.R. 34 Cal. 257; 5 C.L.J. 148], it did not avail to cut down clear, though absolutely general language.‖

46. Vested rights such as rights to appeal and to demand a

reference already accrued, cannot be taken away by

repeal of Act

CIT v. Dharamchand Dalchand

[1 ITC 264 (Nagpur)]

―Under the ordinary law, vested rights including rights to

appeal and to demand a reference that have already accrued are

taken away by the repeal of any Act; but the procedure would be

under the new Act. The rule regarding vested rights is not

confined to substantive rights but extends equally to remedial

rights or rights of action including rights of appeal: see Maxwell‘s

Interpretation of Statutes, 6th Edition 401. In Gopeshwar Pal vs.

Jiban Chandra [(1914) I.L.R. 41 Cal. 1125; 18 C.W.N. 804; 19 C.L.J.

549; 24 Ind. Cas. 37], it was held that, though procedure may be

regulated by an Act for the time being in force, still the intention

to take away a vested right without compensation or any saving, is

not to be imputed to the legislature in any case unless it be

expressed in unequivocal terms. [Cf. Chief Commissioner of Public

Works vs. Logan (1903) A.C. 355]. This was a case of right to sue.

In Ramakrishna Chetty v. Subbaraya Aiyar [(1915) I.L.R. 38 Mad.

101; 24 M. I. J. 54; (1913) M.WN. 303; 18 Ind. Cas. 64] which is a

67 Basic Principles

case of limitation, it was held that the rule regarding vested rights

is not confined to substantive rights but extends equally to the

remedial rights or rights of action including rights of appeal. At

page 106 of the same ruling there is a quotation from an English

case, In re Athlumney, Ex parte Wilson [(1898) 2 Q.B. 547], where wright J. observed;

“Perhaps no rule of construction is more firmly established than

this that a retrospective operation is not to be given to a statute

so as to impair an existing right or obligation, otherwise than as

regards a matter of procedure, unless that effect cannot be avoided without doing violence to the language of the enactment”

And, further, their Lordships observe:

“It is unreasonable to suppose that the Act intended to destroy a

man‟s rights without giving him an opportunity to comply with

its provisions. The Court, if asked to give retrospective effect to a

statute, will bear in mind the consequences of doing so. See Ex parte Todd, In re Ashoroft [(1887) 10 Q.B.D. 186].”

47. Non-revenue profit/losses are not covered in Income

Tax unless specifically provided in statute

Rathan Singh, Proprietor, Rathan Singh

Motor Service, Madura v. The CIT, Madras


―It is one of the fundamental principles of income tax

legislation both in India and in England that capital losses are

never allowed in income tax assessment unless specifically

provided for in the words of the statute. It is equally true that

profits arising from capital transactions are not liable to be taxed.

I am fortified in this conclusion by the remarks of Schwabe C. J.,

in Board of Revenue vs. Ramanathan Chettiar (I.T.C. 244 at p. 247) where he states:

“It does not seem probable that the legislature meant to provide

a deduction for losses on sales of machinery by manufacturing

concerns without at the same time bringing into account any

profits that might be made on such sales. Sales of machinery are

sales of parts of the capital of a concern of this kind and the


resulting profits or losses on such sales are dealt with quite apart from this section.”

Chapter III

Powers of Legislature

1. Powers of Legislature while framing fiscal laws



[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =

PTCL 1997 CL 260 = PCTLR SC (Pak) 845]

―That in view of wide variety of diverse economic criteria,

which are to be considered for the formulation of a fiscal policy,

legislature enjoys a wide latitude in the matter of selection of

persons, subject matter, events, etc. for taxation. But with all this

latitude certain irreducible desiderata of equality shall govern classification for differential treatment in taxation laws as well.

That courts while interpreting laws relating to economic

activities view the same with greater latitude than the laws

relating to civil rights such as freedom of speech, religion etc.

keeping in view the complexity of economic problems which do

not admit of solution through any doctrinaire or strait jacket

formula.‖

2. Legislature, particularly in economic activities, enjoys

wide latitude in the matter of selection of person,

subject-matters, events etc., for taxation

Call Tell (Pvt.) Limited through Authorized Representative and another v.

Federation of Pakistan through Secretary, Ministry of Law Justice and

Human Rights Division, Islamabad and others

[2004 PTD 3032 (S.C. Pak.) = (2005) 91 TAX 1 (S.C. Pak.)]

―The learned counsel pointed out that the Chief

Automation (D.T.), Data Processing Centre, Income Tax

Department, Karachi, by letter dated 15.8.2002, had pointed out

that it was not practicable or humanly possible to provide names and addresses, NTN etc., for the purpose of

71


collection of income-tax. It was lastly contended that the Central

Board of Revenue had failed to provide any structure for the

workability and collection of tax. Therefore, this Court was

required to lay down necessary guiding principles by applying

doctrine of reading down a statute so as to make the provisions

of section 236 of the Ordinance workable and practicable.

Reliance was placed on the cases Elahi Cotton Mills Limited

(supra), Rauf Bakhsh Qadri v. the State (2003 MLD 777) and Sunil Batra v. Delhi Administration (AIR 1978 SC 1675).

On the other hand, Mr. Makhdoom Ali Khan, the learned

Attorney General of Pakistan submitted that the other

companies dealing with the pre-paid telephone cards were

collecting and paying tax without any difficulty as required under

section 236 of the Ordinance. It was pointed out that letter

dated 15.8.2002 by the Chief Automation (D.T.), had nothing to

do with the workability or otherwise of the provisions of section

236 of the Ordinance or the collection of advance tax on the

pre-paid cards. The charging provisions of the tax did not suffer

from any taint of invalidity. Therefore, the machinery provisions

of the statute providing the manner and method for collection of

such a tax were to be construed so that it would not defect a tax.

In this regard, the learned Attorney General relied on the cases

of Commissioner of Income Tax Bengal v. Mahaliram Ramjidas (AIR

1940 PC 12) and Khan Abdul Ghafoor Khan DAHA v. Controller of

Estate Duty, Government of Pakistan (1969 PTD 128). It was

brought to our notice that as against 4.6 million P.T.C.L. line

phones and three million mobile phones there were only one

million taxpayers in the country. As many as 279 companies had

been authorized by the Pakistan Telecommunication Authority

to extend the facility of Public Call Offices. The amount of

advance tax deducted from the value of the pre-paid telephone

cards was automatically collected by the petitioner and other

companies for onward payment to the Income Tax Department.

The inter-city telephone cards were used through the PTCL

lines. It was argued that the plain duty of the Court was to

ascertain the intention of the Legislature and to carry it out. It

73 Powers of Legislature

was not for the Courts to question the policy or motive of the

Legislature or to refuse to give effect to a statute merely because

it appeared to be harsh or unreasonable. Reference was made to

the cases of the Punjab Province v. Malik Khizar Hayat Khan Tiwana

(PLD 1956 Federal Court 200) and Air League of PIA Employees

Union and another v. Federal of Pakistan/The President/Chief Executive

and another 2003 PLC (C.S.) 145). It was lastly argued that the tax

on ―deemed income‖ were examined and upheld by this Court

in cases of Elahi Cotton Mills Limited (supra) and Commissioner of

Income Tax v. Asbestos Cement Industries Limited and others 1993 PTD 343.

The question of Constitutional validity of advance tax was

exhaustively considered and upheld by this Court in the case of

Elahi Cotton Mills Limited (supra) while interpreting the provisions

of section 80C, 80CC and 80D of the Income Tax Ordinance,

1979. It will be useful to reproduce, in extensor, the relevant portions of the aforesaid judgments:-

―(17) We may now refer to the background which

necessitated the enactment of the impugned sections.

In this regard, it may be pertinent to refer to the final

report of the National Taxation Reforms

Commission, hereinafter referred to as the NTRC, or

December, 1986, which mostly comprised the

representatives of business community representing

various trade associations. NTRC in the above report

commented upon the corruption obtaining in the

Government and semi-Government department as

under:-

―So far as corruption is concerned, there is no

doubt in the mind of the public that most

Government and semi-Government

departments are corrupt; many know it from

personal experience, while others have just to

look at the standard of living of the

comparatively low-paid officials, their cars, their

houses, the type of parties they give, the


expensive schools their children attend and the

clothes and jewelry their wives wear to realize

that all this costs a lost of money and that such

expenses could not be covered by the

emoluments of the officials concerned.

Inquiries, suspensions and periodic wholesale

removals have been tried but the basic weapon

against corruption is confiscation of the ill-

gotten gains. This has not been practiced so

far.‖

The menace of tax evasion is not a new discovery but

it has been so since the imposition of the same but the

degree of tax evasion has alarmingly increased and so

also the malpractices in the Income Tax Department

entrusted with the levy and collection of tax. Lord

Green in the case of Lord De Walden VIR TC 134

(CA) (1942) 10 ITR Suppl 90, 94 touched upon the question of tax evasion as follows:-

―For years a battle of maneuver has been waged

between the Legislature and those who are

minded to throw the burden of taxation off their

own shoulders on to those of their fellow

subjects. In that battle the Legislature has often

been worsted by the skill, determination and

resourcefulness of its opponents, of whom the

present appellant has not been the least

successful. It would not shock us in the least to

find that the Legislature has determined to put

an end to the struggle by imposing the severest

of penalties. It scarcely lies in the mouth of the

taxpayer who plays with fire to complain of burnt figures.‖

From the above case-law and the treaties, inter alia the following principles of law deductible:-

(vii) That the policy of a tax, in its operation, may

result in hardships or advantages or


disadvantages to individual assessees which are

accidental and inevitable. Simpliciter this fact

will not constitute violation of any of the

fundamental rights.

(viii) That while interpreting Constitutional

provisions Courts should keep in mind, social

setting of the country, growing requirements of

the society/nation, burning problems of the day

and the complex issue facing the people which

the Legislature in its wisdom through legislation

seeks to solve. The judicial approach should be

dynamic rather than static, pragmatic and not

pedantic and elastic rather than rigid.

(ix) That the law should be saved rather than be

destroyed and the Court must lean in favour of

upholding the constitutionality of a legislation

keeping in view that the rule of Constitutional

interpretation is that there is a presumption in

favour of the constitutionality of the legislative

enactments unless ex facie it is violative of a Constitutional provision.

(xii) That what is not ―income‖ under the Income Tax

Act can be made ―income‖ by a Finance Act. An

exemption granted by the Income Tax Act can be

withdrawn by the Finance Act or the efficacy of

that exemption may be reduced by the imposition

of a new charge, of course, subject to Constitutional limitations.

(xvii) That generally the effect of a deeming provision in

a taxing statute is that it brings within the tax net an

amount which ordinarily would not have been

treated as an income. In other words, it brings

within the net of chargeability income not actually

accrued but which supposed to have accrued notionally.


(xviii) That when a statute enacts that something shall

be deemed to have been done which in fact and

in truth was not done, the Court is entitled and

bound to ascertain for what purposes and

between what persons the statutory fiction is to be resorted to.

(xix) That where a person is deemed to be something

the only meaning possible is that whereas he is not

in reality that something, the Act requires him to

be treated as he were with all inevitable corollaries of that state of affairs.

(xxx) That the theory of reading down is a rule of

interpretation which is resorted to by the Courts

when they find a provision read literally seems

to offend a fundamental right or falls outside the

competence of the particular Legislature.

(xxxi) That though the Legislature has the prerogative to

decide the questions of quantum of tax, the

conditions subject to which it is levied, the manner

in which it is sought to be recovered, but if a taxing

statute is plainly discriminatory or provides no

procedural machinery for assessment and levy of

the tax or that is confiscatory, the Court may strike down the impugned statute as unconstitutional.

(xxxii) That the rule of interpretation that while

interpreting an entry in a Legislative List it

should be given widest possible meaning does

not mean that Parliament can choose to tax as

income as item which in no rational sense can

be regarded as a citizen‘s income. The item

taxed should rationally be capable of being considered as the income of a citizen.

(xxxiii) That before charging tax, an assessee must be

shown to have received income or the same has

arisen and accrued or deemed to be so under the


statute. Any amount which cannot be treated as

above is not an income and, therefore, cannot be subject to tax.

(xxxiv) That there is a marked distinction between a tax

on gross revenue and a tax on income, which

for taxation purposes, means gains and profits.

There may be considerable gross revenues, but

no income taxable by an income tax in the accepted sense.

(32) we have summarized hereinabove in para 31 the ratio

decidendi of the above discussed cases and certain

pertinent observations made therein. A perusal of

above sub-paras (i) to (xxx) of para. 31 indicates that

the same does not advance the case of the appellants.

On the contrary, they reinforce the principle of law

that the Legislature, particularly in economic activities,

enjoys a wide latitude in the matter of selection of

person, subject-matters, events etc., for taxation. The

presumption is in favour of the validity of the

legislation. The burden to prove that the same is invalid is on the person who alleges it.

However, one can urge that the general observations

contained in sub-paras (xxxi) to (xxiv) of para 31 lend

support to some extent to the appellants case.

However, it should not be overlooked that in none of

the cases from the judgments of which the above

observations have been lifted the questions, as to

whether there can be presumptive tax or the

minimum tax, in view of Entries 47 and 52 of the

Legislative List, was in issue. In this view of the

matter, it would be inappropriate to apply the tests

traditionally prescribed by the Income Tax Act and/or any other statute.

(34) Keeping in view the above case-law and the treaties and

the aforesaid legal inference drawn therefrom, we may

now revert to the question of vires of impugned


sections. It may again be observed that the power to

levy taxes is a sine qua non for a State. In fact it is an

attribute of sovereignty of State. It is mandatory

requirement of a State as it generates financial resources

which are needed for running a State and for achieving

the cherished goal, namely, to establish a welfare State.

In this view of the matter, the Legislature enjoys

plenary power to impose taxes within the framework of

the Constitution. It has prima facie power to tax whom

it chooses, power to exempt whom it chooses, power

to impose such conditions as to liability or as to

exemption as it chooses, so long as they do not exceed

the mandate of the Constitution. It is also apparent that

the entries in the Legislative List of the Constitution are

not powers of legislation but only fields of legislative

heads. The allocation of the subjects to the lists is not

by way of scientific or logical definition but by way of

mere simple enumeration of broad catalogue. A single

tax may derive its sanction from one or more entries

and many taxes may emanate from one single entry. It

is needless to reiterate that it is a well-settled

proposition of law that an entry in the Legislative List

must be given a very wide and liberal interpretation.

The word ―income‖ is susceptible as to include not

only what is in ordinary parlance it conveys or it is

understood, but what is deemed to have arisen or

accrued. It is by working out the net income tax after

adjusting admissible expenses and other items, but the

same may also be levied on the basis of gross receipts,

expenditure etc. There are new species of income tax, namely, presumptive tax and minimum tax.

(42) We may again point out that the NTRC, which mostly

comprised the representatives of business community

representing various trade associations, in its report of

December, 1986, quoted hereinabove in para 17,

highlighted the corruption obtaining in Government


and semi-government departments and so also to

dishonest tendency on the part of the tax-payers to

evade the payment of lawful taxes by using unfair

means. In such a scenario, the Legislature is bound to

adopt modern and progressive approach with the

object to eliminate leakage of public revenues and to

generate revenue which may be used for running of the

State and welfare of its people. The imposition of

minimum tax under section 80D is designed and

intended to achieve the above objectives. The rate of

half per cent of minimum tax adopted under section

80D seems to be on the basis of the minimum rate of

tax suggested by the Exports Enhancement Committee.

In our view the above provision falls within the

Legislative competence under Entry 47 read with Entry

52. The approach of this Court while interpreting the

Constitution should be dynamic, progressive and

oriented with the desire to meet the situation effectively

which has arisen keeping in view the requirement of

ever changing society. Applying the above rule of

interpretation, we do not find any infirmity in the

impugned section 80D of the Ordinance.‖

A somewhat similar view was taken by this Court in the

case of Commissioner of Income Tax versus Asbestos Cement

Industries Ltd. and others (supra).

The learned Judges of the High Court of Sindh came to the

following conclusion in para. 11 of the impugned judgment

that:-

―The advance tax impugned in this petition does not

fall within the purview of presumptive tax regime. The

advance tax collected by the petitioner No. 1 from the

petitioner No. 2 and all other buyers of the pre-paid

telephone cards shall be merely credited with the

Government which can be utilized and adjusted to the

extent found necessary towards the ultimate liability of

income tax due, after it has been determined and the


excess amount if any is to be refunded to the purchasers of pre-paid telephone cards…‖

In our view, the impugned judgment by the High Court of Sindh

is in conformity with the ratio laid down by this Court in the

case of Elahi Cotton Mills Limited (supra) and he same does not

suffer from any legal infirmity so as to warrant interference by

this Court.‖

3. Taxing rights of legislature are unlimited as long as

these are not confiscatory



[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―That the taxing power is unlimited as long as it does not

amount to confiscation and that the legislature does not have the power to tax to the point of confiscation.

That the word reasonable is a relative generic term difficult

of adequate definition. It inter alia connotes agreeable to reason;

conformable to reason; having the faculty of reason; notional;

thinking; speaking; or acting rationally; or according to the dictates

of reason; sensible; just; proper and equitable or to act within the constitutional bound.‖

4. Parliament is competent to levy presumptive taxation;

broad principles relating to fiscal laws explained



[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―In our view, Sections 80C and 80CC of the Ordinance fall

within the category of presumptive tax as under the same the

persons covered by them pay a pre-determined amount of

presumptive tax in full and final discharge of their liability in respect of the transactions on which the above tax is levied.

If we were to read Entry 47 [of the 4th Schedule to the

Constitution, Part I] in isolation without referring to Entry 52,


one can urge that Entry 47 does not admit the imposition of

presumptive tax as the expression taxes on income employed

therein should be understood as to mean the working out of the

same on the basis of computation as provided in the various

provisions of the Ordinance. We are inclined to hold that

presumptive tax is in fact akin to capacity tax i.e. capacity to

earn. In this view of the matter, we will have to read Entry 47 in

conjunction with Entry 52 which provides taxes and duties on

production capacity of any plant, machinery, undertaking,

establishment or installation in lieu of the taxes or duties

specified in Entries 44, 47, 48 and 49 or in lieu of any one or

more of them. Since under Entry 52, tax on capacity in lieu of

taxes mentioned in Entry 47 can be imposed, the presumptive

tax levied u/Ss 80C and 80CC of the Ordinance is inconsonance with the above two entries if read in conjunction.

Since u/Ss 80C and 80CC the imposition of presumptive

tax is in substitution of the normal method of levy and recovery of the income tax, the same is in consonance with Entry 52.

The question, as to whether a particular tax is confiscatory

or expropriatory, is to be determined with reference to the actual

earning or earning capacity of an average prudent successful

entrepreneur in a particular trade or business. The fact that a

particular assessee has suffered loss/losses during certain

assessment years, is not germane to the above question. In this

regard reference may again be made to the case of the Madurai

District Cooperative Bank Ltd. vs. Third Income Tax Officer, Madurai

(supra), referred to hereinabove in para 28(x), wherein taxable

income of the assessee declared was Rs. 51,763; whereas the tax

imposed was Rs.76,674/07 including surcharge. Indian Supreme

Court sustained the above levy and inter alia held that what is

not income under the Income Tax Act can be made income

under the Finance Act or exemption granted by the Income Tax

Act can be withdrawn by the Finance Act or its efficacy can be

reduced.

Reasonable classification does not imply that every person

should be taxed equally. It may be pointed out that reasonable


classification is permissible provided it is based on an intelligible

differentia which distinct persons or things that are grouped

together from those who have been left out and that the

differentia must have rational nexus to the object sought to be

achieved by such classification. It may further be pointed out

that different laws can be validly enacted for different sexes,

persons in different age groups, persons having different

financial standings and that no standard of universal application

to test reasonableness of a classification can be laid down as

what may be reasonable classification in a particular set of

circumstances, may be unreasonable in the other set of

circumstances. The requirement of reasonable classification is

fulfilled if in a taxing statute the Legislature has classified

persons or properties into different categories which are subject

to different rates of taxation with reference to income or

property and such classification would not be open to attack on

the ground of inequality or for the reason that the total burden

resulting from such a classification is unequal. The question, as

to whether a particular classification is valid or not, cannot be

decided on the basis of advantages and disadvantages to

individual assessees which are accidental and inevitable and are

inherent in every taxing statute as it has to draw a line

somewhere and some cases necessarily may fall on the other side of the line.

We may observe that once the Court finds that a fiscal

statute does not suffer from any constitutional infirmity, it is not

supposed to entangle itself with the technical questions as to the

scope and modality of its working etc. The above question pre-

eminently deserve to be decided by the Government which

possesses of experts services and the relevant information which

necessitated imposition of the tax involved unless the same

suffers from any legal infirmity which may warrant interference by the Court.

The impugned provisions of the Ordinance are based on

reasonable classification as they are founded on an intelligible

differentia which distinguishes persons covered thereunder with


the other tax-payers. It has also rational nexus to the object

sought to be achieved by such classification i.e. to broadening the tax base and to recover the minimum tax.‖

5. Levy of minimum tax held constitutional



[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―Sections 80C and 80CC cannot be equated with section

80D as the same is founded on different basis. It may again be

observed that section 80D is based on the theory of minimum

tax. It envisages that every individual should pay a minimum tax

towards the cost of the Government. The object of the

minimum tax is to ensure that the tax-payers who receive

substantial amounts from exempt sources, pay at least some tax

on their economic incomes of the year. This is achieved by

reducing or disallowing certain itemised deductions. We may

again observe that a large number of assessees though generally

earn profits but on account of various tax concessions including

tax holidays, depreciation allowance etc. under Schedule II and

deductions allowed under the various provisions of the

Ordinance, show loss instead of any net profit, with the result

that they do not contribute any income tax towards the public

exchequer. The levy of minimum tax has been adopted in some

other countries of the world including U.S.A., Israel, France,

Columbia and Thailand besides India. In United States, u/s 56(a)

a tax equal to 15% of the amount, by which sum of the items of

tax preference exceeds the greater of (i) $100,000 (b) .......... (c) ................. etc. is levied.

We may again point out that the NTRC, which mostly



December, 1986, quoted hereinabove in para 17, highlighted the

corruption obtaining in Government and semi-Government

departments and so also the dishonest tendency on the part of

the tax-payers to evade the payment of lawful taxes by using


unfair means. In such a scenario, the Legislature is bound to

adopt modern and progressive approach with the object to

eliminate leakage of public revenues and to generate revenues

which may be used for running of the State and welfare of its

people. The imposition of minimum tax u/s 80D is designed

and intended to achieve the above objectives. The rate of half

per cent of minimum tax adopted u/s 80D seems to be on the

basis of the minimum rate of tax suggested by the Exports

Enhancement Committee. In our view, the above provision falls

within the legislative competence under Entry 47 read with

Entry 52. The approach of this Court while interpreting the

Constitution should be dynamic, progressive and oriented with

the desire to meet the situation effectively which has arisen

keeping in view the requirement of ever changing society.

Applying the above rule of interpretation, we do not find any

infirmity in the impugned Section 80D of the Ordinance.

It may be stated that non-obstante clause in section 80-D is

for the purpose of liability to pay minimum tax of half per cent

on the annual turnover. This will exclude any provision of the

Ordinance which may be inconsistent with it. But the same does

not exclude the application of other provisions of the Ordinance

which are not inconsistent with section 80-D. There seems to be

no conflict between above Section 80-D and section 35 of the

Ordinance, and hence the same remains available to assessees.

To claim business loss or to carry forward the same u/s 35 of

the Ordinance from year to year, is not affected by the above levy of half per cent on the annual turnover u/s 80D.

The Central Board of Revenue in a written undertaking

dated 9.4.1997 filed before this Court confirmed that subject to

the conditions laid down in paras 3 and 4 of Circular No. 3 of

1996 dated 18.3.1996, it has retrospective effect and will be

applicable to all pending assessments. The relevant portion of the

aforesaid circular has already been quoted hereinabove, the effect

of which is that while computing the annual turnover of an

assessee, the amounts of sales tax and excise duty charged in terms

of paras 3 and 4 of the aforementioned circular would be


excluded. The above undertaking of the Central Board of Revenue

is incorporated as a part of this judgment. We may point out that

an executive order/notification, which is detrimental or prejudicial

to the interest of a person, cannot operate retrospectively.

However, a beneficial executive order /notification issued by an

executive functionary can be given retrospective effect. In this

regard it will suffice to refer to the judgment of this Court in the

case of Army Welfare Sugar Mills Ltd. and others vs. Federation of

Pakistan and others (1992 S.C.M.R. 1652). The above written

undertaking of the Central Board of Revenue to make this circular

applicable retrospectively is in consonance with the aforesaid

judgment of this Court.

In our view, since the provisions of Act XII of 1992 are

subsequent in time and as they are contained in a special statute,

they shall prevail over the provisions of Section 80D of the

Ordinance, which was enacted through Finance Act, 1991,

which was an earlier statute and which was part of a general

statute. In this view of the matter, assessees who fulfil the

conditions of the notifications referred to in the Schedule to

Section 6 of Act XII of 1992, are entitled to the protection. The

question, as to whether a particular assessee fulfils the conditions

of the above notifications, is a question of fact, which will have

to be determined by the hierarchy provided under the Ordinance

and not by this Court. However, in order to eliminate

multiplicity of litigation and to avert element of harassment to

assessees, we have dealt with the legal aspect of the above

contention though apparently it was not urged before the High

Court as we do not find any mention in any of the judgments under appeal.

Assessees who are covered by the notifications mentioned in

the Schedule to Section 6 of the Protection of Economic Reforms

Act, 1992 (Act XII of 1992), are entitled to the protection in terms

thereof as per paras 52 to 54 hereinabove. They may approach the Income Tax Department.‖

6. Restriction on power to levy tax




[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―That the rule of interpretation that while interpreting an

entry in a legislative list it should be given widest possible

meaning does not mean the Parliament can choose to tax as

income an item which in no rational sense can be regarded as

citizen‘s income. The item taxed should rationally be capable of being considered as income of a citizen.‖

Messrs Mahmood & Company v.

Assistant Collector, Sales Tax (Enforcement & Collection), Shalimar

Division, Lahore and 2 others

[2005 PTR 89 [H.C. Lah.] = 2005 PTD 67 (H.S.C Lah.)]

―The levy of tax, its rate and collection does not depend

upon the will or agreement of some gentlemen who purport to

represent other taxpayers of their class. The Constitutional

prohibition against imposition of tax, except under the authority

of a law as contained in Article 77 read with Article 127, also

extends not only to the rate of tax and the procedure of its

collection unless the superior legislation had delegated such a

power and that power had been exercised strictly in terms and conditions of the delegation.‖

7. When legislation is violative of fundamental rights



[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―That income tax is a tax on a person in relation to his

income. It is a tax imposed upon a person (natural or artificial) in relation to his income.

That any legislation whereby either the prices of

marketable commodities are fixed in such a way as to bring them

below the costs of production and thereby make it impossible

for a citizen to carry on business or tax is imposed in such a way

so as to result in acquiring property of those on whom the


incidence of taxation fell then such legislation would be violative

of the fundamental rights to carry on business and to hold property as guaranteed in the constitution.‖

8. Past and closed transactions cannot be reopened by

giving retroactive effect to an amending provision

unless so provided

Income Tax Officer & another v. Chappal Builders

[1993] 68 TAX 1 (S.C.Pak.)

―We are of the opinion that, even though the amending

provisions in question, were a part of the procedural laws, they

cannot be given retrospective effect, in the facts of the present

case. There is no dispute between the parties, that but for the

amendments, the business profits for the chargeable accounting

period in question, were not liable to be assessed on 31.1.1958.

On the expiry of the period of four years u/s 14, the assessee

had, therefore, clearly acquired a right and the assessment for the

said year became a past and closed transaction. This right could

not, therefore, be taken away by giving retroactive operation to

the amended statutory provisions extending the period for

assessment. The contentions advanced on behalf of the appellant

are without substance.‖

CIT v. Eastern Federal Union Insurance Company

[1982] 46 TAX 6 (S.C.Pak.)

―We are of the opinion that, even though the amending

provisions in question, were a part of the procedural laws, they

cannot be given retrospective effect, in the facts of the present

case. There is no dispute between the parties, that but for the

amendments, the business profits for the chargeable accounting

period in question, were not liable to be assessed on 31.1.1958.

On the expiry of the period of four years u/s 14, the assessee

had, therefore, clearly acquired a right and the assessment for the

said year became a past and closed transaction. This right could

not, therefore, be taken away by giving retroactive operation to

the amended statutory provisions extending the period for

assessment. The contentions advanced on behalf of the appellant are without substance.‖


9. Double Taxation is prerogative of legislature

Pak Industrial Development Corporation v. Pakistan,

through the Secretary, Ministry of Finance

[(1992) 65 TAX 84 (S.C.Pak.) = 1992 PTD 576 =

PLD 1992 SC 562]

―Unless there is any prohibition or restriction imposed on

the power of legislature to impose a tax twice on the same

subject-matter, double taxation though a heavy burden and

seemingly oppressive and inequitable cannot be declared to be

void or beyond the powers of the legislature. It may, however,

be noted that double taxation can be imposed by clear and

specific language to that effect. Where the language is not clear or specific by implication such levy cannot be permitted.‖

Haji Muhammad Shafi & Others v. Wealth Tax Officer & Others

[(1992) 65 Tax 315 (S.C.Pak)]

―It is, thus, clear that unless there is any prohibition or

restriction on the power of the legislature to impose a tax twice

on the same subject matter, double taxation cannot be declared

illegal or void though it may be oppressive and inequitable.

Unless there is a clear law imposing tax twice merely by

implication tax cannot be imposed twice over. There should be a clear and specific provision to that effect.‖

10. The powers of legislature to tax non-residents

The Imperial Tobacco Company of India Ltd. v.

CIT, South Zone Karachi

[(1960) 2-Tax (Suppl.-308) (S.C.Pak)]

―This construction is consistent with the words and the

sense of the definition of British India as well as with the

principle observed in section 4 of Income Tax Act, and the rule

of International Law that a legislature has an authority to tax its

citizens wherever they be, and to tax the foreigners only if they

earn or receive income in the country for which legislature has the authority to make the laws.‖


11. Levy of presumptive taxation

Continental Chemical Co. (Pvt.) Ltd. v. Pakistan and others

[(2001) 83 TAX 305 (H.C.Kar.) = PTCL 2001 CL. 454]

―Under the Indian Income Tax Act, 1961 presumptive tax

regime has been made applicable to limited number of items but

the deduction made at source has been made liable for

adjustment against the tax demand created on regular

assessment.‖

12. Levy of Corporate Asset Tax is constitutionally valid

ICC Textiles Limited v. Federation of Pakistan and Others

[(1999) 79 Tax 77 (H.C.Lah.)]

―...there is no limitation placed on the use of word assets in

item No. 50 of 4th Schedule [ to the Constitution] and the

question as to whether gross assets or net assets are to be taxed

was relateable to mechanism and could be determined by the

Federal Legislature while further legislating on the subject. I am,

therefore, unable to agree with the learned counsel on the

interpretation being placed on item No. 50 of 4th Schedule to

the Constitution. No doubt tax can only be levied by the

Parliament as ordained by Article 77 of the Constitution but as

by promulgating section 12 of the Finance Act, 1991, the tax is

being levied on the capital value of assets, no valid exception can be taken thereto.‖

13. Corporations created by provincial statutes are not

“governments”

Indus Steel Pipes Ltd. v. CIT, Companies-II, Karachi and others

[(1999) 79 Tax 410 (H.C.Kar.)]

―Having examined 1997 PTD (Tribunal) 1435, it appears

to be a correct view that a corporation created as a result of a

statute was held not to be a part of the Provincial Government.

The present appellant company being an assessee cannot be

taken to be an organ of the State and, therefore, it seems that the

issue in hand can only be resolved by examining the status of a

company and looking into the important distinctive features. It

would be seen that the definition of the Government in the


definition clause cannot be extended to an extent so as to

include bodies created by Provincial or Federal Statutes or

incorporated as public companies as nothing is to be employed

in statutes or documents which is inconsistent with the words

expressly used. We further find that legislative intent is absent so

to include corporation like the appellant company as an integral

part of the Federal Government. We further find that in the

present set of circumstances, the legislature has, in fact restricted

this concession to companies and corporations directly owned

by them and not to those, which are so owned by them through the medium of intermediate corporations.

We further find that a company owned by a Government

shall not, for all purposes, be deemed to be a Government

Department. It may be quite correct that 50% holding of shares

by a corporation for carrying on the functions in which they are

engaged may be to some extent are carried out on behalf of the

Government and further that the income of the corporation to

the extent of 50% income of the appellant company is, in fact,

the income of the Government of Pakistan. One further aspect

could also not be ignored that 50% shares are held by the

corporation in the appellant company, then at least to the same

extent, employees of the appellant company would be employees

of the corporation and then whether it could be said that to the

extent of 50% employees of the appellant company shall be

deemed to be Government servants and all properties owned by

the Corporation are owned by the Government and further all

contracts made by the corporation will only be made by the

President is required by Article 173 of the Constitution.

Consequently, we are of the view that a company or a

corporation owned by the Government shall be deemed to be a

department of the Government, which was confined for the

purposes of its immunity to tax earlier granted and available under Article 165 of the Constitution.‖

14. Personal interest must yield to larger interest

Pakistan Burma Shell Ltd., etc. v. Federation of Pakistan through

Secretary Ministry of Finance,


Government of Pakistan, Islamabad, etc.

[1998] 78 TAX 234 (H.C.Kar.) = PTCL 1998 CL. 690

―[Per Mamoon Kazi, J. Contra.] - The expression ―tax on

income‖ would not only include ―within its ambit profits or

gains actually received by an assessee, but even something that

may be presumed by the legislature to have been received. The

Legislature in order to achieve certain object would therefore, be

acting within its power while resorting to this method of

legislation. As was again observed in Elel Hotels‟ case, ―taxation is

now not a mere source of raising money to defray expenses of

Government. It is a recognised fiscal tool to achieve, fiscal and

social objectives‖. Although, in the present case, ostensibly gross

receipts of the assessee or the turnover of his business have been

deemed to be his income, but in reality only a certain percentage

thereof, higher than the imposition is presumed to be his

income. Inherent in the concept of income no doubt, is also the

concept of profitability and any amount to be called income

must have some characteristics of income as the term is

ordinarily understood by its various connotations, but the Court

only has to ascertain that what has been deemed to be the

income of the assessee can reasonably be deemed to be his

income. Viewing the issue in the above background, it cannot be

said in the present case that the Legislature has transgressed the limits provided by the Constitution.

Under section 80C of the Ordinance the whole of the

amount received by a person on account of supply of goods or

on execution of a contract or the amount spent by an importer

of goods (which shall also include customs duty and sales tax) is

to be deemed to be the income of such person. Likewise,

u/s 80CC of the Ordinance the whole of export proceeds of a

person are to be deemed to be his income. Under section 80C of

the Ordinance, a tax at the rate of one-half per cent is to be

imposed as minimum tax In relation to the turnover of business

or trade of a person. The liability for payment of Income Tax

varies in case of sections 80C and 80CC from one half percent

to one percent of the income in case of exports and from two


percent in case of imports to two and one-half percent in case of

supplies. These rates neither appear to be expropriatory nor

confiscatory. Unless the imposition is disproportionate to

income, it cannot be said to be confiscatory.

In our opinion, the mere fact that margin of profit would

be different cannot render the said provisions discriminatory or

arbitrary or violative of Article 25 of the Constitution.

Profitability in any trade or a business & profession is also

commensurate with the relative efficiency of its management

although there can be various other factors responsible for the

same. However, no two companies or firms having similar trade

or business can earn similar margin of profit. The impugned

provisions of the Ordinance are apparently based on a

presumption that a certain percentage of the assessee‘s gross

receipts would be tilt minimum profit. The assesses has been

taxed accordingly by the said provisions. Since the provisions are

applicable to an assessee engaged in a trade or business it can be

normally presumed that the assessee will keep a sufficient margin

of profit on his total turnover or his gross receipts. The income

tax payable does not appear to be so unreasonable as to be

regarded as arbitrary or confiscatory it is noteworthy that in case

of sections 80C and 80CC of the Ordinance the assessee is not

required to file returns. The provisions have, therefore been

designed to be simple avoiding tedious procedure of assessment

for the convenience and. benefit of the assessee. In case of

section 80D of the Ordinance, a return has to be filed and in

case the tax payable by an assessee is more than one-half

percent, the same will be assessed and paid accordingly. In case,

no tax is payable or the tax payable is less than one-half per cent,

such tax has to be paid. The provisions of section 80D on the

face thereof do not appear to be discriminatory as they are applicable to the assessee as a class.

Section 80D which also by virtue of the non-obstante

clause inserted therein purports to include such companies or

registered firms in the tax net in whose case no tax is payable or

has been paid for any reason enumerated in section 80D of the


Ordinance. The application of the provisions of section 80C or

80CC of the Ordinance to certain contractors, importers or

exporters, etc. as a distinct class is also not difficult to

comprehend because tax was already being deducted from them

at source u/s 50 of the Ordinance. Therefore, the Legislature in

Its own wisdom made the above provisions applicable to them.

Apparently, the tax purported to be levied is neither

unreasonable or discriminatory nor it appears to be confiscatory.

However, merely because a fiscal statute is unreasonable or

oppressive, its constitutional validity cannot be called in question.

In the present case, companies and registered firms have

been classified by the legislation as a separate class and so have

been certain contractors, suppliers, importers and exporters. The

object sought to be achieved has been shown to be to generate

more funds for the public revenue or to prevent evasion of

Income Tax. It can hardly be denied that in this country, one of

the methods that can be effectively employed to plug loss of

revenue is by resort to presumptive taxation. Therefore, there is

a reasonable nexus between the legislation and the object it seeks

to achieve. As was pointed out earlier, the legislature has

sufficient latitude to classify persons or things in different

categories to achieve the object of the legislation. The mere fact

that the legislation tends to diminish the assessee‘s profile is not

sufficient to-make it confiscatory either. The petitioners have

failed to discharge the burden by demonstrating that the legislation in question is not in tune with the fundamental rights.

In the present case, as we also pointed out earlier, the

income tax levied on the gross receipts or as the case may be, the

turnover does not appear to be unreasonable and the legislation

appears to be based on a presumption that the assessee‘s

minimum profit from the trade or business would exceed the

Income Tax imposed under the said provisions of the

Ordinance. Apparently, there appears to be no ground for

assuming that such a measure is discriminatory or confiscatory,

barring of course, a few exceptions reference to which has just


been made in this judgment. However, as has been pointed out,

when a larger benefit for the community is to be achieved, individual interest must yield to the larger interest.‖

15. Powers of Federal Government to levy income tax on

any property or income, including that of Provincial

Government

Punjab Small Industries Ltd. v. DCIT, Lahore

[(1995) 71 Tax 220 (H.C.Lah)]

―In the constitution as originally framed, Article 165

ordains that no tax can be levied by the Federal Government on

any property or income of the Provincial Government.

However, later on doubts arose as to whether the income of

corporation owned and controlled by the Government or set up

by it under Act of Legislature can be deemed to be the income

of the Government within the meaning of Article 165 of the

Constitution. In order to remove these doubts, the constitution

was amended by Constitution (Amendment) Ordinance (P.O. 11) 1985 and Article 165-A was added which reads as under:-

Art. 165-A - “Power of Majlis-e-Shoora

(Parliament) to impose tax on the income of

certain corporations, etc. (1) For the removal of

doubt, it is hereby declared that Majlis-e-Shoora

(Parliament) has, and shall be deemed always to have

had, the power to make a law to provide for the levy

and recovery of a tax on the income of a corporation,

company or any other body or institution established

by or under a Federal Law or a Provincial Law or an

existing law or a corporation, company or other body

or institution owned or controlled, either directly or

indirectly by the Federal Government or a Provincial

Government, regardless of the ultimate destination of such income.‖

16. Parliament can introduce a new change of tax either

by incorporating that change in the Income Tax Act or

by Finance Act

United Liner Agencies Ltd. Kar. v. CIT, Karachi


[(1988) 57 Tax (H.C.Kar)]

―The Income Tax Act or Income Tax Ordinance is a

permanent Act or Ordinance while the Finance Acts are passed

every year and their primary purpose is to prescribe the rate at

which the income tax will be charged under the Income Tax Act

or Ordinance. But that does not mean that a new and distinct

change cannot be introduced under the Finance Act. We are of

the view that the exigencies of the financial year determine the

scope and nature of its provisions. If the Parliament has the

legislative competence to introduce a new change of tax, it may

exercise that power either by incorporating that change in the

Income Tax Act, or by introducing it in the Finance Act or for

the matter in any other statute. This is generally determined by

the consideration whether the new change is intended to be

more or less of a permanent nature or whether its introduction is

dictated by financial exigencies of the particular year. Therefore,

what is not income under the Income Tax Act can be made

income by a Finance Act, an exemption granted by the Act can

be withdrawn by the Finance Act or the efficacy of the

exemption may be reduced by the imposition of a new change.‖

17. Words occurring in a constitutional provision relating

to legislative power should be liberally construed

Pakistan Industrial Development Corporation v. Pakistan, through Secretary, Ministry of Finance

[(1984) 49 Tax 76 (H.C.Kar)]

―The cardinal rule of interpretation is that the words should be read in their ordinary, natural and grammatical meaning. However, where courts are called upon to interpret a word occurring in a constitutional provision relating to legislative power, then the words are to be deliberately construed so as to

give it widest connotation.‖

18. Levy of super tax on free reserves which had already

suffered tax held not to be ultra-vires of the powers of

Legislature under the Constitution

Pakistan Industrial Development Corporation v. Pakistan, through Secretary, Ministry of Finance

[(1984) 49 Tax 76 (H.C.Kar)]


―The Finance Acts, 1967 and 1968 by which the impugned amendments were introduced in the Income Tax Act providing for levy of Income Tax on ‗free reserves‘ are intra vires. It is stated in para 30 of the petition that the amount lying in ‗free reserves‘ of the company were in fact profits of the corporation on which Income Tax was already paid but this fact is not sufficient to render the levy of tax on such sums ultravires of the powers of Legislature under the Constitution. On a fair reading of para 20 of the petition we are convinced that the amounts lying in ‗free reserves‘ of the petitioner were nothing but unappropriated profit which could legitimately be taxed by the Legislature as ‗income‘ in exercise of its power under Entry No.

43(c) of the Third Schedule to the Constitution of 1962.‖

19. Redundancy cannot be readily attributed to the

legislature

Mst. Zarina Yousaf v. Inspecting Additional Commissioner of Income Tax/Wealth Tax, Sialkot Range, Sialkot and another

[2005 PTR 102 [H.C. Lah.] = 2005 PTD 108 (H.C. Lah.)]

―The Courts are to presume that absurdity was not intended by law makers while it will be a sure result if the interpretation of the Revenue in the situation in hand is accepted as correct. It needs to be noted that connecting an assessee personally to the exemption is likely to defeat the very purpose

of exemption.‖

Pakistan Lyallpur Samundri, Transport Co. Ltd. v.

CIT, Lahore Zone, Lahore

[(1982) 46 Tax 143 (H.C.Lah)]

―One of the cardinal rules of interpretation of statutes is that

where an amendment in the law takes place there must be implied

necessarily an intention on the part of the Legislature to depart from

the earlier law in some respects. Redundancy cannot be readily

attributed to the Legislature. The position canvassed by the learned

counsel for the petitioner would lead us to the conclusion that such

an amendment is redundant because inspite of it the position in

regard to the adjustment of unabsorbed depreciation carried

forward remained as it was before the amendment. This cannot be

readily accepted. There must be something in the law to irresistibly


indicate, that the alteration sought has not been achieved on the words or expressions used in the amending Act.‖

20. Legislature has the power to enact curative legislation

CIT, (East) Karachi v. Ebrahim D. Ahmad & others

[(1982) 45 Tax 232 (H.C.Kar)]

―From the principles deduced from the case law discussed

hereinabove, it is evident that the Legislature has the power to enact

curative legislation and to validate orders/actions which were not

valid or were without jurisdiction when passed or taken in cases

when some proceeding arising from such order or action remains

pending.

As observed hereinabove that there cannot be any cavil to

the proposition that an original invalid or an order/action

without jurisdiction can be validated by the Legislature while

some proceeding arising therefrom remains pending and that the transaction does not become past and closed.‖

21. Power to make and promulgate Ordinance includes the

power to levy tax

Mst. Saeeda Begum & others v. Govt. of Pakistan & another

[(1977) 35 Tax 180 (H.C.Kar)]

―(Power to make and promulgate Ordinance for peace and

good Government) .... must include the power to exact tax

without money no good Government can function. The subject

of tax therefore must be included within the scope of the phrase.

The only limitation that is placed on the power of the President

to promulgate Ordinance is that it is subject to the like

restrictions as the powers of Federal legislature to make laws and

the Ordinances so promulgated may be controlled or superseded

by any such act. In other words the President can promulgate an

Ordinance on any subject in regard to which the Federal

Legislature can legislate which impliedly defines the scope of the

legislation by the use of the phrase peace and good Government.‖

22. Rules cannot be made by subordinate delegate

authority unless expressly permitted


CIT v. Adamji Sons

[(1966) 14 Tax 174 (H.C.Kar.)]

―It is settled principle in law that a subordinated delegate

authority cannot make rules or issue notification under a statute

so as to give a retrospective effect to them, unless the statute itself grants such power.‖

23. Subordinate Legislation in the name of removing

difficulties usurped the powers of Legislature

M/s Kashmir Edible Oil Ltd. v. Federation of Pakistan

2005 PTR 70 [H.C. Lah.]

―A general remark after reading the SRO would be that

here is classic case where the person sitting in a subordinate

legislature has, under the excuse of removing difficulties,

wrongly tried to usurp the powers of the legislature and passed

an edict which aimed at overwhelming all intentions of the

legislature in a fiscal matter which has always to be construed strictly.‖

Chapter IV

Role of Deeming Provisions/Certain Expressions

1. Deeming provisions in respect of income



[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―That generally the effect of a deeming provision in a

taxing statute is that it brings within the tax net an amount which

ordinarily would not have been treated as an income. In other

words, it brings within the ambit of chargeability something

which might not actually accrue but which through a legal fiction shall be deemed to have accrued notionally.

That when a statute enacts that something shall be deemed

to have been done which in fact and in truth was not done, the

court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to.

That where a person is deemed to be something the

only meaning possible is that whereas he is not in reality that

something, the Act required him to be treated as he were with all inevitable corollaries of the statute of affairs.

That the legal fictions are limited for a definite purpose,

they cannot be extended the purpose for which they are created.‖

101

2. Widest amplitude of an entry in legislative list does not

extend to tax something which is not a citizen‟s income




[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―That before charging tax, an assessee must be shown to

have received income or the same has arisen and accrued or

deemed to be so under the statute. Any amount which cannot be

treated as above is not an income and, therefore, cannot be subject to tax.

That there is a marked distinction between a tax on gross

revenue and a tax on income, which for taxation purposes,

means gains and profits. There may be considerable gross

revenues, but no income taxable by an income tax in the

accepted sense.‖

3. Scope of definition of „tax on income‟ under the

Constitution



[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―We may state that at this juncture, it will not be out of

context to take up Mr. Iqbal Naim Pasha‘s submission that the

definition of the term ‗tax on income‘ given in Article 260 of the

Constitution provides guideline as to the import and scope of

Entry 47 of the Fourth Schedule to the Constitution, Part I, by

providing that ‗tax on income‘ includes a tax in the nature of

excess profits tax or a business profits tax which, according to

him, have the same connotations which were understood in

respect of Excess Profits Tax Act, 1940, and the Business Profits Tax Act, 1947.

The above contention is devoid of any force, firstly, for the

reason that the definition of the term ‗tax on income‘ given in

Article 260 of the Constitution, used the words ‗tax on income‘

includes a tax in the nature of an excess profits business or a

business profits tax. The factum that the word ‗includes‘ has been

employed and not the word ‗means‘ indicates that the definition

given in Article 260 of the above term is not exhaustive. Secondly,

103 Role of Deeming Provisions/Certain Expressions

the entries in the Legislative List, as pointed out hereinabove, are

to be construed liberally and not in a pedantic manner. The word

‗income‘ as highlighted hereinabove in various reports and

treatises is susceptible to a very wide meaning. We may point out

that the question, as to whether the impugned taxes are direct or

indirect taxes highlighted by Mr. Sikandar Hayat with the aid of

above three Privy Council cases, is not relevant. In the above cases

the controversy in issue was, whether the Dominion concerned‘s

legislature had the power to levy the impugned tax or the Province

concerned. There is no such controversy involved in the instant case. Even otherwise, the impugned taxes are direct taxes.‖

4. Deeming provisions in a statute cannot spill over to

other provisions in a statute and are to be construed

strictly within the four corners of their objects

CIT/WT, Sialkot Zone, Sialkot v. Messrs Thapur (Pvt.), Sialkot

[2002] 86 Tax 274 (H.C.Lah.) = 2002 PTD 2112

―It is settled law that deeming provisions in a statute

cannot spill over to other provisions in a statute and are to be

construed strictly within the four corners of their objects. The

deeming provisions of section 80CC, therefore, are confined

only to the kind of receipts and the assessees mentioned therein.

Neither the receipts nor the assessees mentioned therein are

relevant for any other purpose including the charge of the Fund.‖

5. Deeming provisions how to be construed

Kashmir Feeds (Pvt.) Ltd. v. CBR, through Chairman,

Government of Pakistan, Islamabad and another

[(1999) 80 Tax 24 (H.C.Kar.) = 1999 PTD 1655]

―When a statute contemplates that a state of affairs should

be deemed to have existed, it clearly proceeds on the assumption

that, in fact, it did not exist at the relevant time but by a legal fiction one has to assume as it did exist.‖

6. Word “may” sometime be construed as “shall”

Mohammad Sadiq v. University of Sindh

[PLD 1996 SC 182]


―Generally, the word ‗may‘ involves a choice and ‗shall‘

involves order. This is the customary usage of these words when

they appear in a statute. Even an enabling word like may may

become mandatory, when the object of the power is to effectuate a legal right.‖

7. Scope of deemed income

CIT v. Syed Akhtar Ali

[1994] 69 TAX 38 (H.C.Kar.)

―Setion 12(7) envisage ‗deemed income‘ income where an

assessee makes any loan or advance to any person which is either

interest free or on which interest at a nominal rate is charged.

We are of the view that in such a situation, interest worked out

at the rate of two percent above the bank rate as reduced by the

interest, if any, charged by the assessee shall be deemed to be interest income of the lender.‖

8. “Include” and “shall be deemed to be included” -

meaning of

CST v. Lever Brothers Pak Ltd.

[(1991) 64 Tax 124 (H.C.Kar)]

―It is well-settled that the word ‗including‘ or the

expression ‗shall be deemed to be included‘ is generally used in

interpretation clause in order to enlarge the meaning of words and phrases occurring in the body of the statute.‖

J.L. Wei & Co. v. CIT

[1989] 59 TAX 108 (H.C.Kar.)

―The law clearly provides that all the entires found in the

assessee‘s account books for the previous year unless clearly

explained and the nature and source are disclosed satisfactorily, the same will be treated as income and will be charged to tax.‖

Colony Textile Mills Ltd. v. CST, Lahore Zone, Lahore

[(1975) 32 Tax 282 (H.C.Lah.)]

―What is correct construction of word ‗include‘ depends

upon the facts and circumstances of each case. Sometimes it is

used in interpretation clauses in order to enlarge the meaning of

105 Role of Deeming Provisions/Certain Expressions

the words or phrases and must be construed as comprehending,

not only such things as they signify according to their nature and

import, but also the things which the interpretation clause

declares that they shall include. But the word ‗include‘ is

susceptible of another construction, which may become

imperative, if the context of the Act is sufficient to show that it

was not merely employed for the purpose of adding to the

natural significance of the word or expression defined. It may be

equivalent to mean and include (as in the position in section

2(11) of the Act) and in that case it may afford an exhaustive

explanation of the meaning which, for the purpose of the Act must invariably be attached to those words or expressions.‖

[2003] 88 TAX 121 (Trib.)

―It is an established principle that main function of the

definition of a term is to remove vagueness and to provide a

degree of definiteness to the said term of phrase or word so

defined. It is also an established principle of interpretation of law

that the word ―include‖ whenever is given in any definition is

often used in interpretation clause in order to enlarge the

meaning of that word or phrase occurring in the provisions of

the statute/law and when it is so used then that word and phrase

must be construed as comprehending not only such things it

signify according to its nature and import but also things which

the interpretation clause declares that it shall include. It clearly

means that the definition of a word or phrase when it say

―includes‖ then it would amount to include along with what has

been so given in its plain literal and ordinary dictionary meaning.

Obviously the word used in an inclusive definition imply

extension of that term and phrase and they cannot be treated as

restrictive in nature..... We, therefore, do not find any merit in the AR‘s contention that this receipt is covered by Section 80C.‖

9. Assessment and levy of super tax on total income of

three months at the rate applicable to twelve month‟s

notional income as a condition for permitting change

of previous year by assessee was held without legal

sanction.


CIT v. Nishat Cinema, Lyallpur

[1979] 39 TAX 140 (H.C.Lah.)

―We heard the learned counsel for the Department who

urged that under this proviso the Income Tax Officer had wide

discretion to burden the permission for change of previous year,

with such conditions as he may think fit. The assessment of

notional income and imposition of super tax thereon, according

to the learned counsel are reasonable conditions, which can

justifiably be imposed on the assessee by the Income Tax Officer, to accord his consent.

It is thus obvious that the tax is to be levied on the profits

and gains of the business carried on by an assessee. Gain is the

equivalent of profit and profit accrues if the receipts from the

business exceed the expenditure incurred for acquiring the

receipts. Section 10 is, however, subject to the other provisions

of the Act. The combined effect of sections 3, 4, 6 and 10 is that

to sustain the levy there should have been income attributable to

the business carried on by the assessee. The concept of notional

income of a previous year, by multiplying 3 months‘ income by 4 is thus not vouched by the provisions of the Income Tax Act.

It appears to us that in imposing conditions on an assessee,

to allow him to change his previous year, there is an overriding

limitation on the powers of the Income Tax Officer not to levy

such a condition which is not warranted by the Income Tax Act

itself. The learned counsel for the Revenue has placed reliance

on the proviso to spell out the powers for the assessing authority

to set out the impugned condition. But as observed above this

power is qualified and has to be exercised within the limits fixed

by the statute. The proviso has to be interpreted in harmony

with the other provisions of the Income Tax Act and not to nullify those provisions.‖

Chapter V

Specific Words Explained

1. “Accrue” and “arise”

Cement Agencies Ltd. v. ITO, Central Circle II, Karachi

[(1969) 20 TAX 33 (S.C.Pak)]

―The policy of the Ordinance is to make the amount of

income taxable when it is received either actually or

constructively. So far as the words accrue and arise are

concerned. We are to take ordinary dictionary meaning of these

words. Since both the words have been used in the provision in

question they must be taken to have distinct meanings. Accrues

conveys the sense of growing up by way of additional or increase

or as accession or advantage, while the word arises connotes

comes into existence or notice or presents itself. It is, however,

to be noticed that these two words have been used in

contradistinction to the word received indicating a right to

receive. The words accrues and arises represent a state anterior

to the point of time when the income becomes receivable and

connote a character of the income which is more or less

inchoate.‖

Commissioner of Agricultural Income Tax v. BWM Abdur Rehman

[(1974) 29 Tax 212 (S.C.Pak.)]

―Whereas receive clearly connotes a specified sum passing

into the possession of the receiver. The word accrued, in the

context, obviously means no more than that a right had arisen in

a certain person to recovery of a certain sum. The expression

accrued in the context also, carries plainly the sense of an accrual

for the benefit of the person concerned, as distinguished from

the sense of merely receiving money under legal obligation to

pass it on to another person or authority, which is incidental to the recovery of cesses by an assessee.‖

109

2. “Accrue” and “arise” vis-a-vis effect of book entries


Pandit Pandurang v. CIT, Central Provinces

[2 ITC 69 (Nagpur)]

In a very recent case decided by the Privy Council, St. Lucia

Usines and Estates Co. vs. St. Lucia [(1924) A.C. 508 at p. 512], Lord Wrenbury has observed:-

―The words ‗income arising or accruing‘ are not

equivalent to the words ‗debts arising or accruing.‘ To

give them that meaning is to ignore the word

‗income‘. The words mean ‗money arising or accruing

by way of income‘ There must be a coming in to

satisfy the word income ... If the tax-payer be the

holder of stock of a foreign Government carrying say

5 per cent interest, and the Government is that of a

defaulting state which does not pay the interest, the

tax-payer has neither received nor has there accrued to

him any income in respect of that stock. A debt has

accrued to him but income has not. It does not follow

that income is confined to that which the tax-payer

actually receives. Where income tax is deducted at the

source the tax-payer never receives the sum deducted but it accrues to him.‖

3. „Adjudicate‟ necessarily implies settling a matter

Messrs. Prime Chemicals through Member of Association of Person v.

Government of Pakistan through Secretary Finance, Islamabad and 3

others

[2004 PTD 1388 (H.C. Lah.)]

―To adjudicate, necessarily implies settling a matter. This is

synonymous with the word ―adjudge‘. The adjudicatory process

may be before an administrative authority or before a court of

law. Even if it is before an administrative agency, the rights are

to be adjudged after notice to parties affording opportunity of

hearing and appraisal of record. The factual position and the

finding are to be recorded specifically. Reference in this connection may be made to the following cases:–

(i) People v. Rave, 364, III, 72, 3 N.E. 2 d 972, 975.

111 Specific Words Explained

(ii) Allegpency Ludlum Steel Corp. v. Pennsylvania Public Utility com‘n, 501 pa. 71, 459A, 2d 1281 1221.

In the case of Samuel Goldwyn, Inc. v. United Artists

Corporation, C.A.A. Del., 113 F. 2d 703, 706, adjudication is

defined as hearing, after notice of legal evidence on the factual issues involved.

Again in the case of Campbell v. Wyoming Development Co., 55

Wye, 347, 100 p. 2d 124, 132, it was said that adjudication

contemplates that the claims of all the parties thereto have been

considered and set at rest.‖

4. Adjudication requires passing of a speaking order

Messrs. Prime Chemicals through Member of Association of Person v.

Government of Pakistan through Secretary Finance, Islamabad and 3

others

[2004 PTD 1388 (H.C. Lah.)]

―Obviously, a factual inquiry based on record for purposes

of adjudication had to be conducted. A bare and bald statement

that the case of the petitioner and one other as referred to in

paragraph 22 of the order being identical, the order was

extendable even to them, made this no order in the eye of law as

it violated the very purpose of adjudication as well as the

principle of natural justice, which requires formulation of a

speaking order disposing of a case reflecting a discussion of a

factual position and handing down of a judgment or a finding on

such basis. On the touchstone of the standards laid for purposes

of adjudication since remote antiquity, we find that the order

under reference and as reflected in paragraph 22 is hardly an

order. It is destitute of any discussion relevant to the record of

this case. It is perverse and consequently a nullity in the eye of

law. It deserves to be quashed and a direction is, therefore,

issued to the Deputy collector Customs, Sales Tax and C.E.

(Adjudication), Lahore, to re-write the order afresh after hearing

the petitioner and to dispose of the matter in accordance with

the observations made hereinabove and to refrain from passing such orders in serious matters in such a slipshod manner.‖


5. “Agricultural Income” when remains to be such in the

hands of recipient

CIT, Punjab, NWFP & Bahawalpur v. Mrs. E.V. Miller

[(1959) 1 TAX (III-1) (S.C.Pak)]

―A servant employed on an agricultural farm under a

contract of service can no more claim his salary to be agricultural

income on the ground that he is paid by his master out of his

agricultural income than a shopkeeper can claim exemption from

tax because the price which he has received for his wages has

come out of the agricultural income of the buyer. But if income

lying in reserve with a person is agricultural income which he

himself cannot enjoy and is meant to be distributed among its

rightful claimants, it cannot be disputed that no change of

character is implied in the distribution of that income because

income is earned for expanding and; a person who is precluded

in law from expanding it on his own enjoyment and holds it for

the benefit of the others does not bring out any change in the nature of that income when he posses it on to the beneficiary.‖

6. “Agriculture” and “agricultural purposes”

CIT, East Bengal v. Kumar Narayan Roy Choudhry and others

[(1959) 1-TAX (III-207) (S.C.Pak.)]

―The word agriculture is not used in the Act in its extended

dictionary meaning. It has been used in a narrow sense and so

interpreted, it means that an operation to be agricultural must involve or be connected with the cultivation of the soil.‖


7. “Annual value”

CIT v. Kathiawar Coopperative Housing Society

[(1985) 51 Tax 5 (H.C.Kar)]

―From plain reading of sub-section (2) it would appear that

the actual rent received by the landlord is not the basis for

determining that taxable amount, but the amount which the

leased property is likely to fetch by way of rent or which the

property might reasonably be expected to fetch from year to year

shall be the basis of calculating the taxable amount.‖

8. “Approval” and “permission” are not synonymous

[2004 PTD (Trib.) 618]

The learned counsel also argued that under section 13 the

DCIT is required to obtain approval of the IAC whereas in this

regard such approval was not obtained. He pointed out that in

fact the DCIT/ITO Circle-B Sukkur vide his letter, dated

13.6.2002 addressed to IAC Sukkur Range Sukkur has sought

―permission‖ of the IAC and in response to this letter the IAC

vide his letter, dated 24.6.2002 also granted ―permission‖ to the

DCIT. He produced copies of both the letters which support the

point raised by the learned counsel. The learned counsel cited

two decisions in support of his arguments that where ―approval‖

was mandatory only ―permission‖ by the IAC was not enough

for addition under section 13. These two cases cited as judgment

of the Supreme Court of Pakistan reported as 1998 SCMR 2013

in Civil Appeals Nos. 162 and 163 of 1995 and 2003 PTD (Trib.)

1238 ITAT Lahore Bench decided 15.8.2002 support the arguments of the learned counsel.

In view of the above discussion and in ratio decidendi of the

above case-law we have to observe that the DCIT as well as the

IAC Sukkur because of their inapt and careless attitude have

caused loss of Revenue and the law in this respect favours the

assessee. The case-law cited by the learned counsel and referred

above have also been followed by us in I.T.A. No. 676 of 2003

(Assessment year 1998-99) decided on 16.9.2003. Accordingly


we confirm the order of CIT(A) and dismiss department appeal.‖

M/s. Chhuna Mal Salig Ram v. Punjab NWFP

[5 ITC 316]

―The annual value of property u/s 9 of the Income Tax

Act does not include sums paid by the tenants to the owner on account of house tax payable by the owner....‖

9. “Artificial juridical person”

[1998 PTD (Trib.) 1379]

―Artificial juridical person includes a company, a local

authority and a cooperative housing society. Company is not

covered by the provisions contained in section 80B of the Income Tax Ordinance, 1979.‖

10. “Assess”

CIT v. Kamran Model Factory

[2002] 86 TAX 39 (H.C.Kar.) = 2002 PTD 14

Mr. Rehan Hasan Naqvi referred us to the definition of the

word ―assess‖ as defined in Black‟s Law Dictionary, 5th Edition,

on page 116 as under:-

―To ascertain; fix the value of. To fix the amount of

the damages or the value of the thing to be

ascertained. To fix, to calculate the rate and amount of tax.‖

In the book titled Excellent Legal Words and Phrases by Mian

Muhibullah Kakakhel, Vol-I the word ―assess‖ has been defined on page 552 as under:-

―To fix the amount to be paid as tax or assessment,

i.e., that tax fixed as rate or rent.‖

Longman‟s Dictionary of Contemporary English, New Edition, on page 64 defines the word ―assess‖ as under:

―To calculate or decide the value or amount of.‖

In the Chamber‟s 20th Century Dictionary, New Edition, 1983, on page 73 the word ―assess‖ has been defined to mean-


―to fix the amount of, as a tax; to tax or fine; to fix the value or profits of, for taxation, to estimate.‖

11. “Assessable income”


[2002] 86 TAX 39 (H.C.Kar.) = 2002 PTD 14

In the book titled Excellent Legal Words and Phrases by Mian

Muhibullah Kakakhel, Vol-I the word ―assessable income‖ has been defined on page 553 as under:-

―Assessable income‖ means what the words convey

namely that income which is assessable to income-tax under the Income-tax Act.‖

12. “Assessment”


[2002] 86 TAX 39 (H.C.Kar.) = 2002 PTD 14

Longman‟s Dictionary of Contemporary English, New Edition, on page 64 defines the word ―assessment‖ as under:

―The act of assessing; the value or amount at which

something is calculated.‖

Muhammad Amjad v. CIT, Zone A Karachi [(1992) 65 Tax 176 (H.C.Kar) = 1992 PTD 513]

―Kanga and Palkhivalas in the Law and Practice of Income

Tax, Eighth Edition Volume I, at page 1127 have commented

upon the word assessment. They have observed that ―the word

assessment is used in the Act as meaning sometimes the

computation of income, sometimes the determination of the

amount of tax payable; and sometimes the whole procedure laid

down in the Act for imposing liability on the taxpayer. The word

assessment must be understood in each section of this Act with

reference to the context in which it is used, in some sections it

has a comprehensive meaning and includes reassessment (e.g.

section 265) and in some sections it has a restricted meaning and

is used as distinct from re-assessment (e.g. section 147)‖. They

have further observed that ―the method prescribed by the Act

for making an assessment to tax using the word assessment in its

most comprehensive sense as including the whole procedure for


imposing liability upon the taxpayer consists of the following

steps. In the first place, the taxable income of the assessee has to

be computed. In the next place, the sum payable by him on the

basis of such computation has to be determined. Finally, a notice

of demand in the prescribed form specifying the sum so payable has to be served upon the assessee.‖

13. “Agreed assessment” though framed outside the four

comers of the Act is still an assessment at par with any

other assessment

CIT, Sargodha v. Irshad Anwar & Co. Kamalia

[2002] 85 TAX 470 (H.C.Lah.) = 2002 PTD 750

―An agreed assessment could only be framed where an

assessing officer was handicapped in proceedings or collecting

evidence. However, from the attending circumstances, he has in

his mind a certain estimate of income which escaped assessment.

Keeping in his mind his disability to collect incriminating

evidence, he settles for an offer which appears to him to be

reasonably near the mark that he had settled in his mind as

regards recovery of escaped income. In any case an agreed

assessment though framed outside the four comers of the Act is

still an assessment as any other assessment could be. It does not

stand either at a higher or at lower pedestal then any other assessment.

A blanket protection to an agreed assessment, therefore,

can neither be in accordance with law nor the public policy. It is

one of the settled propositions of law that parties can neither

vest jurisdiction in a statutory authority nor by agreement can divest it wherever it is available to him under the law.‖

14. Agreed assessment violative of Contract Act will be

voidable

CIT, Sargodha v. Irshad Anwar & Co. Kamalia

[2002] 85 TAX 470 (H.C.Lah.) = 2002 PTD 750

―An assessing officer framing an agreed assessment can

always make a case to avoid that ―agreement‖ if he can prove

that the same was coloured by wrong declarations, even

innocent, mis-representation and fraud. A consent given by the


assessing officer fraught by fraud or even on a bona fide mistake

on the part of the assessee will not be a ―free consent‖ as

contemplated in section 14 of the Contract Act. Any such

agreement would obviously be voidable at the option of the revenue.‖

15. “assessment year”-- stable interpretation should be

adopted

Nagina Silk Mills, Lyallpur v. ITO, A-Ward, Lyallpur & others

[(1963) 7 TAX 442 (S.C.Pak.) = PLD 1963 SC 322]

―The word ―assessment year‖ should not be broken into two segments i.e., ―assessment‖ and ―year‖. It must be given stable

interpretation and must be held to mean a period of twelve months. The ―year‖ here does not mean period of shorter or longer duration than a time frame of 12 months.‖

16. “Best judgment” must reflect fair and proper

estimate

Ayenbee (Pvt.) Ltd. v. Income Appellate Tribunal and others

[2002] 86 TAX 117 (H.C.Kar.) = 2002 PTD 407

―The best judgment assessment thus should not be punishment which is meted out to the assessee and must

reflect the Assessing Officer‘s fair and proper estimate after taking into consideration of local knowledge, repute of the assessee‘s circumstances, his own knowledge of previous

returns of the assessee and other parallel cases, which are proved to be parallel. In this respect we are fortified by the judgment of the Hon‘ble Supreme Court in Messrs Pak Co. Ltd. Sargodha vs. CIT, Rawalpindi Zone 1985 SCMR 786.‖

17. “Business”

CIT, Lahore Zone, Lahore v. Muhammad Allah Bux

[(1977) 35 Tax 74 (H.C.Lah)]

―The term business has been defined in section 2(4) of the

Act. Business includes any trade, commerce or manufacture or any

adventure or concern in the nature of trade, commerce or

manufacture. It has been repeatedly observed that business with the aid of meaning given in dictionary be deprecated.‖


CIT v. New China Glassware Company

[(1974) 30 Tax 158 (H.C.Kar.)]

―The definition of the word business, as contained in

section 2(4) of the Act, embraces only such activities as are in the nature of trade, commerce or manufacture.‖

18. “Business connection”

General Bank of Netherlands Ltd. v. CIT, Central Karachi

[(1991) 63 Tax 149 (S.C.Pak)]

―After survey of case law, learned Judges in the High Court

correctly took the view that in order to bring a case under the

head of business connection, it is necessary that there should be

some activity in the taxable territory which contributes, directly

or indirectly, to the earnings of those profits or gains which are

to be taxed. Their Lordship also agreed with the view canvassed

by the appellant that the interest earned on the securities in

question cannot be said to be profits or gains accruing or arising from any business connections in Pakistan.‖

19. “Capital” and “dividend” - distinguished

CIT v. Pakistan Insurance Corporation & Others

[(1997) 75 Tax 113 (S.C.Pak)]

―The words capital and dividend though related have entirely

different considerations. In the context of the Income Tax Law,

very broadly speaking capital would signify investment whereas

dividend would denote gain or return on the investment.

However, in clause (d) of section 2(6A) of the Act, an extended

meaning has been given to the word dividend so to bring to tax

such payment also that a company may make by manipulating its

share capital .... The scope of this clause can not be extended

when the company merely returns to the shareholders only their

original investment.‖

20. “Case”

Abdul Rashid v. Special Judge (Central) Lahore & another

[(1976) 34 Tax 199 (H.C.Lah.)]


―The word case in section 5 of the Act has recorded

statutory interpretation in the explanation to sub-section (7-A)

of section 5 in the following manner:-

―In this section, the word case in relation to any person

whose name is specified in an order or any direction

issued thereunder, means all or any proceedings under

this Act in respect of any year which may be pending

on the date of such order or direction which may have

been completed on or before such date, and includes all

proceedings under this Act which may be commenced

after the date of such order or direction in respect of

any year.‖

21. “Certified copy”

CIT/CST Rawalpindi v.

Pakistan Television Corp. Ltd. Rawalpindi

[(1978) 38 Tax 181 (H.C.Lah.)]

―A certified copy will, therefore, be one which answers the

requirements as given in section 76 of the Evidence Act, by

reference, even though Evidence Act is not applicable. It may,

therefore, be supplied in any form provided that it bears a

certificate of an authorised officer that it is a true copy of the

original in his custody.‖

22. “Charitable purposes”

CIT, East Zone, Karachi v. Merchant Navy Club

[2004 PTD 1304 (H.C. Kar.)]

―At the very outset, we would like to observe that the

Income-tax Officer and the Appellate Assistant Commissioner

have ignored the objects of establishing the respondent‘s club as

contained in the Memorandum of Association and rules and

regulations with the result that they have lost sight of the

dominant and main object of establishing the respondent club. It

appears that they have not examined the issue in right perspective

and were influenced by an incidental and ancillary activity whereby

the entertainment of dancing performance and drinks to the sea-

men wee provided at concessional rates. We agree with the


proposition laid down in the judgments cited above that the

expression ‗charitable purpose‘ carries a broader and extended

connotation. The definition given in the Explanation to section

4(3) of the Repealed Act, to the effect that it includes relief to the

poor, education, medical relief and the advancement of any other

object of general public utility is inclusive and is not exhaustive, conclusive or exclusive.‖

Pakistan Seamen Contributory Welfare Fund Karachi v.

Income Tax Appellate Tribunal & 2 Others

[(1993) 67 Tax 400 (H.C.Kar)]

―As is evident from clause 2(14), the definition of

charitable purpose is not exhaustive but the same is an inclusive

definition which only has the effect of enlarging the ordinary

meaning of the expression charitable purposes. It would,

therefore, be erroneous to assume that the definition in any case

restricts the meaning of the said expression to what has been

referred to be in the said definition. Consequently, the mere fact

that the object, for which the petitioner institution has been

constituted, is not public benefit, cannot in any manner disentitle the petitioner to claim exemption under clause (94).‖

23. “Charity” and “charitable purposes”

Sadar Anjuman-i-Ahmedia, Rabwa v. CIT, Rawalpindi

[(1977) 36 Tax 117 (H.C.Lah)]

―It is undoubtedly very difficult to define charity with

precision. The literature on the point is as vast as despairing. The

question strictly speaking is not whether a charity exists, but

whether the trust on which property is held as trust is for a

charitable purpose. In determining its legal meaning the courts

have been guided by the lists of charitable objects set out in the

pre-amble to the statutes 43 Eliz I. C. 4, 1601. The best

classification of charitable purposes under the above Act has

been given by Lord Machaghtens speech in CIT vs. Pensel [(1891)

A.C. 531] which is being consistently followed by the English

Courts. It was stated that charity in its legal sense comprises four principal divisions:


i) trusts for relief of poverty;

ii) trusts for the advancement of education;

iii) trusts for the advancement of religion; and

iv) trusts for the purposes beneficial to the community, not falling under any of the preceding heads.

That judgment added that the trusts referred to are not the

less charitable in the eye of law because incidentally they benefit

the rich as well as the poor, as indeed, every charity that deserves

the name must do so either directly or indirectly. The American

Law Institute in the Restatement of Trusts adds two more headings.

v) promotion of health; and

vi) governmental and municipal purposes.

The religious and charitable objects of Muslim Waqfs

cannot be of any assistance in the cases in hand. A perusal of the

explanation after the second proviso in section 4(3)(i) of the Act,

would show that the scope of the term charitable purpose in the

Act are as extensive as adopted by the British or American

Courts and guidance can be sought from them in view of the paucity of authority in this country.

Further, it is well established principle of law of charities

that a purpose is not charitable unless its benefit is directed

either to the public-at-large or a sufficient section of public or

community sufficiently defined or identified by some quality of a public nature.......‖

24. “Commercial” and “commerce”

Raleigh Investment Co. Ltd. v. CIT, (East) Karachi

[(1983) 47 Tax 214 (H.C.Kar)]

24.1 Word commercial meaning of

According to Ballentines Law Dictionary, 3rd Edition, page 222, it means:

―Pertaining to the purchase and sale or exchange of

goods and commodities and connoting as well forms


of, and occupation in business enterprises not

involved in trading in merchandise; in a broad sense,

embracing every phase of commercial and business

activity and intercourse.‖

24.2 Word Commerce meaning of

―According to Blacks Law Dictionary, 4th Edition, page

336 the word ―commerce is defined as, the exchange of goods, productions or property of any kind.‖

25. “Company” and “shareholders” Relationship between


[(1959) 1 TAX (III-1) (S.C.Pak)]

―The constituents of a company are its shareholders

because its promoters must subscribe to its shares in order to

bring it into existence. The company has a memorandum of

association which controls its business activity. For the

management of its affairs it has its own articles of association

and a board of directors. The assets of a company are owned by

it and not by its shareholders but the company is constituted for

the purpose of earning profits and the shareholders are not only

entitled to rateable distribution of its assets on its being wound

up, but also indirectly control the management of the company

by appointing the directors. Thus the shareholders have ultimate

control over the management of the company, though they do

not directly manage its affairs. It is true the directors derive their

authority from the law, but as their own appointment rests with

the shareholders, they are, in substance, the agents or delegates

of the general body of the shareholders. What is of vital

importance, however, is that a company is brought into existence

and exists for sole purpose of earning profits and gains and it

earns them not for itself but for the benefit of the shareholders.

To earn profits for its shareholders being the reison dentre of the

company, a company would be defeating the object of its own

existence if croesus-like it filled coffers with gold and did not

distribute it as dividend to its shareholders. A company cannot

enjoy its own income, the ultimate beneficiaries of the income


being the shareholders themselves. Who, on the

recommendation of the directors, declare the dividends. If a

company went on taking its profits to reserve every year and did

not distribute it among its shareholders, it would be acting

contrary to all business principles and the shareholders would be

compelled either to change its management or to dissolve it

because they invest their capital for the purposes of enjoying the

income and not for the purpose of the company accumulating

such income. True, a company is a person but it is only a

juridical person, having no mouth to feed or person to shelter

and sustain, and if it is taxed, it is taxed not on any general

principle of law but because such is the policy of the Statute that

taxed it. Its own income is but notional and it is only on its

distribution that it becomes the actual income of its shareholders.‖

26. “Company limited by guarantee”

Sind Industrial Trading Estate Ltd., Karachi v.

Central Board of Revenue and 3 others

[1975] 31 TAX 114 (H.C.Kar.)

―A company limited by guarantee is generally a non-profit

making association and such a company is an alternative to a

company by shares. Under the scheme of Companies Act 1913,

a company cannot be created in which the members are free

from any liability whatsoever. Therefore, ordinarily a company

created under the Companies Act is limited by shares, that is, the

members of the company are made liable as contributories to the

extent of the shares they have taken or they have agreed to take

in the company. But such a company is not suitable for non-

profit making association, and therefore, as an alternative to such

a company, the companies Act permits the incorporation of a

company limited by guarantee, that is, a company in which the

members agree that, in the event of liquidation of the company

they will subscribe an agreed amount. In effect, such members are

guarantors of the company‘s debts up to the agreed amount. As

regards the working capital of such a company, it generally


comes from other sources, that is, endowments, grants, fees, subscriptions, etc.‖

27. “Complete”

Hudabiya Engineering (Pvt.) Ltd., Lahore v. Pakistan through Secretary, Ministry of Interior, Govt. of Pakistan, Islamabad

[(1997) 76 Tax 302 (H.C.Lah.)]

―According to Blacks Law Dictionary, 6th edition, at page

285, complete as adjective means full, entire, including every

item or element of the thing spoken of, without omissions or

deficiencies; as, a complete copy, record, schedule or transcript,

perfect, consummate; not lacking in any element or particular; as

in the case of a complete legal title to land, which includes the possession, and the right of property.

In Corpus Juris Secundum, volume 15-A at page 118 complete

has been defined as absolutely finished; completed or concluded;

consummate, entire, filled up, free from deficiency, perfect,

including every item or element of the thing spoken of, without

omissions or deficiencies, whole; lacking nothing, with no part,

item, or element lacking; having all needed or normal parts,

elements or details.

Similarly in Words and Phrases, permanent edition 8, at page

386, while defining complete it is stated that the word complete

means filled up with no part, item or element lacking, free from deficiency, entire, perfect, consummate.‖

28. “Consultancy fee” falls under the term “industrial and

commercial profits”

CIT v. Unilever P.L.C., U.K.

2002 PTD 44 (H.C.Kar.)

―While referring to the above definition, Mr. Javed

Farooqui has stated that all kinds of fee have been excluded

from the definition of ―industrial and commercial profits‖ and

this exclusion would squarely cover consultancy fee. The

argument, though neither raised in the grounds of appeal nor

arises out of the order of the ITAT, has no merit. The term

―industrial and commercial profits‖ cannot be given any


pedantic connotation; this term cannot be understood in a

manner not so intended or expressed. The inclusions have to be

given their common sense, ordinary and grammatical meaning. A

Division Bench of this Court in Raleigh Investment Co. Ltd. vs. CIT

1983 PTD 126 has even found gains from the disposal of shares

to be included in the term ―industrial and commercial profits‖.

In Glaxo Group Ltd. vs. CIT 1992 PTD 636 it was held that when

foreign consultants tender technical advice to local companies,

the same constitutes ―personal services‖ and cannot be included

in the term ―industrial and commercial profits‖. In the latter case

the Court had followed its earlier judgment in Glaxo Laboratories

vs. CIT 1991 PTD 195. In both the cases exemptions claimed by

the non-resident assessee were partly declined. The Supreme

Court, however, overturned the demand of exemption in both

these judgment in appeal in Glaxo Operations UK Ltd. vs. CIT

being C.A. 76-K of 1991 and 26-K of 1992, dated 28.11.1993

(unreported), wherein it was held that a company or a corporate

body would ―obviously‖ act through human agencies such as

employees, and thus the use of the foreign company of its

personnel for the purposes of consultancy agreement would not

be fatal to the claim of exemption, thus imply that such

consultative service would not make it a ―personal service‖

excluding it from the ambit of ―industrial or commercial

profits‖. The Supreme Court‘s judgment has been followed in

Glaxo Group Ltd. vs. CIT ITR No.529 of 1990 dated 3.9.1998

(unreported), decided by a Division Bench of this court. In Lars

Costa Adhom vs. CIT 1994 PTD 590, a Division Bench of the

Lahore High Court found the supervision in relation to erection

of machinery by non-resident the Swedish nationals to be an act

performed by the said person on behalf of the Swedish

Company. The proceeds from such supervision were found to

qualify for exemption under the Avoidance of Double Taxation

Treaty between Pakistan and Sweden. A plain reading of the

definition of ―industrial and commercial profits‖ cited above

confirmed that not all types of fee have been excluded from the

ambit of ―industrial or commercial profits‖. The exclusion is

only in relation to a fee drawn by an enterprise from the


management, control or supervision of the trade, business or

other activity of other enterprise or concern. In other words, the

exclusion is in relation to a fee earned from the management,

control or supervision of an enterprise in Pakistan. A

consultancy fee by no stretch of imagination would arise or be

payable as a consideration for managing, controlling or

supervising an enterprise. The term ―consultation‖ has been the

subject-matter of discussion by our Courts. In Burewala Textile

Mills Ltd. vs. Punjab Government NLR 1979 Lab. Lah 297, it was

observed that ―consultation‖ presupposes that one who has to

consult has a problem or a proposition; it can be between a

layman and an expert or between two experts. The Lahore High

Court in Electric Equipment Manufacturing Co. Ltd. vs. Government of

Punjab 1979 PLC 416 (Lahore) considered a number of reference

including ―Words and Phrases‖, Permanent Edn., Vol. IX, p.3;

Rolls vs. Minister [1984] 1 All ER 13; R. Pushpam vs. The State of

Madras AIR 1953 Mad. 392 and Fiether vs. Minister of Town

Planning [1947] 2 All ER 496, to hold that the word ―consult‖

implies conference of two or more minds respecting a topic in

order to enable them to evolve a correct or satisfactory solution.

In the context of judicial appointments our Supreme Court in

the celebrated Judges‘ case i.e. Al-Jehad Trust vs. Federation of

Pakistan PLD 1996 SC 324 has also dilated upon the term

―consultation‖ to carry a ―consultative process‖ between the

consultees and the ―consulters‖. The latter was subsequently

followed in Al-Jehad Trust vs. Federation of Pakistan PLD 1997 SC

84. It is an admitted position that the fee in question is towards

consultancy and the term ―consultancy‖ (as confirmed by the

above definitions) would denote tendering advice and

counselling and surely not managing, controlling or supervising.

Consultancy fee thus falls under the term ―industrial and

commercial profits‖. The contention of the learned counsel of

the appellant on this score also fails. The upshot of the above

discussion is that the four appeals in question are dismissed, the

order of the ITAT maintained and the questions of law framed

above are answered in the affirmative, however, there shall be no order as to costs.‖


29. “Debt”, “Loan”, “Owe” and “due” difference between

CWT v. Noor Rai Ibrahim

[(1992) 65 Tax 262 (S.C.Pak)]

―From these judgments, definitions and meanings it can

safely be stated that the word debt has a wide meaning and is an

obligation to pay an ascertained sum in present or in future. Any

amount owed to some other person would be a debt owed by

him to the creditor. The essence of the word debt is the

obligation to pay and the amount which is payable. It is a liability

to the person who has an obligation to pay, the amount which may be certain or calculable readily.‖

CWT, Lahore Zone, Lahore v. Mst. Fozia Mughis, Lahore [(1975) 32 Tax 1 (H.C.Lah.)]

―It is further to be noticed that the word debt is to be kept

distinct from what is known as a loan, for every loan may be a

debt but every debt will not necessarily be a loan. Our view is

that a debt is a sum of money which is now payable or will

become payable in future by reason of a present obligation

debitum in praesenti solvendum in futuro. In some cases it may not be

presently payable and it may be uncertain in amount which will

become certain when accounts are finally dealt with. In other

words it is a present liability to pay an amount in future, though it was not ascertained but was ascertainable.‖

―As regards the word owed in Aiyers Law Lexicon (1940

Edition page 931) it is written that owe means to be under obligation to pay.‖

―It is to be remembered that strictly speaking there is a

difference between the words owed and due for that which is

due is always owed by the debtor, but which is owed may not be

due at a particular date .... the former refers to liability whereas

the latter to payability.‖

A.J. Hartshorn v. CIT, (West) Karachi [(1984) 49 Tax 198 (H.C.Kar)]

―In Strouds Judicial Dictionary, IVth Edition, meaning of the

word due is immediately payable (it is common signification).


The word due signifies a fixed and settled obligations or liability

which has to be determined in each case from its own context

and usually is neither contingent nor dependent on any

happening.‖

Taimur Shah v. CIT [(1976) 34 TAX 151 (H.C.Kar.) = PLD 1976 Kar. 1030]

―We find ourselves unable to agree with the broad

proposition of Mr. Nusrat that the word due has an implication

of a liability which is continuing from the past.‖

30. “Deemed order”

[(2004) 89 TAX 418 (Trib.) = 2004 PTD (Trib.) 752]

―The upshot of above discussion is that there is no concept

of a deemed order anywhere in the world. The Legislature has

declared a properly prescribed piece of paper as an order, which has to be treated as such.

As a result after the assessment year 1995-96 when the

return filed would be deemed to be an assessment order under

section 59 and 59A the provisions of section 65(1)(c) would

come into operation. This means that the said order deemed to

be an order can also be opened under section 65 after the

assessment year 1995-96. The analogy which one can draw is

that when the Legislature has declared some document to be an

assessment order the High Court is of the opinion that it can be

cancelled under section 65 but when it was not held to be an

order it could not have been cancelled. This finding of the

Honourable High Court fully supports our views.‖

31. “Default”

Irfan Gul Magsi v. Haji Abdul Khaliq Soomro and others [1999 PTD 1302]

―Expression default connotes an element of wilful and

deliberate failure to fulfil an obligation and negligence in the

performance of the duty. Every failure on the part of a person

without any ulterior design and mala fide intention would not

equate with the expression default as used in its strict legal sense.

Before a person is declared to be in default, it is absolutely


necessary that there should have been a demand to make

payment of a determined sum which should have remained

unresponded and unattended for a period beyond the period

prescribed by law. Issue of default in the context of Rent Laws

was set at rest in the famous case reported as Ghulam Muhammad

Lundkhor vs. Safder Ali (PLD 1967 SC 530). In the words of the

apex Court the word default in legal terminology necessarily

imports an element of negligence or fault and means something

more than mere non-compliance. To establish default one must

show that the non-compliance has been due to some avoidable

cause, for a person who ought not to be made liable for a failure

due to some cause for which he is, in no way, responsible or

which was beyond his control. It is not lightly to be presumed

that the law intends to cause injustice or hardship, thus, unless

the Legislature has made its intention clear that construction

must be preferred which will prevent manifest injustice and

obviate hardship. On this principle also the expression default

should mean an act done in breach of a duty or in disregard of

an order or direction. This view was followed in the subsequent

cases reported as Muhammad Hassan Khan vs. Mirza Abdul Hamid

(1981 SCMR 799), Irshad Hussain vs. Abdul Rehman Kazi (1983

SCMR 471), M. Imamuddin vs. Surriya Khanum (PLD 1991 SC 317) and NDFC vs. Naseemuddin (PLD 1997 SC 564).‖

32. “Definite Information”

CIT, Companies Zone-II, Karachi v. Sindh Engineering (Pvt.) Limited, Karachi

[2002] 85 TAX 386 (S.C.Pak) = 2002 PTD 419

―Therefore, question arises whether ‗definite information‘

was passed on to Income Tax Officer. In the instant case it came

to the notice of Successor Income Tax Assessing Officer that

while making original assessment no material was brought on

record to entitle the respondent to claim exemption of 5%

rebate of super tax being a public company which material fact

was consciously neither disclosed nor brought to the notice of

the predecessor assessing authority thereby concealed the same

consequently respondent-company was not properly and lawfully


assessed and thereby got exemption of 5% rebate of super tax.

The Successor Assessing Officer in the circumstances was

competent to issue notice and to impose additional assessment

against the respondent being not ‗public company‘ considering

that there was no material in support of said fact. To elaborate

this aspect of the case it is to be observed that for exercise of

jurisdiction under section 65 of the Ordinance for the purpose

of additional assessment condition precedent is that there should

be a ‗definite information‘ but it should not be gossip or

surmises.

In the instant case if ‗definite information‘ as said above

would have been placed before the Successor Assessing Authority,

then he would be legally justified to re-open the case under section

65 of the Ordinance for the purpose of additional assessment

because the additional relief of rebate was obtained by assessee

contrary to law applicable on the subject. But in the present case if

the Income Tax Appellate Tribunal after recording the evidence

and exercising the jurisdiction, would have found that respondent

was a public company within the relevant provision of law we would have endorsed the decision but it was not done.‖

E.F.U. General Insurance Ltd. & Others v.

Federation of Pakistan & Others

[(1997) 76 Tax 213 (S.C.Pak) = 1997 PTD 1693 =

PLD 1997 SC 700]

―It was observed that the words ―definite information‖ are the key-

words for the purpose of justifying action under sub-section (1)

[Section 65] and, as the said words had not been defined in the

Ordinance they will carry their literary meanings. It was observed

that every information cannot be treated as the basis for re-opening

of the assessment but the information should be of the nature

which should qualify as ―definite information‖ and that the

expression ―definite information‖ could not be given a universal

meaning but it will have to be construed in each case. It was further

observed that where an assessee discloses all the material facts

without any concealment and the assessment had been consciously

completed by the Income Tax Officer, in such a case, in the absence


of the discovery of any new facts which can be treated as ―definite

information‖ there cannot be any scope for reopening of the

assessment u/s 65. It was further observed that any change of

opinion on the basis of the same material by the Income Tax

Officer will not warrant pressing into service the said provision. It

was observed that a circular from the Central Board of Revenue

interpreting any provision of a law not a definite information for

reopening of assessment by an Income Tax Officer. It was then

observed that expression definite information will include factual

information as well as information about the existence of a binding

judgment of a competent court of law/forum for the purposes of

section 65 of the Ordinance, but any interpretation of a provision of

law by a functionary which has not been entrusted with the function

to interpret such provision judicially cannot be treated as a definite information.‖

IAC & Another v. Pakistan Herald Ltd. [(1997) 76 Tax 131 (S.C.Pak) = 1997 PTD 1485]

―The term ‗definite information‘ conveys a meaning which is not

the same as change of opinion. A different interpretation of any

provision of law or deriving a different conclusion from a given

set of facts will not amount to a definite information. It will be a

change of opinion. Therefore, the basis for reopening the

assessment was a change of opinion of the respondent. The

respondent therefore could not have taken any action u/s 65 of

the Income Tax Ordinance as it was not based on any definite information, but on change of opinion.‖

Central Insurance Co. & Others v. CBR, Islamabad

[(1993) 68 TAX 86 (S.C.Pak)]

―Mere guess, gossip or rumour cannot be treated as

definite information. However, the expression definite

information cannot be given a universal meaning, but it will have to be construed in the circumstances of each case.

The term definite information conveys a meaning which is

not same as change of opinion. A different interpretation of any

provision of law or deriving a different conclusion from a given


set of facts will not amount to definite information. It will be a change of opinion.

Receiving or obtaining by an assessing officer certain

interpretation of a particular provision of law from any

department, be it a ministry of law or Central Board of Revenue

or any legal adviser or from his knowledge and reading law

books would not constitute information in terms of section 65.

Dangerous results may follow from a liberal interpretation

of the word information as sometime advocated by the

Department, as it will give unrestricted discretion in the hands of

the assessing officers who may on their own interpretation of law set at naught the settled and final assessment.‖

Saitex Spinning Mills, Lahore v. CIT, Zone-3, Lahore

[2003 PTD 808 (H.C.Lah.)]

―After hearing the learned counsel for the parties and on taking

Question No.2 first, we are in agreement with the learned counsel

for the appellant that re-opening of the case of the assessee was

certainly unjustified. The Assessing Officer failed to bring home

the availability of definite information as contemplated in section

65 of the repealed Ordinance to re-open the case. The view of

their Lordships of the Supreme Court as expressed in re: E.F.U.

General Insurance Co. Ltd. vs. Federation of Pakistan (PLD 1997 SC

700) an re: Central Insurance Co. vs. Central Board of Revenue (1993

SCMP 1232) lends support to the submissions made at the bar

that mere reference to a declared value by another assessee would

not by itself be a ―definite information‖ to become a sufficient

ground to re-open a completed assessment. The idea of sanctity of

a completed assessment is certainly averse to the re-opening based upon conjectures and surmises.‖

33. “Discard”

Pak Services Ltd. v. CIT, (Revision) Karachi

[(1993) 68 Tax 49 (S.C.Pak)]

―No doubt that extended meaning of discard given in the

dictionary includes abandonment. However, all abandonment of

property cannot and does not amount to discarding of the


property. The word discard entails a choice, a selection, a

voluntary act of leaving behind, causing of leaving or

abandoning. Without such a choice, selection or volition, the

word discarded would be inappropriate to use. For example, if

one was made to forcibly leave his house, that would not amount to discarding the house.‖

34. “Dividend”

CIT, Peshawar Zone, Peshawar v. Siemen A.G.

[(1991) 63 TAX 130 (S.C.Pak.) = PLD 1991 SC 368]

―The word return is generally understood as profit in the

nature of dividend and not in the nature of interest and/or

obligatory charge. Return on capital as guaranteed in the

agreement between the parties was thus dividend within the

meaning of term as defined in Income Tax law. The Income Tax

authorities cannot change the nature of the contract intended by

the parties under the pretext that the rule of interpretation of a

fiscal law in this behalf is different. The courts are bound to

apply Islamic rules of interpretation to all laws, and fiscal laws are no exception.‖


[(1959) 1 TAX (III-1) (S.C.Pak)]

―The company though a separate legal person in the

contemplation of law and liable to assessment as a subject

chargeable with tax is not for all purposes to be regarded as

entirely separate and distinct from the shareholders. The

underlying principle of the clause as the commissioner in stating

the present case has recognised is that the dividend represents merely the shareholder‘s share in the income of the company.‖

Siemens A.G. & Halske v. CIT

[(1983) 47 Tax 132 (H.C.Pesh)]

―Dividend according to Blacks Law Dictionary, may denote, a

fund set apart by a corporation out of its profits, to be

apportioned among the shareholders, or the proportionate

amount falling to each. Prima facie a ―dividend‖ according to

Strouds Judicial Dictionary, means a payment to share holders when a


company is a going concern. In Halsburys Laws of England Volume

VII, 4th Edition, the ordinary meaning of dividend is share of

profits, whether at fixed rate or otherwise, allocated to the

holders of shares in a company. The term is generally used with

reference to trading or other companies, and to payments made

to members of a company as such and not by way of remuneration for services.‖

35. “Employee”

CIT, North Zone, Lahore v. Owen Roberts & Co. Ltd. Lahore

[(1973) 27 Tax 95 (H.C.Lah.)]

―The word employee is too well understood in the English

language and usage to require any elucidation and we would

restrict overselves to observe that the expression employee

clearly envisages the relationship of master and servant and can

hardly be applied to a person who is an alter ego of a juristic person.‖

36. “Enduring benefit”

Sindh Trading Company v. CIT

[(1967) 15 Tax 53 (H.C.Kar.)]

―The expression enduring benefit does not imply that it

necessarily lasts for ever. It only means that it should endure in

the way that fixed capital endures. What degree of durability or

permanence it should possess for qualifying as a capital asset,

depends upon the facts of each case. The main consideration in

such cases always is, whether the expenditure concerned, is part

of the company‘s working expenses, or in other words,

expenditure laid down as part of the process of profit-earning or

whether on the other hand, it is a capital outlay, viz. expenditure

necessary for the acquisition of property or of rights of a more

or less permanent character, the possession of which is a condition of carrying on its trade at all.‖

37. “Enemy”, “enemy territory” and “aggrieved party”

Associated Cement Companies Ltd. v. Pakistan

[(1978) 38 Tax 132 (S.C.Pak)]


―Now in the following Rules namely, the Defence of

Pakistan Rules, framed u/s 3, enemy and enemy territory have been comprehensively defined as under:-

2-(2) enemy means any person or state at war with, or engaged in military operations against Pakistan.

2-(3) enemy territory means-

(a) any area which is under the sovereignty of, or

administered by, or for the time being in

occupation of, state at war with, or engaged in military operations, against Pakistan.

(b) any area which may be notified by the Central

Government to be enemy territory for the

purposes of these rules or such of them as may be specified in the notification.

Aggrieved party:- Now in order to be aggrieved party

within the meaning of sub-Article (2) of Article 98, of the

Constitution of Pakistan 1962, it would be imperative for a party

to show that any of his proprietary or personal right as

recognized by the laws of the country, has been invaded or

denied to him. Right and remedy are no doubt complementary

concepts, because right without remedy would be meaningless

just as it would be inconceivable to think of a remedy without a

corresponding right. In other words a right, be it tangible or

intangible such as the right of a person to enjoy his property or

to remain secure in his reputation, clearly postulates something

of value to a person for the protection or the realisation of

which remedy is provided in every civilised legal system.

Inevitably, therefore, if a person is unable to show that any of

his right as recognized by law has been invaded or denied to him

then he would have no cause of action to seek any relief, for

evidently he cannot claim to be aggrieved.‖

38. “Erroneous”

United Builders Corporation Mirpur v. CIT, Muzzafarabad

[(1984) 49 Tax 34 (H.C.AJ&K)]


―The word erroneous, as defined in Oxford Dictionary,

means, mistaken, incorrect, in the legal sense, an order was considered erroneous if it deviated from the law.‖

39. “Erroneous” – the scope of word explained

[(2004) 89 TAX 316 (Trib.) = 2004 PTD (Trib.) 422]

―The word ‗erroneous‘ in almost all the legal dictionaries

have been defined to mean an error of law. It is correct that an

‗error‘ may include in its meanings all kinds of mistakes but the

word ―erroneous‖ means basically ―an error of law‖. In this

regard one can refer Blacks Law Dictionary 5th Edition

published by West Publishing Company in 1979. Defining the word erroneous it speaks as follows:-

Erroneous: Involving error; deviating from the law.

This term is not generally used as designating a corrupt or evil act.

Similarly erroneous assessment and erroneous judgment have been defined as follows:

Erroneous assessment: Refers to an assessment that

deviates from the law and is therefore invalid, and is a

defect that is jurisdictional in its nature and does not

refer to the judgment of the assessing officer in fixing

the amount of valuation of the property in r Blatt, 41 N.M. 269, 67 P. 2d 293, 301.

Erroneous Judgment: One rendered according to

course and practice of court, but contrary to law,

upon mistaken view of law, or upon erroneous application of legal principles.

Above definitions have been followed in many earlier and

recent judgments. In this regard we can refer 1984 PTD 137 (H.C.

AJK), 1991 PTD (Trib.) 321 and (1969) 20 Tax 51 (Trib.). Going

through the ratio decided of the above judgments one can come

to the obvious conclusion that the word ―erroneous‖ even if is

expanded to the ‗error of fact‘ it still cannot be considered as wide

enough to consider an estimate, a gossip, a feeling which gives

reason to suspect, an apprehension or possibility of a better


judgment by way of superior wisdom and experience. It is a

different word than error and mistake. The income tax law is very

specific in charging various situations. For a mistake, which is

synonymous to the word error, a separate section has been

provided. Even for this wider connotation the opinion of the

court is that the ―mistake‖ that floats from the order is the one,

which can be rectified. In the present situation where the

legislature is very particular in mentioning the word ―erroneous‖

we cannot allow extension of arms by exercising jurisdiction which

is not provided by section 66A.‖

40. “Evasion” and “Avoidance” - the difference

CIT, Companies II, Karachi v. Sultan Ali Jeoffery & others

[(1993) 67 TAX 51 (S.C.Pak)]

―In the field of taxation, tax avoidance and tax evasion are two

different terminologies conveying completely different meaning.

Tax avoidance occurs when a person in a legitimate manner as

provided by law adopts a course by which the tax liability is reduced

or eliminated. In doing so the assessee seeks his remedy and

mechanism within the provisions of law.... Avoidance of tax by

adopting legal methods will not amount to evasion of tax. But the

moment avoidance is sought by illegal contrivance, deceitful

methods and adopting a course not permissible in law it turns into

evasion.‖

41. “Evasion of Tax”

CIT, Companies II, Karachi v. Sultan Ali Jeoffery & others

[(1993) 67 Tax 51 (S.C.Pak)]

―Evasion with reference to taxation laws means to illegally

manipulate things in such manner that the tax payable under law

cannot be assessed. By an act of evasion the assessee can reduce

his tax liability or completely eliminate it. Evasion of tax or duty

is always in breach of the applicable and binding law. In taxation

law evasion will mean adoption of such deceitful mechanism and

manipulation not permitted by law which may result in reduction or elimination of tax liability.‖

42. “Execution of Contract”


Sarwar & Co. v. CBR & others

[(1997) 76 Tax 1 (H.C.Lah)]

―The meaning being placed by the learned counsel on the

expression execution of contract is neither borne by the context

in which it has been used nor by its dictionary meaning. In Blacks

Law Dictionary, 5th Edition, at page 510, execution of contract

has been defined as including performance of all acts necessary

to render it complete. Similarly, according to Words and Phrases

permanent edition, execution means, completion, fulfilment or perfecting of anything.‖

43. “Expenditure” & “reserves”

CIT, (Central) Karachi v. New Jubilee Insurance Co. Ltd.

[(1982) 46 Tax 125 (H.C.Kar)]

43.1 expenditure, meaning of

―Expenditure is thus what is paid out or away and is something which is gone irretrievably.‖

43.2 reserves, meaning of

―According to Ballentines Law Dictionary, third edition,

page 1101, reserves means:

Verb: To appropriate to a particular purpose. To

exclude. To set aside. To set apart from that which

has been granted. To make a reservation.

Noun: In insurance, a sum of money variously

computed or estimated, which, with accretions from

interest, is set aside, as a fund with which to mature or

liquidate, either by payment or reinsurance with other

companies, future unaccrued and contingent claims,

and claim accrued but contingent and indefinite as to amounts or time of payment.‖

44. “Failed” and “default” are not synonymous.

Masood Textile Mills Ltd. v. Commissioner of Income Tax, Companies Zone, Faisalabad and others

[(2004) 89 TAX 51 (H.C. Lah.)]


―The word ―fail‖ according to the Ballentainets Law

Dictionary, third edition, at page 450, means to refuse, to

neglect. Similarly, in Black‘s Law Dictionary ―fail‖ has been

defined as fault, negligence, or refusal. Consequently, the mere

non-payment by itself would not amount to failure to pay unless

there has been a neglect or refusal or inexcusable commission on the part of a person liable to pay the amount.

A somewhat similar situation arose in the cases of Sindh

Employees‟ Social Security Institute v. Silver Industries Ltd. (1982) PLC

1062) and Messrs RLD Ball Bearing Limited v. Sindh Employee‟s Social

Security Institution, Karachi (PLD 1991 SC 308). In both the cases the

dispute was with regard to payment of increase under section 23

of the West Pakistan Employees Social Security Ordinance, 1965,

according to which, if an employee fails to pay on the due date the

contribution payable by him, the amount so payable shall be

increased by such percentage or the amount as may be prescribed.

In the first case, honourable Mr. Justice Ajmal Mian (as he then

was) after considering various dictionaries as also the case-law

ruled that although words ―fail‖ and ―default‖ were not

synonymous, and ―fail‖ has wider connotation as compared to

―default‖ but the reasonable interpretation would be that in order

to attract the penal provision of levy or increase contained in the

above section, there should be inexcusable, neglect or omission on the part of the employer to pay contribution.‖

45. “Failure”

CIT, North Zone, Lahore v. Waris Silk Weaving and

Knitting Mills, Gujranwala

[(1973) 28 Tax 181 (H.C.Lah.)]

―If a person is required by law to do something which

becomes impossible for him to do, not on account of his own

negligence or fault, but on account of something which was

unavoidable and in any case not subject to his control, he cannot

be said to have failed to perform that which the law or an order passed under the law required him to do.‖

46. “Fixed capital”


The Punjab National Bank Ltd. v. CIT, Punjab & NWFP


―Securities purchased by banks are permanent investments

being part of their fixed capital. They do not form part of their stock-in-trade.‖

47. “Fixed capital” and “circulating capital”

Gillander Arbuthnot & Co. v. CIT

[(1966) 13 Tax 163 (H.C.Lah.)]

―Fixed capital represents the amount spent on setting up

structure of the business, e.g. land and machinery, for

manufacture of goods, the sum paid for acquiring a concern and

the amount spent on purchase of stock and securities, etc.

Appreciation of their value is not a trading receipt and their

depreciation not a trading expense to be incorporated in the

profit and loss account. Circulating or floating capital in the

amount spent on running the concern, in carrying on and

carrying out an operation of business for making profit, for

example purchase of raw-material, pay-roll, directors‘ fee, etc.

Literally, it is that capital which keeps circulating and floating in

the course of business and does not constitute its outer

framework. The amount spent in this account is trading expense

and an increase on it a trading receipt to be incorporated and

circulating capital is, however, not inflexible, e.g., land and

machinery will be circulating capital in the hands of a real estate

dealer and manufacturer of machinery, respectively, but fixed capital in the hands of a manufacturer of goods.‖

48. “General Public”

Pakistan Tourism Development Corporation Ltd.

and another v. Collector, Customs, Central Excise

and Sales Tax, Lahore and others

2005 PTR 14 [S.C. Pak] = 2005 PTD 104 (S.C. Pak) = (2005) 91

Tax 105 (S.C. Pak)]

―This brings us to the main plea relating, to the term

―General Public‖ appearing in section 2(28). Term ―General


Public‖ has been defined in Words and Phrases Permanent Edition Volume 18, Gabardine Gondola. It is as follows:

General Public: The ―general public‖ is not confined to

citizens of a municipality but embraces all the people

and is represented by the Legislature: Rayor v. City of Cheyenne, 178 P. 2d 115, 116, 63, Wyo. 72‖.

The spirit of above term is not to limit its scope, but to

enhance it. There was no legal justification for a narrow

construction of said term, as has been done by High Court. In the

case reported as Goalundo Ice Association Ltd. v. Commissioners

of the Rajabari Municipality (PLD 1952 Dacca 12), the word

―public‖ as used in section 125(l)(b) of the Bengal Municipal Act

was defined as ―including every member of the public in general‖.

In Chamber English Dictionary, the word ―General‖ means

―relating to genus or whole class: including various species: not

special‖ not restricted or specialized: relating to the whole of to all or most.‖

49. “Goods” do not include immovable property

Kawther Grain (Pvt.) Ltd. v. DCIT, Gujranwala

[(1999) 80 Tax 262 (H.C.Lah.)]

―The interpretation of word Goods as adopted by the

Assessing Officer does not find support either from the Income

Tax Ordinance or for that mater from any other law. The consistent

view of the Superior Courts in Pakistan that in cases of fiscal

statutes only the letter of law should be seen has sufficiently been

highlighted in re: Collector of Customs vs. S.M. Ahmad & Company (supra)

and re: Muhammad Younis vs. CBR (supra). It is also an accepted

proposition that the words used in a statute if not defined therein

should be assigned their ordinary dictionary meaning. Reference to

the aforesaid two dictionaries supports the contention of the learned

counsel. The sale of immovable property including land and

building alongwith machinery installed therein could by no imagination be treated as supply of goods or services rendered.‖

50. “Goodwill”

Controller of Estate Duty, Lahore v.


Muhammad Bashir Muhammad Nazir & others

[(1974) 29 Tax 91 (H.C.Lah.)]

―A goodwill is a thing very easy to describe, very difficult

to define, it is the benefit and advantage of the good name and

reputation and connection of a business. It is the attractive force

which brings in customers. It is the one thing which

distinguishes an old established business from a new business at

its first start. The term goodwill is nothing more than a summary

of the rights accruing to the purchasers from their purchase of the business and property employed in it.

The goodwill of a partnership may be said in a general way

to be the value of its business, over and above the value of its

tangible assets and which grows out of the firm‘s name, trade worked up and publicity obtained.

It is as much an asset of the firm, to the amount of its

actual value to the business, as is its physical property, and

consequently, is the subject of sale and other contract or of a

right of action for a trust concerning it, as is any other property

of the firm. Like any other form of goodwill, the goodwill of

partnership depends very largely upon the continuance of the

business and a cessation of the business, for any extended time

will generally in whole or in part, destroy the value of the

goodwill.... Goodwill being an asset of the firm is subject to a

partial ownership of every member thereof and is ascertained in

the same manner as any other asset, by settlement of partnership.‖

51. “Guess work” vis-a-vis best judgement explained

Ayenbee (Pvt.) Ltd. v. Income Appellate Tribunal and others

[2002] 86 TAX 117 (H.C.Kar.) = 2002 PTD 407

―It is further added that the so-called ―guess work‖ as

already explained cannot be otherwise than that of a ‗prudent

man‘ and that too on the basis in cases where ―evidence‖ is not

at all available, of necessary probabilities. The cases cited by the

authors in this behalf are: ―1937 PC 133 (AIR V 24): ILR Nag.

191: 64 Ind. App. 102:31 Sind LR 284; 1957 Pat. 467 (AIR V 44


C 140): 36 Pat. 886: 1955 Trav-Co. 67(67) [(S) AIR V 42 C 26]:

ILR‖ Trav-Co. 1022; 1952 Pat. 235 (AIR V 39); 31 Pat. 246

(Case under S. 10(4), Bihar Sales Tax Act. 6 of 1944, which is

analogous to S, 23(4), Income Tax Act - AIR 1937 PC 133 Fol.):

1926 Lah. 233 (AIR V 20); 9 Luck 85 (An Income Tax Officer

does not possess absolute arbitrary authority to assess at any

figure he likes, and although he is not bound by strict judicial

principles, he should be guided by the rules of justice, equity and

good conscience) (AIR 1934 Nag. 183) (AIR V 21); 31 Nag. LR

32: 1938 Lah 867 (AIR V 25); ILR 1939 Lah 47: IR 1940 Nag. 83 (AIR V 27); ILR 1941 Nag. 360‖.‖

52. “Hearing”

Messrs Essem Power (Ltd.), Escorts House though Company Secretary Mr. Qaim Mehdi v. Federation of Pakistan through Secretary, Ministry of

Finance and 2 others [(2004) 89 TAX 380 (H.C. Lah.) = 2004 PTD 811 (H.C. Lah.)]

―Hearing‖ is obviously a proceeding where the parties are

heard or evidence is taken to determine the issue and also to

record decision on the basis thereof. It consists of any

confrontation, oral or otherwise, between an affected individual

and the decision maker sufficient to allow individual to present

his case in a meaningful manner. Sub-rules (2) and (3) of Rule 20

of ITAT Rules can only be resorted to by the Tribunal to

proceed ex parte or in default upon non-appearance of one or

both the parties. Sub-rule (1) however applies where both the

parties appear. On the appearance of both the parties, the

Tribunal under sub-rule (1) is bound to give hearing to both the

parties. Scope of these sub-rules is thus well defined. Each sub-

rule applies to a distinct situation. A judgment delivered after

hearing the parties under sub-rule (1) cannot be recalled by the

Tribunal under the proviso, which is applicable only to

judgments delivered under sub-rule (2) or (3) of Rule 20.

Assessee‘s application before the Tribunal under the

proviso was not maintainable as the assessee was not a party in

default. It had appeared through its counsel and had fully

participated in the appeal proceedings.‖


53. “Immunity”

Hudabiya Engineering (Pvt.) Ltd., Lahore v. Pakistan through Secretary, Ministry of Interior, Govt. of Pakistan, Islamabad

[(1997) 76 Tax 302 (H.C.Lah.)]

―In Ballentines Law Dictionary, 3rd Edition, the following

definition of Immunity appears at page 584:

―A personal favour granted by law, contrary to the general

rule ex parte levy, 43 Ark 42. A privilege or special privilege, a

favour granted, an affirmative act of selection of special subjects

of favours not enjoyed in general by citizens under constitution,

statute, or laws, Hammer vs. State 173 Ind. 199, 89 NE 850. A

right in the negative form of freedom from action or restraint

which otherwise might be taken against or imposed upon a

person such as the right of witness to be free from arrest while

attending court.‖

54. “Includes”


[(1983) 47 Tax 132 (H.C.Pesh)]

―The word includes [in section 2 (6-A) of I.T.A. 1922] is

significant and it is apparent that the word means has not been used

in the section. The includes denotes that the definition is inclusive

and not exhaustive. The meaning of both these words has been

given at page 197 of Crais on Statute Law, 1952 Edition, and it is

remarked that there are two forms of interpretation clause. In one,

where the word defined is declared to mean so and so, the definition

is explanatory and prima facie restrictive. In the other, where the

word defined is declared to include so and so, the definition is extensive.‖

55. “Including”

CST, Rawalpindi Zone, Rawalpindi v.

Abdul Razaq Zia-ul-Qamar

[(1973) 27 Tax 99 (H.C.Lah.)]

―We have already seen that the word including is used for

enlarging the scope and for bringing in species which would

otherwise not be covered.‖


56. “Income”



[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―The expression income entails wide spectrum. It covers

actual as well as constructive receipts and benefits in cash or

kind. It even includes what one saves by using it for oneself. For example, use of house by its owner.

That as per dictionary, the word income means a thing that

comes in. Its natural meaning embraces any profit or gain which

is actually received. However, while construing the above word

used in any entry in a legislative list, the above restrictive

meaning cannot be applied keeping in view that the allocation of

the subjects to the lists is not by way of scientific or logical

definition but by way of mere simple enumeration of broad categories.

That what is not income under the Income Tax Act can be

made income by Finance Act. An exemption granted by the

Income Tax Act can be withdrawn by the Finance Act or the

efficacy of that exemption may be reduced by the imposition of

a new charge, of course, subject to Constitutional limitations.

That the question, whether a particular kind of receipt is

income or not would depend on its answer on the peculiar facts

and circumstances of the case. If the nature of the receipt and its

source are not satisfactorily explained by an assessee, facts which

are generally within his peculiar knowledge the Income Tax

Officer may legitimately presume that the amount in question is an income of the assessee from an undisclosed source.

In Haig‘s language, income is increase or accretion in one‘s

power to satisfy his wants in a given period in so far as that

power consists of (a) money itself, or (b) anything susceptible of

valuation in terms of money, whereas, Simon equates personal

income with algebraic sum of consumption and change in network.


That the process of income determination is often expressed

as one of the matching costs and revenues. It involves the process of

working out costs used in connection with the earning of the

revenue in a particular accounting period.‖

Pak Industrial Development Corporation v. Pakistan,

through the Secretary, Ministry of Finance

[(1992) 65 TAX 84 (S.C.Pak.) = 1992 PTD 576 =

PLD 1992 SC 562]

―Word Income as used in section 2(24) should be read in

its ordinary, natural and grammatical meaning. However, when

this term is to be viewed in the constitution conferring legislative

powers, the most liberal construction should be put upon this word so that the same may have effect in their widest amplitude.‖

CIT v. Faysal Islamic Bank of Bahrain, Karachi

[(2001) 83 TAX 376 (H.C.Kar.) = PTCL 2001 CL. 410]

―The definition as appearing in section 2(24) of the

Ordinance of the word/expression ―income‖ would mean ―net

income‖ after making all permissible allowances, deductions, depreciation etc.

If assuming for the sake of argument that the definition is

to be taken to mean ―net income‖, the said definition cannot be

assigned to the word/expression ―income‖ as used in section 23

of the Ordinance as the very purpose of section 23 of the

Ordinance would be defeated. As has already been stated herein

above, section 3 of the Ordinance as the very purpose of section

23 of the Ordinance provides the various permissible allowances,

depreciations, expenditures etc., which are to be deducted from

income. Such deduction can only be made from the ―gross

income‖ and not from the ―net income‖ as the ―net income‖

would be arrived at after providing/deducting all the permissible

allowance, expenditures, depreciation etc.

Addition in section 23(1)(v), the legislature has given its

clear intention that depreciation on assets given on lease shall be

allowed against lease rentals only.‖

Pakistan Industrial Development Corporation v.


Pakistan, through Secretary, Ministry of Finance

[(1984) 49 Tax 76 (H.C.Kar)]

―Income therefore, in the light of above dictionary

meaning would include all moneys or other gains periodically

received by an individual, corporation etc., for labour, service or

from property, investments, operations, etc. Income denotes a

thing that comes in. Therefore, in its natural meaning the word

income will embrace any profit or gain which is actually

received.‖

CIT, (Central) Karachi v. Habib Insurance Co. Ltd. Karachi

[(1969) 19 Tax 222 (H.C.Kar.)]

―Having held that the word income in the Government of

India Act 1935 has to be given the widest possible meaning the

court observed that the gains taxed u/s 12(B) were profits that

were received by the assessee. It was in this context that the

court went on to say that, according to its ordinary meaning,

income means a thing that comes in...... We have to construe the

word income in the widest possible manner and, in our opinion

the word is wide enough to include capital gains on the

appreciation of investment as provided in rules 3 and 6 even though such gains have not been realised.‖

57. “Income tax authority”-- ITAT is not covered in section

156(3)

[2003] 88 TAX 9 (Trib.) = 2003 PTD (Trib.) 1708

―In our view, there is a clear cut bifurcation in the provisions

of sub-section (1) of section 156 of the Ordinance, 1979 with

regard to the terms ―any income tax authority‖ or the ―Appellate

Tribunal‖ which have been clearly disjoined from each other by

using the word ―or‖ in between them. In sub-section (3) of the

said section, only the words ―any income tax authority‖ have been

used but there is no any mention of Appellate Tribunal. In these

circumstances, there appeared to be a cautious

omission/intentional omission by the Legislature of not including

the words ―the Appellate Tribunal‖ along with the words ―income

tax authority‖ in the provisions of sub-section (3) of section 156


whereas specifically the said words (the Appellate Tribunal) were

mentioned in sub-section (1) of the said section. Even otherwise,

the various classes of ―income tax authorities‖ have been

enumerated in section 3 under Chapter-11 of the then Ordinance,

1979 but the Appellate Tribunal has nowhere been included in the

categories of ―income tax authorities‖. In fact, the Appellate

Tribunal stands constituted by separate provision u/s 133 under

chapter-XIII of the Ordinance, 1979 and as such is a forum not falling within the category of term ―income tax authority‖.‖

58. “Individual” & “association of persons”

The Punjab Province v. The Federation of Pakistan

[(1960) 2-Tax (Suppl. 3) (S.C.Pak)]

―There can be no doubt that the word individual can only

mean a natural person i.e. a human being. While every individual

must be a person, the converse is not true because an artificial

juridical person or a legal person, whether it is a corporation

aggregate or corporation sole, is not an individual.

By no stretch of imagination the provincial government can be held to be an association of persons.‖

59. “Individual” and “such individual”

Rashid Akhtar & Sons v. CIT, Lahore

[(1980) 42 Tax 168 (H.C.Lah)]

―There are in fact three reasons for giving to the words any

individual now a meaning different from one that is urged ....

Firstly, the word individual as held in the case of Khatija Begum, in

its ordinary meaning, and as it was then used in section 3 of the

Income Tax Act, implied both a male and a female..... Secondly,

any doubt in this respect has been further removed by the

substitution of the expression her husband by the expression he

or she in clause (i). The context now is such that it positively

indicates that the individual could be male or a female.....

Thirdly, in clause (ii) the use of the expression such individual

takes us back to the individual mentioned in the opening words

of sub-section (3) of section 16. The scope of expression such individual is, as wide as that of the expression an individual.‖


60. “Industrial undertaking” – meaning of

[(2004) 89 TAX 461 (Trib.)]

―EPZA Ordinance, 1980 was promulgated to set up export

oriented industries and EPZA Rules, 1981 were made in

pursuance to section 26 of EPZA Ordinance, 1980 for carrying

out the purposes of the EPZA Ordinance, 1980. However, in no

manner the EPZA Ordinance, 1980 & EPZA Rules, 1981 can

extend any tax concession to a support organization, such as a

bank or an insurance company, which is only admissible to an

industrial undertaking under clauses (126) & (128) of 2nd

Schedule of Income Tax Ordinance, 1979 for the simple reason

that it is the domain of the legislature to levy tax on certain

classes of income and to exempt certain classes from tax under

income tax law. In this regard reference is made to section 14(1)

of Income Tax Ordinance, 1979 which provides that the

incomes or classes of income or person or classes of persons

specified in the 2nd Schedule shall be exempt from tax under

this Ordinance, subject to conditions and to the extent specified

therein. Sub-section (2) of section 14 formally provides that only

the Federal Government may, from the time to time by

notification in the official gazette, make such amendment in the

2nd Schedule, by adding or omitting or making any change in

any clause or condition therein, as it may think fit subject to

approval by the National Assembly. Thus if the definition of an

industrial undertaking was extended to include any supporting

enterprise/organization, such as bank or insurance company, it

should have been made by the Federal Government by a

notification u/s 14(2) of Income Tax Ordinance, 1979 and not

by any other law, as quoted or cited by the learned counsel for the appellant.

The argument of the learned D.R. that although an industrial

undertaking has not been defined in 2nd Schedule, but a definition

is available for the same in Part-IV of First Schedule, as

reproduced supra, has some force as it is a settled principle that if

no definition of a particular term is available in its particular place,

its definition in the same enactment or in some other enactment


may be adopted. And if it is not available even in any enactment

then its general meaning should be adopted. In this regard even

the general meaning an ‗industrial undertaking‘ does not favour

the assessee which is a banking company and no way is engaged in

producing any goods for the market nor has employed any machinery for the purpose of its business activities.

Reference is also made to section 48 of Income Tax

Ordinance, 1979 under which exemption from tax is allowed to

newly established industrial undertaking with certain conditions

as laid down under sub-section (2) of section 48. This section is

identical to section 14 read with clauses (126) & (128) of 2nd

Schedule. In sub-section (2) of section 48 various conditions

have been laid down including:

―(d) that it employs ten or more workers and involves the

use of electrical energy or any other form of energy

which is mechanically transmitted and is not generated

by human or animal agency; or twenty or more

workers and does not involve the use of electrical

energy or any other form of energy which is mechanically transmitted.‖

Although these conditions do not apply to clauses (126) &

(128) yet it gives a general idea as to what an industrial undertaking for which an exemption is claimed has to be.

We have also considered the arguments of the learned

counsel that while section 2(e) of EPZA Ordinance, 1980

requires that an industrial undertaking shall be further specified

in this behalf by the Federal Government and that EPZA Rules,

1981 notified vide SRO 1058(I)/81, dated 23.9.1981 are made

under the said notification and that the rules have further

specified such supporting enterprises under rules 5(3), 10 and to

be more specific under rule 15(4) of EPZA Rules, 1981. But we

have noted that EPZA Rules, 1981 have been made in exercise

of powers conferred by section 26 of EPZA Ordinance, 1980,

and not u/s 2(e) of EPZA Ordinance, 1980. Section 26 of

EPZA Ordinance, 1980 simply provides that the ―Federal


Government may, by notification in official gazette may make rules for carrying out the purpose of this Ordinance.‖

61. “Interest”


[(1983) 47 Tax 132 (H.C.Pesh)]

―The word interest has not been defined in the Income

Tax Act. Various meaning of interest have been given in

Strouds Judicial Dictionary and at serial no. 42 it is shown to mean

compensation paid by the borrower to the lender for

deprivation of the use of his money. Interest, according to

Blacks Law Dictionary, means the compensation allowed by law

or fixed by the parties for the use or forbearance or detention

of money. According to Whartons Law Lexicon, interest means

money paid at a fixed rate percent for the loan or use of some other sum, called the principal.‖

62. “Liable”

Noon Sugar Mills Ltd. v. CIT, Rawalpindi

[(1990) 62 TAX 74 (S.C.Pak)]

―The word liable inter alia carries the meaning as subject to

an obligation, that for which one is liable, a debt, bound or

obliged in law or equity, responsible, chargeable, answerable,

legally subject or amenable to, compellable to make satisfaction, compensation or restitution.

The above quoted definitions of word liable indicate that it

inter alia carried the meaning as subject to an objection, that for

which one is liable, a debt bound or obliged in law or equity,

responsible chargeable answerable legally subject or amenable to,

compellable to make satisfaction compensation or restitution.

It is also evident that the meaning of the word liable is not

restricted to denote an absolute and fixed liability but has the

meaning expressed by phrase within the range of possibility.‖

CIT, Rawalpindi v. Noor Sugar Mills

[(1975) 32 Tax 273 (H.C.Lah.)]


―The word liable is susceptible of two interpretations. In a

wider and a broader sense it means answerable or responsible in

law. In narrow and stricter sense it only connotes held liable,

after the liability has been fixed on him by adjudication.‖


63. “Life”

Adeel-ur-Rehman and others v. Federation of Pakistan and others

2005 PTR 1[S.C. Pak.] = 2005 PTD 172 (S.C. Pak.)]

―The word ‗life‘ has been interpreted in the case reported as Ms. Shehla Zia vs. WAPDA (PLD 1994 SC 693) as under:-

―The word ‗life‘ in the Constitution has not been used

in a limited manner. A wide meaning should be given

to enable a man not only to sustain life but to enjoy it.‖

64. “Manufacture”

CIT v. Paskin (Pvt.) Ltd.

2003 PTD 2073 (H.C.Kar.)

―The term ―manufacture‖ is not defined in the Income Tax

Ordinance, therefore, aid has to be taken from the for

ascertaining it‘s ordinary meaning. In the Blacks Law Dictionary 6th Edition at page 965 it is defined as follows:

Manufacture.-The process or operation of making

goods or any material produced by hand, by

machinery or by other agency anything made from the

raw materials by the hand, by machinery, or by art.

The production of articles for use from raw or

prepared materials by giving such materials new

forms, qualities, properties or combinations, whether

by hand labour or machine, Cain‟s Coffee Co. vs. City of Muskogee, 171 Ok1, 635, 44 P.2d 50,52.

In the 21st Century Dictionary revised Edition at page 837 the term is defined as follows:

Manufacture-. 1. To make something from raw

materials, especially in large quantities using

machinery. 2. To invest for fabricate something. 3. To

practice, act or process or manufacturing something. 4. Anything manufactured.

On examining the definition of the term manufacture, it

is clear that it is used for describing the process of making of


goods or any material produced by hand or by machinery or by

any other process from raw material in large quantities. What

respondent appears to have done is that it has cut the leather

which is the raw material and then stitched the cut pieces to

make them into jacket. Then the respondent appears to have

stitched buttons and made kaj to make the jacket complete. In

doing this job, the respondents are admittedly in large quantity.

Now keeping in view the definition of the term ―manufacture‖

as reproduced above, undoubtedly, the job undertaken by the

respondent is of manufacture of leather garment. It is

immaterial for the purpose of clause (125A), that the process

of manufacturing of leather garment is undertaken by the

respondent for itself or for others. The service charges as is

referred to in the question will obviously be the profits and

gains derived by the respondent from manufacturing of leather

garments. In this view of the matter our answer to the question referred in the affirmative.‖

The CIT, Burma v. Messrs Steel Brothers and Co., Ltd.

[2 ITC 129 (Rangoon)]

In Murray‟s New English Dictionary, manufacture is defined as

to work up (Material) into forms suitable for use. In Annandale‘s

Concise English Dictionary, manufacture is defined as the operation

of reducing raw materials into a form suitable for use by more or

less complicated processes. In Chamber‟s Twentieth Century

Dictionary manufacture is defined as to make from raw materials

by any means into a form suitable for use. According to these

definitions it appears to me to be self-evident that Messrs. Steels

operations in the milling of rice, in the extraction and conversion

of timber, in the ginning of raw cotton and the pressing of oil-

seeds all amount to manufacture.‖


65. “Material”

Pak. Educational Society Karachi v. Govt. of Pakistan through Chairman

& Secretary Revenue Division Islamabad

[(1993) 67 Tax 311 (H.C.Kar)]

―The meaning of the word material given in Legal Thesaurus by

W.C. Burton basic, capital, cardinal, central, compelling,

consequential, essential, extensive, far-reaching, fundamental,

indispensible, influential, key, heading, main, major, memorable,

momentous, necessary, paramount, pertinent, pivotal, prevalent,

primary, principal, relevant, remarkable, salient, signal,

significant, substantial, valuable, vital, weighty, worth

considering.‖

65.1 “Material Evidence”

―The expression material evidence has been defined by

Blacks Law Dictionary as under:-

Material Evidence:- Such as is relevant and goes to the

substantial matters in dispute, or has a legitimate and

effective influence, or bearing on the decision of the case.

Materiality, with reference to evidence does not have the

same signification as relevancy.‖

66. “May”

CIT v. Surridge & Beecham

[(1968) 18 Tax 72 (H.C.Kar.)]

―Ordinarily the word may is used in a permissive or an

enabling sense. But this is not universally true. There are cases in

which it is used in the imperative sense. When statutes authorise

persons to do acts for the benefit of others or for public good or

the advancement of justice, the use of expression may has a

compulsory force.‖

67. “Merge” & “Merger”

A&B Food Industries Ltd. v. CIT/CST, Karachi

[(1992) 65 Tax 281 (S.C.Pak)]

―The definitions of the words merge and merger given in

Corpus Juris Secundum, Vol 57, pages 1067 and 1068, which read as follows:-


Merge: The verb to merge has been defined as meaning to

suck or disappear in something else; to be lost to view or

absorbed into something else; to become absorbed or

extinguished; to be combined or be swallowed up; to lose

identity or individuality. It has also been defined as meaning to

sink the identity or individuality of; to cause to disappear; to

make to disappear in something else; to cause to be absorbed or

engrossed; to swallow up. It is frequently used with the words in or into.

Merger. In law it is the absorption or extinguishment of

one estate or contract in another. It is said that merger is an

operation of law not depending on the intention of the parties.

However, it has also been stated that it is the law that merger is

largely a question of intention to a great extent depending on the

circumstances surrounding each particular case, and it is said that

the courts will always presume against it whenever it will operate

to the disadvantage of a party. In merger there is a carrying on of

the substance of the thing, except that the substance is merged

into, and becomes a part of a separate thing with a new identity....‖

68. “Mistake apparent from record” Scope of section 156

[(1998) 77 Tax 151 (Trib.)]

―Where a provision is capable of two interpretations, the

adoption of one of such interpretations could not be considered

a mistake apparent from the record for which action could be taken subsequently.

Mistake contemplated u/s 156, Income Tax Ordinance,

1979 must be one that could/would immediately meet the eye

and should not be one that could be established by a long-drawn process of argumentation.‖

69. “Notice”, “give notice” and “opportunity”

[(2004) 89 TAX 365 (Trib.) = 2004 PTD (Trib.) 441]

―In order to further appreciate the legal requirement of the

proviso quoted supra, we need to understand the meanings of

important words ―Give a Notice‖, ―Notice‖ and ―Opportunity‖.


Since these legal terms are not defined in the Ordinance, we shall

consult Black‘s Law Dictionary and the Commentary of Kanga & Palkiwala:-

Black‘s Law Dictionary:

Give notice.-To communicate to another, in any

proper or permissible legal manner, information or

warning of an existing fact or state of facts or (more

usually) of some intended future action; e.g. tenant

giving landlord thirty-day notice of termination of

tenancy; employee giving employer two weeks notice intention to quit; to give notice of appeal to appellant.

The word ―Notice‖ in its turn has been given the following

meaning:-

Notice.-Information; the result of observation,

whether by the senses or the mind; knowledge of the

existence of a fact or state of affairs; the means of

knowledge. Intelligence by whatever means

communicated. Any fact which would put an

ordinarily prudent person on inquiry. That which imparts information to one to be notified.

Notice in its legal sense is information concerning a

fact, actually communicated to a person by an

authorized person or actually derived by him from a

proper source, and is regarded in law as ―actual‖ when

the person sought to be affected by it knows thereby

of the existence of the particular fact in question. It is

knowledge of facts which would naturally lead an

honest and prudent person to make inquiry, and does

not necessarily mean knowledge of all the facts. In

another sense, ―notice‖; means information, an advice,

or written warning, in more or less formal shape,

intended to apprise a person of some proceeding in

which his interests are involved, or informing him of

some fact which it is his right to know and the duty of the notifying party to communicate.‖


70. “Occupation”

CIT, Madras v. Sri Krishna Chandra

Gajapathi Narayan Deo, Raja of Parlakimedi


―If, however, he (that is the owner) furnishes it (that is, the

vacant house) and keeps it ready for habitation whenever he

pleases to go to it, he is an occupier though he may not reside in it one day in a year.‖

71. “Opinion”

Star Rolling Mills v. CIT

[(1974) 30 Tax 27 (H.C.Kar.)]

―An opinion on the basis whereof a statutory authority is

entitled or empowered to take any action or initiate any legal

proceeding, may by accurate or erroneous, but it must be an

honest opinion or conviction, based on tangible material capable

of sustaining such opinion, and not mala fide opinion or colourable exercise of statutory power.‖

72. “Or”

Pakistan Services Ltd., Karachi v. CIT, Central Zone-C (COS-1)

[(1999) 80 Tax 106 (H.C.Kar.) = 1999 PTD 2901]

―We do not see any reason for holding that word ‗or‘

appearing in Explanation (i) to section 24(i) of the Ordinance is

not to be used in its ordinary and natural use as disjunctive and to

use it as conjunctive as to relate to the word bonus with the

expression payable to an employee in accordance with the terms of his employment as remuneration.‖

73. “Owners”, “ownership” and “own”

Burma Railway Co. v. Secretary of State

[1 ITC 140 (Burma)]

―It must be presumed that the legislature was aware that the

expressions owner, ownership and the verb to own in its various

tenses have been frequently used in Acts of a similar nature and

further that they can be and are used in various meanings in

different Acts, in some of which they have been specially defined


for the purposes of particular sections. Nevertheless the

expression has not been defined for the purposes of this Act. It

may have the narrow and technical meaning of the full ultimate

and legal owner, but if this was intended, it could easily have been

expressed and the failure to do so points to its not having been so intended.‖

74. “Paid”

CIT, Rawalpindi v. K.K. & Co. Ltd.

[(1980) 42 Tax 81 (H.C.Lah)]

―.... the word paid used in the context of the bonus u/s

10(2)(x) could not be so extended as to cover any provision of

payment at the end of the year unless the obligation is

discharged by actual payment of the sum involved during the accounting year.‖

75. “Pay” or “paid”

[2004 PTD (Trib.) 2087 = (2004) 90 Tax 240 (Trib.)]

―Section 25(c) as reproduced above uses the word ―paid‖.

The word ―paid‖ has not been defined by this section. So, we

will have to look at the Dictionaries for understanding the

meaning of the word ―paid‖ or ―pay‖. According to Oxford

Dictionary ―pay‖ means ―to give a person what is due in

discharge of debt or for services done or goods received‖. New

Webster‘s Dictionary defines word ―pay‖ as; ―to discharge a debt

or obligation by giving or doing something, to recompense as for

goods supplied or services rendered, to satisfy claims of a person

by giving money due‖. Chamber 20th Century Dictionary gives

the following meaning of the word ―pay‖; ―To satisfy, to gratify,

to give what is due in satisfaction of a debt, in exchange, in

compensation, in remuneration. To settle or discharge a claim,

bill, debt, duty by having over money for, or other equivalent, compensation, etc.‖

76. “Party in default”

Messrs Essem Power (Ltd.), Escorts House though Company Secretary

Mr. Qaim Mehdi v. Federation of Pakistan through Secretary, Ministry of

Finance and 2 others


[(2004) 89 TAX 380 (H.C. Lah.) = 2004 PTD 811 (H.C. Lah.)]

―The resort to the proviso is available to a ―party in

default‖ to show a ―sufficient cause‖ preventing it from

appearing before the Tribunal on the day of appeal hearing. In

the present case, none of the parties were in default during the

hearing of the appeal before the Tribunal. The counsel for the

assessee admitted that both the parties appeared and participated

in the appeal hearing and were not absent and that the judgment

was neither a default nor an ex parte judgment. He however,

contended that delay delivery of judgment amounts to ―default

of hearing‖ whereof the proviso could be invoked by the assessee.

This argument has no weight. The words ―party in default‖

as used in proviso to Rule 20 is obviously meant for the person

or persons failing to appear and attend the hearing of appeal

before the Tribunal in terms of sub-rule (2) or sub-rule (3) of

Rule 20 and thus inviting a judgment in default or ex parte.

These sub-rules respectively apply where ―the appellant or

the respondent does not appear‖ (sub-rule (2)) or where ―both

the parties remain absent‖ (sub-rule (3)), the Tribunal may

decide the appeal on merits. The proviso provides a remedy

against the decisions made by the Tribunal in the absence of one

or both the parties referred to in the proviso as ―the party in

default‖. Such ―party in default‖ can apply within thirty days to

the Tribunal for recalling the order by proving that such party

was prevented by a sufficient cause from appearing when the

case was called on for hearing. This remedy is against default or

ex parte decisions if the non-appearing party can show a

sufficient cause for its absence. The word ―party in default‖ as

used in the proviso and in the context of Rule 20 of ITAT Rules

can by no stretch be interpreted to mean ―the default in

hearing‖. Default in hearing is denying an opportunity of hearing

to a party even when the party was present before the Court or

the Tribunal. The terms ―party in default‖ and ―default in

hearing‖ or non-hearing connote different meanings and arise

out of different situations and entail different consequences. The


non-appearing party denies itself the hearing by remaining

absent from the Court when the case is called for hearing. Its

default in appearance becomes the reason for the judgment in

default or ex parte judgment by the Court. Contrarily the default

in hearing a party is attributable to the Court before whom the

party or the parties appear but are denied the opportunity by the

Court to submit their case either adequately or otherwise. The

absence of hearing can also arise from the absence of notice or

adequate notice in the case. As a consequence of no notice or

inadequate notice if a party is unable to attend the Court on the

day the case was fixed, remedy of the application under the

proviso can be availed of if a decision is made on such non-

appearance of a party. If a party attends and participates in the

hearing of the case proceedings, the proviso to Rule 20 will not be applicable.‖

77. “Pay”

CIT, North Zone, Lahore v. Mst. Wazirunnissa Begum

[(1974) 29 Tax 188 (S.C.Pak.)]

―The word pay in section 16(2) means to satisfy, to set at

rest, to discharge, to require with what is due or deserved etc.,

and it is obvious that the word as used in the aforesaid provision

means when the money is actually delivered and not when a

decision is made to make the payment.‖

78. “Penalty”

Citi Bank N.A. Karachi v. CIT, Central Zone C Karachi

[(1994) 70 Tax 159 (H.C.Kar)]

―Term penalty according to the Blacks Law Dictionary is an

elastic term with many differentiations of meaning. It involves

an idea of punishment corporeal or pecuniary, civil or criminal,

although its meaning generally is confined to pecuniary

punishment. There cannot be two opinions about such meaning

of the term. But in order to understand the real import of a term

in a statute, it is necessary to examine the statute itself as an aid to interpretation.‖

79. “Permanent establishment”


CIT v. Unilever P.L.C., U.K.

2002 PTD 44 (H.C.Kar.)

―The above definition confirms that the term ―permanent

establishment‖ denotes a branch, management, factory or other

fixed place of business but does not include an agency unless the

agent has and habitually exercises a general authority to negotiate

and conclude contracts on behalf of such enterprise or has a

stock of goods or merchandize from which he regularly meets

his order. This definition of ―permanent establishment‖ hardly

covers the visits of the expatriates/employees of the respondent.

The term ―permanent establishment‖ signifies some

permanence. In CIT vs. Fisakhapatnam Port Trust [1983] 144 ITR

146 the Andhra Pradesh High Court at page 162 has found a

―permanent establishment‖ to connote ―projection of the

foreign enterprise itself into the territory of the taxing state in a

substantial and enduring form; (vide F.E.Koch‘s Book on the

Double Taxation Conventions published by Stevens & Sons,

London, 1947, Vol-1 at page 51, quoting Mitchell B. Caroll.

Before the sub-Committee of the Committee of U.S. Senate

Foreign Relations). The appellant has failed to bring any

evidence or document on record to substantiate its claim that the

respondent has maintained a ―permanent establishment‖ here in

Pakistan. The ITAT‘s finding of fact that the respondent has not

maintained a ―permanent establishment‖ in Pakistan has gone

unrebutted in view of the appellant‘s failure to bring forth any

other evidence to the contrary (see CIT vs. Abbott Finance 1982

PTD 31). There is thus no reason to disturb this finding of fact

In light of the above discussion we hold that the visits of the

expatriates of the respondent in Pakistan would not constitute a ―permanent establishment‖ of the respondent in Pakistan.‖

80. “Pending” vis-a-vis revision petition under repealed

I.T.O. 1979

Home Service Syndicate v. CIT

2003 PTD 2109 (H.C.Lah.)

―The revision petitions on the date when the new

Ordinance came into being were not pending and were filed on


28th of August, 2002 within the limitation provided by section 138(c) of the old Ordinance.

This Court is reminded of the case of Delbert-Evans vs.

Davies & Watson [1945] 2 All E.R. 167, D.C., wherein it was observed:

There is ample authority for saying that during the

time between the conviction of an accused person on

indictment and his appeal to the Court of Criminal

Appeal the case is not ended at all, the case is still sub

judice. The case is pending, to use the expression

which has been used in many cases and in many

judgments, and the publication of improper matter

may amount to a contempt of Court. Newspapers

who choose to publish comments upon a criminal

case while it is still pending, and criminal case is still

pending while the time for appealing has not run out

at least, and most assuredly in the case of a man who

is appealing or is proposing to appeal - if they choose

to comment on the facts of the case other than upon

matters which have been given in evidence in open Court, they do so at their peril.

In this case, the petitioner-Company had not filed his

revision petition but was proposing to do the same within the time frame of 90 days when the new law came into being.‖

81. “Pending” ordinarily means that the matter is not

concluded


2003 PTD 2109 (H.C.Lah.)

―In the case of S.K. Kashyap vs. State of Rajasthan (AIR 1971

SC 1120 at page 1128), the Supreme Court of India said that the

word ―pending‖ ordinarily means that the matter is not

concluded and the Court which has cognizance of it can make

an order on matter in issue. The test is whether any proceedings

can be taken in the case before the Court or Tribunal where it is


said to be pending. The answer is that until the case is

concluded, it is pending.‖

82. “Pending” not only means actually pending but what is

proposed to be filed within an unexpired periphery of

time


2003 PTD 2109 (H.C.Lah.)

―It must be understood that whereas an appeal is a right, the

revision too is provided by the statute. The Saving Clause of the

Ordinance itself as well as the provision of section 6(e) of the

General Clauses Act protects these provisions of revision of the old

law as long as the matter was pending. It is clear to us that

―pending‖ does not mean physical pending but would also include

within its definition what is proposed to be filed within an unexpired

periphery of time which has happened in the present case. When we

look at the impugned orders, we see that the Commissioner of

Income Tax relied on the dictionary meaning of the words

―pending‖ without realizing that the word ―pending‖ had to be

construed in context with the present proceedings and the law and a

mere reliance on a mere dictionary meaning did not make a correct

appreciation.‖―

83. “Person”

Begum Nusrat Bhutto v. ITO, Circle V, Rawalpindi

[(1980) 42 Tax 59 (H.C.Lah)]

―The power of authority of the present day Legislature is

not limited to the following of principles of jurisprudence and

treat a dead man as a non-entity which in actual fact is; the

Legislature can treat the dead man as alive as for certain

purposes, it can treat a living human being as dead for example in cases of bankruptcy or insolvent.‖

84. “Presumptive Tax Regime”

[2004 PTD (Trib.) 2786]

―Regarding definition of word income we have already

mentioned that in Presumptive Tax regime (PTR) the turnover is


income while in other cases the income basically is receipts minus expenses. The distinction, therefore, is obvious.‖

85. “Previous year”

Sheikh Miran Bux Karam Bux Ltd. Karachi v.

ITO, Company Circle 12, Karachi

[(1976) 33 Tax 99 (H.C.Kar.)]

―Previous year had only one definition in the Income Tax

Act, 1918. However, by a subsequent legislation, namely, the

Income Tax Act of 1922, the definition of previous year was

enlarged. While retaining the old definition, paragraph (b) was

added, and paragraph (c) was introduced by the Income Tax

(Amendment) Act 1939. Looking at the two paragraphs, it is

clear that, in case of paragraph (a), the previous year meant an

accounting year comprised of a full period of twelve months and

corresponding to a financial year preceding the financial year of

assessment. But in paragraph (b), the use of words such period

was unqualified and gave a discretion to the Central Board of

Revenue or such authority, as was authorised by the Board in

this behalf to lay down the length of the period which could either be less than one year or more than one year of a year.‖

86. “Processing”

Rafhan Maize Products Co. Ltd. v. CIT

[1988 PTD 571 (S.C.Pak)]

―Admittedly the operation of freezing, preserving or

canning of these items would not change their identity and,

therefore, the word processing as used in the aforesaid legal

provision, is also to be interpreted or understood in the same

manner, i.e. the identity of the raw material is not destroyed in the operation or operations.‖

Crescent Sugar Mills & Distillery Ltd. Lahore v.


[(1981) 43 Tax 1 (H.C.Lah)]

―The term manufacture has often been understood as

transformation of one article into a commercially different

commodity. The Tribunal does not appear to be wrong in


confining the processing to undergoing a treatment which does

not change the identity of the goods. May be, that in some

shades in exact, the connotation of the word manufacture and

processing overlap but we, feel, that here the word processing is

not amenable to extended meaning and conceivably has been

used along with the associated words in the cognate sense as a

phenomenon of the food processing industry which includes,

the canning, freezing and preservation of goods through various methods.‖

87. “Proceedings” and “pending proceedings”

[2003] 88 TAX 145 (Trib.)

―In a general scene, the form and manner of conducting

juridical business before a court or judicial officer. Regular and

orderly progress in form of law, including all possible steps in an

action from its commencement to the execution of judgment.

Term also refers to administrative proceedings before agencies, tribunals, bureaus, or the like.

An act which is done by the authority or direction of the

court, agency, or tribunal, express or implied; an act necessary to

be done in order to obtain a given and; a prescribed mode of

action for carrying into effect a legal right. All the steps or

measures adopted in the prosecution or defence of an action.

Statter vs. United States, C.C.A. Alaska, 66 F.2d 819, 822. The

word may be used synonymously with ―action‖ or ―suit‖ to

describe any act done by authority of a court of law and every

step required to be taken in any cause by either party. The

proceedings of a suit embrace all matters that occur in its progress judicially.

Term ―proceeding‖ may refer not only to a complete

remedy but also to a mere procedural step that is part of a larger

action or special proceeding. Rooney vs. Vermont Investment Corp.,

10 Cal.3d 351, 110 Cal. Rptr. 353, 365, 515 p.2nd 297. A

―proceeding‖ includes action and special proceedings before

judicial tribunals as well as proceedings pending before quasi-

judicial officers and boards. State ex rel. Johnson vs. Independent


School Dist. No. 810. Wabasha Country, 2600 Minn. 237, 109

N.W.2d 596, 602. In a more particular sense, any application to a

court of justice, however made, for aid in the enforcement of

right, for relief, for redress of injuries, for damages, or for any remedial object.

―Proceeding‖ means any action, hearing, investigation,

inquest, or inquiry (whether conducted by a court administrative

agency, hearing officer, arbitrator, legislative body, or any other

person authorized by law) in which, pursuant to law, testimony can be compelled to be given.

….. In the case of Income Tax proceedings this would

mean and include the assessment stage before he taxation officer

to the final order by the Supreme Court of Pakistan. During this

period or if in between the petitioner does not opt for an appeal,

the case attains finality and until then the entire process is

covered within the definition of the word ‗proceedings‘.

The use of word ―pending‖ enlarges the scope of the

section. It has been defined at page 1134 of the same Dictionary.

It originates from the Italian words ―LIS-PENDENS‖ which

mean continuity till final judgment through which the cause of

action is set at rest. Seeking help from General Clauses Act, 1893

section 6 he defined the pending proceedings to be as the

continuation upto the execution or implementation of the final

order. Pending proceedings has been held as continuation till

culmination point i.e. execution of the final order after which neither any appeal was filed nor any remedy was left.‖

88. “Profit”

CIT, Karachi v. Paracha Textile Mills Karachi

[(1973) 28 Tax 155 (H.C.Kar.)]

―The word profits has not been defined in the Income Tax

Act. Firstly the word profits as occurring in the said proviso

must be understood in its context, and that is, in relation to the

bonus paid to the employees and the requirement of

reasonableness between profits and bonus, including as aforesaid, commercial expediency.‖


The Bharat Insurance Company Ltd. v. CIT, Punjab & NWFP

[5 ITC 288 (High Court Lahore)]

―In Mersy Docks and Harbour Board vs. Lucas (2 Tax Cas. 25)

interpreted by the House of Lords to mean the next proceeds of

a concern after deducting the necessary outgoing without which

those proceeds could not be earned or received or income of

whatever character it may be over and above the costs of

receipts and collection, and the gains of a trade were taken to be

whatever was gained by the trading, for whatever purpose it was

used. The same view was adopted by the majority of that House

in Last vs. London Assurance Corporation (2 Tax Cas. 100). There is

nothing to show that the word profit is used in different sense in the Indian Income Tax Act.

In Board of Revenue vs. Al. A.R. RM Arunachalam Chethiar (1

ITC 75), a similar interpretation was adopted by a Special Bench

of the Madras High Court on the basis of several English

decisions.... The Income Tax then in force was the Act of 1918,

but there seems to be no material difference in the provision of

that Act and the present Act so far as the point under discussion is concerned.‖


89. “Property”

Hamdard Dawakhana v. CIT, Karachi

[(1980) 42 TAX 1 (S.C.Pak)]

―There is consensus of judicial opinion that the term

property, as used in clause (i) is a term of the wide import and

subject to any limitation or qualification which the context might

require, it signifies every possible interest, which a person can

acquire, hold and enjoy. It is comprehensive enough so as to

cover even business, cash, deposits, securities and other such

things. There is nothing in the language of the clause in question

to restrict in any manner the normal and accepted meaning to

the word property so as to exclude business from its contention.‖

90. “Receivable” u/s 17 means actually received and not

“due”

[2003] 87 TAX 148 (Trib.) = 2003 PTD (Trib.) 1146

―The learned A.R. sought strength from the Indian

jurisdiction reported as 22-ITR 13 (Bombay High Court) in the

case of Seth Lalbhai Dalpatbahi vs. Commissioner of Income Tax,

Bombay North. In the supra judgment Section 8 of the Repealed

Act, 1922 which is almost identical to Section 17 of the Income

Tax Ordinance, 1979 was the subject matter of discussion, the

instant case is very much relevant especially in view of the fact

that in the above cited judgment the Honourable Bombay High

Court was seized of the matter to determine the meaning of

word ―receivable‖. The facts of the supra cited case are that

interest on security was payable on the 15th April and 15

October every year. These securities were lodged with the

Imperial Bank of India. 15th October, 1944 was holiday, 16th

October was a working day and 17th and 18th October were

again Diwali holidays. The Imperial Bank collected the interest in

respect of this half year on the 21st October, 1944 and credited

it to the assessee‘s account in the bank pass book on the same

date. The assessee however, passed the corresponding entry in

his books of account on 25th October, 1944. This half yearly

income falling due for payment on 15% October, 1944, had


been treated by the Department as income of the assessment

year 1945-46. The assessee contended that this should be

included in the assessment year 1946-47. In this regard the

assessee had relied upon Section 8 of the Repealed Income Tax

Act, 1922 which dealt with the assessability of income under the head ―Interest on securities‖ which reads as under:-

The tax shall be payable by an assessee under the head

―interest on securities‖ in respect of the interest

receivable by him on any security of the Central

Government or Provincial Government, or on

debentures or other securities for money issued by or on behalf of a local authority or a company.

It was the contention of the assessee that word

―receivable‖ in this connection means ―received‖ and as the

interest was credited by the bank to the assessee‘s account on

21st October, 1944, it should be treated as the income of the

year in which this date falls, i.e. assessment year 1946-47. The

Tribunal held that the interest was receivable by the assessee on

the 16th October, which was a working day and, therefore, it

was the income of the year in which this date falls, i.e. the

accounting year relevant to the assessment year 1945-46. The

Tribunal did not agree with the assessee that ―receivable‖ means

―received‖. On a reference application forwarded to the High Court for the determination of the same, it was held.

Undoubtedly, the language used by the Legislature is

―receivable‖ and not ―received‖ and we are asked to

draw the necessary inference that the Legislature was

attempting to tax interest on securities not when it

was received, but when it was capable to being

received. But when on looks a little more closely into

the scheme of the Act, it is clear that ―receivable‖ in this case does not mean ―capable of being received‖.‖

91. “Received”-- A person cannot receive a thing from

himself




―The Act contains no definition of the word receive or

received but in Murrays Oxford Dictionary the expression receive is

defined as to take in ones hand or into ones possession

(something held out or offered by another), to take delivery of (a

thing) from another, either for oneself or for a third party. In the

Imperial Dictionary the same expression is defined as to get or

obtain; to take, as a thing offered, given, sent, committed, paid,

communicated or the like; to accept. It seems to me that the

word receive implies two persons, namely, the person who

receives and the person from whom he received. A person cannot receive a thing from himself.‖

―.... Taking the expression received in its ordinary

dictionary meaning, I am of opinion that the assessee, who had

already received the money in Baluchistan, did not receive it

again when he brought it into, or forwarded it to, the Punjab. I

would, therefore, hold that he is not taxable on the alleged income mentioned in the reference‖.

92. “Repeal” & “amendment”

Eastern Federal Union Insurance Co. v. CIT

[(1966) 14 Tax 211 (H.C.Kar.)]

―There is no difference in principle between repeal and

amendment. Section 6 of General Clauses Act is applicable to

the present case. Under this provision of law the repeal does not

affect any right, privilege, obligation or liability, acquired, accrued under any enactment so repealed.‖

93. “Reserve”

CIT, Central Zone Karachi v. United Liner Agencies, Karachi

[(1990) 62 Tax 31 (H.C.Kar)]

―The word reserve in its ordinary sense means keeping

apart something with a view to utilise it on a future date for a

particular or specific purpose. Therefore, any amount which has

been kept apart with reference to its particular use at a future

time will be called a reserve. But if there is an unappropriated

amount in the profit and loss account without specifically


keeping it apart for utilising for any purpose in future, it will not be deemed to be a reserve.‖

94. Unlawful action/order does not force any law of

limitation for filing of appeal

[2004 PTD (Trib.) 838]

―This judgment of the august High Court has cloyed the

present assessee to file appeal before the First Appellate

Authority being the case was also selected through parametric

balloting. It is consensus judicial opinion that where any order

has been passed by an authority in excess of its jurisdiction or

suffered from want of jurisdiction, no finality can be affixed to

such order and that should be ignored for all practical purposes.

Even limitation of file appeal against the order which has been

passed without lawful jurisdiction would cease to run meaning thereby appeal against such order can be instituted at any time.

Similarly, any proceedings which are conducted without any

lawful authority, how come those proceedings can get refuge

under the law and low on what grounds superstructure built on

such void proceedings can stay on the earth. Corollary would be that such building must fall down.

Reverting to the facts of the case, it is not disputed on

behalf of the Department that the Hon‘ble High Court had not

declared selection of the cases through parametric method to be

violative of para 6 of the SAS for the year 2000-2001, without

lawful jurisdiction. In the given scenario, I hold that since

selection of the case through computer balloting has been held

by the august Lahore High Court, Lahore to be passed by the

DCIT was without lawful jurisdiction and is nullity in the eye of

law. I offer to be assessed on agreed basis, therefore, purported

consent of the assessee does not confer jurisdiction to the

Assessing Officer to make an illegal assessment. Thus, the DCIT

had no jurisdiction to process the assessee‘s case under normal

law and the order passed thereunder being without lawful jurisdiction is nullity in the eye of law.‖

95. Law of limitation vis-à-vis rules of justice explained


Collector of Sales Tax and others v. Shabhbaz & Co. and others

2005 PTR 72 [S.C. Pak.] = (2005) 91 Tax 107 (S.C. Pak.)]

―It may be noted that the question of condoning of delay on

the ground so urged by the learned counsel is debatable in view of

the latest judgment of this Court in the case of Muhammad Hussain

and others v. Muhammad and others 2000 SCMR 367 and Ali Muhammad

through L.R.s v. Chief Settlement Commissioner 2001 SCMR 1822,

however, leaving the question of limitation for consideration at a

later stage, in view of the earlier judgment of this Court in Civil

Petition No.1068-L of 2002 wherein leave to appeal had been

granted subject to limitation, leave to appeal in this case is also granted.‖

[2004 PTD (Trib.) 1543 = (2004) 89 Tax 546 (Trib.)]

―According to the learned counsel there was no sufficient

cause beyond the control of department justifying the late filing

of appeal and that the plea taken by the department that

departmental formalities take longer period was also no ground

and in this regard he referred to the case reported as 2000 S.C.J.

586. It was further pointed out that the ground taken by the

department that several officers were involved in the filing of

appeal was also not a valid ground in law as held in the case

reported as 2000 SCMR 706. Further according to the learned

counsel that the Government cannot be treated differently than

an ordinary litigant for condonation of delays which in the

present case was solely on account of negligence which is no

cause of condonation of delay. Reliance for this purpose was

placed on the case reported as 1999 CLC 45. The learned

counsel therefore, pleaded that the condonation having not been

properly explained as per the reasons mentioned in the

application filed by the Commissioner of Income-tax reproduced

above, the appeal was not maintainable on the face of it and

should be dismissed in limine.‖

96. “Sales” and “supplies”

CIT v. Prime Dairies Ice Cream Limited

[(1999) 80 Tax 282 (H.C.Lah.)]


― ....the supply may include sale but this cannot be

synonymous with the aforesaid expression .... The

expression supplies as embodied in section 50(4) of the Income Tax

Ordinance, 1979 (XXXI of 1979) does include sales.‖

97. “Shall”

Allied Bank of Pakistan Ltd., Azad Kashmir Branches, Mirpur through

Inam Elahi Azhar, EVP and Provincial Chief,

PHQ (Punjab) v. Income Tax Appellate Tribunal,

AJK Council, Muzaffarabad and others

[2001] 83 TAX 404 (H.C.A&JK) =

[2000] 82 TAX 417 (H.C.AJ&K) = 2000 PTD 2872

―No doubt, that in section 134(5), the word ‗shall‘ has been

used but merely and simply on the basis of the word ‗shall‘, it

could not be construed that it is mandatory provision of law.

Both the aforesaid Reports clearly convey that where the

consequences of failure to comply with the provision are not

stated, the provision is directory and where the consequences are

specifically mentioned, the provision is mandatory. In the instant

case, the consequences of failure to comply with section 134(5)

has not been given, therefore, it could not be construed as a

mandatory provision of law but it is a directory provision of

law.‖

98. “Specify”

CIT, North Zone, Lahore v. Lahore Central Iron

and Hardware Machinery, Merchants

[(1973) 27 Tax 40 (H.C.Lah.)]

―To sum up, therefore, if something has been described as

far as is reasonably possible or as far as a careful man of business

could and would do without going into the unreasonable

particulars and it need not be a completely accurate and detailed

description and it can be unambiguously identified it would be

said to have been specified. This in fact is a specification by reference and this is nothing usual.‖

99. “Supply”

Al-Khair Gadoon Ltd. vs. Commissioner of Income Tax


[(2004) 90 TAX 271 (H.C. Lah.) = 2004 PTD 2467(H.C. Lah.)]

―No doubt in the original provision only supply was

mentioned and purchases did not figure anywhere but it will

hardly be significant as expression supply itself is comprehensive

enough to include the activity of both sale as well as purchase.

Those who understood its true import included purchase, those

who did not exclude it therefrom. It was in view of this

confusion whether contrived or real, that the legislature in its

wisdom inserted the explanation. Since supply is just

inconceivable without the activity of sale and purchase, it would

be absurd and unconscionable to exclude purchase from the purview of the above mentioned provisions.

Their Lordships of Lahore High Court for the first time

much before the insertion of the explanation while referring to

the meaning of the expression ‗supply‘ as defined in the Black

Law Dictionary and explaining its true import and implication

held that supply being an expression of general nature connotes

the availability of aggregate of things needed and demanded for a given use or purpose and thus includes sale as well as purchase.

Amendment in an Act or Ordinance cannot be

retrospective, if it imposes a new or adds to an already existing liability or tends to take away a right already accrued.

Assuming that the insertion of the explanation was an

amendment, which is not the case, yet it being declaratory in

nature will have retrospective effect from the date the original provision was given effect.‖

100. “Tax”

Muhammad Younus v.

Chairman Municipal Committee, Sahiwal

[(1986) 53 Tax 93 (H.C.Lah)]

―A tax is a compulsory extraction or a contribution

imposed by a sovereign authority or required by the general

body of the subjects and citizens. The power to levy a tax has to

be founded in a statute whereby authority is given to levy and


collect the compulsory contribution in the good of the citizens or for running the administration....‖

101. “Tax” and “fee”

Biafo Industries v. Federation of Pakistan

PTCL 2000 CL. 384

―Therefore, the distinction between a tax and fee lies

primarily in the fact that tax is levied as a part of common

burden or general revenue, while a fee is a payment for special

benefit or privilege. This distinction between tax and fee was

adopted in the case of Abdul Majid and others PLD 1960 Dacca

502 and in the case of Mahboob Yar Khan PLD 1975 Lah. 748.

However, it should not be forgotten that there is no generic

difference between a tax and fee. Both are compulsory exaction

of money by public authorities. A tax is imposed for public

purposes and is not supported by any consideration of service

rendered in return. Whereas a fee is levied in view of services

rendered. Consequently, there is an element of quid pro quo

between the payer of the fee and the authority which imposes it.‖

102. “Tax paid” and “tax payable”

[2003] 87 TAX 136 (Trib.) = 2003 PTD (Trib.) 1222

―The connotation ―tax paid‖ and ―tax payable‖ cannot be

interpreted to exclude the tax payable under presumptive tax

regime for the earlier assessment years. It rather applied to all

kinds of taxes paid by an assessee for the impugned order either

under section 80B, C or D. Similarly, for comparison purposes

the tax payable for 1996-97 shall be grossed up by excluding tax

payable under any of the above sections as well as surcharge

payable by the said assessee during the relevant assessment year

1996-97. The result of above discussion is obvious. The

assessing officer had accepted a return, which was erroneous in

law and obviously prejudicial to the interest or revenue, as the

same was not covered within the scheme of Self-assessment. It

has caused prejudice to the revenue on both counts, i.e., for the

reason of payment of lesser tax and also that the ITO had no


jurisdiction to accept the return, which did not qualify for the

Scheme of Self Assessment. The cancellation by the IAC, therefore, is upheld and the appeal is dismissed.‖

103. „Turn-key project‟

[2004 PTD (Trib.) 2695]

―Turning, to the definition of ‗turn-key project‘ he

submitted that it was well-established now in legal terminology

that a ‗turn-key project‘ meant a complete unit where what was

required by owner was only to turn the key. He also invited our

attention to our decision as to what was meant by turn-key in

reported judgment cited as (1998) 78 Tax 93 (Trib.) He further

emphasized by referring to the well-esblished maxims of law that

it was substance of the transaction which was to be examined

and not the form, for the purposes of taxation. In this regard he

referred to reported decision of Karachi High Court (1996) Tax

14-305 and (1993) 67 Tax 113 (Trib.)

We have examined the issue before us. It would be

pertinent to refer to the definition of turn-key contract as given

in Black‘s Law Dictionary:

―Turn-key-Contract.

Project in which all owner needs to do is ―turn the

key‖ in the lock to open the building with nothing

remaining to be done and all risks to be assumed by

contractor. Glassman Const. Co., Inc v. Maryland City

Plaza, Inc. D.C. Md. 371 F. Supp, 1154, 1159. Term

used in building trade to designate those contracts in

which builder agree to complete work of building and

installation to point of readiness for occupancy. It

ordinarily means that builder will complete work to

certain specified point, such as building a complete

house ready for occupancy as dwelling, and that

builder agree to assume all risk. Gantt v. Van der Hoek, 251, S.C. 307, 162 S. E. 2d 267, 270.

―In oil drilling industry as job wherein driller of oil well

undertakes to furnish everything and does all work required to


complete well, place it on production, and turn it over ready to

turn the key and start oil running into tanks. Retsal Drilling Co.

v. Commissioner of Internal Revenue, C.C.A. tex., 127 F. 2d

355, 357. A turn-key contract to drill a well involves the testing

of the formation contemplated by the parties and completion of

a producing well or its abandonment as a dry hole, all done for

an agreed-upon total consideration, putting the risk of rising

costs, well trouble, whether, and the like upon the driller, but it

does not, in the absence of a clear expression, require the driller

to guarantee a producing well. Total drilling (sic) Abraham 64 No.M. 380, 328 P. 2d 1083, 1091.

The Contract turn-key project was examined in somewhat

similar circumstances, by Division Bench of this Tribunal in the

case reported as 1998 PTD (Trib.) 3771. In that case also, like

this case before us, the assessee had executed part of the

contract, and the Division Bench, after having examined the facts and circumstances of the said contract has held:-

(41) We further find that there is sufficient documentary

evidence to conclude that although the respondent

has constructed the mean and major portion of the

Pipeline System envisaged, planned and designed as

per DBD, some of the essential element of the system

have been constructed by others and until such other

elements have been integrated, no testing or

commissioning has been possible for the respondent.

Thus, in our considered opinion the contract executed

by the respondent lacks the essential characteristics of

a turn-key project both as commonly understood in

terms of its dictionary meaning as well as explained in

the C.B.R. Circular 6 of 1994 ibid and that the ration

of decision (in 1948) 16 ITR (supra) 101 (HL) is

applicable to the employment of the term Turnkey in

the instant case. We find that the respondent has not

been extended the benefits that has promoted the

legislation explained in sub-para (d) of para 4 of the C.B.R. Circular being reproduced by us hereunder:-


(d) Withholding tax regime for non-resident contractors.

Non-resident Contracts, including those executing

turn-key projects were so far subject to withholding

tax equivalent to 3% of the gross receipts which was

treated as full and final tax liability. The rate of tax so

charged was found to be law given relatively high

profit margins in such contracts, particularly in case of

turn-key projects involving designing, consultancy,

supply equipment and machinery, and installation thereof.‖

We do not agree with the view that each part of the contract is

an integral whole and each part must be deemed to turn key in it

is own right, detached from over all project. This is not what is

meant or understood by term ―turn key‘. The substance of the

contract shows that it was only a smaller part of the over all

project and could not be deemed as ‗turn key‘ project. The

DCIT should not have gone by the nomenclature used in the

audited accounts. He was therefore, not justified in holding the

assessee as assessee in default for not declaring the tax at the rate

of 8% otherwise applicable on execution of a ‗turn key‘ project,

he also acted contrary to the explanation given by C.B.R. in

Circular No. 6 of 1994 where ‗turn key‘ project was understood

as a project involving designing, consultancy supplies of

equipment machinery and installation thereof. Any part of it

such as designing but not execution, could not be held to be a

turn key project. We are therefore, clear in our mind that this

was a case of misinterpretation of law by the two officers below.

The Charge of tax under sections 5/86 is therefore, held to be illegal and is hereby vacated.‖

104. “Turnover”

[(2004) 89 TAX 480 (Trib.) = 2004 PTD (Trib.) 355]

―Before examining this contention of the learned AR of

the assessee, we would like to refer to the meaning of ‗turnover‘

as given in the Principles of Income Tax Law with International Tax


Glossary by Huzaima Bukhari and Dr. Ikramul Haq, which reads as follows:-

―Turnover

Volume of business of an enterprise as set forth in the

profit and loss account. It is usually measured by

reference to the gross receipts, or gross amounts due,

from the sale of goods or services, etc. supplied by the entity.‖

In the Concise Oxford Dictionary, Ninth Edition, this term has been given the following meaning:

―turnover/../n. 1. the act or an instance of turning

over, 2. the amount of money taken in a business, 3.

the number of people entering and leaving

employment etc. 4. a small pie or tart made by folding

a piece of pastry over a filing, 5. US Sport loss of

possession of the ball to the opposing team‖.

Of the above meanings given in the Concise Oxford

Dictionary, the Item No. 2 is the only relevant part which says

that the turnover means the amount of money taken in a

business which, to our minds, appears to be a basic essence of

the definition of ‗turnover‘. We are not really inclined to agree

with the submission of the learned AR of the assessee that the

explanation to subsection (2) of section 80D of the 1979

Ordinance, contains an absolute and exhaustive definition of the

term ‗turnover‘ as this is an Explanation which has been

introduced to remove the doubt and, prima facie, such doubts

were there with regard to the treatment of trade discounts

shown on invoices of bills. A plain reading of section 80D shows

the intention of the Legislature to levy a minimum tax on a

company irrespective of whether it has earned any profit or not.

The term ‗turnover‘ is a wide term and in our considered view it

includes the receipts and accruals from the major business

trading professional activity of the Company and since the law

says that the turnover from all sources must be taxed, it has to

be from all sources and all activities which are not in the


ordinary course of the business of the assessee, such as the sale

of fixed assets, would not form a part of the turnover. We also

do not agree with the submission of the learned AR of the

assessee that there is no benefit provided to the customers of the

assessee. The assessee is engaged in the business of providing

financial facilities to its customers and certainly this is a benefit

to its customers by way of providing loans and credits and other

financing facilities. Thus, in our considered view, the assessee

cannot be excluded from the purview of the provisions of

section 80D of the 1979 Ordinance.‖

[2003] 87 TAX 156 (Trib.) = 2002 PTD (Trib.) 3006

―.....minimum tax u/s 80D is chargeable on the turnover of a

company and company includes a trust as defined by Section

2(16)(bb). This minimum tax is chargeable on the turnover even if

the income of a company is otherwise exempt from tax under any

provision of Income Tax Ordinance. Thus tax u/s 80D would be

charged on the turnover of the respondent trust even if its income

or receipts have been allowed exemption under any of the clauses of

Second Schedule to the Income Tax Ordinance. The word turnover

has been defined by Section 80D in its explanation to sub-section

(2) which has been reproduced supra. According to this explanation,

turnover means the gross receipts, exclusive of trade discount

shown on invoices or bills, derived from the sale of goods or from

rendering, giving or suppling services or benefits or from execution of contracts.

If assessee‘s above mentioned receipts are seen in the light of

the explanation which defines turnover, we find that the donations

do not represent turnover as the same have not been derived from

the sale of goods or from rendering giving or supplying services or

benefits or from execution of contracts. Hence donations are not

chargeable to minimum tax u/s 80D. So far as tuition/admission fee

and other income are concerned the same have been received by the

School, which the assessee is operating for rendering services in

connection with education, and therefore, the same are chargeable

to ltax u/s 80D. In view of the foregoing discussion, it would meet

the ends of justice if the donations received by the assessee trust are


exempted from the levy of minimum tax under section 80D.

However, assessee‘s other income and receipts on account of

tuition/admission fee may be charged by the assessing officer to tax

under section 80D. With these directions the appeal filed by the revenue disposed off.‖

105. “Working capital”, “current assets” and “current

liability”

CIT v. Pakistan Tobacco Company Ltd.

[(1988) 57 TAX 118 (H.C.Kar.) = 1988 PTD 66]

―From the above quoted passages from the various books

on accounting the following deductions can be deduced with

reference to the terms, working capital, current liability and current

assets.

(i) The working capital is the amount that remains for

the running or working of a business after the

purchase price of the fixed assets has been paid.

(ii) That the difference between the current assets and current liabilities is also called working capital.

(iii) Working capital can also be defined as the money

which has been put into business and which has to

stay there, the amount of cash and supplies necessary

to be kept in hands to meet current expenses and

contingencies as they arise for the proper, safe and

convenient conduct of the business having regard to

the owners ordinary outstanding both payable and receivable.

(iv) Total working capital represents the investment of the

company‘s medium and longer term funds in assets

which are expected to be realised within the year of

trading. It is not a permanent investment but turn

over many times in a year. It is required for

maintenance of inventories i.e. stock of raw-materials,

work-in-progress, and purchase of goods, for

extending credit to customers and for maintaining a

cash balance. The total requirement is met partly by


the credit that the suppliers of goods and services

rendered to the firm and the remaining by the firm itself.

(v) That according to Machullan Dictionary of

Accounting, working capital is current assets less

current liability other than those for taxation and

proposed dividends.

(vi) Current liability is a financial obligation of company

falling due within one year or within an operating

cycle if it is longer than one year.

(vii) Current liabilities are debts which business must pay

in near future not later than 12 months from the date

of the last balance sheet which includes inter alia taxes.

106. “Year” - How to be understood

Nagina Silk Mills, Lyallpur v. ITO, A-Ward, Lyallpur & others

[(1963) 7 TAX 442 (S.C.Pak.) = PLD 1963 SC 322]

―Definition alone cannot extend a period of (limitation) which

had already commenced to run many years earlier, according to a

fixed measure of time, namely, a year of twelve months. The

legislature never intended that the period of limitation prescribed

in the Act should become variable with the changes in the

―financial year‖ or ―year‖ inserted by Finance Act for certain

other purposes, namely, to accord with the new accounting years adopted by Government.‖

Chapter VI

Construction of fiscal statutes

1. A fiscal statute has to be construed in its true

perspective

Messrs BILZ (Pvt.) Ltd. v. DCIT, Multan and Another

2002 PTD 1 (S.C.Pak)

―Learned counsel stated that the Assessing Officer after

having gone through the registers should have pointed out the

parties from whom the advance tax was liable to be deducted.

We are afraid that the contention raised by the learned counsel

has no force because as it has been observed hereinabove that it

is the petitioner firm itself who made the supplies, therefore, no

one else better than it would have knowledge that from whom

the deduction is to be made. The department had successfully

discharged its obligation by making reference of the details of

the supplies, which were made under different heads as per the

contents of the show-cause notice. It may be noted that

according to the settled principle of law that a fiscal statute has

to be construed in its true perspective and in respect of payment

of income tax, if it is found due against a party, then such statue

cannot be interpreted liberally in order to make out a case in

favour of an assessee who has failed to pay the tax.‖

2. Exemption clauses, rules of interpretation

World Trade Corporation v. The Excise & Sales Tax,

Appellate Tribunal (Lahore Bench), Lahore and 2 others

[1999 PTD 1179 = PCTLR (S.C.Pak) 524]

―All kinds of foodstuff(s) exempted from sales tax under

Serial No. 3 of the Sixth Schedule of which, currently, there

subsist as many as eleven sub-entries, are qualified by the word

unprocessed. To put the matter more explicitly, it is only such foodstuff(s) as are unprocessed, which would

187


qualify for the exemption. Tamarind with seeds was not in an

unprocessed form. Thus, the same did not qualify for exemption.

The normal rule is that words in a statute, unless the

context otherwise warrants or the Legislature exhibits a different

intention are to be accorded their ordinary natural meanings.

Sixth Schedule, Item No. 3(ii) of Sales Tax Act, 1990, in relation

to the word unprocessed has resorted to both these devices. As a

result, ordinarily literal meanings shall have to be ascribed to the

word except when in a given context, the Legislature, cognisant

of attending exigencies, has either expanded or curtailed its

connotations. Thus, whereas the controlling words of the entry

remain constant, some of the aspects of processing, though not

all, are exemplified by sub-item (ii) itself, when such pointedly

exclude from the exempted category fruits, fruit juices and

vegetables, bottled, canned or packaged. Now, according to

ordinary dictionary meanings, the word process used as a verb,

inter alia, equals to prepare (agricultural produce) for marketing

e.g. by canning, bottling or treating it chemically. Therefore,

while packaging is, additionally, illustrated in the sub-heading,

there is nothing to suggest that other normal forms of

processing, manual, mechanical or chemical, have thereby been

excluded. Indeed, there are items in the heading e.g. 3(iv) where

packing is not treated as processing, such as freezing or

otherwise preserving, is not taken as processing under the item

in hand viz. 3(ii). The position, therefore, remains that only such

of the foodstuffs stand exempted from sales tax, as be in the

generic unprocessed form, the Legislature explicitly exercising its

own option to deviation, wherever, in relation to a given sub-

item, it deems fit. The only categories excluded from the

circumstances of processing in Serial No. 3(ii) of the Sixth

Schedule are freezing or otherwise preserving, normally falling

within the element of processing. No occasion arises for further

limiting the ambit of the qualifying word processed occurring in the entry.‖

189 Construction Of Fiscal Statutes

3. Rule of interpretation regarding words and

expressions used in fiscal statute


[(1990) 62 Tax 74 (S.C.Pak)]

―.....in this behalf reference to the following judgments of this court will not be out of context:

(i) Meher Khan vs. Yaqub Khan and another (1981 SCMR 267) in which this court observed as follows:-

―No doubt the elementary rule of construction

is that the words used in a statute should be

construed liberally but according to what is

termed as the golden rule of interpretation by

Maxwell, the ordinary meaning of a word need

not be adhered to if a construction based on it,

would be at variance with the intention of the

legislature as collected from the statute itself or

if it leads to an absurdity. In such cases the

language may be varied or modified so as to avoid such absurdity or inconvenience....‖

(ii) Hirjan Salt Chemical (Pak) Ltd. vs. Union Council and

others (1982 SCMR 522); in which this court made the following observations:

―It is now well established principle of

interpretation of statutes that rules which are

merely subordinate legislation cannot over-ride

or prevail upon the provisions of the parent

statute and wherever there is an inconsistency

between a rule and statute, the latter must

prevail. This however, envisages that all efforts

to reconcile the inconsistency must first be

made and the provisions of the parent statute

prevail only if the conflict is incapable of being

resolved. We also do not have any cavil with the

proposition that when construing any word used

in a statute which has not been defined therein,


it should be understood to have been used in its

dictionary meaning or even its ordinary or popularly understood meaning...‖

4. An equitable construction of a fiscal statute is not

permissible


[(1959) 1-TAX (III-207) (S.C.Pak.)]

―A fiscal statute should be construed strictly and no question of equitable construction arises.‖

Dreamland Cinema, Multan v. CIT, Lahore

[(1977) 35 Tax 169 (H.C.Lah)]

―There is no dispute about the proposition that

equitable construction of a fiscal statute is not permitted. A

person must be taxed only if he comes within the letter of law,

otherwise he is free even though his case falls within the spirit of

law as held in Hira Chand vs. Emperor (AIR 1931 Lah. 572). In

CIT vs. Ectis C. Reid (AIR 1951 Bom. 333) their Lordships

observed that in interpreting a taxing statute the language should

not be strained to hold subject liable to tax. The judicial

committee of the Privy Council approved the following passage

in Bank of Chittinad vs. Income Tax Officer, Madras (AIR 1940 PC 183):

―If the person sought to be taxed comes within the

letter of law he must be taxed, however, great hardship

may appear to be. On the other hand, if the Crown,

seeking to recover the tax cannot bring the subject

within the letter of the law, the subject is free, however,

apparently within the spirit of the law, the case might otherwise appear to be.

Where two equally reasonable constructions are possible,

one strict and the other beneficial to the assessee, the latter

should be preferred in a taxing statute in view of the rule laid

down in CIT vs. Hossen Kasam Dada (PLD 1961 SC 375).‖

5. Fiscal rules are meant for good fiscal governance




[2004 PTD 1621 (H.C. Lah.)]

―These rules of interpretation are particularly applicable to

fiscal matters, and as observed by the Hon‘ble Supreme Court in

re ―Pfizer Laboratories Ltd. v. Federation of Pakistan and others (supra)

to good governance in financial matters. All budgetary estimates

are made on yearly basis and therefore a number of fiscal steps

are taken to either improve or change the fiscal rules and

regulations keeping in view the condition of the economy. These

fiscal rules, regulations and instructions are relevant, by and large

to a particular assessment or financial year and altogether change

their implications after a passage of time. The period of one year

laid down for the purpose of claiming of refund needs to be seen in that background as well.‖

6. Literal approach, unless it leads to a manifest

absurdity, has to be followed

CIT/WT, Sialkot Zone, Sialkot v.

Messrs Thapur (Pvt.), Sialkot

[2002] 86 Tax 274 (H.C.Lah.) = 2002 PTD 2112

―In matters of taxation a literal approach, if it does not lead to a

manifest absurdity, has to be followed. In income-tax law, the

words ―total income‖ as well as ―assessment‖ have their peculiar

meanings. In re: CIT, West Bengal-III vs. Balkrishna Malhotra

(1971) 81 ITR 759, their Lordships of the Supreme Court of

India observed that since the judgment of Madras High Court in

Viswanathan Chettiar vs. Commissioner of Income-tax (1954) 25 ITR

79 no other High Court in India had interpreted the word

―assessment‖ as used in the proviso of section 34(3) of the late

Act in a different way. The Madras High Court in that judgment

had concluded that the word ―assessment‖ meant not merely the

computation of the income of the assessee but also the

determination of the tax payable by him. In re: Commissioner of

Income-tax, West Bengal vs. Blackwood Hedge (India) (P.) Ltd. (1971)

81 ITR 807, the Calcutta High Court re-counted the three well-

known stages of imposition of tax, namely, (a) liability to pay tax,

(b) computation of tax payable and (c) recovery of tax. It was


accordingly observed that every order which contemplated

computation of income or determination of the amount of tax

payable was not an order of assessment within the meaning of

late Income-tax Act, 1922. In the next case relied upon by Mr.

Ibrar Hussain Naqvi, Advocate, re: CIT. Madras (Central) vs.

N.D. Georgopoules (1980) 125 ITR 630 the Madras High Court

expressed the view that the word ―assessment‖ normally

connoted the entire process commencing from the submission

of the return till the determination of tax liability. In re: CIT,

Kerala vs. Datpathe (1972) 83 ITR 823, it was found that the word

―total income‖ used in sections 66 and 110 of the Indian Income

Tax Act, 1961 meant total income computed as envisaged by

these sections and in accordance with the other provisions of the

Act. The Supreme Court of India in re: CIT, (Central), Delhi vs.

Harprashad & Co. (P.) Ltd. (1975) 99 ITR 118 was considering

the definition of the word ―income‖ as well as ―total income‖ as

used in various provisions of the late Income-Tax Act, 1922.

Their Lordships finally concluded that an income in order to

come within the purview of definition must satisfy two

conditions. Firstly, it must comprise the total amount of income,

profits and gains referred to in section 4(1) of the Act. Secondly,

it must be ―computed in the manner laid down in the Act‖. ―In

the view of their Lordships if either of these conditions failed,

the income will not be part of the total income that can be

brought to charge. It will be noted that the words ―income‖ and

―total income‖ as defined respectively in section 2(24) and

section 2(44) of the Income Tax Ordinance bear almost the

same meaning assigned to them under the late Act, 1922.

Therefore, the ratio settled in the aforesaid judgment clearly

attracted to understand their meaning in the context of the Income Tax Ordinance as well.‖

7. Machinery provision in a taxing statute to be liberally

construed in order to effect recovery

CIT/WT, Sialkot Zone, Sialkot v.

Messrs Thapur (Pvt.), Sialkot

[2002] 86 Tax 274 (H.C.Lah.) = 2002 PTD 2112


―Even by employing the most liberal rules of construction

of machinery provisions we have not been able to support the

working back of presumptive income by the Assessing Officer

and then its subject to charge of Workers‘ Welfare Fund. The

provisions of section 4 of Workers‘ Welfare Fund lay out the

stage at which the levy of the fund has to be made. It is firstly at

the time of filing of a return and in case of any change in the

income returned and the income assessed, at the time assessed

although subsection (4) of section 4 further contemplates thai an

order for levy of fund can be made after an assessment has been

framed yet the reference still remains to the framing of an

assessment. There is no other incident or stage to which the levy

of the fund can be linked. In order to grant the prayer of the

Revenue not only this Court will have to lay down a rule which

would amount to legislate but also a number of lacunas will have

to be supplied.

The charging provisions of section 4 of Workers‘ Welfare

Fund Ordinance and those of presumptive tax regime under

section 80CC to our mind cannot be reconciled or be interpreted

in a way to justify a charge. The charge as noted earlier

necessarily bears a reference to and follows pattern of a regular

assessment framed on observation of usual formalities and

following computation of income keeping in view the different

provisions of the Income Tax Ordinance. Since that does not

happen in cases covered by section 80CC, the charge and

computation of Fund in such cases is neither legally justified nor

otherwise possible. The charging provisions of section 4 of

Workers‘ Welfare Fund Ordinance are clear that the Legislature

intended the charge on the real income of an industrial concern.

There is nothing in these provisions which can possibly be

extended, enlarged or stretched to hold that the levy was contemplated on presumptive income as well.‖

8. Principle of strict construction meant for taxing

provisions and does not apply to machinery provisions

Deans Associates (Pvt.) Limited v. IAC of Income Tax

[2002] 86 TAX 138 (H.C.Kar.) = 2002 PTD 441


―Principle of strict construction of fiscal statue is applicable

only to taxing provisions such as charging provisions and not to

those parts of the statute which contain machinery provisions as

per principle laid down in 1980 Tax LR 185. Power u/s 66A can

be exercised by the respondent only when the following factors co-exist:

(i) There should be proceedings under the Act.

(ii) In such proceedings the ITO must have passed the order.

(iii) The commissioner should consider that the said order

is erroneous and prejudicial to the interest of the Revenue.

(iv) It is only when all the above mentioned factors co-

exist then the respondent will have jurisdiction to take action u/s 66A.

(v) For the purpose whether the aforesaid factors are

available to the respondent to take action needs

factual inquiry for which propriety demands that the

respondent should allow to proceed in the matter in accordance with law.

As mentioned above the petitioner has alternative remedies

before the Department under the provisions of the Income Tax

Ordinance, 1979. The petitioner is well within his right to raise

all legal and factual pleas before the respondent by filing fresh

reply of the notice date 27.4.2000 who is duty-bound to consider

the same and pass speaking order including assumption of

jurisdiction.‖

9. When language is clear provisions are to be construed

strictly

CIT, B-Zone, Lahore v. Lahore Cantonment Cooperative Housing Society,

Lahore

[2002] 85 TAX 25 (H.C.Lah.) = 2002 PTD 629

―The words of the statute are clear and do not admit of any

interpretation other than the one already made by the Tribunal.

Since the provisions of fiscal statutes are to be construed strictly


we entertain no doubt that penal provisions of section 88 were not

attracted to the case of the assessee. An admitted liability or the

one detemrined by an Assessing Officer after long drawn

proceedings are absolutely two differnet things. The concession

given by law to pay tax with return only to the extent of an

admitted liability or the income being returned therein, cannot

possibly be cirucmvented by ignoring the express words of the

statute.‖

10. Benefit of ambiguity should be given to the assessee

Searle Pakistan (Pvt.) Ltd. v. Government of Pakistan through Secretary

Ministry of Finance & Another

[(1994) 69 Tax 10 (H.C.Kar)]

―There is no cavil about the settled principle of

interpretation that taxing provisions should be strictly

interpreted and the benefit of ambiguity, if any, must go to the

subject.‖


[(1977) 35 Tax 169 (H.C.Lah)]

―Where two equally reasonable constructions are possible,

one strict and the other beneficial to the assessee, the latter should be preferred in a taxing statute.‖

11. Tax must be imposed by clear and unambiguous

language

Commissioner of Sales Tax Lahore v. Lutfi & Co. Lahore

[(1973) 28 Tax 168 (H.C.Lah.)]

―Since the exemption creates an exception to the general

rule of taxation, it would be for the assessee to show that his

case falls strictly within the scope of the exemption.‖

Kashmir Pottery Works, Sialkot v. CST, North Zone, Lahore

[(1973) 28 Tax 172 (H.C.Lah.)]

―It has to be kept in mind that since the notification deals

with the exemption of certain items from tax it has to be construed strictly.‖

Rahmatullah and Sons v. CST, Lahore

[(1973) 27 Tax 256 (H.C.Lah.)]


―We fully agree with the principle that the ambiguity, if

any, in the construction of a taxing statute must be resolved in

favour of the subject. But this principle has no application

where, as in this case, the charging section clearly imposes the

liability but the assessee relies on an exemption which is in the

nature of an exception to the general rule on the subject. The

exemption must be strictly construed and confined to the exemption itself and not extended beyond it.‖

Secretary of State v. Seth Khemchand Thaoomal

[1 ITC 26 (Sind)]

―As, observed in Maxwell on the Interpretation of Statutes,

4th Ed., page 429: Statutes, which impose pecuniary burden, are

subject to the rule of strict construction. It is a well-settled rule

of law that all charges upon the subject must be imposed by

clear and unambiguous language, because in some degree they operate as penalties.‖


12. Exemption cannot be allowed if not claimed

Singer Sewing Machine Co. v. CIT and others

[1964] 9 TAX 273 (H.C.Kar.) = 1964 PTD 554

―Assessee was entitled to relief u/s 15B of 1922 Act, but

he did not claim this relief in the return of income. It is held that

assessing officer was not bound to grant relief as ignorance of law is no excuse.

Judicial Review : COMMENTED by the Supreme Court of Pakistan in

[1965] 11 TAX 364 (S.C.Pak). Their Lordships observed:

“. . . That such a proceeding in revision would be a

judicial proceeding and not merely departmental affair. The

power of revision has to be exercised, according to judicial

principles. The provision of section 33A(2) of 1922 Act

apparently envisages a remedy alternative to a regular

appeal from assessment. In the circumstances, it became

the duty of the Commissioner to grant relief if the

entitlement was clear. The learned Commissioner

apparently misdirected himself in holding that he had no

power to interfere in the matter.

“. . . All these factors go to establish the bona fides

of the assessee-company in claiming that the assessment

in question were not appealed against, owing to

misapprehension of the correct position. The High Court

has observed, in this connection, that ignorance of law was

no excuse. That may be conceded, but section 33, sub-

section (20) provided an alternative judicial remedy to the

assessee, of which it availed itself and the relief was denied

to it, on an erroneous view of law by the Commissioner.

“. . . It must be found as a result of the above

discussion, that the Commissioner declined to exercise his

undoubted jurisdiction in the case, on a ground which was

legally not supportable. This fact calls for correction of his

order. We allow the appeal and quash the order passed by

the CIT, in this case.”

13. In case of ambiguity/doubt, the benefit should be given

to taxpayer and not the Revenue

Hari Krishna Das v. CIT, UP

[5 ITC 275 (Allahabad)]


―The Income Tax Act is a fiscal enactment and in the case

of an ambiguity, it is to be construed by the well-known principle in favour of the subject and not against the subject.‖

14. Benefit of doubt is the right of taxpayer


[1 ITC 161 (Burma)]

In Finance Act, 1894 and Studdert, In re [(1900) 2 Ir. R. 400 at

p. 410] Fitzgibbon L.J. said : ―The benefit of the doubt is the right of the subject‖.

15. Courts while interpreting a statute must adhere to the

plain meaning of the words

Commissioner of Income-Tax, Karachi v.

Messrs Nazir Ahmed and Sons (Pvt.) Ltd., Karachi

[(2004) 89 TAX 385 (H.C. Kar.) = 2004 PTD 921 (H.C. Kar.)]

―Now coming to the explanation under consideration, we

find that under the original enactment any person responsible

for making any payment in full or in part to any person on

account of supply of goods was required to deduct the advance

tax at the time of making payment at the rate specified in the

First Schedule, however, by inserting explanation through

Finance Act, 1998, it was provided that the expression supply of

goods include both cash and credit purchase of goods by the

buyer whether on a contract or not or credit or in cash. With the

insertion of this explanation the distinction between supply and

sale was removed. The Trite Law of Taxation is that the words

used in the tax laws until and unless defined in the statute shall

be taken in the same sense and meaning as is understood in the

common parlance by the business community. There can be no

doubt that the supply of good and sale are not one and the same

in nature. Although every supply is a sale but every sale is not

supply. These concepts are so clear that they do not require any

elaboration. With the insertion of explanation under

consideration the sale was also held to be supply of goods and

thus, it is a substantive piece of legislation whereby a sale, by a

fiction of law has been deemed to be supply of goods. It is also

pertinent to note that it has enlarged and extended the scope of


section 50(4) of the Ordinance and because of the provisions

contained in section 80C of the Ordinance, has the effect of

enhancing the liability whereby the tax deducted under section

50(4) is to be held as full and final discharge of liability and the

tax so deducted shall not be allowed adjustment as originally

envisaged in subsection (4) of section 50, whereby the credit of

tax so deducted in any financial year was subject to the

provisions of section 53, because of non-obstante clause

contained in section 80C, thus, looking to the effect of the

explanation it cannot be held that it is merely declaratory or

clarificatory in nature or has been inserted for the purpose of

removal of doubt. There is yet another principle that no

absurdity or unreasonableness is to be attributed to the

Legislature. Now if the provisions contained in the explanation

under consideration are held, to be retroactive in application, it

will create illogical and unreasonable consequences as the payer

shall be held to be a defaulter under section 52 of the Ordinance,

for not deducting the advance tax on sales treating the same as

supply of goods and shall further be liable to the charge of

additional tax for failure to deduct the advance tax under section

86 of the Ordinance for failure to deduct the advance tax, as was

done in the case under consideration.‖

Muhammad Younus v.

Chairman Municipal Committee, Sahiwal

[(1986) 53 Tax 93 (H.C.Lah)]

―It is also true that the historical background of a statute

serves as a useful guide in ascertaining the intention of the

legislature, but, only if the words used are capable of more than

one interpretation; but it has never been held that courts may

depart from the plain meaning of the words employed in statute

because of its historical background. The court remains under an

obligation to adhere to the plain meaning of the words employed in it.‖

16. Meaning of doubtful words to be gathered by reference

to words associated with them

Crescent Sugar Mills Distillery Ltd. Lahore v.



[(1981) 43 Tax 1 (H.C.Lah)]

―It is one of the cordinal rules of the construction of

statute that when several words have been used in an enactment,

the meaning of the doubtful words may be gathered by reference to words associated with it.‖

17. Fiscal statutes be strictly construed and no addition or

omission therefrom permissible

Taimur Shah v. CIT

[(1976) 34 TAX 151 (H.C.Kar.) = PLD 1976 Kar. 1030

―The provisions of the aforesaid (Section 45A) come into

play only when an assessee fails to pay the tax due from him. It

is, therefore, to be seen when a tax is due from a person leaving

aside the deduction of tax at source u/s 18 or the payment of

advance tax u/s 18-A, neither of which provisions are applicable

in the instant case, tax is to be determined and assessed under

the provisions of section 23 of the Act, mainly, on the basis of

the returns of income to be made u/s 22. On such assessment

being made, the tax becomes due and a notice of demand is to be issued u/s 29 of the Act specifying the sum due and payable.

The amount specified in the notice of demand is required

to be paid with the time specified in the notice, as provided in

section 45. An assessee thus would be deemed to have failed to

pay the tax due from him if he fails to pay the tax by the date

specified in the notice of demand issued u/s 29. In the instant

case, as already pointed out, the three notices of demand for the

three charge years in question were all issued in September 1965

much after section 45A had been added to the Income Tax Act.

As such the assessee‘s failure to pay the tax due from him

occurred after section 45A had become a part of the Income Tax Act.

No question, therefore, of retrospective operation of

section 45A arises in the instant case. If the intention of the

legislature had been that the application of this section should be

restricted to the tax due for the charge years following insertion


of the said section then this intention would have been made

manifest by the use of appropriate words. There is. however,

nothing in section 45A which implies that its application is

restricted to tax due for the year following the insertion of the

said section. In a fiscal statute, its provisions have to be strictly

construed and no additions to or omissions therefrom are

permissible. As such, we are unable to construe section 45A of

the Act so as to limit its application to tax due for the years

following its addition to the Act as this can only be done if we

were to add these words or words of similar import in the

section, which is not permissible to us.

According to Maxwell, 10th Edition : ―It is but a corollary to

the general rule of literal construction that nothing is to be added

to or taken from a statute unless there are similar adequate

grounds to justify the inference that the legislator intended same

thing which it omitted to express‖. As observed by Lord Mersey

in (1910) AC 409, 420:

―It is a strange thing to read in an Act of Parliament

words which are not there, and, in the absence of clear

necessity, it is a wrong thing to do.‖

18. Construction of law should not lead to startling results

Crown Bus Service Ltd. Lahore v. CBR and others

[(1976) 34 Tax 54 (H.C.Lah.)]

―It is well settled that courts should follow that

construction of law which does not lead to startling results or

destructive ends.‖

19. Tax can only be imposed by clear words of the Act



―No tax can be imposed except by words which are clear

and the benefit of the doubt is the right of the subject [per Lord

Justice FitzGibbon in re Finance Act, 1894 and Studdert [(1900) 2

Ir.R. 400], and the Court is not entitled to substitute for express

words or an irresistible inference a process of guess-work,

however subtle the reasoning or ingenious the marshalling of

facts by which such a process is supported. If the person sought


to be taxed comes within the letter of the law he must be taxed,

however great the hardship may appear to the judicial mind to

be. On the other hand, if Crown, seeking to recover the tax,

cannot bring the subject within the letter of the law, the subject

is free, however apparently within the spirit of the law the case

might otherwise appear to be. In other words, if there be

admissible, in any statute, what is called an equitable

construction, certainly such a construction is not admissible in a

taxing statute, where you can simply adhere to the words of the

statute.‖

[2003] 87 TAX 183 (Trib.)

―It is a well-settled rule of law that all charges upon the

subject must be imposed by clear and unambiguous language

because in some degree they operate as penalties, the subject is not

to be taxed unless the language of the statute clearly imposes the

obligation and language must not be strained in order to tax a

transaction which had the legislature thought of it, would have

been covered by appropriate words. Here, the intention of the

statute was clarified by adding ―Explanation‖ in the main

provision of section 2(e) and as Circular No.18 of 1991 dated July

2, 1991 issued by the CBR. This Explanation was effective from

28th June, 1979, therefore, the burden of tax was presumed to be

levied from such date.‖

20. Strict rule of interpretation to tax a subject

Secretary to the Board of Revenue (Income Tax) v.

North Madras Mutual Befit & Co


―It is commonplace that in statutes of taxation the

imposition of a duty must be in plain terms [Per Buckley L.J., in

Inland Revenue Commissioner‟s vs. Gribble [(1913) 3. K.B. 212 at p.

219]; such a statute must be construed strictly and the onus lies

upon the Crown to show that the person whom it is sought to tax falls clearly within its operation.‖

21. Subject can only be taxed if statute expressly so

provides



[1 ITC 161 (Burma)]

―In Tennant vs. Smith [(1892) A.C. 150 at page 154], Lord

Halsbury L.C. said: This is an income tax Act, and what is

intended to be taxed is income. And when I say what is intended

to be taxed, I mean what is the intention of the Act as expressed

in its provisions, because in a taxing Act, it is impossible, I believe,

to assume any intention, any governing purpose in the Act, to do

more than take such tax as the statute imposes. In various cases

the principle of construction of taxing Act has been referred to in

various forms, but I believe they may be all reduced to this, that

inasmuch as you have no right to assume that there is any

governing object which a taxing Act is intended to attain other

than that which it has expressed by making such and such objects

the intended subject for taxation, you must see whether a tax is

expressly imposed. Cases, therefore, under the taxing Acts always

resolve themselves into a question whether or not the words of

the Act would have reached the alleged subject of taxation. Lord

Wensleydale said in Micklethwaite, re [(1855) II Ex. 452 at p. 456], It

is a well established rule, that the subject is not to be taxed without clear words

for that purpose; and also, that every Act of Parliament must be read according to the natural construction of its words.‖

22. Subject taxable if within letter of law, not taxable if

not within letter of law though within the spirit


[1 ITC 37 (Madras)]

―In Partington vs. Attorney-General [(1869) 4 E.G.I. App. H.L. 100], Lord Cairns stated the rule thus

―As I understand the principle of all fiscal legislation,

it is this. If the person sought to be taxed comes

within the letter of the law he must be taxed, however

great the hardship may appear to the judicial mind to

be. On the other hand, if the Crown, seeking to

recover the tax, cannot bring the subject within the

letter of the law the subject if free, however apparently

within the spirit of the law the case might otherwise


appear to be. In other words, if there be admissible, in

any statute, what is called an equitable construction

certainly such a construction is not admissible in a

taxing statute where you should simply adhere to the words of the statute.

In Coltness Iron Company vs. Black [(1881) 6 App. Cas. 315]

Lord Blackburn stated the same rule somewhat differently. The noble Lord said:

―No tax can be imposed on the subject without words

in an Act of Parliament clearly showing an intention

to lay a burden on him. But when that intention is

sufficiently shown it is not open to speculate on what

would be the fairest and most equitable mode of levying that tax.‖

23. Burdening a subject with heavy taxation on personal

views of any official is not sustainable

[(2004) 90 TAX 29 (Trib.)]

―The ratio and the principle laid down in these two cases is

that burdening a subject with heavy taxation on personal views

of the official involved, irrespective of the position held by him

in the income tax hierarchy, cannot be sustained. Since, the

assessing officer has estimated the sales on the whimsical

inference drawn from certain set of facts and a wild guess as well

as of a fanciful estimate, therefore, such estimation of sales

cannot be held good and made basis for adoption of sales for

the year under appeal. As a natural sequel the sales should be

adopted considering history of the case and having taken regard

to the encouraging results declared by the assessee from year

after year. The assessing officer is, accordingly, directed to adopt the sales at Rs. 28,00,000/- for the year under appeal.‖

24. Court must stick to the letter of the statute


[1 ITC 161 (Burma)]

―In Attorney-General vs. Milne [(1914) A.C. 765 at p. 771]

Viscount Haldance L.C. said: It may be that, if probabilities,


apart from the words used, are to be looked at, there is, on the

construction which the Court of Appeal have put on the statute,

a causus omissus which the legislature was unlikely to have

contemplated. But, my Lords, all we are permitted to look at is

the language used. If it has a natural meaning we cannot depart

from that meaning unless, reading the statute as a whole, the

context directs us to do so. Speculation as to a different

construction having been contemplated by those who framed

the Act is inadmissible, above all in a statute which imposes

taxation, and in the same case Lord Atkinson said:-

―To succeed the Crown must bring the case within the

letter of that enactment. It is not enough to bring the

case within the spirit of it, or to show that if the

section be not construed as the Crown contends it

should be construed, property which ought to be

taxed will escape taxation, or will enjoy...an immunity

from successive levies of estate duty. These evils, if

such they be, must, if they exist, be cured by

legislation. Judicial tribunals must in interpreting these taxing Act stick to the letter of the statute.

Again in Lumsden vs. Inland Revenue Commissioners [(1914)

A.C. 877 at p. 887], Viscount Haldane L.C. said:-

―The duty of a court of construction in such cases is

not to speculate on what was likely to have been said

if those who framed the statute had thought of the

point which has arisen; but, recognising that the

words leave the intention obscure, to construe them

as they stand, with only such extraneous light as is

reflected from within the four corners of the statute itself, read as a whole.‖

Chapter VII

Language of Statute

1. If two views are possible from reading a provision of

law, then one favouring the citizens is to be given

preference

Amin Spinning Mills and another v.

Deputy Collector Central Excise and others

[(2004) 90 TAX 191 (S.C. AJ&K) =

2004 PTD 2479 (S.C. AJ&K)]

―The expression ‗question of law arising out of such order‘

in section 66 of the Indian Income-Tax Act, 1922, cannot be

restricted only to those questions which have been argued and

decided by the Tribunal. Sometimes, a question of law is raised

before the Tribunal but an aspect of that question is neither

raised nor decided. In such circumstances, other aspects of the

same question can be allowed to be urged before the High Court.

It is by now well settled that a Court of law and Tribunal

should apply correct and relevant law of the land on the

proposition before it irrespective of the fact that a party has referred the law or not.

If two views are possible from reading a provision of

law, then the view which favours the citizens may be given

preference over the second view. The aforesaid solitary

principle of law is supported by the authorities titled The State

v. Syed Qaim Ali Shah (1992 SCMR 2192), and B.P. Biscuit

Factory Ltd. Karachi v. Wealth Tax Officer and another (1996) 74

Tax 81 (S.C. Pak.)=(1996 SCMR 1470).‖

207

2. Rule of benefit to subject where two interpretations

are possible


Mst. Zarina Yousaf v. Inspecting Additional Commissioner of Income

Tax/Wealth Tax, Sialkot Range, Sialkot and another

2005 PTR 102 [H.C. Lah.] = 2005 PTD 108 (H.C. Lah.)]

―If two reasonably acceptable interpretations of a provision

of law are possible then the one that goes to the benefit of the subject should be adopted.‖

Micropak (Pvt.) Ltd., Lahore v.

Income Tax Appellate Tribunal, Lahore and 2 others

[(2001) 83 TAX 451 (H.C.Lah.) = 2001 PTD 1180]

―Where two interpretations of a taxing statute are equally

possible then the one favourable to the subject was to be adopted.‖

3. When two interpretations are possible in relation to

any provision in the discipline of taxation, the one

favourable to the assessee would prevail

IAC of Income Tax and others v.

Messrs Micro Pak (Pvt.) Limited and others

2002 PTD 877 (S.C.Pak)

―Before parting with these matters, it may be observed that

all concerned are one on the point that when two interpretations

are possible in relation to any provisions in the discipline of

taxation, the one favourable to the assessee is to prevail. The

learned Members of the Division Bench of the High Court were

quite right in reiterating the above principle of law in paragraph

12, already reproduced above, of the impugned judgment.‖

Mehran Associates Ltd. v. CIT, Karachi

[(1992) 66 Tax 246 (S.C.Pak)]

―The cardinal principles of interpretation of a fiscal statute

seem to be that all charge upon the subject are to be imposed by

clear and unambiguous words. There is no room for any

intendment nor there is any equity or presumption as to a tax. A

fiscal provision of a statute is to be construed liberally in favour

of the taxpayer and in case of any substantial doubt, the same is to be resolved in favour of the citizen.‖

Allied Bank of Pakistan Ltd., Azad Kashmir Branches,

209 Language Of Statute

Mirpur through Inam Elahi Azhar, EVP and Provincial Chief, PHQ (Punjab) v. Income Tax Appellate Tribunal,

AJK Council, Muzaffarabad and others [2001] 83 TAX 404 (H.C.A&JK) =

[2000] 82 TAX 417 (H.C.AJ&K) = 2000 PTD 2872

―Where a provision was open to two reasonably possible

interpretations, then, the interpretation which favours the

taxpayer has to be adopted.‖

J.A. Textile Mills Ltd. v. CBR [(2000) 81 TAX 88 (H.C.Lah.) = 1999 PTD 4138]

―.....in case of other laws and statutes which infringe upon

the rights of citizen or a party the apex court in re: Abdul Rehman

vs. Inspector General of Police, Lahore and 2 others (PLD 1995 SC

546) favoured a beneficial interpretation. The rule settled in re:

CIT, East Pakistan vs. M/s. Hossen Kasam Dada, Karachi (PLD

1961 SC 375) states that when two equally reasonable

constructions are possible one strict and other beneficial then

the latter should be preferred. The situation, thus, calls for

employing at least two general principles. First that where an

article or income can equally be placed under two heads of

income or tariff then the one favourable to the tax payer should

be adopted. Second when an item or income etc. expressly falls

into one clause then its placing into another clause would be

unjustified. All the moreso, when the other clause is subject to a higher rate of tax.

Rijaz (Pvt.) Ltd. v. Wealth Tax Officer Circle III Lahore [(1996) 74 Tax 9 (H.C.Lah)]

―It was observed that according to the well-accepted

principles of interpretation the doubt has to be resolved in

favour of the citizen. In these circumstances, the law-maker

could clarify its intention by adding an explanation which cannot be legitimately objected to.‖

Commissioner Sales Tax v. Rizki Ink Company Ltd. [(1991) 64 Tax 34 (H.C.Kar)]


―.....according to us, if two interpretations are possible then

any interpretation which favours the assessee has to be preferred.‖

CIT, Central Zone B, Karachi v. Zakia Siddiqui [(1989) 59 Tax 79 (H.C.Kar)]

―It is well recognised principle of interpretation that if a

fiscal statute is capable of two reasonable interpretations then

the one which is favourable to the subject be adopted.‖

Highland Manufacturers (Pak) Ltd. v. CIT, (West), Karachi [(1985) 51 Tax 66 (H.C.Kar)]

―We would observe that the Income Tax provisions have

to be strictly construed and should be interpreted in a manner which is more favourable to the subject.‖

4. Doctrine of favourable interpretation applies to

charging and not to machinery provisions

Barnala Commission Shop, Chak-Jhumra v.

Income Tax Officer, B-Ward, Lyallpur

[1963] 7 TAX 153 (H.C.Lah.) = 1963 PTD 534 = 1963 PLD 311

―Fiscal provision in case of ambiguity should be

interpreted in favour of subject. This doctrine applies to

charging provisions of Act and not to collecting provisions.‖

5. Two equal possible interpretations of exemption clause

one favouring the revenue to be adopted

CIT/WT, Multan Zone, Multan v. Allah Yar Cotton Ginning &

Pressing Mills (Pvt.) Limited, Multan Road, Vehari

[2000] 82 TAX 433 (H.C.Lah.) = 2000 PTD 2958

―Further that in case of doubt or two equally possible

interpretations the one in favour of the revenue shall be adopted.

For reference see the judgement in re: Army Welfare Sugar Mills Ltd. vs. Federation of Pakistan (1992 SCMR 1652).‖

6. Rule of interpretation of ambiguous words

Jamat-i-Islami Pakistan through Syed Munawar Hassan, Secretary

General v. Federation of Pakistan through Secretary, Law, Justice and

Parliamentary Affairs &


Muttahida Qaumi Movement (MQM) through Deputy Convener, Senator

Aftab Ahmad Sheikh v. Federation of Pakistan through Secretary,

Ministry of Interior,

PLD 2000 S.C. 111

―It is a well-settled rule of construction of statutes that if

the words used are ambiguous and admit of two constructions

and one of them leads to a manifest absurdity or to a clear risk

of injustice and the other leads to no such consequence, the second interpretation must be adopted.‖

7. If there was any doubt or ambiguity in language even

then interpretation favourable to assessee had to be

adopted

Khurram Saghir Industries, Lahore v. CIT, Zone-A, Lahore

[(2001) 83 Tax 489 (H.C.Lah.)

―The use of word ―prior‖ in second proviso to sub-section

(1) of section 13 and in sub-section (2) makes it very clear that

two ―prior‖ separate approvals of the Inspecting Additional

Commissioner were required where an Assessing Officer was to make addition to the declared value of any valuable property.

Obviously the requirement of prior approval was meant to

safeguard the interest of the assessee to avoid arbitrary exercise

of jurisdiction vested in the Assessing Officer. A simultaneous

approval normally will not serve the purpose of the provisions

because more often than not a simultaneous approval would be

a fait accompli. Lastly as remarked by the learned Division

Bench of the Karachi High Court in the aforesaid judgement

even if there was any doubt or ambiguity in the language the

interpretation favourable to the assessee had to be adopted as laid down by the apex Court in re: B.P. Biscuit Factory Ltd.

For the aforesaid reasons we are of the considered view

that two separate prior approvals u/s 13(2) and in proviso to

section 13(1) of the Ordinance were required and a combined

approval obtained under both these sub-sections or of the draft

assessment order did not fulfil the requirement of law.‖

8. In case of ambiguity in language, statement of objects

and reason, can be relied upon


Mst. Fatima Bibi c/o Crown Bus Service, Lahore v.

CIT, North Zone (West Pakistan), Lahore

[(1962) 6 TAX 1 (H.C.Lah.) =

1962 PTD 625 = 1962 PLD 809]

―Statement of objects and reasons be referred when there

is ambiguity in fiscal statute. In such a case benefit should go to subjects.‖

9. Ambiguity in language should be resolved in the

favour of taxpayer

CIT v. Muhammad Kassim

[(2000) 81 TAX 229 (H.C.Kar.) = 2000 PTD 280]

―If there was any doubt or ambiguity in the language used

in the statute which rendered same capable of several

interpretations, then the interpretation favourable to the assessee or the citizen was to be adopted.‖

10. Literal rule can only be deviated in case of ambiguity

in language; otherwise courts should adhere to plain

words

Muhammad Hayat Haji Mohammad Sardar v.

CIT, Punjab & NWFP

[5 ITC 159 (High Court, Lahore)]

―But the argument ab inconvenient as well as that based upon

the order in which the two sections stand, may influence the

interpretation of a statute when its language is ambiguous and

capable of more than one meaning ..... When once the meaning

is plain, it is not the province of a Court to scan its wisdom or its

policy. Its duty is not to make the law reasonable, but to expound it as it stands, according to the real sense of the words.

11. Plain words and patent meanings of law are to be

applied and interpreted as they are and no latent

meanings are to be attached to the patent words which

convey the plain and obvious meaning

CIT, Karachi v. Messrs Civil Aviation Authority

2002 PTD 388 (H.C.Lah.)


―Plain words and patent meanings of law are to be applied

and interpreted as they are and no latent meanings are to be

attached to the patent words which convey the plain and

obvious meaning.‖

12. Liability of withholding agent is restricted to plain

language of statute


[(2001) 83 Tax 305 (H.C.Kar.) = PTCL 2001 CL. 454]

―In our view the principle of law which thus, emerges from

these Indian authorities is that where the payee/deductee pays

his full tax, any short-fall in or failure to deduct income tax at

source by the deductor/payer would not make the later an

assessee in default, since non-deduction or short-fall in relation

to thereof would be of no consequence. This principle is

squarely applicable in the present case since the sellers/importers

in the present case having paid their full tax, any failure to deduct the tax by the petitioner would be of no consequence.

Respondent No. 3 has created a liability which cannot be

ascribed as one u/s 50(4)(a) of the 1979 Ordinance. In fact the

deduction of tax contemplated u/s 50(4)(a) also makes the following incumbent conditions:

(a) the credit of the tax deducted or imposed has to be passed on to the deductee;

(b) the deductee shall be allowed to claim the benefit of

this deduction in his return of total income tax and towards his final tax liability.

However, through the Circular under discussion the

exemption in relation to deduction at source u/s 50(4) has been

extended to all recipients who may enjoy exemption under any

of the provisions of the 1979 Ordinance. This would surely

include the further exemption prescribed by section 80C(4).

Applying this circular also the petitioner was under no obligation

to deduct tax at source u/s 50(4) in relation to the purchases on

which tax at import stage had been deducted u/s 50(5) and

which constituted a final discharge of liability u/s 80C(4). The


respondent 2 and 3 were bound to obey these

orders/instructions u/s 8 of the 1979 Ordinance, while these

instructions were also in keeping with the provisions of the 1979

Ordinance in particular section 80C(4). Failure to disregard this CBR Circular is ipso facto an unlawful exercise of jurisdiction.

The jurisdiction to apply the provisions of the 1979

Ordinance in any manner is not restricted to the proceedings for

the assessment or recovery of final income tax liabilities but also

relates with the same force in respect of advance tax, be it u/s

50(4) or section 53 or any other provision of the 1979

Ordinance. In the context of advance deduction of income tax at

source there is no provision in the 1979 Ordinance nor any

jurisdictional order issued by CBR confers jurisdiction on the respondents Nos. 2 and 3.

On the contrary, the proviso to section 50(4)(a)

categorically confirms that the substantive provision of section

50(4)(a) is to apply to non-residents as well, but only mutatis mutandis.

It is settled law that where impugned orders are void and

completely without jurisdiction (as in this case) a petitioner can directly approach the Court in its Constitutional jurisdiction.

It is an admitted position that the tax to be deducted is an

advance tax, more particularly when the provision of section

50(4)(a) has been made subject to section 53 of the 1979

Ordinance. Any advance tax, of necessity thus, has otherwise to

be imposed as per the scheme of advance tax u/s 53, before the

year runs out. The income tax to be deducted has to be a

percentage of purchase and is directly linked up with the

transactions. But if the tax u/s 50(4)(a) or u/s 53 is imposed

after the end of the year to which it relates, it would cease to

have the character of advance tax. Under section 53 of the 1979

Ordinance the last instalment of advance tax is to be paid or

collected by 15th June. In this case for the purposes of advance

tax, the assessment year 1996-97, respectively, while the

respondent No.3, however, admittedly had issued his first notice

on 1.6.1998 and then on 3.6.1998 and had completed orders in


July/August, 1998. These proceedings and orders were thus, beyond section 50(4)(a) incompetent and time-barred as well.

In case an assessee continues default of section 53 and the

time for framing the regular assessment or the end of the

assessment year reaches, the substantive default of section 53

(i.e. advance income tax) would automatically lapse since under

law any payment of section 53 is a credit with the exchequer

which is liable to be adjusted with the actual liability for that year.‖

13. Court must confine itself to language of law


[(2000) 81 TAX 229 (H.C.Kar.) = 2000 PTD 280]

―While interpreting a provision of statute, Court has to

read the provision as it exists and to deduce or infer the meaning

in accordance with the existing test or the words or particular

provision. Court is not supposed to add to or subtract any

word(s) from any provision of a statute while interpreting a

provision so as to give same a meaning other than the one which obviously and plainly flows or can be inferred from it.‖

14. Statutes should be interpreted strictly in accordance

with letter of law

J.A. Textile Mills Ltd. v. CBR

[(2000) 81 TAX 88 (H.C.Lah.) = 1999 PTD 4138]

―It is an established principle that fiscal statutes should be

interpreted strictly in accordance with the letter of law used and

the words employed. For reference see 1977 SCMR 371 re:

Collector of Customs, Karachi & Others vs. M/s Abdul Majeed Khan &

Others. Also that in case of any ambiguity or doubt arising from

construction, the same should be resolved in the favour of

subject. For reference see PLD 1961 SC 375 re: CIT, East

Pakistan vs. M/s. Hossen Kasam Dada, Karachi & others and Abdul

Majeed Khan and others (supra). The ratio settled in 1993 SCMR 274

= 1993 PTD 69 re: Mehran Associate Limited vs. CIT, Karachi also supports this kind of approach in fiscal matters....‖

15. Inconsistencies are in-built in Income Tax


Hatz Trust of Simla v. CIT, Punjab & NWFP

[5 ITC 8 (High Court Lahore)]

―It is true that the interpretation of the Indian Income Tax

Act is far from being an easy matter. It is founded on the

English Acts with certain differences to meet different

conditions. The English Acts have been added so or varied to

meet certain attempts to evade them and the same is true of the

Indian Acts. The result is that there may appear to be certain

inconsistencies....‖

16. General Language not infrequently intended sub modo



―General language is not infrequently intended sub modo,

and even in statutes cannot be taken at the foot of the letter. But

in the first place an Income Tax Act may be taken to have been

framed so as to express intentions of the legislature on a matter of

cardinal importance for its purpose. Secondly, the words

employed in section 4 - the charging section are calculated to an

end which in the absence of any saving clause they are apt and

sufficient to secure, that is, they place on the subject claiming

exemption the burden of making out his case under the strict

provisions of the statute. Thirdly, the modification sought to be

implied overlaps a modification made expressly and with much

care to limit and define its scope. Fourthly, the basis of the

express modification is the payment of land revenue, and the

legislature so far from moving in diversa materia, may very easily

be supposed to regard its own provision as a precise formula,

probably of compromise, adequately meeting the obligations

imposed on it for modern purposes by the Permanent

Settlement as well as the demands of others (e.g., the more

highly assessed holders of estates temporarily settled) for some

degree of uniformity in the incidence of direct taxation. It is

difficult indeed to believe that the effect of the tax upon such

important subjects as mining profits in permanently settled

provinces was left to be thrashed out as against all interests upon

the terms of the Regulation. Nor can it reasonably be taken as


axiomatic that it is any more fair or just to tax forthwith an estate

subject to periodical revision as regards land revenue than to tax an estate permanently settled.‖

17. It is inconceivable that a person can be saddled with

responsibility/liability for non-compliance of law

which is to be enacted somewhere in future




―The case, under consideration pertains to assessment year

1995-96, meaning thereby the period ending 30th June, 1995.

The explanation has been inserted by Finance Act, 1998 and if

the operation of the explanation is held to be retrospective a

person would be held to be defaulter for not making compliance

with law which was to be enacted after three years of the

transaction taking place during the period relevant to the

assessment year 1995-96. It is inconceivable that a person can be

saddled with responsibility/liability for non-compliance of law

which is to be enacted somewhere in future. Because of the

totally changed facts and circumstances, emanating from the

introduction of presumptive tax regime the ratio of the judgment

in the case of Dream Land v. Commissioner of Income Tax, (1977) 35 Tax 179 (Lah.) is not attracted.

For the foregoing reasons, it is held that the learned

Tribunal was fully justified to hold that the explanation added to

section 50(4) of the Ordinance, by Finance Act, 1998, cannot be

applied retrospectively. After hearing learned counsel for the

appellant, the appeal was dismissed in limine by a short order on 30.10.2003. These are the detailed reasons in support thereof.‖

Chapter VIII

Application of Statute

1. Application of rule generalibus specialia derogant

CIT, East Pakistan, Dacca v. Engineers Limited, Dacca

[1967] 16 TAX 81 (S.C.Pak.)

―The second contention, raised by the learned counsel for

the CIT, that clause (xvi) was not applicable rested on the rule

that a special provision in a statute excludes the application of a

general provision of similar nature. This is a well established rule

of construction of statutes, but is attracted in the interpretation of clause (xvi) the relevant clauses read as follow:

(xii) any expenditure (not being in the nature of capital

expenditure) laid out or expended on scientific research related to the business;

(xiv) any expenditure of a capital nature on scientific research related to the business;

(xv) any expenditure laid out or expended on the training

abroad of citizens of Pakistan, in connection with a

scheme approved by the Central Board of Revenue for the purposes of this clause; and

(xvi) any expenditure (not being in the nature of capital

expenditure or personal expenses of the assessee) laid

out or expended wholly and exclusively for the purpose of such business, profession or vocation.

The scope of clause (xvi) which is residuary nature is thus

wholly different from the sums included in clause (xii), (xiv) and

(xv). There being no similarity of subject-matter between clauses

(xii), (xiv), (xv) and (xvi) of section 10(2) the rule generalibus

specialia derogant was clearly not attracted.‖

219

2. Interpretation of charging and machinery provisions

of a fiscal statute


Trustees of the Port of Karachi v. CBR & another

[(1990) 61 Tax 30 (H.C.Kar)]

―A taxing statute usually contains charging and machinery

provisions. The former fixes the liability to pay tax and has to be

construed strictly and where two reasonable interpretations are

possible one which favours the subject should be accepted. Once

the liability to tax is fixed the machinery provision comes into play.

This has to be construed liberally and in a manner that the recovery

is ensured. Where more than one reasonable interpretation of such

provision is possible one which favours recovery should be

adopted.‖

3. Interpretation of machinery provisions of a fiscal statute

Trustees of the Port of Karachi v. CBR & another

[(1990) 61 Tax 30 (H.C.Kar)]

―Mr. Sheikh Haider the learned counsel for the respondent

has contended that as section 50(7A) is not a charging but

machinery provision it should be liberally interpreted to ensure

that recovery of tax is made and no part of it escapes. It is true

that the machinery provisions of a fiscal statute should be

interpreted in such a manner that recovery is not frustrated or

adversely affected. But it does not mean that to achieve this object

one can travel beyond the realm of law and do violence to

language and intention of the statute. The machinery can be

extended only to the extent it is permissible under law. In this

attempt one cannot override the rights of other parties only

because a recovery has to be made. Such provisions have their

own limitations and they are to be found within the statute itself.‖

4. Law applicable on the first day of assessment year will

apply and not the one in existence during the next year

CIT v. Pakistan Tobacco Company Ltd.

[1988] 57 TAX 118 (H.C.Kar.) = 1988 PTD 66

―The legal proposition is very obvious, namely, that

accounting year is different from assessment year. The law

applicable to a particular assessment year will be the law which is

221 Application Of Statute

in force in that year and not the law which was in force during the accounting year unless otherwise stated or implied.‖

5. For the purposes of assessment of income the law

applicable is that in force on the first day of the

relevant assessment year

Rustam F. Cowasjee & 2 others v. CBR & 2 others

[(1985) 52 Tax 123 (H.C.Kar.)]

―It is well-settled that for the purposes of assessment to

income tax the law to be applied is that law that is in force in the

assessment year, in other words the income tax as stands

amended on the first day of July of a financial year will apply to the assessment of that year.‖

6. Right accrued cannot be taken away by implication

Harjina & Company (Pak) Limited, Karachi v. CIT

[1964] 8 TAX 1 (H.C.Kar.) = 1963 PTD 867 = 1963 PLD 996

―Rights under existing laws are not to be supposed to have

been repealed by implication unless intention becomes clear from language of law.‖

Chapter IX

Interpretation of Statute

1. Statute must be intelligibly expressed and reasonably

definite and certain







PLD 2000 S.C. 111

―Statutes must be intelligibly expressed and reasonably

definite and certain. An act of the Legislature to have the force

and effect of law must be intelligibly express and statutes which

are too vague to be intelligible are a nullity. Certainty being one

of the prime requirements of a statute, a statute in order to be

valid must be definite and certain. Anticipated difficulty in

application of its provisions affords no reason for declaring a

statute invalid where it is not uncertain. Reasonable definiteness

and certainty is required in statutes and reasonable certainty is

sufficient. Reasonable precision, and not absolute precision or

meticulous or mathematical exactitude, is required in the drafting

of statutes, particularly as regards those dealing with social and economic problems.

Penal statutes contemplate notice to ordinary person of

what is prohibited and what is not. Statute creating an offence

must be precise, definite and sufficiently objective so as to guard

against an arbitrary and capricious action on the part of the State functionaries who are called upon to enforce the statute.‖

223

2. While interpreting fiscal notifications the only guiding

principle should be that no undue advantage could be

taken on the basis of far-fetched or scholarly


interpretation which the plain language does not

imply nor intended to mean

Collector of Central Excise and Sales Tax v. Rupali Polyester Ltd. and others [2003] 87 TAX 49 (S.C.Pak.)

―It hardly needs any elaboration that while interpreting a

notification [this circular can also be equated with notification

having sanctity of law) ―the purpose or purposes for which a

notification is issued would be relevant in determining the vires

of a notification. One of the practical and effective ways of

proliferating the purpose is to see how far the suggested

meaning destroys and defeats or promotes the ultimate purpose.

In this research the Court is not confined to the literal meaning

of the words used in the notification but it has to adopt a

rational attitude by attempting to align its vision to that of the

draftsman while drafting the notification in question‖. [Bindra‘s

―Interpretation of Statutes‖, 7th Edn., p.833). A careful analysis of

Circular No.2 of 1988 and its ingredients as mentioned

hereinabove would show that it is free from any ambiguity,

absurdity or confusion and the language employed therein is so

plain which cannot be twisted whatever principles of

interpretation may be pressed into service because the question

of any insertion, deletion or addition does not arise as it is to be

interpreted in such a manner that the object of its issuance is

promoted rather than hampered. We are of the considered

opinion that while interpreting Fiscal Notifications the only

guiding principle should be that no undue advantage could be

taken on the basis of far-fetched or scholarly interpretation

which the plain language does not imply nor intended to mean.

The provisions as contained in section 30 of the Sales Tax Act,

1951 are to be kept in view and no separate meanings can be

assigned which are not in consonance with the said Act. It is an

admitted feature of the case that the sales tax was recovered

from the customers and added to the cost of production.‖

3. Exemption clauses provided under industrial

incentives should be construed liberally

Irum Ghee Mills Limited v.

225 Interpretation Of Statute

Income Tax Appellate Tribunal and another

[2000] 82 TAX 3 (S.C.Pak)

―For the reasons discussed above, the appeal is allowed,

the ex-parte order dated 30.06.1997, the subsequent appellant

orders and judgement of the High Court, dated 26.6.1998 are set

aside, and the appellant is declared entitled to the exemption

granted by clause 118E of the Second Schedule to Income Tax

Ordinance, 1979. Since the principal objection of the clause was

to encourage setting up of industrial undertakings by offering tax

incentives to boost up industrial growth a benefit view was to be taken rather than to defeat its object on technical grounds.‖

4. Effect of non-obstante clause

E.F.U. General Insurance Ltd. & Others v.

Federation of Pakistan & Others

[(1997) 76 Tax 213 (S.C.Pak) = 1997 PTD 1693 =

PLD 1997 SC 700]

―Effect of said non-obstante clause is that the specified

sections of the Act or rest of the Ordinance to the extent that

these are inconsistent with Section 10(7) and First Sched. of the

Act or section 26 and Fourth Sched. of the Ordinance shall not

be given effect to. No inconsistency exists between the special

provision relating to general insurance business in the Act or

Ordinance and the applicable Schedules containing general

provisions for computation of tax on business. Such general

provisions then apply for computation of tax on income from general insurance business.‖


5. Non obstante provision overrides conflicting provision

CIT v. National Agriculture Ltd., Karachi

[2000] 82 TAX 73 (H.C.Kar.) =

[2000] 81 TAX 249 (H.C.Kar.) = 2000 PTD 254

―....if two provisions of a Statute are not consistent or are

in conflict with each other then the provision of the section

starting with the expression ―notwithstanding‖ or with ―non

obstante‖ clause would have preference and would override the

provisions or the sections of the Statute dealing with the same

subject-matter.‖

6. Interpretation of statute is not CBR‟s domain

Central Insurance Co. & other v. CBR Islamabad

[(1993) 68 Tax 86 (S.C.Pak)]

―The interpretation of any provision of the Ordinance can

be rendered judicially by the hierarchy of the forums provided

for under various sections of the Ordinance, namely, the Income

Tax Officer, Appellate Assistant Commissioner, Appellate

Tribunal, High Court and this court and not by the CBR.

Therefore, interpretation of statute is not CBR‘s domain.‖

7. Proceedings of the Legislature can be resorted to when

the words of a provision are ambiguous

A&B Food Industries Ltd. v. CIT/CST, Karachi

[1992] 65 TAX 281 (S.C.Pak)

―We are inclined to hold that reference to the proceedings of

the Legislature can be resorted to when the words of a provision

of a statute are ambiguous with the object to discover the real

intention of the law-makers but when there is no ambiguity in the

language employed in the relevant provisions of the statute,

recourse to the proceedings of the Legislature cannot be made in

order to construe the same in violation of the language employed

therein.

In our view, if the language of the statute is clear and

unambiguous, the Court is bound to construe and to give it

effect without taking into consideration anything extraneous to

the same.


Reference may also be made to a recent decision of this

court in the case of Miss Benazir Bhutto vs. Federation of Pakistan [PLD 1988 SC 416]‖.

8. General and specific words


[(1990) 62 Tax 74 (S.C.Pak)]

―Reference may also be made to para 189 from the

Construction of Statute by Earl T. Crowford 1940 edition, which reads as follows:

General and special words or terms: It is also basic rule

of construction that general words should be given a general

construction, that is, they should be given their full and natural

meaning, unless the statute in some manner reveals that the

legislative intent was otherwise. Such a contrary intent may be

found in the purpose and subject matter, or context of the

statute, so that as a result the general terms may be qualified or restrained.....‖

9. Words in statutes cannot be treated as surplusage or

redundant

Muhammadi Steamships Company Ltd. v. CIT, (Central) Karachi

[(1966) 14 Tax 281 (S.C.Pak.) = PLD 1966 S.C. 828]

―Provisions granting exemptions or privileges have to be

construed strictly against the person claiming the exemption or

the privilege. It is a well established rule of interpretation of

statutes that no words in a statute are to be treated as surplusage or redundant.‖

10. Every word used in a statute has to be given effect to

and no word of provisions of a statute is to be treated

as surplusage and redundant


[2002] 86 TAX 39 (H.C.Kar.) = 2002 PTD 14

―The principle of interpretation of statute that every word

used in a statute has to be given effect to and no word or

provisions of a statute is to be treated as surplusage and

redundant. The case of East and West Steambship Co. vs. Queensland


Insurance Co. Ltd. reported in PLD 1963 SC 663 can be cited in

support of the above proposition. A similar observation was

made by the Supreme Court in the case of Jalal Mehmood Shah vs.

Federation of Pakistan reported in PLD 1999 SC 395. In the

circumstances, the omission on the part of the Assessing Officer

for making the order for levy of Workers‘ Welfare Fund at the

time of finalizing the assessment even if considered to be an

error or mistake visible or apparent from the record or found

floating from a bare reading of the order of the Assessing

Officer, he would not have the right to have recourse to section

156 of the Income Tax Ordinance.‖

11. Rule of harmonious construction of statutes

CIT, Karachi v. Khatija Begum, partner Shakil Impex Karachi

[(1965) 12 Tax 95 (S.C.Pak)]

―Now it is well-settled that: the words of a statute, when

there is doubt about their meaning, are to be understood in the

sense in which they best harmonize with the object of the

enactment and the object which the legislature had in view.‖

See Maxwell on Interpretation of Statute. The same author also

says that:

“To arrive at the real meaning it is always

necessary to get an exact conception of the aim,

scope and object of the whole Act, to consider

according to Lord Coke (I) what was the law

before the Act was passed; (ii) what was the

mischief or defect for which the law had not

provided; (iii) what remedy Parliament has

appointed; and (iv) the reasons of the remedy.”

Mustafa Prestressed R.C.C. Pipe Works Ltd. Karachi v.

Commissioner of Sales Tax (Investigation), Karachi

[(1990) 62 Tax 119 (H.C.Kar.)]

―It is well-settled principle of interpretation that all the

provision of an enactment have to be construed harmoniously.‖

CIT, Lahore Zone Lahore v. Malik & Co. Lahore

[(1974) 29 Tax 165 (H.C.Lah)]


―Rules and the section are to be read together in harmony and not in derogation of one another.‖

12. Cautious approach is necessary when adopting foreign

case-law

Beach Luxury Hotel Ltd. v. CIT, (Central), Karachi

[(1981) 44 Tax 40 (S.C.Pak.)]

There is, however, a word of caution, a reservation to be

kept in view in all such historical and comparative studies. Not

much help can be directly obtained in construing a particular

provision of our Income Tax Act, by reference to interpretation

of similar, or analogous provisions, in Income Tax Legislation in

England or India. However, on analogous provisions,

fundamental concepts and general principles, unaffected by the specialities of either, the authorities may be helpful as guides.‖

13. Court cannot imply anything not expressed in statute

Hirjna & Co. (Pak) Ltd. Karachi v.

Commissioner of Sales Tax, Central Karachi

[(1975) 31 Tax 78 (S.C.Pak.)]

―We may here observe that in interpreting the taxing

statute the courts must look to the words of the statute and

interpret it in the light of what is clearly expressed. It cannot

imply anything which is not expressed, it cannot import provisions in the statute so as to support assumed deficiency.‖

14. Person sought to be taxed must come within the letter

of law

CIT, North Zone, Lahore v. Mst. Wazirunissa Begum

[(1974) 29 Tax 188 (S.C.Pak.)]

―In determining whether or not a particular matter comes

within a taxing statute, it is only the letter of law to be looked

into. There is ample authority for the proposition that in a fiscal

case, form is of primary importance, the principle being that if

the person sought to be taxed comes within the letter of the law,

he must be taxed, however great a hardship may thereby be

involved but on the other hand if the crown cannot bring the

subject within the letter of the law he is free, however, apparent


it may be that his case comes within what might be called the spirit of the law.‖

15. No words to be treated as surplusage

Muhammadi Steamship Company Ltd. v.

CIT, (Central) Karachi

[(1966) 14 Tax 281 (S.C.Pak.) = PLD 1966 S.C. 828]

―It is well established rule of interpretation of statute that

no words in a statute are to be treated as surplusage or

redundant. The words ‗such capital being computed in

accordance with the rules made by the Central Board of Revenue‘ could not be read as surplusage or redundant.‖

16. Exemption clauses vis-a-vis rules of interpretation

Muhammadi Steamship Company Ltd. v.

CIT, (Central) Karachi

[(1966) 14 Tax 281 (S.C.Pak.) = PLD 1966 S.C. 828]

―Provisions granting exemptions or privileges have to be

construed strictly against the person claiming the exemption or the privilege.‖

17. A fiscal statute should be construed strictly


[(1959) 1-TAX (III-207) (S.C.Pak.)]

―A fiscal statute should be construed strictly and no question of equitable construction arises.‖

18. Abrogation of International Law

Imperial Tobacco Co. of India Ltd. v.

CIT, South Zone, Karachi

[(1959) 1-TAX (III-284) (S.C.Pak.)]

―Statutes are not to be construed as abrogating

International Law unless their language clearly leads to that

result, and that extra territorial operation of a statute over

foreigners is not to be presumed as having been intended unless it is expressly so stated.‖

19. While interpreting a fiscal statute, there is no room for

any intendment, inference or presumption


CIT, Companies-I, Karachi v.

Messrs National Investment Trust Ltd., Karachi

2003 PTD 589 (H.C.Kar.)

―The learned counsel has conceded that while interpreting

a fiscal statute there is no room for any intendment, inference or

presumption and the plain words used by the Legislature are to

be looked only, for application of a particular provision. He has,

however, insisted that income, profits and gains are to be

computed for the purpose of Income Tax Ordinance, 1979 in

accordance with the method of accounting regularly employed by the assessee.‖

20. Hypothetical construction/interpretation is not

permissible

[2004 PTD (Trib.) 2749]

―It is trite law that the subject is not to be taxed unless the

language of the statutes clearly imposes the obligation, and

language must not be strained in order to tax transactions which

had the Legislature thought of it would have been covered by

appropriate words. Beneficial legislation has to be interpreted

benevolently as far as possible. Hypothetical

construction/interpretation is not permissible as held by the Honourable Superiour Courts.‖

21. Fiction of law is restricted to the extent specified in

statute and its scope is not to be extended

CIT, Companies-I, Karachi v.

Messrs National Investment Trust Ltd., Karachi

2003 PTD 589 (H.C.Kar.)

―The explanation is not general in terms and shall not be applied

to other sections of Income Tax Ordinance, on the basis of the

principle that a fiction of law is restricted to the extent specified

in the statute and its scope is not to be extended. The intention

of the Legislature is clear from the fact that no such explanation

has been inserted in section 50(6A) of the Income Tax

Ordinance, 1979.‖


22. Definitions given in a particular statute are meant

strictly for the said law unless adopted by other

statutes through legislation or reference

CIT, Companies-II, Karachi v. Messrs Muhammad Usman Hajrabai Trust Imperial Courts, Karachi 2003 PTD 577 (H.C.Kar.)

―It is established principle of the interpretation of statutes

that the definitions given in a particular statute are to be

employed for the purpose of the said statute only until and

unless the definitions are adopted by any other statute through

the legislation by incorporation or reference. A perusal of

section 2 of the Income Tax Ordinance clearly shows that the

definitions given therein are for the purpose of the Income Tax

Ordinance only. For the purpose of Wealth Tax Act, 1963, the

definitions of the terms expressions and words used in the said

Act have been given in section 2 thereof. In sub-section (2) of

section 2 of the Wealth Tax Act, 1963, it is stated that, ―the words

and expressions used but not defined in this Act shall have the

meaning assigned to them under the Income Tax Ordinance,

1979‖. Since the expression company as used in the Wealth Tax

Act, 1963, is defined in section 2(9) of the said Act, therefore,

the contention of the Revenue that, the learned ITAT ought to

have interpreted the expression company used in the Wealth Tax

Act, 1963 with reference to the definition given in the Income Tax Ordinance is not tenable and is without any substance.

In the judgements cited by the appellant itself, it is clearly

stated that, in taxing statute one has to look merely at what is

clearly stated. There is no room for any intendment. There is no

presumption as to a tax. Nothing is to be read in, nothing is to

be implied, one can only look fairly at the language used. By

now, it is established principle of the interpretation of fiscal

statutes that, a tax on any person is to be levied by clear and

unambiguous words and the expressions used in the charging

sections are not to be stretched by any process of interpretation

so as to bring a person within the tax net, not falling under the

clear and plain language of the statute. For the foregoing

reasons, we are of the opinion that, the learned ITAT has


correctly interpreted the law in the light of the established

principles of the interpretation of fiscal statutes pertaining to the

charging of tax. The impugned finding of the learned ITAT that,

a trust is not liable to the charge of wealth tax is not open to any

exception and is hereby upheld. The contention of the appellant

is without substance with the result that all the appeals stand dismissed in limine.‖

23. Law is to be interpreted in the totality of the scheme

contained in a particular statute and is not to be taken

in isolation

BILZ (Pvt.) Ltd. v. DCIT, Multan and another

2002 PTD 1 (S.C.Pak)

―Learned counsel stated that the Assessing Officer after

having gone through the registers should have pointed out the

parties from whom the advance tax was liable to be deducted.

We are afraid that the contention raised by the learned counsel

has no force because as it has been observed hereinabove that it

is the petitioner firm itself who made the supplies, therefore, no

one else better than it would have knowledge that from whom

the deduction is to be made. The department had successfully

discharged its obligation by making reference of the details of

the supplies, which were made under different heads as per the

contents of the show-cause notice. It may be noted that

according to the settled principle of law that a fiscal statute has

to be construed in its true perspective and in respect of payment

of income-tax, if it is found due against a party, then such statue

cannot be interpreted liberally in order to make out a case in favour of an assessee who has failed to pay the tax.‖

Messrs Indus Basin & Co. v. CIT

[2002 PTD 2169 (H.C.Kar.)]

―The learned ITAT further ignored another cardinal

principle of the interpretation of statutes that a law is to be

interpreted in the totality of the scheme contained in a particular

statute and is not to be taken in isolation. We have seen that, the

word ‗building‘ has been used in its broader sense which is

inclusive of all the three categories of buildings appearing at


Serial Nos.I, II and II-A, under the heading ‗building‘, in Table

annexed to rule 2. We have already referred to the use of term

‗building‘, in section 23(l)(v), rule 1 (1), (2), (3), (3A) and rule 2

of the Third Schedule. In rule 5 of the Third Schedule also, word

‗building‘ has been used for the purpose of allowing initial

depreciation but for the purpose of rate of depreciation,

different categories have been given at Serial Nos.(a), (aa), (aaa)

and (b). .Under clauses (a), (aa) and (aaa) the nature and use of

the building has been described while in clause (b) it is simply

stated, ‗in the case of other building‘. It means that clause (b) in

rule 5(1) is in the nature of residuary clause and similar is the

position of rule 2 where at Serial No.I, it is described as building

(not otherwise specified) while at Serial Nos.II and II-A Factory

or workshop (excluding godowns and offices) and residential

quarters for labourers have been described, meaning thereby that

at Serial Nos. II and II-A description of the buildings have been

given and Serial No. 1 is residuary in nature. Reading of rule 2

and rule 5 shows that the Legislature after giving particular

description of some categories of the building has left all other

categories of building in residuary provisions. It is pertinent to

observe here that the categories of various assets under

particular head, does not have the effect of taking away any class

of asset outside or beyond the parameters of main heading of

the asset. In other words, notwithstanding, the classification of

assets in different categories for the purpose of rate of

depreciation all of them belong to the same specie under which

they are categorized.‖

24. It is not for the Courts to supply for deficiency in the

language of law as framed

CIT/WT, Sialkot Zone, Sialkot v. Messrs Thapur (Pvt.), Sialkot

[(2002) 86 Tax 274 (H.C.Lah.) = 2002 PTD 2112]

―The prayer of the Revenue for a liberal construction of

the provisions of section 80CC read with section 4 of the

Workers‘ Welfare Fund Ordinance if granted in the manner it is

being sought, a number of blanks will have to be filled in and

many deficiencies supplied to justify computation of the fund. It


is not for the Courts to supply for deficiency in the language of

law as framed. Where law expressly holds out to an assessee that

in case of particular receipts the deduction made at source in

respect thereof shall be his final discharge of liability under the

Income Tax Ordinance, any further charge with reference to the

provisions contained in another legislation cannot justify a

further charge.‖

25. No provision of a statute should be considered in

isolation, until and unless any section/provision

thereof is a complete code in itself. Any Scheme

contained in a statute or subordinate legislation

should be considered in totality of the Scheme

A. Rehman alias Abdullah and another v.

Federation of Pakistan and others

2002 PTD 804 (H.C.Kar.)

―Before giving our finding on the point under

consideration, it would be appropriate to state that the

established principle of interpretation of statutes is that no

provision of law contained in a statute is to be considered in

isolation, until and unless any section/provision is a complete

code in itself an any Scheme contained in statute or subordinate

legislation, is to be considered in the totality of the Scheme.

Thus, adhering to this principle, we will consider all the relevant

provisions in the Scheme together in their totality.‖

26. Where language of any statute or legal document is

clear, then the same has to be acted upon accordingly

A. Rehman alias Abdullah and another v.


2002 PTD 804 (H.C.Kar.)

―Here the golden principle of interpretation of statutes

comes into picture that where the language of any statute or legal document is clear, it has to be acted upon accordingly.‖

27. If the words are not already defined in the statute,

such words used in a section of the statute are to be

given their ordinary meaning



[2002] 86 TAX 39 (H.C.Kar.) = 2002 PTD 14

―The general principle of interpretation is that the words

used in a section of the statute are to be given their ordinary

meaning if not already defined in the statute. By giving the

ordinary meaning of the word ―assessable‖ there can be no other

possible interpretation than the one which we had arrived at

hereinabove. From the above discussion the only conclusion

which can be had is that assessees who are not required to file

return of total income under the Income Tax Ordinance, relating

to presumptive tax regime cannot be subjected to the charge/levy of Workers‘ Welfare Fund.‖

28. Words, “tax payable on the basis of such return” are to

be interpreted on a reading of return of total income as

a whole including the claim of exemption if any, and

the assessment order is not to be read as part of return

of total income under any principle of the

interpretation of statutes


2002 PTD 388 (H.C.Lah.)

The words, ―tax payable on the basis of such return‖ are to

be interpreted on a reading of return of total income as a whole

including the claim of exemption if any, and the assessment

order is not to be read as part of return of total income under any principle of the interpretation of statutes.‖

29. Document is to be read as a whole and not in piece or

in conjunction with any other material which is not be

part of document


2002 PTD 388 (H.C.Lah.)

―Document is to be read as a whole and not in piece or in

conjunction with any other material which is not part of document.‖

30. Principles for determining mandatory or directory

provision of law


Mirpur through Inam Elahi Azhar, EVP and Provincial


Chief, PHQ (Punjab) v. Income Tax Appellate Tribunal,


[2001] 83 TAX 404 (H.C.A&JK) =

[2000] 82 TAX 417 (H.C.AJ&K) = 2000 PTD 2872

―No universal rule or absolute test existed for determining

whether a provision of law was mandatory or directory and it

was to be determined according to the intention of the

Legislature and the language which had been used in the

provision. Ordinarily, where consequences of failure to comply

with certain provisions were not stated those were to be deemed

to be directory, and where the consequences were specifically

mentioned, the provision was mandatory. Statute, as a general

rule was understood to be directory when it contains matter

merely of directions but it was construed as mandatory when

those directions were followed up by an express provision that

in default of following them, he had to face the consequences.

Provision was mandatory if its disobedience entitled a serious legal consequence.‖


31. Correct interpretation of Rule 15 vis-a-vis right of

appeal


Mirpur through Inam Elahi Azhar, EVP and Provincial

Chief, PHQ (Punjab) v. Income Tax Appellate Tribunal,


[2001] 83 TAX 404 (H.C.A&JK) =

[2000] 82 TAX 417 (H.C.AJ&K) = 2000 PTD 2872

―Rule 15 further contains that where the memo. of appeal

is not filed in the manner specified, then, the Registrar or the

Officer authorized under rule 7, may return it to the appellant

or his authorized representative, if any, to bring it in

conformity with the provisions of the said Rules within such

time as he may think. The aforesaid rule also lends support to

the arguments that section 134(5) is directory provision of law

and not mandatory because it suggests that if any memo of

appeal is not accompanying the necessary document then, the

Registrar shall return the same and provide further time for its

completion. Thus, it clearly shows that in case, the appeal fee

was not deposited within time then the Registrar should have

directed the appellant to deposit the requisite appeal fee. He

should have also provided time to the appellant for depositing

the appeal fee, so, it could not be said that this provision is a

mandatory provision of law, therefore, if, at all, the memo of

the appeals were not accompanying the requisite fee, then,

under rule 15, it was the responsibility of Registrar to provide

further time to the appellant for depositing the appeal fee.

Nothing like such was done in the instant cases. It is to be

noted that if it would have been a mandatory provision of law,

then, in rule 11, it should have been mentioned that the memo

of appeals should accompany the requisite court-fee and the

consequences for failure of which would have also been provided in the aforesaid rules.‖


32. “Assessment consciously completed”, meaning of

National Beverages (Pvt.) Ltd. v.


[(2001) 83 TAX 359 (H.C.Kar.) = PTCL 2001 CL. 250]

―The expression ―assessment consciously completed‖ has

been elaborately explained by the Supreme Court in the case of

Pakistan Tobacco Co. Ltd. vs. Government of Pakistan and 3 others

(PTCL 1992 CL. 376 = 1993 SCMR 493) as under:-

6. The question as to when reopening of the case u/s 65 of Income Tax Ordinance, 1979 is allowed and justified in spite of the fact that all material facts were

already on the record when previous finding was given, came up for detailed examination before this Court in the case of Edulji Dinshaw Limited (supra) in

which nearly the whole case-law on the subject has been noticed. It is held in the reported judgement of that case once all the facts have been fully disclosed by

the assessee and considered by the Income Tax Authorities and assessments have been consciously completed and no new fact has been discovered there

can be no scope for interference with these concluded transactions under the provisions of section 65 on the ground that the income chargeable to tax under the

Ordinance has escaped assessment or has been under-assessed in the meaning of section 65(1)(a)(b) of the Ordinance. Maximum emphasis in this ruling is on use

of words to the effect ‗assessments have been unconsciously completed‘. Requirement spot-lighted is that Income Tax Officer has applied his mind

consciously to the facts of the case and perusal of the record. If there is conscious application of mind, then rule laid down in this case will apply with full force. If

there is no conscious application of mind by Income Tax Officer, then rule laid down in this case will not be attracted.‖

33. Parametric computer balloting held contrary to the

law


Ikhlaq Cloth House, Faisalabad v. ACIT, Circle-12,

Faisalabad Zone, Faisalabad and 3 others

[2001 PTD 3121]

―Article 2A of the Constitution and promulgation of

Shariat Application, 1990 enjoins on the State to deal with issue

under Islamic dispensation and Islamic principle of

interpretation of statute should be followed. Admittedly

respondent while promulgating Self-Assessment Scheme for the

year 2000-2001 made a clear representation that cases for

selection of audit would be made through random computer

ballot. This was the promise given out by the Government to the

taxpayer and the citizens. It has a binding effect in law and

jurisprudence. It is commanded by the God Almighty through

the passages contained in Qura‘an-e-Hakeem in Surah Bakara,

Surah Al-Maida and Sura Bani Israel that the promises made to

each other should be adhered to. This solemn transcendental

principle is to be followed and is not merely decorative. The

promise becomes more imperative when it is given out by the

Government. Therefore, such promise has a binding force and

cannot be allowed to be breach moreso by the hierarchy of

respondent No. 4. The device or parametric computer balloting,

therefore, has no place in the Self-Assessment Scheme under

consideration and it is alien to the Scheme. It, therefore, follows

that the parametric computer balloting is contrary to the law under the said Scheme and has to be declared as such.‖

34. Machinery provisions cannot be construed to go

beyond the spirit of law

Leather Connections (Pvt.) Ltd. v.

Central Board of Revenue, Islamabad

[2001] 83 TAX 1 (H.C.Lah.)

―It is settled proposition of law that principle of strict

construction of fiscal statute is applicable only to taxing

provisions such as charging provisions and not to those parts of

statutes which contain machinery provisions as per principle laid

down in (1980 Tax Law Report 185). It is true that the

machinery provisions of a fiscal statute should be interpreted in


such a manner that recovery is not frustrated or adversely

affected. But it does not mean that to achieve this object one can

travel beyond the spirit of law and do violence to language and

intention of the statute. The machinery can be extended only to

the extent it is permissible under the law. In this attempt one

cannot override (rights) of other parties only because a recovery

has to be made. Such provisions have their own limitation and they are to be found within the statute itself.‖

35. Claimant of an exemption has to prove the same

without any ambiguity



[2000] 82 TAX 433 (H.C.Lah.) = 2000 PTD 2958

―These cannot be read as exemption granting provisions. It

is an established proposition of fiscal laws that the claimant of an exemption has to bring it home without any ambiguity.‖

36. Machinery provisions of fiscal law should be construed

so as not to destroy recovery mechanism

Leather Connections (Pvt) Limited v. The CBR,

Govt. of Pakistan, Islamabad through its Chairman

[2000] 82 TAX 42 (H.C.Lah.)

―Mere reading of aforesaid section, notification and letter

dated 4.4.1995 reveal that the same are in accordance with law.

Section 50(7BB) was inserted by the competent body by Finance

Act No. 10 of 1993, as per principle laid down by the Hon‘ble

Supreme Court in Ellahi Cotton Mills‟s case (PLD 1997 SC 582).

Proviso (ii) of aforesaid section 50(7BB)(b) confers powers to

CBR therefore, CBR issued SRO No. 614/93, dated 18.7.1993

which was published in official gazette on 18th July, 1993,

therefore, contention of petitioner‘s counsel has no force that CBR has no authority to issue notification.

Similarly the contention of petitioner‘s counsel has no

force that notification was not published in the official gazette.

CBR has given formula to determine the estimated cost of

construction of a building on the basis of cost of construction as


specified by Pakistan Public Works Department or Provincial

Building Department does not indicate at all that the CBR has

delegated its powers to the other department on the well known

principle of adoption or legislation by reference which is known

principle. In arriving to this conclusion I am fortified by judgment of this Court ―P.I.A. Corp‟s case (PLD 1979 Lah 415).

It is also settled proposition of law that interpreting a fiscal

statute that Court must look all the words of statute and

interpret the same in the light of what is clearly expressed and

Court has no jurisdiction to imply anything which is not

expressed. In this behalf reliance is placed on Hanjama and

Company vs. Commissioner (1971) 23 Tax 230 (S.C.Pak) = (1971

SCMR 128) and Collector of Custom‟s case (1977 SCMR 371).

It is settled proposition of law that principle of strict

construction of fiscal statute is applicable only to taxing

provisions such as charging provisions and not to those parts of

statutes which contain machinery provisions as per principle laid down in (1980 Tax Law Report 185).

It is true that the machinery provision of a fiscal statute

should be interpreted in such a manner that recovery is not

frustrated or adversely affected. But it does not mean that to

achieve this object one can travel beyond the spirit of law and do violence to language and intention of the statute.

The machinery can be extended only to the extent it is

permissible under the law. In this attempt one cannot override

rights of other parties only because a recovery has to be made.

Such provisions have their own limitation and they are to be

found within the statute itself. In arriving to this conclusion I am

fortified by the following judgments:

CIT,‟s case AIR 1940 PC 124 Maithram vs. Ranjidas.

Escorts Limited‟s case [1975] 31 TAX 164 (H.C.Lah.) =

1975 SCMR 570.‖

37. Rule of liberal construction of machinery provisions


[2002] 86 TAX 138 (H.C.Lah.) = 2002 PTD 441


―Principle of strict construction of fiscal statue is applicable

only to taxing provisions such as charging provisions and not to

those parts of the statute which contain machinery provisions as

per principle laid down in 1980 Tax LR 185. Power under

section 66A can be exercised by the respondent only when the

following factors co-exist:

(i) There should be proceedings under the Act.

(ii) In such proceedings the ITO must have passed the

order.

(iii) The commissioner should consider that the said order

is erroneous and prejudicial to the interest of the

Revenue.

(iv) It is only when all the above mentioned factors co-

exist then the respondent will have jurisdiction to take

action under section 66A.

(v) For the purpose whether the aforesaid factors are

available to the respondent to take action needs

factual inquiry for which propriety demands that the

respondent should allow to proceed in the matter in

accordance with law.

As mentioned above the petitioner has alternative remedies

before the Department under the provisions of the Income Tax

Ordinance, 1979. The petitioner is well within his right to raise

all legal and factual pleas before the respondent by filing fresh

reply of the notice date 27.4.2000 who is duty-bound to consider

the same and pass speaking order including assumption of jurisdiction.‖

Leather Connections (Pvt) Limited v. The CBR,

Govt. of Pakistan, Islamabad through its Chairman

[2000] 82 TAX 42 (H.C.Lah.)

―It is also settled proposition of law that machinery

provisions of fiscal statute should be liberally construed to

ensure recovery as per principle laid down by this Court in W.P.

Province vs. K.B. Amir-uddin (PLD 1953 Lah 433). The aforesaid

judgment was confirmed by Federal Court reported as (P.L.D.


1956 Federal Court 220). The same was again upheld by the

Hon‘ble Supreme Court in Let. Con. Nawabzada Muhammad Amir

Khan‟s case (PLD 1961 SC. 119) The contention of learned

counsel for respondent No. 3 has a force that in case of non-

deduction of advance tax on the basis of aforesaid section penal

consequences have to be faced by respondent No. 3 as is held by

D.B. of Karachi High Court in Raman‟s case (1985 PTD 787).‖

38. Things should be done as required by law

M. Saleem v. Dy. Director FIA/CBC, Multan and another

PTCL 2000 CL. 465

―Where a thing was provided to be done in a particular manner,

it had to be done in that manner and if not so done, the same

would not be lawful.‖

39. Redundancy should not be readily assigned by courts


[2000] 81 TAX 229 (H.C.Kar.) = 2000 PTD 280

―It is a well-established principle of interpretation of

statutes that no provision of an enactment is to be treated as

redundant or surplus and has to be given its meaning and effect

to.‖

40. Strict rule of fiscal statutes emphasised

CIT/WT, Companies Zone, Faisalabad v. Rana Asif Tauseef C/o Rana

Hosiery & Textile Mills (Pvt.) Ltd., Faisalabad

[2000] 81 TAX 7 (H.C.Lah.) = 2000 PTD 497

―Before proceeding further, we feel necessary to reiterate

three well-knows rules of construction of fiscal statute. Firstly,

that fiscal statutes are to be construed strictly and a citizen is to

be taxed within the letter and spirit of a charging statute. Briefly,

the imposition of tax must be affected by plain words of

Legislature. Lord Atkinson stated this principle in case of Ormond

Investment Co. vs. Betts, (1928) A.C. 143, 162 in the following words:-

It is well-established that one is bound, in construing

Revenue Acts, to give a fair and reasonable construction

to their language without leaning to one side or the other,


that no tax can be imposed on a subject by an Act of

Parliament without words in it clearly showing an

intention to lay the burden upon him, that the words of

the statute must be adhered to, and that so-called equitable constructions of them are not permissible.‖

41. Exemption clauses are to be construed strictly

CIT/WT, Companies Zone, Faisalabad v. Rana Asif Tauseef C/o Rana

Hosiery & Textile Mills (Pvt.) Ltd., Faisalabad

[2000] 81 TAX 7 (H.C.Lah.) = 2000 PTD 497

―Where the fiscal legislation embodies exemption/

deduction provisions, the same are construed strictly and against

assessee. See Iram Ghee Mills Ltd. vs. Income Tax Appellate Tribunal,

(1998 PTD 3835); Thirdly; an exemption/deduction provision

should be construed by liberal approach with an eye on the

underlying purpose of said provisions. If the language of that

provision is doubtful, the same should be resolved in favour of

assessee on the touch-stone of the intention of legislature. See

P.A. Likunju, Cashew Industries vs. CIT, (V. 166 (1986) ITR 804),

CIT, Luknow vs. U.P. Cooperative Federation Ltd. (V. 176 (1989)

ITR 435 and Collector of Central Excise, Bombay-I, and another vs.

Parle Export (P) Ltd. (V. 183 (1990) ITR 624). Reference be made

also to Heartland vs. Damon‟s Estate (103 V.519, 156, Atl. 518) and

Kimball vs. Potter (N.H. 196 Atl. 272). Observation of learned

Judge, in first case, in following terms:-

A law for the assessment and collection of taxes is to be

construed with the utmost liberality. But in order to be

subjected to a tax, the property must be such as is

ordinarily included, in the description given in the

statute, and not such as can be brought within it by a

process of reasoning only or by a strained construction

because the legislature must be presumed to be fairly

able to describe such property as it desires to tax

without resorting to a strained construction or a course of fine reasoning.‖

42. The scope of “Explanation” and its impact explained





―From the above proposition of law relating to the scope of explanation the following conclusions are drawn:-

(i) The ordinary object of an explanation to a statutory

provision is to explain the meaning and intendment of the Act.

(ii) Where there is any obscurity, ambiguity or vagueness

in the main enactment, the explanation clarifies the

same so as to make it consistent with the dominant

object which it seems to be subservient. The

explanation is a note of caution by the Legislature to

rectify the judicial error and to give guideline for future, clarifying the intention of the Legislature.

(iii) Normally, the explanation does not enlarge or limit the provision already enacted.

(iv) Sometimes, the legislature steps in to convey its real,

intention if not fully conveyed by the earlier

enactment or there has been a misconception about he scope of a provision.

(v) Sometimes definition or a deeming clause is inserted by an explanation.

(vi) Sometimes on account of ineptness or lack of

dexterity on the part of draftsman, substantive

provisions are also enacted with the heading explanation.

(vii) If an explanation is merely declaratory or clarificatory

in nature or is meant to fill in certain obvious gaps or

to convey the real intention of the legislature by

explaining the menaing and intendment of the Act or

by clarifying an obscurity or vagueness in the main

enactment it is always retrospective in effect and is

operative since the very inception of the enactment and shall be held to be existing all along.


(viii) However, if a substantive/a new enactment has been

made or a new definition is added or a deeming

provision is inserted or the scope of a provision

particularly a substantive/charging provision is

enlarged or extended it shall not have the

retrospective effect until and unless specifically specified so by the Legislature.

A perusal of the Ordinance shows that an explanation was added to subsection (3) of section 19 of the Ordinance as follows:-

―Explanation.—For the purpose of this section, any

property, the owner of which is in receipt of any rent,

whether in cash or otherwise, whether from employer

or otherwise, shall not be taken to be in the

occupation of such owner for the purpose of his own residence.‖

43. Explanation can be added to elaborate the meanings

Rijaz (Pvt.) Ltd. v. Wealth Tax Officer Circle III Lahore

[1996] 74 TAX 9 (H.C.Lah.)

―As a general principle it is true that an explanation does

not enlarge the scope of the provision to which it is attached but

it is equally well-settled that if doubts about true interpretation

of a provision have arisen, it is open to the legislation to clarify

its intention by amending the law which may as well be by

adding an explanation. All principles of interpretation are agreed

towards finding out the true intent to the legislation which in the

present case was made clear by adding an explanation which cannot be ignored.‖

44. Object of adding an Explanation to a statutory

provision is only to facilitate its proper interpretation

and to remove any possible confusion or

misunderstanding about its true meaning

[2003] 87 TAX 183 (Trib.)

―In order to understand the purpose of explanation added

in the statute, we would refer to the case law cited by the learned

counsel for the assessee.


(a) PLD 1981 SC I

In the case, the Honourable Supreme Court while

interpreting the Explanation added to the statutory provisions, has observed:-

―The contention that the explanation relating to

clause (i) of section 13(2) is not truly an

Explanation but is, in fact a ―deeming clause‖ is

wholly fallacious. The legislature in its wisdom,

has specifically named it as an Explanation and

made it relatable to clause (i) of section 13(2) in

order to indicate as to what the term ―rent due‖

may include. We feel that there is no ambiguity

in the words used by the legislature necessitating

a construction other than the one indicated by a plain reading of that word‖.

The object of addition of an explanation to a statutory

provision has been considered in the case of Colony Sarhad

Textile Mills vs. Collector, C.E. & I.C. (1) It may be mentioned

that the present Chief justice of the Supreme Court (Mr. Justice

S. Anwarul Haq), was a party to the said judgment. We

respectfully agree with the observations made by the Court in that case which are as follows:

―The object of addition of an explanation to a

statutory provision is only to facilitate its proper

interpretation and to remove any possible confusion

or misunderstanding about its true meaning. It does

not per se create or extinguish any liability which has

to be spelled out only from the main provision sought

to be interpreted with the assistance of the

Explanation. In other words, the Explanation is to be

relied upon only as a useful guide or in aid to the construction of the main provision‖.

The objective of the explanation in the present case is

obviously the same namely to remove any doubt as to the

meaning of the term ―rent due‖ as used in clause (1) of section


13(2) and to clarify that in addition to the amount of rent

simpliciter it could also include other charges and taxes agreed to

by the parties. And even in the present case, the Explanation

does not create, or add anything to the main section but merely

illustrates as to what the term ―rent due‖ may include.

Obviously, therefore, the Explanation does not place any

limitation on the type and the number of other charges the

payment of which the tenants may agree to pay and which would thus become due from him.

(b) PLD 1968 Lahore 202

In this case, the Honourable Lahore High Court has observed as under:

―The argument must in our opinion fail for

more than one reason. For one thing, the

Explanation is not a substantive provision. It is

merely an aid to the interpretation of proviso (b)

to clause (5A)‖.

(c) PLD 1982 Lahore 109


―It is well settled that an ―Explanation‖ does not

enlarge the scope of main section which it is

supposed to explain. It was held so in the

Kishan Sing vs. Prem Singh and others (1)

Generally, an ―Explanation‖ is added to a

section by way of clarification and to facilitate its

interpretation. However, the true contraction of

an ―Explanation‖ must depend upon its terms and the language used in it‖.

(d) PLD 1969 Lahore 228



―It is well-settled that an Explanation does not

enlarge the scope of the original section that it is supposed to explain‖.

(e) PLD 1982 Lahore 115


―Generally, an ―explanation‖ is added to a section

by way of clarification and to facilitate its

interpretation. However, the true contraction of

an ―explanation‖ must depend upon its terms and the language used in it‖.

In view of above case law, it emerges that:

(i) the explanation is not a substantive provision and it is

merely an aid to the interpretation of proviso added to the main section;

(ii) explanation is added to remove any doubt as to the meaning of any proviso or section; and

(iii) It is well settled that an ―explanation‖ does not enlarge

the scope of main section which is supposed to explain

and an explanation is added to section by way of clarification to facilitate its interpretation.

In our view, the true interpretation of an ―Explanation‖

must depend upon its terms and language used in it and

generally an explanation is added to a section by way of clarification and to facilitate its interpretation.

In view of whatever stated above, we are of the view that

an ―Explanation‖ is added by way of clarification and to facilitate

its interpretation. Normally, it would apply prospectively,

specially when it creates substantive obligation. But in this case,

the ―Explanation‖ was added to sub-clause (ii) of clause (e) of

section 5 wherein it was mentioned that it shall be effective from

20th day of June, 1979. Therefore, the intention of the legislature

was clearly spelt out by the amendment and categorically the

date was mentioned. In view of this, the effect of this


―Explanation‖ was to take effect from 20th June, 1979. In view

of this, the order of learned CIT(A) is found proper and the tax

levied for these assessment years is also as per the law. The

combined order of learned CIT(A) for the assessment years 1987-88 to 1990-91 is hereby confirmed.‖

45. Harmonious construction is recommended

Mustafa Prestressed R.C.C. Pipe Works Ltd. Karachi v. Commissioner of

Sales Tax (Investigation), Karachi

[(1990) 62 Tax 119 (H.C.Kar.)]

―It is well-settled principle of interpretation that all the provisions of an enactment have to be construed harmoniously.‖

46. Basic rules to construe charging and machinery

provisions

Arafat Woollen Mills Ltd. v. Income Tax Officer,

Companies Circles E-1, Karachi

[1986] 54 TAX 1 (H.C.Kar.) = 1986 PTD 316

―Income Tax Act/Ordinance provides structure for levying

and collection of tax and purpose of scheme of Act/Ordinance

relating to this object must be kept in view. Provisions of

Income Tax Act/Ordinance are to be construed in such a way as

to make it workable. Sections which impose charge should be

strictly construed and those which deal with machinery of

assessment and collection should not be subjected to strict construction.‖

47. Speech of the Federal Minister has no legal

consequences or effect

CIT/CST (Central Karachi) v. A.B. Food Industries Ltd. Karachi

[(1984) 50 Tax 158 (H.C.Kar)]

―I have no hesitation in holding that the speech given by

the Finance Minister cannot have any effect on the legal

consequences flowing from the language employed in the enactment.‖

S. Muhammad Din & Sons Ltd. v. STO, Special Circle I, Lahore

[(1977) 36 Tax 74 (H.C.Lah.)]


―In my opinion, however, such speeches are meant for the

consumption of the lay public but cannot have any effect on the

legal consequences of the relevant enactments, the rules made

thereunder or the notifications issued in pursuance thereof.‖

[(1983) 47 Tax 1 (Trib.)]

―Even otherwise, the Tribunal in its order has held that the

speech of the Finance Minister seems only as a helpful guide for

finding out the intention of the legislature. It cannot, however,

control the provisions of law as enunciated by the Finance Act itself.‖

48. Role of history of legislation in interpreting a

provision of law/statute

Sainrapt & Et. Brice, Karachi v. CIT, (West), Karachi

[(1979) 40 TAX 116 (H.C.Kar.) = PLD 1979 591]

―It is well established that in the interpretation of statutes,

the meaning of the words should be considered in the light of

history of the legislation and the state of the law at the time the

statute was passed, in order to consider whether the statute was

intended to alter the law or to leave it exactly where it stood

before. As observed by Maxwell on Interpretation of Statutes, 12th

edition, page 47, the court is not to be oblivious of the history of

law and legislation in amending the law. Craies on Statute Law, 7th

edition,(at page 126) observes that the cause on necessity of the

Act may be discovered by considering the state of the law at the

time when the Act was passed and in memorable cases the

courts with a view to construing an Act have considered the

existing law and reviewed the history of legislation upon the subject.‖

49. Inapt and inaccurate phraseology of draftsman cannot

nullify a provision made by legislature



[(1977) 36 Tax 8 (H.C.Lah.) = 1977 PTD 183 =

PLD 1977 Lah. 797]


―I put on the phrase additional amount of tax, renders the

last two words virtually redundant but clearly I am of this view

also, that an inapt and inaccurate phraseology of the draftsman

cannot and should not nullify a provision made by the legislature

which is consistent with existing legal norms. A passage from

Sweet and Maxwell, 11th edition, at page 221, based on sound

judicial precedents, may be quoted in support of this view. It is to the following effect:

―Where the language of a statute in its ordinary

meaning and grammatical construction, leads to a

manifest contradiction of the apparent purpose of the

enactment, or to some inconvenience or absurdity,

hardship or injustice, presumably not intended, a

construction may be put upon it which modifies the

meaning of the words, and even the structure of the

sentence. This may be done by departing from the

rules of grammar, by giving an unusual meaning to

particular words, by altering their collection, or by

rejecting them altogether, under the influence, no

doubt, of an irresistible conviction that the legislature

could not possibly have intended what its words

signify, that the modifications thus made are mere

corrections of careless language and really give the

true meaning. Where the main object and intention of

a statute are clear, it must not be reduced to a nullity

by the draftsman‘s unskillfulness or ignorance of the

law, except in a case of necessity or the absolute intractability of the language used.‖

50. Departmental construction can be used in aid of

interpretation

Crown Bus Service Ltd. Lahore v. CBR & others

[(1976) 34 Tax 54 (H.C.Lah.)]

―It was laid down in Nazir Ahmad vs. Pakistan and 11 others (PLD

1970 SC 453 at page 459) that a passage from Crafords Statutory

Construction, 1940 edition, at page 399 may be usefully

reproduced to point out the effect of departmental construction,


that is to say, the construction which is placed in practice on the

provisions of a statute or rule by the administrative authorities

who are charged with the execution of the statute or the rules.

The learned author observes; ―Where the executive construction

has been followed for a long timing an element of estoppel

seems to be involved. Naturally many rights will grow up in

reliance upon the interpretation placed upon a statute by those,

whose duty it is to execute it. Often grave injustices would result

should the courts reject the construction adopted by the

executive authorities.‖

51. Interpretation leading to destructive ends should be

avoided by Courts

Crown Bus Service Ltd. Lahore v. CBR & others

[(1976) 34 Tax 54 (H.C.Lah.)]

―In Act IV of 1924 no particular mode of constituting a

Central Board of Revenue has been mentioned except, perhaps,

by making appointments of its members and we are doubtful as

to whether any such plea in this context can be successfully

advanced by the petitioner. The objection of the learned counsel

for the petitioner is based on the assumption that u/s 2 of Act

IV of 1924 two formalities viz. (a) constitution of Central Board

of Revenue and (b) appointments of its members, had to be

independently performed and if, for instance, certain person or

persons are straightaway appointed as members of the Central

Board of Revenue that probably is not enough. We do not agree,

because, there is nothing to lead to such a corollary in the

wording of section 2 of Act IV of 1924. Confining ourselves to

the notification dated 29.8.1947 we may observe as a matter of

principle, all that the courts of law are required to examine while

considering a document or an instrument is the intention and

not merely the form of any order or direction contained therein

depending upon the facts, circumstances and the context of each

case. Acting on that principle we hold that if the intention of

making appointments of certain officer or officers as members

of the Central Board of Revenue is for example with a view to

establish the Central Board of Revenue and similarly if the


appointments cannot be made except when it implies a creation

of the Central Board of Revenue, then on the facts and overall

circumstances in such situations, it can be safely held that the

aforesaid appointment inter alia implied the constitution of the

Central Board of Revenue as well and a specific and independent

recital regarding the creation of the Central Board of Revenue is

not to be considered as a must, especially when as already

pointed out, in Act IV of 1924 no particular form and procedure for constituting a Central Board of Revenue had been laid down.

The view of our government has also been the same. This

will bear out the deductions which we have made from

Governor-General‘s Orders Nos. 2 and 12 of 1947 hereinbefore

referred to. The first was issued by Lord Mountbatten and the

letter by the Quaid-i-Azam Muhammad Ali Jinnah in their

capacities as Governor-General of their respective countries.

These two Orders implied that the Central Board of Revenue

constituted as a legal entity in 1924 continued with necessary

adaptation for each Dominion and it was on that assumption

that without staging its recreation or re-constitution various

powers, functions and directions were given or assigned to it,

because, otherwise there was no justification to quote or make

mention of Central Board of Revenue for Pakistan and Central

Board of Revenue for India in those two Orders when no such

Boards as alleged by the petitioner existed then and thereafter.

We were told that neither in India nor in Pakistan there was

staged any re-creation or re-constitution of the Central Board of

Revenue afresh and that both the countries acted on the

premises that the Central Board of Revenue constituted in 1924

was a legal entity which had duly come into being in that year

and later on only appointments of its members were to be made

whenever necessary. It was on that construction of the relevant

law that both the countries uptil now worked. The Central Board

of Revenue is referred to in (i) Income Tax Act XL of 1922 (ii)

Central Board of Revenue Act VI of 1924; (iii) Excess Profits

Tax Act XV of 1940; (iv) Business Profits Tax Act XXI of 1947;

(v) Central Excise and Salt Tax Act I of 1944; (vi) Sea Customs


Act VII of 1888; and (vii) Land Customs Act XIX of 1924. If

the contention of the learned counsel for the petitioner is

accepted it will mean that almost whole of the revenue financial

laws of the country came to a stand still due to non-creation of

the Central Board of Revenue as alleged. Obviously we cannot

endorse such a plea. If the contention as suggested by the

learned counsel for the petitioner is accepted that will create

complications and confusions for all concerned leading to a great

deal of chaos in the country and will throw open all the actions

taken, functions performed, orders passed and directions issued

by the Central Board of Revenue after 1947 up to-date or, as a

matter of fact, onward from 1924. On the other hand, the view

taken by us will not lead to any destructive results. It is well

settled that courts should follow that construction of law which does not lead to startling results or destructive ends.‖

52. Marginal notes to the section of an Act cannot be

referred to for the purpose of construing the Act

CIT, Lahore v. Aziz Din

[1976] 33 TAX 258 (H.C.Lah.)

―But in this connection before us reliance was strongly

placed on the marginal note to section 46 of the Act which

speaks of the ―Mode and time of recovery‖. It was, therefore,

contended that sub-section (I) of this section relating to

imposition of penalty is nothing but a provision for mode of

recovery of the tax and a part of the machinery provided to

facilitate the recovery of tax. It is lever and a handle to exert

pressure on the assessee and even to force him to pay the arrears

of tax due from him. But we see no force in this contention. These marginal notes do not form part of the section.

These observations were cited with approval by Their

Lordships of the Supreme Court in The Commissioner of

Agricultural Income Tax, East Bengal vs. B.W.M. Abdul Rehman

Manager, Taki Bara Taraf Wards Estate [(1973) SCMR 445] and the

Court observed that in interpreting a fiscal statute only the letter

or the law must be looked to and there is no room for any

intendment. Also in Messrs Hirjina & Co. (Pakistan) Ltd. Karachi


vs. Commissioner of Sales Tax Central, Karachi [(1971) SCMR 128],

the Court held that in interpreting a taxing statute the Courts

must look to the words of the Statute and interpret it in the light

of what is clearly expressed. It cannot imply anything which is

not expressed, it cannot import provisions in the statute so as to

support assumed deficiency. In the instant case, we find that in

the adaptation order passed by the Central Board of Revenue, it

is not expressly stated that the penalty provisions contained in

sub-section (1) of section 46 of the Income Tax Act are

applicable to the amount payable in virtue of Martial Law

Regulation No. 43/48 and it is not permissible to import any such construction into that order by implication.‖

53. Caution should be used while borrowing the meaning

attached to terms and phrases used in one statute,

while interpreting another statute

CIT, Rawalpindi v. Noor Sugar Mills [(1975) 32 Tax 273 (H.C.Lah.)]

―It is not always safe to borrow the meanings attached to

terms and phrases used in one statute as aid in support of the

interpretation of a different statute meant for a different purpose

and dealing with a wholly different subject matter. It is of course

permissible to have recourse to the ordinary dictionary meanings in interpreting a statute.‖

54. Inclusive definitions enlarge the scope of a term/word

[2004 PTD (Trib.) 1029]

―It is an established principle that main function of the

definition or a term is to remove vagueness and to provide a

degree of definiteness to the said term of phrase or word so

defined. It is also as established principle of interpretation of law

that the word ‗include‘ whenever is given in any definition is

often used in interpretation clause in order to enlarge the

meaning of that word or phrase occurring in the provisions of

the statute/law and when it is so used then that word and phrase

must be construed as comprehending not only such things it

signifies according to its nature and import but also things which

the interpretation clause declares that it shall include. It clearly


means that the definition of a word or phrase when it say

‗includes‘ then it would amount to include along with what has

been so given in its plain, literal and ordinary dictionary meaning.

Obviously the words used in an inclusive definition imply

extension of that term and phrase and they cannot be treated as restrictive in nature.‖

55. Definitions given in a particular statute are restricted

to the said statute unless any other statute adopts the

same by incorporation or reference

CIT, Companies-II, Karachi v. Messrs Muhammad Usman Hajrabai Trust Imperial Courts, Karachi 2003 PTD 577 (H.C.Kar.)

―It is established principle of the interpretation of statutes

that the definitions given in a particular statute are to be

employed for the purpose of the said statute only until and

unless the definition is adopted by any other statute through the

legislation by incorporation or reference. A perusal of section 2

of the Income Tax Ordinance clearly shows that the definitions

given therein are for the purpose of the Income Tax Ordinance

only. For the purpose of Wealth Tax Act, 1963, the definitions

of the terms expressions and words used in the said Act have

been given in section 2 thereof. In sub-section (2) of section 2 of

the Wealth Tax Act, 1963, it is stated that, ―the words and

expressions used but not defined in this Act shall have the

meaning assigned to them under the Income Tax Ordinance,

1979‖. Since the expression company as used in the Wealth Tax

Act, 1963, is defined in section 2(9) of the said Act, therefore,

the contention of the Revenue that, the learned ITAT ought to

have interpreted the expression company used in the Wealth Tax

Act, 1963 with reference to the definition given in the Income Tax Ordinance is not tenable and is without any substance.‖

56. Defining a provision in one enactment by the help from

other laws is never safe

[2004 PTD (Trib.) 1104]

―The point of view of the Tribunal, therefore, is very clear.

When it says that remedial provision in terms of clause 59 in Part


IV had come to reduce the rigours of section 12(9A) and for this

purpose comments that this may perhaps was keeping in view

section 245 of the Companies Act it does not mean that it has

considered the provision of Company Law as application in the

income-tax proceedings. It was only a comment to say that in the

presence of the governing clause under section 245 of the

Companies Law the introduction of section 12(9A) was not

justified. This, however, does not mean that after its introduction

its application can be corrupted by taking queue from the language

of the provisions of the company. It is a settled principle of

interpretation that while defining a provision in one enactment the

help from other laws is never safe. These facts kept in view the

questions posed either by the Department or by the assessee, all

are considered as firstly not properly drafted and secondly without

substance. The result is obvious. Both the reference applications

are rejected.‖

57. Terms and phrases used in a statute prima facie should

be construed in their popular sense

CST, Rawalpindi Zone, Rawalpindi v. Rashid Burner, Sialkot [(1974) 29 Tax 221 (H.C.Lah.)]

―There are two rules as to the way in which terms and

expressions are to be construed, when used in an Act of

Parliament. The first rule is that general statutes will prima facie be

presumed to use words in their popular sense.... critical

refinement and subtle distinction are to be avoided and the

obvious popular meaning of the language should, as a general rule, be followed.‖

58. While interpreting a statute - nothing is to be read in

and nothing is to be implied

CIT v. Nagina Talkies (property) Karachi [(1974) 29 Tax 115 (H.C.Kar.)]

―In fiscal statutes the meaning has to be ascertained from

the plain language of the statute and nothing is to be implied in

such statute.‖

59. Meaning of doubtful words should be interpreted by

reference to meaning of words associated with it


Kashmir Pottery Works, Sialkot v. CST, North Zone, Lahore [(1973) 28 Tax 172 (H.C.Lah.)]

―In order to ascertain the meaning of any word or

phrase that is ambiguous or susceptible to more than one

meaning, the court may properly resort to other words with

which the ambiguous words associated in the statute.

Accordingly if several words are connected by a copulative

conjunction a presumption arises that they are of the same class, of course a contrary intention is indicated.‖

60. Provisions should be interpretated in accordance with

the plain meaning of the language used therein

Eastern Textile Mills Ltd., Chittagong and G.Merajuddin and another v. CIT, East Pakistan, Dacca

[1966] 13 TAX 145 (H.C.Dacca)

―It is an accepted principle of interpretation that a statute is

to be understood in accordance with the plain meaning of the

language used in it. ―If there is one rule of construction of

statutes and other document, it is that you must not imply

anything in them which is inconsistent with the words expressly used‖.‖

61. Departmental instructions cannot be used in aid of

interpretation

Mujibur Rehman v. CIT [(1966) 13 Tax 141]

―Departmental directions have nothing to do with the interpretation of the statute.‖

62. Statute should be given its ordinary meaning

Noor Hussain, Dacca v. CIT, Dacca

[1963] 7 TAX 113 (H.C.Dacca)=1963 PTD 161=1963 PLD 373

―Interpretation of one statute by analogy to interpretation

of another is unsafe, particularly when two statutes are not pari

materia. Proper way of construction is to give effect to all words

of relevant provisions dispassionately. Fiscal statute must be

strictly construed in favour of assessee. Golden rule is that statute must prima facie be given its ordinary meaning.‖


63. Once intention of legislature is clear no extraneous

principle of interpretation or construction of statute is

to be employed

Collector of Central Excise and Sales Tax v.

Rupali Polyester Ltd. and others

[2003] 87 TAX 49 (S.C.Pak.)

―Canons of construction and rules of interpretation are

directed to one and only one end, namely, towards finding out

the intention of the Legislature. When this is clear, there is no

room for praying in aid any extraneous principle of

interpretation or cannons of construction. (Mozzaffar Ahmad

vs. Anwar Ali PLD 1965 Dacca 269. PLR 1964 Dacca 906, 16

DLR 336 (DB).‖

64. Punctuation marks and construction of statutes

Maharani of Bardwan v. Krishna Kamini Dasi

[14 ILR PC 365]

―It is an error to rely on punctuation in construing Acts of the Legislature.‖

Seth Gurmukh Singh v. CIT

[(1944) 12 ITR 393 (Lahore)]

―...... in the interpretation of statute punctuation, not being

a part of the statute to be construed, is not a determining factor

and if the proviso as punctuated leads to an absurd result or

conflicts with some other provision of the statute which is

unambiguous and free from doubt, the punctuation must yield

to an interpretation that is reasonable and makes it consistent with the other provisions of the Act ......‖ [p. 424].

Board of Revenue v. Ramanathan Cheltian


―It is then argued that, on the true construction of clause

(vii), all sales of machinery are included irrespective of whether

they are sold by reason of their being obsolete; in other words,

that the words as obsolete govern the word discarded appearing

immediately before them and not the word sold. The

phraseology of this clause is not very happy because it is obvious


that the words could bear either meaning; but the statute has

been punctuated, and we must take the punctuation marks as

part of the statute. If it were intended to read the words as

obsolete, as governing sold one would expect to find a comma

after the word sold There is none, the comma being put after the word obsolete.‖

Chapter X

Retrospectivity

1. Fiscal laws and theory of retrospectivity

CIT, (AJ&K Council), Muzaffarabad and another v. Asian D.

Enterprises through Eijaz Qureshi, Managing Director and 5 others &

CIT, (AJ&K Council), Muzaffarabad and 2 others v. Messrs Cade

Creets Associates through Managing Partner, Diwan Ali Khan Chughtai

and another

[2000] 81 TAX 371 (S.C.AJ&K.) = 2000 PTD SC 892;

CIT, AJK and another v.

Asian D. Enterprises and other

[2000] 82 TAX 518 ((S.C.AJ&K.)

―It is evidence from the case law, referred to by the learned

counsel for the appellants, that there is no proposition in

support of the view that a fiscal law cannot be made operative

retrospectively. Obviously, when there is no such embargo

imposed upon the Legislature by the Interim Constitution Act,

how such a restriction can be assumed. Thus, the very basis on

which the findings of the High Court rest is without any legal substance.

Even if it is assumed for the sake of argument that demand

of additional income tax is ‗deprivation‘ of the ‗property‘ of the

respondents within the meanings of paragraph I, that has been

done in pursuance of law, i.e., the Income Tax Ordinance, 1979

and the Finance Act, 1995 and, thus, the tax demanded could

not be held violative of the Fundamental Right No. 14 according

to which a person can be deprived of his property according to

law. Needless to say, as has been indicated above, the demand of

additional advance income tax from the respondents was made

in pursuance of the aforesaid statutes which have been validly

265


adapted in the State. However, the fact of the matter is that by

the impugned provision of law, the rate of income tax has not

been retrospectively increased; only the rate of deduction of

advance tax has been increased. The deduction of advance tax is

only a tentative deduction which has to be adjusted when the

final assessment of income tax to be paid by the respondent-

Companies is made. Thus, the findings of the High Court that

demand of additional advance income tax is violative of

Fundamental Right No. 14 guaranteed by the Interim

Constitution Act, are devoid of any force and are not

sustainable. In the light of what has been stated above, we accept

the above entitled appeals, set aside the impugned judgements of

the High Court and hold that additional advance income tax was

rightly demanded from the respondent-petitioners.

Consequently, the writ petitions filed by the respondents are

hereby dismissed.‖

2. Scope of retrospective legislation

ITO, Investigation Circle & others v.

Sulaiman Bhai Jiwa and others

[(1970) 21 Tax 62 (S.C.Pak)]

―It is fundamental rule of law that no statute shall be

construed to have a retrospective operation unless such a

construction appears very clearly in terms of the Act, or arises by

necessary and distinct implication (see Maxwell on the Interpretation

of Statutes - 9th edition - page 221 and Treaties on Statute Law by

Caries - 4th edition - page 329). It follows from this rule that

retrospective effect to a statute may be given either by express

words or that the same may be inferred from the language employed.

3. Retrospective application of law must be by explicit

words

CIT, Rawalpindi Zone, Rawalpindi v. Lyallpur Cold Storage

[1976] 34 TAX 14 (S.C.Pak.)

―Mr. M.A. Lone, learned counsel for the Department

submitted in support of these petitions, that this Court‘s decision

in the case of Noor Hussain still held the field. It was argued

267 Retrospectivity

that the majority decision in that case proceeded on the

interpretation of the crucial words ‗constituted by‘ which had

replaced the earlier expression ‗constituted under‘ and which

despite the amendment of 1965 still remained part of the statute.

Learned counsel further submitted that the amendment of 1965

is merely declaratory and was inserted ex abundati cautela, and,

therefore, will, in the absence of the express words in the

amending statute or by necessary implication, not have retrospective effect.‖

4. Rule to determine retrospective effect

ITO, Investigation Circle & others v.


[(1970) 21 Tax 62 (S.C.Pak)]

The use by the legislature of words, such as ―shall‖ or

―hereafter‖, is taken to indicate an intent that the statute is to be

construed as prospective only; on the other hand the use of

words denoted past time, such as ―heretobefore‖ constitute an

explicit declaration that the Act is to be construed retrospectively.

When retrospective effect to statute is not given by express

words, one must, apart from the language employed, ―look to

the general scope and purview of the statute, and at the remedy

sought to be applied, and consider what was the former state of

the law, and what it was that the legislature contemplated‖. (See Treatise on Statute Law by Caries - 4th edition - page 334).‖

CIT v. Olympia

[(1988) 57 Tax 71* (H.C.Kar)]

―The general rule of construction of statutes is that the

enactments are not to be given retrospective operation unless

the statute expressly provides so or from the language employed

it appears to be the necessary intendment of the Legislature. As,

however remedial statutes are designed to redress an existing

grievance and do public good, and such statutes normally do not



diminish, destroy or affect any vested right, these are liberally

construed. Lahore High Court had also taken the view in

Rippon‟s case (1973) PLD 1973 Lah. 849 that an amending law

which is purely remedial and curative, must be liberally

construed in favour of subject. We also subscribe to the same

view. Then as stated in Crawford, if the rule of liberal

construction is to be applied as it obviously should then any

doubt should be resolved in favour of retrospective operation, if

such operation does not destroy or disturb vested rights, impair

the obligations of contracts, create new liabilities, violate due

process of law or contravene some other provision of law and if

such operation will carry out the intent of the legislature as

ascertained through the application of the principles of liberal construction.

CIT v. Olympia

[(1988) 57 Tax 71* (H.C.Kar)]

―It is a well-settled principle of interpretation of statutes

that any amendment in the existing law will not affect cases

which has been finally determined or proceedings which have

attained finality unless the amendment expressly provides for such effect.‖

Rustam F. Cousjee & 2 others v. CBR & 2 others

[(1985) 52 Tax 123 (H.C.Kar)]

―Retrospective legislation is looked upon with disfavour as

a general rule, and properly so because of its tendency to be

unjust and oppressive.

It is a fundamental rule of law that no statute shall be

construed to have retrospective operation, unless such a

construction appears very clear in terms of the Act, or arises by necessary and distinct implication.

Upon the presumption that the legislature does not intend

to enact what is unjust, every statute which takes away or impair

a vested right acquired under the existing law or creates a new


269 Retrospectivity

obligations or imposes a new duty or attaches a new disability in

respect of transactions or considerations already passed must be

presumed to be intended not to have retrospective operation; If

there are words in the enactment which either expressly state or,

necessarily imply that the statute is to be given retrospective

operation, then the Act should have retrospective operation

even though the consequence may appear unjust and hard; a

statute is not to be construed to have greater retrospective operation that its language renders necessary.‖

5. Judgment of Supreme Court becomes operative from

the date of announcement having no retroactive legal

implication



[2004 PTD 1621 (H.C. Lah.)]

―Also it is a settled proposition that a judgment of the

Supreme court would be operative from the date of

announcement and would have no retroactive legal implication

as found by the apex Court in re: Mst. Attiyya Bibi Khan and others

v. Federation of Pakistan (2001 SCMR 1161). Even in case of

amendment in law providing for remedial measures, according to

the Hon‘ble Supreme Court of Pakistan in re: Commissioner of

Income Tax v. Shahnawaz Ltd. and others (1993 SCMR 73) it will be

effective and applicable only to those cases where assessment

had not been made by the Assessing Officer or where the matter

was pending in appeal before the Tribunal or was sub judice

before the High Court at the time the amending law was

enacted. In the view of the apex Court, cases which had finally

been determined or had attained finality i.e. which were past and

closed transactions could not be reopened under amending

legislation, where there were not express words to that effect in the amending law.‖

6. Authority to legislate includes authority to legislate

with retrospective effect

Mst. Saeeda Begum & others v. Govt. of Pakistan & another

[(1977) 35 Tax 180 (H.C.Kar)]


―.... it is a settled principle that the authority to legislate includes the authority to legislate with retrospective effect.‖

7. The authorities concerned can consider amendment

brought in during the pendency of proceedings, and

benefit if any can be provided to the assessee

Iftikhar Hussain Alvi c/o Kaghan Ghee Mills (Pvt.) Ltd., Gadoon

Amazai Industrial Estate, Swabi v.

ITO/DC, Income Tax and others

PTCL 2003 CL. 213 (H.C.Pesh.)

―It is an established law that amendment brought in during

the pendency can be considered by the authorities concerned,

and benefit if any be provided to the assessee, the Notification

No. SRO 1283(I)/90, dated 13.12.1990 was promulgated when

the assessment of the petitioner was pending, the petitioner is therefore entitled to its benefit.

The Notification SRO 1283(I)/90 dated 13.12.1990 was

promulgated when the assessment of the petitioner was pending

i.e. the assessment order was passed on 29.6.1993. It is by now

established law that amendment brought in law during the

pendency can be considered by the authorities concerned, and

benefit if any be provided to the assessee. In Commissioner of

Income Tax vs. Shah Nawaz Ltd. and others (1993 SCMR 73)

the dicta laid down by the High Court that cases which were

pending at the time of amending law was enacted i.e. cases

which has not been finally determined or proceedings which had

not attained finality the retrospective effect of the amending law

would therefore apply only to those cases where the assessment

has not been made by the ITO or where the appeal was pending

before the Tribunal or the reference was sub judice before the

High Court at the time when the amending law was enacted was approved by the August Supreme Court of Pakistan.

The Income Tax Officer and the learned Income Tax

Appellate Tribunal have failed to appreciate this legal position

properly, therefore, the assessment order passed by the Income

Tax Officer and that of the Income Tax Appellate Tribunal are without lawful authority.

271 Retrospectivity

The net result of the above discussion is that the Income

Tax Officer and learned Income Tax Appellate Tribunal have

failed to properly appreciate that the petitioner was entitled to

benefit of clause (8) of Part I of Second Schedule of the

Ordinance. We, therefore, while answering this Tax Reference

hold that the petitioner was entitled to benefit of clause (8) of Part I of the Second Schedule of Income Tax Ordinance, 1979.

Clause (8) of Part IV of the Second Schedule has

retrospective application preventing the Assessing Officer to

probe into source of income under section 13(1)(aa) of the Ordinance.

So far as the other argument of the learned counsel for the

petitioner that clause (8) has retrospective application preventing

the Assessing Officer to probe into source of income under

section 13(1)(aa) of the Ordinance is concerned, the same also

has a force in it for the following reasons:-

Firstly, in clause (8) the word ―invested‖ has been used

which is of key importance as it has been used in past participle

form. It had covered all those investments which had been made

in the industrial undertaking whose income was assessed under

clauses (118C), (118D) and (118E) of Part I of the Second Schedule of the Ordinance at the time of insertion of clause (8).‖

8. If retrospective operation of a provision results in

injustice it should not be so applied

Mian Muhammad Khalil v. ITO, Company Circle, Faisalabad

[(1979) 40 Tax 113 (H.C.Lah)]

―Where retrospectivity not expressly provided in amended

provision of law, and retrospective operation results in

inconvenience or injustice to the subject. Such a provision cannot be applied retrospectively.‖

9. Remedial and curative legislation has retrospective

effect

CIT v. Shahnawaz Ltd. and others

[1992] 66 TAX 125 (S.C.Pak.)


―The amendment in relevant section was a remedial and

curative legislation designed to soften the harsh, unjust and

unreasonable law, as was then obtaining, not restricting the

maximum period for levy of additional tax. There is no reason

why the remedial law should not be applied to pending

proceedings. Although the amendment was made by the

Finance Act, 1973 but it could not be restricted to assessment

year 1973-74. The retrospective remedy would be available to

all ‗cases which were pending at the time the amending law was

enacted i.e. cases which had not been finally determined or

proceedings which had not attained finality. The retrospective

effect of the amending law, would, therefore, apply only to

those cases where assessment had not been made by the

Income Tax Officers or where an appeal was pending before

the Tribunal or a reference was sub-judice before the High

Court, at the time the amending law was enacted. The cases

which had been finally determined or had attained finality i.e.

which were past and closed, transaction, could not be reopened

under amending legislation there are no express words to that effect employed in the amending law‘.‖

273 Retrospectivity

10. All provisions which come to cure/redress or to allow

relief to assessees will always have effect

retrospectively.

[(2004) 90 TAX 39 (Trib.)]

―This is a limitation, an embargo on the assessing officer

which has provided solace to the long hanging disadvantage to

the assessee. It has come as a remedy and has cured a fault. All

such provisions which come to cure/redress or to allow relief

would always have the effect retrospectively. The question

proposed by the department is of no help. Our decision that this

provision is retrospective applies on all pending cases up to the

stage of High Court. Thus even if the notice has been issued

earlier it shall become illegal if hit by said amendment. Here

again we find strength from the judgment of the Supreme Court referred by us supra.‖

11 Beneficial executive order/notification has

retrospective effect



[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―An executive order/notification, which is detrimental or

prejudicial to the interest of a person, cannot operate

retrospectively. However, a beneficial executive

order/notification issued by an executive functionary can be given retrospective effect.‖

Iftikhar Hussain Alvi c/o Kaghan Ghee Mills (Pvt.) Ltd., Gadoon

Amazai Industrial Estate, Swabi v.

ITO/DC, Income Tax and others

PTCL 2003 CL. 213 (H.C.Pesh.)

―Secondly, in the Notification SRO 1283(I)/90 dated

13.12.1990 no date has been given for application of clause (8),

therefore, there is no bar imposed by the authorities which issued the said Notification to interpret retrospectively.


Thirdly, clause (8) is beneficial in nature. It is also by now

established principle of law that if any Notification/ Circular is

of benevolent nature, the same would go to the assistance of

assessee. In this regard reliance can safely be placed on the

following judgments:

(i) The Commissioner of Income Tax, East Pakistan, Dacca vs.

Noor Hussain (PLD 1964 S.C. 657).

(ii) Laxmichand Hirjibhai vs. CIT, Gujrat-III (128 ITR).

(iii) Gurjargravures Pvt. Ltd. vs. Income Tax Officer, Company

Circle-VIII, Ahmedabad and another (154 ITR 786).

(iv) Rajan Ramkrishna vs. Commissioner of Wealth Tax, Gujrat-

I (127 ITR 1).

(v) Navnil Lal C. Zaveri vs. K.K.Sen (56 ITR 198).

(vi) Ellerman Lines Ltd. vs. CIT (82 ITR 913).

(vii) Bechardas Spg. & Wvg. Mills Co. Ltd. vs. CIT (ITR 153

of 1976).

(viii) Tata Iron & Steel Co. Ltd. vs. N.C. Upadhyaya (ITR 96

1).

(ix) Navnit Lal Ambalal vs. CIT [1976] (105 ITR 735).

(x) M. M. Annaiah vs. CIT (76 ITR 582 Mys).

(xi) Dr. T.P Kapadia vs. CIT (87 ITR 511 Mys).

(xii) Dattatraya Gopal Shette vs. CIT, Poona Range, Poona

Kania.

(xiii) CIT Kerala-I vs. B.M.Edward, INDIA Sea Foods, Cochin

(119 ITR 334).

(xiv) Raja-rajeswari Weaving Mills vs. Income Tax Officer “A”

Ward, Cannanore and another (113 ITR 405).

(xv) CIT Assam, Nagaland, Meghalaya, Manipur and Tripura

(102 ITR 408).

(xvi) (150 ITR 460).

(xvii) UCO Bank vs. CIT (237 ITR 889), (1999 PTD 3752).

(xviii) T.R. No. 33/97 (Usman Ghee Industries vs. CIT). and

(xix) CIT vs. Muhammad Kassim (2000 PTD 280).

275 Retrospectivity

Fourthly, the purpose of insertion of clause (8) was to

encourage industrialists to promote the investment in the

industrial undertaking without fear of probing their source of

income, therefore, employing clause (8) retrospectively would be

in line of promotion of the purpose of the legislation. It is not

always necessary that retrospective application is found in

express words. In the absence of express words whenever there

is intendment to the effect that some provisions will be

retrospective in its application, effect can be given to that

intendment. In this regard reliance can be safely placed on Alif Din vs. Noor (PLD 1969 Peshawar 62).

Clause (118C) of Part I of Second Schedule and Clause (8)

of Part IV of Second Schedule to the Ordinance are inseparable

and inserted together to encourage investment in the industrial undertaking.

The net result of the above discussion is that the Income

Tax Officer and learned Income Tax Appellate Tribunal have

failed to properly appreciate that the petitioner was entitled to

benefit of clause (8) of Part I of Second Schedule of the

Ordinance. We, therefore, while answering this Tax Reference

hold that the petitioner was entitled to benefit of clause (8) of

Part I of the Second Schedule of Income Tax Ordinance, 1979.

We also set aside the assessment order dated 26.6.1993 passed

by the Income Tax/Assessment Officer and the order of learned

Income Tax Appellate Tribunal dated 16.5.1996 and restore the

order of the Commissioner Income Tax (Appeals), dated

12.4.1994. The Reference is sent to the Income Tax Appellate

Tribunal in terms of section 136(5) of the Ordinance with the

direction to pass necessary orders as required under the above

mentioned section of law. The Registrar of this Court is directed

to send certified copy of this judgment under the seal of the

Court and under his signatures to the Appellate Tribunal

enabling it to do the needful. There shall be no orders as to

costs.

The income of Company in which the petitioner had made

investment by purchasing shares was assessed under clause


(118C). When the Company itself was assessed under clause

(118C) then the petitioner was entitled for protection granted to

his investment under clause (8) i.e. the investment in the

Company which was enjoying benefits of clause (118C) was immune from probe.

In clause (8) the word ―invested‖ has been used in past

participle.‖

12. A notification purports to impose a new liability or

obligation cannot operate retrospectively

Bashir Sons (Pvt.) Ltd. v. CBR

[(1993) 67 Tax 395 (H.C.Lah.)]

―It is trite law that a notification which has the effect of

imposing liability or obligation cannot operate retrospectively in the absence of any legal sanction in the statute itself.‖

13. An amendment which is explanatory or clarificatory

can be made to operate retrospectively

Micropak (Pvt.) Ltd., Lahore v.

Income Tax Appellate Tribunal, Lahore and 2 others

[(2001) 83 TAX 451 (H.C.Lah.) = 2001 PTD 1180]

―The findings of this Court in re: Prime Commercial Bank and

others vs. ACIT, 1997 PTD 605 (H.C.Lah.) are relevant. In that

case a Single Bench of this Court on the authority of an earlier

view held in K.G. Old Principal Christian Technical Training Center

Gujranwala vs. Presiding Officer Punjab Labour Court Northern Zone

and 6 others (PLD 1976 Lahore 1097) found it to be a settled

proposition that generally an amendment was clarificatory or

declaratory in nature. In the present case there is nothing to

show that the amendment in section 12(18) by Finance Act,

1998 was brought about to clarify the earlier provision and not

to bring a change in it. All the more so when the amendment

was not given retrospective effect normally clarificatory or

declaratory amendments are given.‖

Rijaz (Pvt.) Ltd. v. Wealth Tax Officer, Circle III, Lahore

[(1996) 74 Tax 9 (H.C.Lah.)]

277 Retrospectivity

―As regards question of retrospectivity suffice it to say that

the power of legislature to legislate retrospectively is well

recognized and in the present case the retrospective operation to

the explanation has been given by a specific provision in the

amending law. Be that as it may, it is trite law that an amendment

which is explanatory or clarificatory always operates retrospectively.‖

CIT, Karachi (West), Karachi v. S. A. Rehman

[1980] 42 TAX 147 (H.C.Kar.) = 1980 PTD 314

―The next argument of Mr. Mansoor Ahmed Khan is that

Act XI of 1966 whereby section 10(2A) was amended is a

declaratory, or in any case a creative enactment. He has stated

that the amendment seeks to define what is a bad or doubtful

debt, or in any case cures the existing provision by giving the

words a purposeful and meaningful intent. Two questions arise

namely whether the amendment is in the nature of declaratory

enactment and if so, whether the same would be of retrospective

application. A Declaratory Act generally takes a form by

statement ―it is declared‖. Patently such words have not been

used. In Act XI of 1966. Th second characteristic of a

declaratory statute is that it intends to remove doubts as to the

meaning of effect of a statue and if not expressly at least by

implication the legislature exhibits the reason for passing a

Declaratory Act Blackstone, J in Nicol v. Verelete [1779] 26 ER

751, stated ―declaratory statues do not prove the law was

otherwise before, but rather the reverse‖. Coleridge, CJ in Jones

vs. Bennet [1890] 63 LT 705, defined a Declaratory Act that

―means to declare the law, or to declare that which has always

been the law, and there having been doubts which have arisen,

Parliament declares what the law is and enacts that it shall

continue what it then is‖. Such characteristics are also lacking in

Act XI of 1966. Further it must be stated that our system of law

abhores retrospective legislation but if ever a necessity has arisen

to give retrospective effect, the statute generally expresses such

intention. Act XI of 1966 can also not be called a procedural or

adjective law because it is a statutory step in determination of


rights of the Income Tax Officer as well as the assessee. The

right is the retention of money on behalf of others. It also makes

an assessee liable to taxation in respect of moneys notionally

treated as his profits while exposing him to at least a risk of

demand. According to us Act XI of 1966 was intended to

provide a limit of time and avoid the lying of money in a sort of

suspense account for a period exceeding three years. New rights

and liabilities came into existence and new concepts of law were

brought into existence. This act cannot, therefore, be called a

Declaratory Act. Curative statutes are by their very nature

intended to operate upon and affect past transactions and are for

such reason wholly retrospective. These statutes are in the nature

of validating statues which operate on conditions already existing

and for such reason have retrospective operation. If the

enactment in question is to be in the nature of a curative law the

legislature would have stated so unambiguously. We are of the view that the amending statute is not even curative in nature.‖


[(1977) 35 Tax 169 (H.C.Lah.)]

―If the object of the statute is to explain the provisions or to remove a doubt, the law would apply retrospectively.‖

14. Declaratory statutes generally apply retrospectively


[1977] 35 TAX 169 (H.C.Lah.)

―All the writers are unanimous in their view that the

declaratory statutes apply retrospectively. A reading of the

explanation would show that the intention of the legislature was

to remove a doubt and explain the intended import of the original provision.

Undoubtedly we have to find out the intent of the

legislature and should not be swayed merely by the use of word

‗declaratory‘ or otherwise. If, therefore, the object of the statute

is to explain the previous provisions or to remove a doubt, the

law would apply retrospectively.‖

279 Retrospectivity

15. As a general principle the Explanation is clarificatory

and declaratory in nature, therefore, it operates

retrospectively. It reflects the true intent of the

legislature

CIT, Zone-B, Lahore v. Sardar Muhammad

[2001 PTD 2877]

―It is well-settled rule of construction of statute that when

a statute amends existing statute by adding, omitting or

substituting any provision in the existing statute and the

amending statute specifically provides that the addition,

omission and substitution shall be deemed always to have been

so made, the addition, omission or substitution shall take effect

from the date when the original provision was enacted. As it has

been specifically provided by the amending Act Explanation

shall always be deemed to have been so added, therefore, the

Explanation so added would, be read as part of section 19(3), as enacted originally.

As a general principle the Explanation is clarificatory and

declaratory in nature, therefore, it operates retrospectively. It

reflects the true intent of the legislature. Reference and reliance is made to the cases which are-

Muhammad Hussain Patel vs. Habib Wali Muhammad

PLD 1981 SC 1; Colony Sarhad Textile Mills vs. Collector,

CE&LC PLD 1969 Lah. 228; Messrs Rijaz (Pvt.) Ltd. vs. The Wealth Tax Officer 1996 PTD (Trib.) 489.

The object of the Explanation in statute is to remove any

ambiguity and bring about clarification relating thereto. The

process of interpretation is geared in finding out the true intent

of the legislature. Therefore, after insertion of the explanation

any ambiguity which surfaced in interpreting the provision of

section 19(3) has been done away with. Language of the

Explanation is plain and simple. It admits no doubt or

ambiguity. Any property the owner of which is in receipt of any

rent whether from employer or otherwise shall not be taken to

be in occupation of such owner for the purpose of his own

residence. This Explanation to section 19(3) clearly entails that


the rent received by the owner in respect of the property which

is in his occupation would be rental income from property and

would be charged to income tax and as the Explanation is

retrospective in its nature and operation, therefore, the deletion

of the rental income by the CIT, (Appeals) and the Income Tax Appellate Tribunal was not correctly made.‖

16. Explanatory amendment is always applicable

retrospectively to all relevant cases pending at the

relevant time


[1977] 35 TAX 169 (H.C.Lah.)

―The amendment under review is of explanatory type

stated to have been introduced ―for the avoidance of doubt‖.

The rule about interpretation of such statute is distinct though

the principles of interpretation of taxing statutes would apply if

attracted to the situation. A reading of the explanation would

show the intention of the Legislature was to remove a doubt and

explain the intended import of the original provision‘. If the

object of the statute is to explain the provisions or to remove a doubt, the law would apply retrospectively.

The addition of Explanation 2 to section 24(2) was with

the object of removing a doubt (probably created by the two

judgments of the West Pakistan High Court) [in CIT vs. Yousuf

& Co. (1967) 15 TAX 4 and CIT vs. Tayah Moosa & Co. [(1967)

15 TAX 62]. The enactment was expressly explanatory in nature.

Therefore, it had to apply retrospectively to all the relevant cases pending on that date.‖

17. Explanation added to section 50(4) cannot be applied

retrospectively




―The above explanation is in the nature of substantive

legislation and it was added by Finance Act, 1996, specifically

stating that it shall be deemed always to have been so added.

Although this explanation was added to nullify the effect of a

281 Retrospectivity

judgment given by the Income Tax Appellate Tribunal and thus,

it could be argued that the Legislature stepped in to correct the

judicial error and convey the real intent of sub-section (3) of

section 19 but the Legislature realized that the provisions

contained in the explanation was not within the normal scope of

explanation and had enlarging effect therefore, the explanation

was added with specific statement that it shall be deemed always to have been so added.

From the perusal of various explanations either enacted at

the time of promulgation of the Ordinance itself, or inserted

subsequently, it is obvious, that all the explanations are not

necessarily declaratory and clarificatory or for removal of doubt.

Some explanations are definitive in nature, some of them have

enacted the deeming provisions, some explanations are on the

face of them declaratory, clarificatory and for the removal of

doubt. Some of the explanations have been specifically inserted

with retrospective effect and the others have no such statement.

Some of the explanations have enlarged and extended the scope

of already enacted provisions and through some explanations

substantive legislation has been resorted to. The result is that no

hard and fast rule can be made applicable to all the explanation

inserted by subsequent legislation. The explanations squarely fall

within the normal purpose and scope of explanations, to wit,

being declaratory, clarificatory, meant for removal of doubt,

removing of obscurity or an ambiguity or filing in any obvious

gap or correcting any pronouncement by the Court taking as

judicial error by the Legislature, shall have the retrospective

effect. However, the explanation whereby substantive legislation

has been made or deeming provisions have been enacted or

substantive provisions of law have been enlarged or extended

creating new liabilities they shall not have retrospective effect.‖

18. Charging provision cannot operate retrospectively

unless explicitly provided so by the legislature

[2004 PTD (Trib.) 1655]

―Brief facts of the case are that the assessee sold a car

during the year for Rs. 80,000. The I.T.O. found that the written


down value of the same on 30-6-1990 was Rs. 38,962. He,

therefore, charged Rs. 41,038 to tax as terminal profit during the

impugned year. Prior to the amendment in Clause 7(c) of the

Third Schedule, sale proceeds of any class of assets over its

written down value was being treated as income of the assessee.

In case, however, if the sale was restricted to one asset out of the

class of assets its sale proceeds were not taxed. The amendment

of 1991 brought in the charge on every asset as against class of

assets and the excess of sale proceeds over the written down

value of each case is now taxable. The impugned year before us

is for 1991-92 wherein the assessee sold one individual asset

which has been charged by the I.T.O. who has given following observation in his support.

―This plea has been considered and it is pertinent to

mention that w.e.f. assessment year 1991-92 an amendment has

been made in Third Schedule by virtue of which terminal

profit/loss is now to be determined on the basis of individual

asset. For assessment year under discussion, terminal profit is to

be worked out on the basis of individual asset rather than a class of assets.‖

The question which has been taken up before us is whether

the amendment brought in by Finance Act, 1991 is applicable to

proceeds made prior to the 30th of June, 1991 or not. Before we

give our findings we should first determine as to the nature of

the present amendment in rule 7 of the 3rd Schedule which deals

with the disposals of assets and treatment of resultant gains or

losses. The rule was prescribed for creating a charge on the asset

which are disposed of by the Companies who are likely to close

down their business. It was felt that assets sold in such

circumstances fetch more value than the one declared by the

assessee in their balance sheet on account of yearly depreciation

received by them in terms of written down value. The legislature

by way of insertion of above provisions intended to discourage

pre-mature sale of capital assets after a relatively short period to

get the benefits of inflationary raise in prices and thus charged to

tax such transactions which were claimed as exempt under the

283 Retrospectivity

garb of capital gain earlier. It was again felt that by usage of the

language ‗Class of Assets‘ the legislature has exempt a single

transaction out of the class of assets and in this way if a person

had more than one cars he could escape the charge by selling

only one of them being a part of a class of assets. To avoid this

situation the legislature brought in another amendment through

Finance Act, 1991 by way of which a single transaction even if

the same is a part of a class of asset has also been covered under

the charging provisions of Income Tax Ordinance, 1979. The

position that emerges is creation of a charge on an asset which

was not there earlier through amendment by Finance Act, 1979.

The charging provisions are always prospective unless otherwise

provided. It is a settled principle of law, however in our support

we refer the judgment, which we feel is more relevant and

applicable on all fours to the present case i.e. (1983) 47 Tax 5

(Trib.) In this case the learned Tribunal has given following findings:-

―A bare perusal of the Explanation that it defines a

notional income and makes it chargeable to tax. No doubt

ordinarily the function or scope of an explanation is to explain

the law as it exists. But in the instant case the legislature has

shown to legislate a substantive charging provision in the garb of

an explanation. In our view, the mere caption given to a

particular provision of law would not legally charge the real

intent and purport of the provisions. Since we have not the least

hesitation in holding that the said Explanation is a charging

provision, there is no escape from the conclusion that it cannot

be given effect retrospectively in the absence of a specific provision making it operative in retrospection;

The legislature is fully competent to legislate a provision with

retrospective operation and it is an established law that unless a

charging provision has not been made retrospective, the same

should always be treated as prospective. It is also equally

established that the retrospectivity in respect of a statute cannot be

presumed. Maxwell on interpretation of Statute 12th addition at

page 216 contains one the most well-known statement of the rule


regarding retrospectivity as expounded by R.M. Wright in Re-Athlumney:

―Perhaps no rule of construction is more firmly established

than this that a retrospective operation is not to be given to a

statute so as to impair an existing right or obligation, otherwise

than as regards matter of procedure, unless that effect cannot be

avoided without doing violence to the language of the

enactment. If the enactment is expressed in language which is

fairly capable of either interpretation, it ought to be construed as

prospective only. The rule has, in fact, two aspects for it

―involves another and subordinate rule, to the effect that a

statute is not to be construed so as to have a greater

retrospective operation than its language renders necessary.‖

Mr. Qadeer-ur-Din Ahmed J. in PLD 1969 SC 599 re:

Nabi Ahmad and another v. Home Secretary Government of

West Pakistan examined the reasons for such presumption against retrospectivity. His lordship remarked:-

―Rights of the parties arising from facts which come into

existence before the passing of a statute, should be presumed to

be unaffected by it, unless it is expressly or by necessary

implication made retrospective. The full significance, and

implications of the protection cannot be fully appreciated unless

we discover its reasons. This is not a statutory protection, yet the

principle has by virtue of a presumption of fair-play effectively

checked encroachments on existing right by the all powerful

British Parliament unless they were found to have been clearly

and unambiguously so intended. The origin of this presumption

is to be found in the conscientious abhorrence that all just men

have for the unjustice that is inherent in changing the legal

implications of a situation to the disadvantage of those who

would otherwise benefit by a right which existed at the time of

the change. As a manifestation of more or less, a natural or

instinctive sense of justice, perhaps an instinctive repugnance to

what one feels to be injustice, the Courts have held that laws do

not ―impose new liabilities in respect of events taking place before their commencement.‖

285 Retrospectivity

19. A penal provision cannot operate retrospectively

CIT, Karachi v. Nisar Ahmad

[(1984) 50 Tax 187 (H.C.Kar)]

―A penal provision can‘t operate retrospectively unless it is so provided by the statute itself.‖

20. Subordinate legislation can be applied retrospectively

only if expressly mentioned

Aftab Medical Stores Dera Ghazi Khan v. CIT, Lahore

[(1976) 34 Tax 10 (H.C.Lah.)]

―A subordinate legislation like rules can be applied

retrospectively only if the parent Act confers such a power on

the rule making authority and it is so expressly mentioned in the rules as well.‖

21. Explanation inserted in section 52 of Income Tax

Ordinance, 1979 has retrospective effect


[(2001) 83 TAX 305 (H.C.Kar.) = PTCL 2001 CL. 454]

―A bare perusal of the explanation added to section 52 of

the Ordinance is sufficient to conclude that it has not created

any new obligation or liability on the taxpayers but has been

solely designed to bring about a change in the forum where a

person responsible for deducting advance tax on behalf of

another assessee as per requirement of section 50 of the

Ordinance is to be proceeded against on his failure to deduct or

collect the advance tax and to deposit the same in Government

treasury.

The question of retrospective operation of the explanation

would have arisen only if it has the effect of imposing new

liability or obligation on the taxpayer or had effected any existing

rights either by taking them away or curtailing them. A bare

perusal of the explanation is enough to hold that it only provides

a change in the forum, whereby the powers to hold proceedings

against the payer as a deemed assessee in default have been taken

away from the Assessing Officer/DCIT, dealing with the tax

proceedings of the recipients and have been conferred on the


Assessing Officer/ DCIT, having power to deal with the tax

proceedings of the payer. It is a well-established principle of law

that when the legislature brings about a change in the forum

then the same is always with retrospective effect unless it has the

effect of curtailing the existing rights available to a party for

challenging any adverse order. By the aforesaid explanation, the

legislature has not taken away any right of appeal or revision or

has not in any manner curbed the rights available to a deemed

assessee in default and is merely in the nature of a change of

officer/authority.

It may also be stated that the object of an ‗explanation‘ to

a statutory instrument is to clarify, to facilitate proper

understanding of a provision and to serve as a guideline as

pronounced by the Honorable Supreme Court in the case of

Naveed Textile Mills Ltd. vs. Assistant Collector (appraising Customs House and other reported in PLD 1984 SC 92.

By virtue of the explanation added/incorporated in section

52 of the Ordinance, the Assessing Officer/Deputy

Commissioner of the Income Tax dealing with the tax

assessment proceedings of an assessee would have the right to

initiate and finalize the proceedings against the said assessee in

cases where he is to be treated as an assessee in default. As such

in view of this, no exception can be taken to the orders passed

u/s 52 read with section 86 of the Ordinance by Assessing Officer/DCIT, respondent No. 3 against the petitioners.

The petitioners should have satisfied themselves by reliable

and satisfactory evidence that the said importers had been

subjected to tax and should not have relied on assumptions,

surmises and conjectures for non-performance of the obligations

cast upon them by section 50(4) of the Ordinance i.e. deduction

and collection of tax from the amount which they had paid to the eleven importers/sellers of medicines.

In view of the addition/incorporation of the explanation to

section 52 of the Ordinance, respondent No. 3 had the

jurisdiction and authority to initiate proceedings u/s 52 against

the petitioners as assessee in default in the assessment

287 Retrospectivity

proceedings relating to the petitioners and no exceptions can be

taken to the order passed by him u/s 52 read with section 86 of

the Ordinance. Consequently, this Constitutional Petition is

found to be without any substance and must fail.‖


22. Retroactivity of the law upheld

CIT, (AJ&K Council), Muzaffarabad and another v. Asian D.

Enterprises through Eijaz Qureshi, Managing Director and 5 others &

CIT, (AJ&K Council), Muzaffarabad and 2 others v. Messrs Cade

Creets Associates through Managing Partner, Diwan Ali Khan Chughtai

and another

[2000] 81 TAX 371 (S.C.AJ&K.) = 2000 PTD SC 892;

CIT, AJK and another v. Asian D. Enterprises and other

[2000] 82 TAX 518 ((S.C.AJ&K.)

―It may also be pointed out that in the instant case neither it

has been the case of the respondents nor there are any findings by

the High Court that any of the respondent-petitioners had paid the

advance Income Tax at the previous rates prior to the enforcement

of the Finance Act of 1995. It is evident from the above mentioned

survey of case law that the findings of the High Court that the

Finance Act, 1995, which was adapted retrospectively by Ordinance

No. 1 of 1998, could not operate retrospectively, are not legally

correct.‖

23. Retroactivity of the law upheld limitation period

extended retrospectively by legislation held not valid

Income Tax Officer, Investigation Circle & others v.


[(1970) 21 Tax 62 (S.C.Pak)]

―The orders annulling the assessments in question on

ground of limitation in view of the extension of the period of

limitation by ex post facto legislation, shall be deemed to have been

made without lawful authority.‖

24. Amendment in sub-clause (a) of rule 5 of the 5th

Schedule to the Income Tax Ordinance held not

retrospective

CIT, Central Zone, Lahore v.

National Security Insurance Co. Ltd., Lahore

[(2001) 84 TAX 500 (H.C. Lah.)]

―....we are of the considered view that in absence of a clear

provision making the aforesaid amendment to be retrospective

289 Retrospectivity

the assessing officer cannot be held to have a power earlier to

the date of amendment to examine, ―reserves‖ or ―provisions‖

for any expenditure etc. The principles with regard to the

prospective or retrospective application of status particularly

taxing statute are quite established. The Supreme Court of

Pakistan in re: Adnan Afzal vs. Sher Afzal (PLD 1969 SC 187)

examined general principles of retrospectively of procedural

provisions. The rule with regard to retrospectivity of remedial

law was examined by the apex Court in re: CIT vs. Shah Nawaz

Ltd. (1992) 66 Tax 126. The effect of change in law on pending

proceedings was also examined by the Hon‘ble Supreme Court

in re: Sardar Ali vs. Muhammad Ali (PLD 1988 SC 287). In case

of taxing statutes an assumption of retrospectively is all the more

forbidden. Though the power of legislature in that regard is

never questioned, yet in absence of an express provision to that

effect in talking statutes, retrospectively of application cannot be

accepted except in cases of remedial legislation or beneficial

notifications as found by the Supreme court of Pakistan in re:

Messrs Army Welfare Sugar Mills Ltd. vs. Federation of Pakistan (1992 SCMR 1652).

The amendment in question certainly clothed the Assessing

Officer with a fresh power to examine certain kinds of reserves

and provisions, which he was not earlier, empowered to do. The

enhancement of scope of his interference with regard to reserves

and provisions in process of an assessment for levy of tax

cannot be taken as procedural in nature. The amendment

represents vesting of a new jurisdiction in the Revenue Collector

which could not travel back to earlier assessment years merely

for the reason that some of the assessments in these years were

still pending that being so, as said earlier, the learned Tribunal

was justified in holding that till the introduction and

enforcement of the aforesaid amendment in sub-clause (a) of

rule 5 of the 5th Schedule to the Income Tax Ordinance the

Assessing Officer was not competent to interfere with a

provision or a reserve as disclosed by an assessee carrying on the business of Insurance.‖


25. Provisions of sub-clause (c) of section (2) of section 111

of the Income Tax Ordinance, 1979 are not

retrospective in nature

CIT, Zone-B, Lahore v. Muhammad Sarwar Khan

[PTCL 2001 CL. 383]

―No law providing for a greater or different punishment

which was available at the time of commissions of the offence or

default can be held to be a valid law muchless to interpret a law which on the face of it appears prospective.

Since the impugned addition in the income of the assessee

was made by resorting to the provision of section 13, the penalty

imposed was clearly not exigible as the act of alleged

concealment and furnishing of inaccurate particulars in terms of

various provisions of sub-section (1) of section 13 occurred

many years before introduction of the provisions. It will also be

noted that the impugned penalty was not made with reference to

any other provisions of the Ordinance or any other sub-clause of

section 111. The view adopted by the learned Judicial Member

that provisions of sub-clause (c) of section (2) of section 111 were not retrospective in nature appears correct.

Provisions of sub-clause (c) of section (2) of section 111 were not retrospective in nature.

Provision providing for penalty is not procedural in nature.

The situation in the present case is, however, totally

different. The provisions of section 111 at the time of

enforcement of Ordinance provided for two kinds of meaning

to the words ―concealment‖ and ―furnishing of inaccurate

particulars‖ of income as used in sub-section (1) of section 111.

Subsequently, the scope of their meaning was enlarged by

introducing a third category in the form of sub-clause (c) which since its introduction reads as under:-

Section 111(2)(c)

(a) xxxxxxxxxx

(b) xxxxxxxxxx

291 Retrospectivity

(c) any act referred to in clauses (aa), (b), (c), (d) and (e) of sub-section (1) of section 13.

Since the impugned addition in the income of the assessee

was made by resorting to the aforesaid provisions of section 13,

the penalty imposed was clearly not exigible as the act of alleged

concealment and furnishing of inaccurate particulars in terms of

various provisions of sub-section (1) of section 13 occurred

many years before introduction of the provisions. It will also be

noted that the impugned penalty was not made with reference to

any other provisions of the Ordinance or any other sub-clause of

section 111. The view adopted by the learned Judicial Member

that provisions of sub-clause (c) of section (2) of section 111

were not retrospective in nature appears correct.‖

26. Amendments in machinery section being procedural

are applicable to pending proceedings

Kohinoor Textile Mills Ltd. v. CIT

[1974] 30 TAX 138 (S.C.Pak.)

―We have carefully re-examined the provisions of the

Finance Act of 1957 and have come to the conclusion that the

applicability of statutory amendments could not possibly have

been made to depend upon modifications to be made by the

executive for then the executive could have rendered the statute

nugatory by one making the necessary modifications. The use of

the words ―modifications, if any,‖ clearly indicated that even if

no modifications were made the amendment would still be

operative. The statute which had come into force by the will of

legislature could not also remain ―dormant‖ at the will of the

executive. It operated of its own force and it becomes the duty

of the executive to give effect to it as far as possible even

without the modifications which could, at best be only of a

consequential nature. We are unable, therefore, to agree with the

High Court that without the modifications the amendment was

not applicable. We are also unable to agree that the amendment

did not apply to pending proceedings because, the provisions of

section 34 of the Income Tax Act impose no charge on the

subject but merely deal with the machinery of assessment as held


by the Privy Council in the case of the CIT, Bengal vs. Messrs

Mahaliram Ramjidas [(1940) 8 ITR 442]. This was, therefore, an

amendment of procedure in which no assessee has a vested

right. Such procedural amendments operate retroactively and apply even to pending proceedings.‖

27. Retrospectivity even in a procedural law is to be

avoided if it affects an existing right or causes

injustice to anyone

[2004 PTD (Trib.) 1655]

―Nevertheless, it is also a settled principle of law that

retrospectivity even in a procedural law is to be avoided if it

affects an existing right or otherwise causes inconvenience or in

justice to anyone. Even if the impugned provision for arguments

sake, as expressed by learned D.R. is to be considered an

amendment in procedure, to which in principle we are not

inclined to (agree), the same cannot charge a transaction

completed by the assessee prior to the amendment. The

arguments of leaned D.R. that the Finance Act regulates to

assessment year relevant to the accounting year ended prior to

the same is of no help to department. The provisions before us

having created a charge which were not there when the

transaction was completed cannot be applied retrospectively.

The addition made by the I.T.O. and confirmed by the learned CIT(A) for the assessment year 1991-92 is, therefore, deleted.‖

28. Omission of provision from statutes held not to operate

retrospectively

Mandviwalla Motors Limited, Karachi v.

CIT, Central Zone „B‟, Karachi

[1991] 64 TAX 19 (H.C.Kar.)

―The Income Tax Officer, Company, Circle II, Karachi,

passed an assessment order on the return filed by the applicants

for assessment year 1971-72. He determined the undistributed

profit of the applicants to be Rs.10,64,690 and imposed a tax of

Rs.2,92,790 in terms of section 23-A of the said Act. On appeal

the amount of undistributed profits was worked out to be

Rs.8,58,392 and consequently tax payable was fixed at

293 Retrospectivity

Rs.2,25,258. As the applicants failed to pay such amount additional tax u/s 45-A of the Act was levied.

On plain reading of the above provision of law it is

abundantly clear that no provision has been made for providing

any machinery for assessment but it clearly imposes a charge on

undistributed income and is therefore of substantive nature.

Such a conclusion is also in conformity with the principles of

interpretation of statutes laid down in the case decided by the

Privy Council and reported in [1940] 8 ITR 442 and followed in

the case reported in 1985 PTD 465. The first contention

advanced by Mr. Muhnmmad Nasim, Advocate for the applicant has no force.

Mr. Muhammad Nasim, Advocate for the applicant has not

been able to show that omission of section 23-A from the Act

through Finance Ordinance, 1972, was done as a remedial or

curative measure.

We are also unable to subscribe to the view that original

order of assessment by the Income Tax Officer required to be

passed after issuing a show cause notice on the subject. At any

rate in absence of any provision of issuing a notice in the

enactment the requirements of principles of natural justice stand

satisfied as the applicants were heard on the subject by the Appellate Authorities.‖

29. Any Act/Ordinance cannot cover any period prior to

coming into force of the Act/Ordinance

[(1984) 49 Tax 34 (Trib.)]

―The well settled principle of law is that subject to any

provision of saving clause, scope and extent of any section of

any Act/Ordinance cannot cover any period prior to coming into force of the Act/Ordinance.‖

30. Rights conferred under statutes cannot be taken away

by later legislation except by express words or by

necessary implication




―I am not myself prepared to go the length of holding that

rights such as those conferred under the Permanent Settlement

can only be abrogated if express provisions cancelling such

rights are inserted in a subsequent legislative enactment. No

doubt the maxim generalia specialibus non derogant may be regarded

as embodying a good working rule of construction, but where

the intention of the legislature to abrogate or modify existing

rights is manifest as a necessary implication from the language

used in the repealing statute, it matters not, in my opinion, that

the existing rights are not therein expressly and specifically

modified or cancelled. Lord Selborne, Lord Chancellor, refers to

this canon of construction in Seward vs. Vera Cruz [(1884) to App. Ca. 59], where he observes:

―If anything be certain it is this, that where there are

general words in a later Act capable of reasonable and

sensible application without extending them to

subjects specially dealt with by earlier legislation, you

are not to hold the earlier and special legislation

indirectly repealed, altered, or derogated from merely

by force of such general words, without any indication of a particular intention to do so.‖

Lord Justice Bowen restated the canon in In re Cuno,

Mansfield vs. Mansfield [(1889) 43 Ch. D. 12 at p. 17] in these words:

―in the construction of statutes, you must not

construe the words so as to take away the rights which

already existed before the statute was passed unless

you have plain words which indicate that such was the intention of the legislature.

See also Irrawaddy Flottila Company vs. Bhagwandas

[(1891) I.L.R. 18 Cal. 620; 18 I. A. 121]. Sunder Mull vs.

Ladhuram Koluram [(1923) I.L.R. 50 Cal. 667; A.I.R.

(1924) Cal. 240: 83 Ind. Cas. 757] and Duke of Argyll

vs. Commissioners of Inland Revenue [(1913) 109 L.T. 893].

295 Retrospectivity

In Garnett vs. Bradley [(1878) 3. App. Cas. 944 at p. 967], Lord

Blackburn laid down what I conceive to be the true rule of

construction applicable in the circumstances of this case. His

Lordship observes:

“There is an other rule if it is properly applied, namely, that

where there has been a particular rule established either by

custom or by statute, where there is some particular law standing

and a subsequent enactment has general words which would

repeal that particular law or particular custom, if they were

taken in all generality, ........ yet nevertheless the first particular

law is not to be repealed unless there is a sufficient indication of

intention to repeal it. It is not to be repealed by mere general

words: the two may stand together; the first, the particular law, standing as an exceptional proviso upon the general law.”

After referring to certain cases, His Lordship continues:

―In all these cases, however, the particular statute

relied upon was a statute in favour of a particular class

of persons or the property of a particular class of

persons. I do not take upon myself to say that all cases

in which that rule have been applied to which that

remark would not be applicable. But where that is the

case, where the particular enactment is particular in

the sense that it protects the rights, the property, the

privileges of particular persons or a class of persons,

the reason for the rule which has been acted upon is

exceedingly plain and strong. It would be very unjust,

or I would rather say unfair (I do not go further than

that), to pass an enactment taking away from a

particular person or class of persons his or their rights

without hearing what he or they have got to say about

it; and if general words were to have the effect of

taking away the rights of a particular person or class

which had been given to them beforehand, it would

be done without their having any knowledge or

opportunity of resisting it and it is not to be imputed

to the legislature or to be supposed that the legislature


would do what was unfair. Therefore, I think that

where only general words are used, there is a strong

presumption that the legislature did not intend to take

away a particular privilege, right or property of a

particular class, unless they have done something to

show that. If they have done something in such a way

as would show that that was their intention, if they

have said in negative words that those rights or

privileges shall all be taken away any enactment to the

contrary notwithstanding, that would prevent the

presumption arising at all. But in the absence of that, I

think it is an intelligible principle to say that the

legislature shall not be presumed to have done

anything unfair, and to have taken away this particular

privilege not having stated openly that they meant to

take it away, or in such open or clear language that the

persons affected might come and resist and use

arguments to show why it should not be taken away,

but having simply used general words quite consistent

with their never having thought of this privilege at all.

I think, my Lords, that that principle will reconcile

almost all the cases; certainly it will reconcile all I have cited, and it is a good and intelligible principle.‖

31. No retrospectivity involving substantive right unless

through explicit legislative intention

Messrs Innovative Trading Company Ltd. v.

Appellate Tribunal and 2 others

[2004 PTD 38 (H.C. Lah.)]

―It is a settled principle in the domain of fiscal law that the

amendment touching upon and dealing with substantive right

could not be given retrospective effect until and unless it is

specifically intended to be so by the Legislature. Conferring a

right of appeal is one of the substantive rights which was thus

provided to the officers of the Customs on 19th of June, 2000.

Conversely, it also abridges the right of the other party to claim

immunity against any order passed in their favour by revisional

297 Retrospectivity

forum. We are not persuaded to agree with the learned counsel

of the Revenue that the amendment brought under section 194A

by virtue of Finance Ordinance, 2000 was not merely procedural

in nature. In case of Haji Abdullah Jan v. The State (2003 SCMR

1063) section 417(2A) of the Criminal Procedure Code was

examined by the Apex Court. Sub-clause (2A) was added under

section 417, Cr.PC through an Amending Act No. XX of 1994

on 28.10.1994 and it was gazetted on 14.11.1994. On 31.10.1994,

learned Sessions Judge passed a judgment of acquittal and an

appeal was preferred by the Deputy Attorney-General of

Pakistan on behalf of the Federal Government. In that case, it

was held that the appeal was not competently filed. It was

further observed that sub-clause (2A) was enforced after the

judgment of acquittal. Therefore, on examining the various

provisions of law we find that the right to file an appeal by any

officer of the Customs, was not available before 19th of June,

2000 and the appellant acquired a valuable right through the

judgment dated 6.5.2000 and this right could not be taken away by construing the amended provision retrospectively.‖

Chapter XI

Powers of Courts/Administrative Jurisdiction

1. Provisions in the Civil Procedure Code relating to

appeals to the Supreme Court are contained in

sections 109 to 112 read with Order XLV, C.P.C.

Prime Dairies Ice Cream Ltd. Lahore v. CIT, Companies Zone

[2002] 85 TAX 509 (S.C.Pak) = 2002 PTD 430

―It is clear from subsection (2) of section 137 of the

Ordinance that provisions of the Civil Procedure Code relating to

appeals to the Supreme Court against the judgment and decree of

the said Court so far as applicable shall apply to appeals under this

section. It is also manifest from this provision of the Ordinance that

provisions of the Civil Procedure Code relating to appeals to the

Supreme Court against the judgment and decree of the High Court

shall be deemed to have been incorporated by way of legislation by

reference to regulate the procedure as to filing of appeals, therefore,

the question of entertainability of these appeals has to be resolved

under the provisions of the Civil Procedure Code treating by fiction

of law that the judgment under appeal is to be deemed to be a

decree of the High Court passed in a regular civil matter. The

relevant provisions in the Civil Procedure Code relating to appeals

to the Supreme Court are contained in sections 109 to 112 read with

Order XLV, C.P.C. According to rule 2 of Order XLV, C.P.C. in

such a case, whoever desires to appeal to the Supreme Court, shall

apply by petition to the Court whose decree is complained of, for a

declaration that the case is fit for appeal to Supreme Court. Order

dated 30.3.2000 of the High Court appears to have been passed on

such a petition moved by the appellants which must have contained

the grounds on which such a certificate was sought. This petition in our opinion keeping in view the

299


provisions of Order XLV as a whole and in particular rule 8 of the said Order is an important document for it, prima facie, appears that the same is to be ultimately treated as memo of appeal containing the grounds for challenging the judgment of the High Court and has to be transmitted to this Court after completion of other formalities as provided in this Order, therefore, the appellants could not present these appeals directly before this Court.

This being so, these provisions of the Civil Procedure Code which have been made part of the Income Tax Ordinance through legislation by reference, as observed above, would hold the field and cannot be said to have been overridden by the provisions of the Supreme Court Rules. In case the statute itself does not provide any procedure for filing such appeals, the matter would have been different, in which case, this Court could invoke the provisions of the rules governing similar certificated appeals under the Constitution on ground of similarity but not in case as is the present one where the Statute

itself by legislation provide procedure for such an appeal.‖

2. Appeals rejected for want of non-observance of

relevant provisions of law

Prime Dairies Ice Cream Ltd. Lahore v. CIT, Companies Zone

[2002] 85 TAX 509 (S.C.Pak) = 2002 PTD 430

―For the foregoing reasons, these appeals are neither maintainable nor entertainable directly. The office is directed to return the memo of appeals alongwith other documents after retaining copies of the same on record of this Court to the appellants. The appellants, may if so, desire, approach the High Court for proceeding further according to the provisions of sections

109 to 112 and Order XLV, C.P.C.‖

3. In granting leave to appeal rule of consistency is to be

followed

Central Insurance Co. Ltd. v. CIT

[(1999) 79 Tax 1 (S.C.Pak.)]

―Mr. Sheikh Haider, learned Advocate Supreme Court,

appearing for the official respondents/caveators, has submitted

that the above petitions merit dismissal as the assessments

301 Powers Of Courts/Administrative Jurisdiction

pursuant to the impugned notices have already been finalised

and recoveries have already been made and the parties have filed appeals etc. against the above assessments.

Since earlier this Court has already granted leave against the

judgment of the High Court which is also the subject-matter of

the present petitions, in order to follow the rule of consistency,

we are inclined to grant leave in the present cases to consider

inter alia the question on which earlier leave has been granted.

However, we are not inclined to grant any stay order. Leave is accordingly granted.‖

4. Judicial approach on constitutional issue should be

dynamic



[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―That the policy of a tax, in its operation may result in

hardship or advantages or disadvantages to individual assessees

which are accidental and inevitable. Simplicitor this fact will not constitute violation of any of the fundamental rights.

That while interpreting constitutional provisions courts

should keep in mind, social setting of the country, growing

requirements of the society/nation, burning problems of the day

and complex issues facing the people, which the legislature in its

wisdom through legislation seeks to solve. The judicial approach

should be dynamic rather than static, pragmatic and not pedantic

and elastic rather than rigid.

That the law should be saved rather than be destroyed and

the court must lean in favour of upholding the constitutionality

of a legislation keeping in view that the rule of constitutional

interpretation is that there is a presumption in favour of the

constitutionality of the legislative enactments unless ex facie it is violative of a constitutional provision.‖

5. Conditions under which courts can strike down a law




[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =


―That though the legislature has the prerogative to decide

the question of quantum of tax, the conditions subject to which

it is levied, the manner in which it is sought to be recovered, but

if a taxing statute is patently discriminatory or provides no

procedural machinery for assessment and levy of tax or that is

confiscatory, the court may strike down the impugned statute as

unconstitutional.‖

6. High Court has only advisory jurisdiction under

Income Tax Law

CIT, Central Zone B, Karachi v. Farrokh Chemical Industries

[(1992) 65 TAX 239 (S.C.Pak.) = 1992 PTD 523]

―The High Court should not have raised a question of law

not forming the part of the Reference expressly or by

implication. The mere fact that the High Court would have

come to a different finding would not justify the conclusion that

the findings of the Tribunal is based on conjectures, suspicion or

irrelevant material. The High Court while deciding the Reference

is not entitled to proceed on its own findings on a question of

fact but has to proceed on the facts and circumstances found by the ITAT.‖

CIT, Lahore Zone v. Sh. Muhammad Ismail & Co. Ltd. Lyallpur

[(1986) 53 Tax 122 (S.C.Pak)]

―.... the High Court cannot disturb or go behind any

finding of fact given by the Tribunal even on the ground that

there is no evidence to support it, unless it has been first

expressly challenged by a question raised in the reference application u/s 66 to the Tribunal.

We may also add that the function of the High Court in

cases referred to it u/s 66 is advisory only and is confined to considering and answering the actual question referred to it.‖

Mst. Fazal Be and 6 others v. CIT,

[1996] 74 TAX 141 (H.C.AJ&K)


―A finding of fact not based on evidence or where a

material evidence is ignored a reference to the High Court will be maintainable.‖

CIT, Central Zone Lahore v. Gauher Ayub

[(1995) 71 Tax 271 (H.C.Lah)]

―This Court can only deal with the question of law arising

out of the order of the Tribunal passed u/s 34 of the Act. The

question arising out of the order of Tribunal is that question

which was raised before the Tribunal and which was dealt with

by the Tribunal, or that question which was not raised before the

Tribunal but was dealt with by it or that question which was

raised and alleged before the Tribunal but was not dealt by the

Tribunal. All such questions are questions of law arising from the order of Tribunal.‖

Nazir Ali M.H. Ganji v. CIT, Companies I, Karachi

[(1994) 69 Tax 71 (H.C.Kar)]

―U/s 136 of the Ordinance, the provision for reference to

the High Court is the same as u/s 66 of the 1922 Act. The

scheme of the Ordinance so far as the scheme of the reference

to the High Court on question of law arises the Tribunal can and

in certain circumstances must seek, at the instance of the

assessee or at the instance of the Revenue, the opinion of the

High Court on such question. The jurisdiction exercised by the

High Court is purely advisory. It is not that of a Civil Court

exercising original or any appellate or revisional jurisdiction. We

are of the view that the powers and jurisdiction of the High

Court are those which are expressed and conferred upon them

and also those which inhere in the exercise of that function and

jurisdiction of giving advice. The appeal is kept pending before the Appellate Tribunal.

It is an admitted position that in answering questions or

disposing of references u/s 136 of the Ordinance, the High

Court do not exercise any jurisdiction conferred upon them by

the Code of Civil Procedure or the Charters or by the Acts

establishing the respective High Courts. We are of the humble


view that in respect of certain matters, jurisdiction exercised by

the High Courts must be kept separate from the concept of

inherent powers or incidental powers in exercising jurisdiction

u/s 136 of the Ordinance. Section 136 of the Ordinance is a

special jurisdiction of a limited nature conferred not by the Code

of Civil Procedure or by the Charters or by the Acts constituting

such High Courts but by the special provisions of the Income

Tax Ordinance for the limited purpose of obtaining the High

Court‘s opinion on question of law. In giving the opinion

properly, if any question of incidental or ancillary power arises

such as giving an opportunity or restoring a reference dismissed

without hearing or giving some additional time to file the paper

book, such powers cannot be so construed as to confer the power of reviewing the judgment.‖

Hamdard Dawakhana (Waqf) v. CIT, etc.

[(1987) 56 Tax 78 (H.C.Kar)]

―High Court can grant stay of recovery of tax, subject to

furnishing bank guarantee of the amounts involved (outstanding tax payable).‖

Dhanrajmal Mamnumal & Sons v. CIT, (West) Karachi

[(1985) 52 Tax 77 (H.C.Kar.)]

―In our view, this Court has always the jurisdiction to

intervene if it appears that the Tribunal has arrived at a finding

based on no evidence or where a finding is inconsistent with the

evidence or contradictory of it or it has acted on material partly

relevant and partly irrelevant or where no person judicially acting

and properly instructed as to the relevant law could have come to the determination reached.‖

Coronet Paints & Chemicals Ltd. Karachi v. CIT, (West) Karachi

[(1984) 50 Tax 115 (H.C.Kar.)]

―It has been held by the superior Courts, that the Court

would be entitled to intervene if it appears that the fact finding

authority acted without any evidence which cannot reasonably be

entertained or facts found are such that no person acting judicially


and properly instructed as to the relevant law could have come to the determination reached.‖

CIT, Lahore v. Umar Saigal

[(1976) 33 Tax 245 (H.C.Lah.)]

―An appeal from the reference under the Income Tax Law

is not concerned by any of the conditions mentioned in Article

185(2), Constitution of Pakistan (1973), Article 185(3) limits the jurisdiction of the Supreme Court by providing that:

An appeal to the Supreme Court from a judgment, decree,

order or sentence of a High Court in a case to which clause (2)

does not apply shall lie only if the Supreme Court grants leave to appeal.‖

7. Persons who are equally placed cannot be treated

discriminately

Bank Al-Habib and another v. Central Board of Revenue

[(2004) 90 TAX 9 (H.C. Lah.)]

―The respondent took different stands on different stages

and finally refused, that blanket approval cannot be granted on

the precedent of Bank of Punjab. The constitutional petitions

were filed, thereafter, immediately. There is no codified law

governing laches. Each case has to be examined on its own

peculiar facts to non-suit or otherwise, on the doctrine of laches.

Protracted correspondence between the parties, suggestive of

consideration, will not attract the rigour of laches.

The petitioner has approached the respondent for the grant

of relief in terms of section 23(1)(ix) of the Ordinance. He cited

the cases of financial institution to which relief was granted in

similar circumstances. The respondent refused to grant relief

mainly on the ground that the petitioner is banking company and

cannot equate itself with the financial institutions, which has

been provided the relief being engaged in development and

building sector and some of the institutions were facing

hardships. The learned counsel, obviously rendered help to him.

The Bank of Punjab performing similar functions and duties like

the petitioner, had approached the Federal Ombudsman who


directed the respondent to grant benefit of Special Reserve in

view of the provisions of section 23(1)(ix) of the Ordinance. The

respondent un-successfully challenged the decision of Federal

Ombudsman before the Honourable President of Pakistan.

Income Tax Appellate Tribunal in an appeal by the Bank of

Punjab against respondent allowed relief in regard to Special

Reserve in accordance with decision of Federal Ombudsman

and decided the appeal in terms thereof. The Central Board of

Revenue, Islamabad, thereafter, in obedience of the judgment of

the Federal Ombudsman and Appellate Tribunal, revised the original assessment by giving benefit of Special Reserve.

The petitioner‘s case is at par with the case of the Bank of

Punjab, being similar placed and similarly circumstanced. He cannot be meted out with discrimination.

Reasonable classification is permissible but if it is arbitrary

or is not founded on any rational basis it will not be deemed to

be classification warranting its exclusion from the mischief of

Article 25 of the Constitution. In Nizamuddin and another v. Civil

Aviation Authority and 2 others (1999 SCMR 467), similar view was

expressed by the Honourable Supreme Court of Pakistan.

Reiterating its view in Aman Ullah Khan and others v. The Federal

Government of Pakistan through Secretary, Ministry of Finance, Islamabad

and others (PLD 1990 SC 1092) and Chairman Regional Transport

Authority, Rawalpindi v. Pakistan Mutual Insurance Company Limited,

Rawalpindi (PLD 1991 S.C. 14) holding that the Government is

not supposed to discriminate between citizens and its

functionaries and cannot be allowed to exercise discretion on

their whim, sweet will or as they please but are bound to act

fairly, evenly and justly. Similar observations were also made in

the case of Messrs Airport Support Services v. The Airport Manager,

Quaid-e-Azam International Airport, Karachi and others (1998 SCMR

2268). In Government of N.W.F.P. through Secretary and 3 others v.

Mejee Flour and General Mills (Private) Limited, Mardan and others

(1997 SCMR 1804) and in Rai Mazhar Iqbal and another v. The

University of the Punjab, Lahore through Vice Chancellor and two others (1922 C.L.C. 1158).‖


8. Two equally possible interpretation emerge leave to

appeal granted

Mian Aziz S. Sheikh v. CIT, Investigation Lahore

[(1981) 43 Tax 105 (S.C.Pak)]

―The question for consideration before the High Court

depended upon two equally possible interpretations of the

expression unless he is himself liable to pay any income tax and

super tax thereon as an agent. The High Court has itself noticed

the fact that there has been a great difference of opinion as to

the interpretation of this expression and since a legal question

which is likely to affect a large number of cases has arisen, we grant special leave to appeal.‖

9. CBR and the Federal Government has no power to

resort to judicial interpretation of law

The CBR, Islamabad and others v.

Sheikh Spinning Mills Limited, Lahore and others

[(1999) 80 Tax 79 (S.C.Pak) = 1999 PTD 2174]

―It seems to be well-settled proposition of law that the

Central Board of Revenue, or for that matter even the Federal

Government, cannot control or curtail judicial adjudication

powers vested in the forums provided under the relevant law by

giving a particular interpretation to a particular provision of the relevant law or by issuing notification/S.R.O. for that purpose.‖

10. CBR is not competent to issue instructions of

judicial/quasi judicial nature

Central Insurance Co. & Other v. CBR Islamabad

[(1993) 68 Tax 86 (S.C.Pak)]

―We may point out that the Central Board of Revenue

cannot issue any administrative directions in the nature which

may interfere with the judicial or quasi-judicial function entrusted to the various functionaries under the statute.‖

11. CBR or any other authority cannot enlarge the scope

of a provision.

[2004 PTD (Trib.) 151]


―Further and this has been pointed out by the DR that the

assets are not separately identifiable has not been established. In

fact the machinery imported during the year was separately

mentioned in balance sheet; hence even if we agree with the

provisions of the Circular, even on factual premises the assessee

does not have any case to argue. In any case the provision

mentioned above does not grant any right to anybody be that

Central Board of Revenue or some other authority to enlarge the

scope of the provision which has granted this exemption,

through a Circular.

The departmental objection is that the machinery is not

used for the whole year hence shall be restricted to the extent of

its utilization in terms of number of days. We have already

shown out agreement with the arguments of DR in respect of

this issue. The provisions of law in terms of clause (3) of the

Third Schedule mentioned above do not give any impression

about the allowance of depreciation as a class. The directions of

the C.B.R., therefore, have come as a piece of legislation to that

extent which perhaps was for the reason that some difficulty in

determination of the separate machinery in a class of machinery

was not possible. This direction is beyond the scope of the

powers available with C.B.R. under section 14 of the Income

Tax Ordinance, 1979. In this regard we are fortified by the

judgment of the ITAT reported as 1999 PTD (Trib.) 1672 and

which has further relied upon the judgment of the Supreme

Court of Pakistan reported as 1993 SCMR 1232 = 1993 PTD

766. The learned Judicial Member as the then he was writing on behalf of the full Bench held:-

―The idea was found to be fallacious in view of the

fact that the C.B.R. being a creation of the Statute

(Act IV of 1924) could not create an exemption in the

way it did by way of the aforesaid letter. Reference

was made to a reported judgment of the Karachi High

Court in re: Syed Ali Azhar Naqvi v. Government of

Pakistan cited as PLD 1994 Kar 67 wherein it was

found ―where a statute provides a procedure for doing


a thing in a particular manner then that thing should

be done in that manner and in no other way or should

not be done at all.‖ The view of their Lordships of the

Lahore High Court expressed in PLD 1971 Lah. 217

re: Chairman Evacuee Property Trust Board West Pakistan

v. Muhammad Din and others was also referred which

said, ‗wherever a statute limits a thing to be done in a

particular form, it necessarily includes in itself a

negative, viz. that a thing shall not be done

otherwise.‖ Lastly it was noted that the competency of

the C.B.R. to issue Circulars, notification or letters to

interpret various provisions of the law was finally

settled by the Supreme Court of Pakistan in re: Central

Insurance Company and others v. C.B.R. and others cited as

(1993) 68 Tax 86 = 1993 PTD 766 = 1993 SCMR

1232. In that case the Court inter alia re-affirmed its

view cited in PLD 1964 SC 657 = (1964) 10 Tax 206

re: CIT East Pakistan Dacca v. Noor Hussain. In that

case (Cornelius C.J. remarked ―in my view if there is a

departure from the law involved in the provision for

relaxation contained in the Circular then that Circular

is to the extent of the deviation, invalid and ineffective and power thereunder is illegally exercised.‖

In above lines the Honourable ITAT has held that the

directions of the C.B.R. which are in conflict to the main

legislation are illegal to the extent they deviate from the said law.

As regards ITA No. 460/LB/1998 is concerned the judgment

has not been produced before us by the learned AR and the

Assessing Officer while following the same has not given any

reference to the findings therein. We, therefore, consider the

same to be as per incuriam as the same apparently has not

discussed the C.B.R. Circular and the main provision in its true

spirit. Here we also find ourselves in agreement with learned DR

that the fiscal law is to be construed strictly and the intendments

behind the legislation should not be ignored. When law clearly

says that the extra shift allowance shall be calculated by adopting


number of days C.B.R. cannot grant further benefit beyond the

legislation through a Circular. One may further refer the famous

judgment of Central Insurance Company decided by the Supreme

Court of Pakistan reported as (1993) 68 Tax 86 (S.C. Pak). We,

therefore, hold that extra shift allowance has correctly been

disallowed by the Assessing Officer. We need not add that the

assets in this case even otherwise were separately identifiable. The assessee appeal on this issue, therefore, is rejected.‖

12. Transfer of jurisdiction

Karachi Industrial Corporation & 3 others v. CIT

[(1975) 32 Tax 170 (S.C.Pak)]

―There is no provision in the law for issuance of a notice

before a case is transferred from one office to another but it was

urged that the rule of natural justice requires that before an order

adverse to a party is passed he shall be heard. There is little force

in the contention. The transfer of jurisdiction in this case was to

facilitate assessment by putting it at one place. Per se such an

order does not result in any prejudice to the assessee. If the

petitioners have any specific grievance against the ITO, they

should bring it to notice of the IAC with whose approval assessment is to be finalised.‖

13. Only question of law which has substance in it be

referred to the High Court

Lungla (Sylhat) Tea Co. Ltd. Sylhat v. CIT, Dacca Circle Dacca

[(1975) 31 Tax 64 (S.C.Pak.)]

―It may be pointed out that it is not every question of law

that must be referred to the High Court. There must be some substance in it.‖

14. Constitutional petition dismissed as withdrawn second

petition on the same issue is maintainable

CIT, Karachi v. Ashfaq Ahmad Khan & 10 others

[(1974) 29 Tax 149 (S.C.Pak.)]

―Writ petition dismissed as withdrawn subsequent writ

petition on the same issue being constitutional petition was held

to be maintainable.‖


15. Anomaly in question of law framed and referred by the

Tribunal to the High Court; High Court should refer

the case back to Tribunal for clarification

Pakistan through CIT, Karachi v. Majestic Cinema

[(1965) 12 Tax 15 (S.C.Pak.)]

―It might have been more appropriate course for the High

Court to take, when it discovered a clear anomaly in the question

referred to it, to send the case back to the Tribunal for

clarification of the question referred to it, so that the High Court

should have known whether it was asked to consider a question

of law applying to the whole matter before the Income Tax

authorities or only to a part.‖

16. Effect of lack of jurisdiction

Nagina Silk Mills, Lyallpur v.

Income Tax Officer, A-Ward, Lyallpur and another

[1963] 7 TAX 442 (S.C.Pak.) = PLD 1963 SC 322

―In the Punjab Province vs. The Federation of Pakistan [PLD

1956 FC 72], it was ruled by the Federal Court that a suit

brought by the Punjab Province to challenge its liability to

Income Tax, on income derived from certain commercial

activities of the Province, u/s 204 of the Government of India

Act, 1935 was not barred by section 67 of the Income Tax Act

or by section 9 of the Code of Civil Procedure. It was pointed

out therein that where the Income Tax Officer‘s order of

assessment was wholly vitiated by complete lack of jurisdiction,

the principle laid down by the Privy Council in cases of

Relight Investment Company Limited vs. Governor-General-in-Council is

a representative, would not apply. The order in such a case

cannot be said to have been passed under the Act, within the

meaning of section 67 of the Act and a suit even in a Civil Court

would not have been barred. It therefore follows that the

extraordinary writ jurisdiction of the High Court could have

been invoked in challenging an Income Tax assessment on the

basis that the officer in question lacked jurisdiction to pass the

impugned order. The writ jurisdiction was conferred on the

High Court by a constitutional provision and even if there be a


conflict between such a provision and another statute, the constitutional provision must prevail.‖

17. Only Supreme Court is competent to adjudicate

between the governments

The Punjab Province v. The Federation of Pakistan

[(1960) 2-Tax (Supp. 3) (S.C.Pak)]

―The principle underlying Article 184 of the Constitution

of Pakistan is that all disputes whether of law or of fact are to be

determined by Supreme Court of Pakistan if the parties to the

dispute happens to be the Federal Government on the one side

and any one or more of the provinces on the other side or if two

or more provinces are arrayed against one another. The

machinery provided for appeals/revisions in the Income Tax Ordinance 1979 is not relevant in such disputes.‖

CIT, Lahore v. Govt. Jallo Rosin and Turpentine Factory, Lahore

[(1976) 34 Tax 71 (H.C.Lah.)]

―On the merits the additional objection raised before us

has considerable force. In this connection Article 185(1) of the

1973 Constitution lays down that the Supreme Court shall, to

the exclusion of every other court, have original jurisdiction in

any dispute between any two or more governments. In the 1962

Constitution there was a corresponding provision in the form of Article 57.‖

18. Appeal/Reference to Supreme Court governed by

Income Tax Law

The Provincial Library & others v. CIT, East Pakistan

[(1959) 1-Tax (III-290) (S.C.Pak)]

―Where the question is whether an appeal to the Supreme

Court lies in income tax matter, the question has first to be

decided not with reference to provision of the Code of Civil

Procedure, but solely in terms of section 137(1), though once the

case is held to be qualified u/s 137(1) the provisions relating to

appeal to the Supreme Court will apply to the appeal as if it were an appeal from decree of a High Court.‖

19. In tax matters Supreme Court jurisdiction is limited


The Provincial Library & others v. CIT, East Pakistan

[(1959) 1-Tax (III-290) (S.C.Pak)]

―The Supreme Court jurisdiction to entertain a statutory

appeal in matters arising under the Income Tax Law is limited to

the case mentioned in sub-section (2) of section 137 and that

such jurisdiction can be invoked only where the High Court has

delivered judgment on a reference made to it u/s 136 and also

certified the case to be fit one for appeal before the Supreme

Court.‖

20. Courts have to interpret the law as it stands and have

no authority to add, delete or subtract any word in or

from the language used in the statute


2002 PTD 2169 (H.C.Kar.)

―The learned Tribunal in order to create the distinction had

to add expression ‗ordinary‘ with expression ‗building‘ used at

Serial No. 1, but in doing so the very cardinal principle of the

interpretation of statutes was lost sight of that the Courts are

merely supposed to interpret the law as it is and have no

authority to add, delete or subtract any word in or from the

language used in the statute. Thus the addition of word

‗ordinary‘, with ‗expression‘ building used by the legislature is

against the, principles of the interpretation of statutes. In doing

so, the ITAT further fell in error by ignoring the principle that

when an expression, word or term, is used by the legislature in a

particular statute at various places and the said term or word has

been defined in the statute with the note that the definitions in

the said statute shall be implied unless the context otherwise

requires, then ordinarily the definition given in the statute is to

be accepted while applying or interpreting the provisions of that

particular statute, and if any deviation is to be made then it has

to be shown that the context in which the said word or term has been used requires otherwise.‖

21. Court is not empowered to deviate from the definition

given in the statute



2002 PTD 2169 (H.C.Kar.)

―The Court is bound to explain and highlight the context

which requires deviation from the definition given in the statute

and must show with reference to the context that a word or term

should take some other complexion or colour, with particular

reference to the context. However, if the definitions are given in

unqualified terms and it is not stated in the definition clause that

the words or terms used may be taken in any other sense with

reference to the context then the Court is not empowered to

assign any other meaning of word or term used in the statute.

Now we see that in section 2 of the Income Tax Ordinance,

1979, it is provided that the definitions given therein shall be

taken for the purpose of Ordinance, unless the context

otherwise requires. The word ‗building‘ is not defined in this

section. It is defined in rule 8 of Third Schedule to the Income

Tax Ordinance. 1979 in unqualified terms and says that for the

purpose of Third Schedule the definitions given in rule 8 shall be

implied. The definitions of the words or terms given in rule 8 of

the Third Schedule are to be taken in unqualified and

unconditional terms for the purpose of entire scheme pertaining to the depreciation contained in the Third Schedule.‖

22. Main function of the definition of a term is to remove

vagueness, ambiguity or complication

[2004 PTD (Trib.) 1029]

―We would like to observe here that when a term is used in

a statute then the same necessarily is to be defined in the

definition clause of that law in order to avoid any ambiguity or

complications or difficulty which may likely to arise while it is

being interpreted and applied to a situation in the context of its

literal and ordinary dictionary meanings in order to construe the

same for arriving at a logical conclusion. What predominates in

the main statute/law and the definition given in the provisions

of that main law. If no definition is given in the main law then

any such term or phrase or word used in the provisions of law

may be given a possible harmonious meaning and conveying a


sense to the said provisions of law while seeing to its plain, literal and ordinary dictionary meaning.‖

[2004 PTD (Trib.) 2749]

―We would like to reassert our earlier observation in so

many cases that when a term is used in a statute, the same must

be defined in the definition clause of that law in order to avoid

any ambiguity, complications and difficulties which may likely to

arise while it is being interpreted and applied to a situation in the

context of its literal and ordinary dictionary meaning in order to

construe the same for arriving at a logical conclusion. What

predominates is the main statute law and the definition given in

the provisions of that mean law. If no definition is given in the

main law then any such term or phrase or word used in the

provisions of law would always be interpreted in a manner that

the said provisions of law may be given a possible harmonious

meaning and conveying a sense to the said provision of law

while seeing to its plain, literal and ordinary dictionary meaning.

Main function of the definition of a term is to remove vagueness

and to provide a degree of definiteness to the said term or phrase or word so defined.‖

23. Disputed questions of fact cannot be resolved in a writ

petition


[2002] 86 TAX 138 (H.C.Kar.) = 2002 PTD 441

―It is settled proposition of law that this court has no

jurisdiction to resolve the disputed questions of fact in

Constitutional jurisdiction as the principle laid down by the

Honble Supreme Court in Muhammad Yunus Khans case 1993

SCMR 618. This Court has considered almost all the case-law on

the subject and laid down a principle in Messrs Pak-Arab Fertilizer

vs. Deputy Commissioner of Income [2000] 81 TAX 224 (H.C.Lah.) =

2000 PTD 263 that writ petition is not maintainable against the

show-cause notice and also observed that party cannot be

allowed to bypass jurisdiction vested by the law in Special

Tribunal. It is pertinent to mention here that the learned counsel

for the petitioner has laid down much emphasis in Shahab-ud-


Din‟s case [1988] 58 TAX 106 (H.C.Kar,) = PLD 1988 Kar. 587

and in the aforesaid case the writ petitions were dismissed and laid down the following principle:

―The petitioner has not availed the statutory remedy

available to him and he has rushed to the Court at the

initial stage when only notice has been served. He will

have the opportunity to examine the material if any

produced before the Income Tax Authorities and

rebut it, before any final order is passed. In the facts

and circumstances of the case in our view the notice

issued by the respondent No. 2 is neither arbitrary,

nor without jurisdiction. We therefore, dismiss the

petition with no order as to cost.‖

24. Question declined lacking substance and being

academic in nature

CIT, Companies, Lahore v. Locus Traders Shan (Pvt.) Ltd., Lahore

[(2001) 84 TAX 516 (H.C.Lah.)]

―This is a case stated by the Lahore Bench of the Income

Tax Appellate Tribunal, at the instance of the CIT, Companies,

Lahore. The following question has been framed for our consideration and answer:-

―Whether on the facts and in the circumstances of the

case, the Tribunal was justified in holding that cost of

freight and insurance is an item of Profit and Loss

Account in spite of the facts that it is direct expense and debitable to the trading account.

After hearing the learned counsel for the Revenue, we will

not take long to hold that the aforesaid question does not raise

any legal controversy as earlier found by a division Bench of this

court in (1999) 79 Tax 283 (H.C.Lah.)=1999 PTD 1329 re: CIT

vs. Anwar Enterprises, Sialkot. While disposing of as many as 461

P.T.Rs./petitions, the learned Division Bench concluded that

these tax references did not raise any question of law arising

from the orders of the Tribunal. Also in view of the introduction

of presumptive tax regime by Finance Act, 1992, similar


questions framed in these references were found to be of academic interest only.‖

25. High Court is competent to entertain writ where

interpretation of law is involved

Bank of Punjab v. Federation of Pakistan [2000] 81 TAX 390 (H.C.Lah.)

The fate of this case turns upon the interpretation of

section 53(b) of the Income Tax Ordinance, 1979 and the said

dispute can very well be decided by this Court in the exercise of

its constitutional jurisdiction without insisting that the petitioner

should follow the remedies provided by the Income Tax

Ordinance, 1979. Furthermore, it appears that the DCIT, was

influenced by Circular No. 13 of 1997 issued by the Central

Board of Revenue which had been declared as without lawful authority by this Court.

In view of what has been said above, this petition is

allowed, the impugned order of the DCIT, to the extent it

disallowed the petitioner to deduct the tax paid by it u/s 50 of

the Income Tax Ordinance, 1979 while computing the payment

of advance tax payable u/s 53, is declared to be without any lawful authority and of no legal effect.‖

26. Every order increasing tax obligation of an assessee or

reducing the refund is appealable u/s 129

Pak-Saudi Fertilizer Ltd. through Managing Director v. Federation of Pakistan through Secretary Finance,

Islamabad and 4 others [(2000) 81 TAX 119 (H.C.Kar.) = 1999 PTD 4061]

―In the context of Income Tax we have been able to lay

our hands on Hassan Ali Khan Kara Bhai vs. CIT PLD 1974 Kar.

473 wherein Noorul Arfeen J writing for the Court held that

notwithstanding that no specific appeal was provided u/s 30 of

the Income Tax Act, 1922 against an order u/s 35, however,

such appeal lay since the order u/s 35 pertook the character of a

fresh assessment order referable to section 23 of the 1922 Act,

and therefore, such an order being in the nature of an order of


assessment was appealable to the Appellant Assistant Commissioner u/s 30 of the Act.

The above discussion would amply confirm that the

omnibus clause in section 129 i.e. or otherwise increasing the

liability of an assessee covers every possible eventuality where

the tax liability or obligation to pay income tax is increased or

refund reduced, making such orders appealable u/s 129.‖

Note: Not approved by the Supreme Court of Pakistan, see

[2001] 83 TAX 119 (S.C.Pak.).

27. Objections to jurisdiction are to be decided before

proceeding in the matter by adjudicating authority

Abdul Majeed Awan v. IAC of Income Tax

[1999] 80 TAX 115 (H.C.Lah.) = 1999 PTD 2910 =

2000 PCTLR 1046

―Admittedly, the petitioner could raise all the objections to

the exercise of jurisdiction, either u/s 156 of Income Tax

Ordinance or u/s 66A of the Ordinance and the respondents

will be duty bound to attend to the objections and determine the

same by recording a well reasoned order. The matter will be

reopened only if the objection as to the exercise of jurisdiction is

overruled. Every quasi-judicial authority is under legal obligation

to consider the objections as to its jurisdiction, if raised in the

proceedings and to decide it as a preliminary step, before

exercising the jurisdiction or invoking authority under the

relevant law. The respondents are expected to first satisfy that

the circumstances warrant for indulgence under the relevant

provisions and that they have the jurisdiction to reopen the matter.‖

28. Ombudsman has no power to declare any legally issued

notification as perverse, illegal, arbitrary or

discriminatory

Frontier Ceramics v. Government of Pakistan & others

[1999 PTD 4126 (H.C.Pesh.)]

―The issuance of notification cannot be termed as

maladministration because it could not be said to have been


issued for a particular person or in a particular case, it was issued

for and applied to all those concerned. In the above provisions

of law [Wafaqi Mohtasib Ordinance of 1983], it is no where

provided that the learned Ombudsman has the authority to

declare any legally issued notification as perverse, illegal or arbitrary and discriminatory.‖

29. CBR has no authority to file presentation against the

orders of Wafaqi Mohtasib

Frontier Ceramics v. Government of Pakistan & others

[1999 PTD 4126 (H.C.Pesh.)]

―.....CBR is not a person as contemplated u/s 32 of the

President Order 1 of 1983 and, therefore, CBR has no authority

to file representations before the President of Pakistan against the recommendations/decisions of the Mohtasib.....‖

30. Objection as to jurisdiction can be raised at any stage

Tapal Energy Ltd. v. Federation of Pakistan

[1999 PTD 4041 (H.C.Kar.)]

―It is an established principle that submission to

jurisdiction of a Court or Authority does not confer jurisdiction

on such court or authority and in support thereof reliance is

placed on the case of Mohammad Afzal vs. Board of Revenue, West

Pakistan and others reported in PLD 1967 SC 314. It may also be

pointed out that the objection as to the jurisdiction can be raised

at any stage and for the above reliance is placed on the case of (i)

Shagufta Begum vs. The Income Tax Officer reported in PLD 1989

SC 360, and (ii) Pir Sabir Shah vs. Shad Mohammad and others reported in PLD 1995 SC 66....‖

31. Courts/Tribunals have inherent powers to recall orders

independent of any statutory provisions

Mst. Tasneem Kausar v. House Building Finance Corporation

[PLD 1999 Lahore 462]

―Court, Tribunal or Authority has an inherent jurisdiction

to recall orders obtained from it by practising fraud and

misrepresentation. Such power is inherently available to a


Court/Tribunal of special or limited jurisdiction independent of

any statutory provision.‖

32. Doctrine of exhaustion explained

Hazoor Bakhsh v. Senior Superintendent of Police,

Rahimyar Khan and 12 others


―While parting with this order we are inclined to reiterate

that rules enunciated above, flow from doctrine of exhaustion as

embodied in Article 199 of the Constitution. It is hardly necessary

to reiterate that this doctrine does not absolutely bar the

jurisdiction of this Court to adjudicate such petitions if other

remedies are available against the impugned orders/ grievance. If

the Court comes to the conclusion that the orders

/proceedings/actions of functionaries of State under attack are in

excess of authority or totally destitute of authority if had power to

come to the relief of the affected party in exceptional

circumstances. Doctrine of exhaustion is regulatory in nature. In

highly exceptional circumstances this Court definitely will come to

the rescue of the affected party as pointed out by a celebrated

Judge Mr. Justice Aftab Hussain in Haji Muhammad vs. Khizar

Hayat PLD 1977 Lah. 424. See Qamar-uz-Zaman vs. Zila Council

Bahawalpir 1990 MLD 1748.‖

33. Constitutional powers of levying taxes by Federation

and provinces

Syed Bhaies Pvt. Ltd. v. Government of Punjab

[(NLR 1999 Tax 176]

―It is a fundamental principle of interpretation that where

Constitution distributes legislative powers between two different

law-making bodies i.e. Federal and Provincial, an act enacted by

any such body should be examined to ascertain its pith and

substance or its true nature and character for purposes of

determining real field of legislation within which subject-matter

of the Act lies.

Wherever legislative powers are distributed between

legislative bodies through legislative lists, situations may arise

where two legislative fields might apparently overlap. It is duty


of Courts, however difficult it may be, to ascertain to what

degree and what extent, the authority to deal with matters falling

within these classes of subjects exists in each legislature and to

define, in the particular case before them, the limits of the

respective powers. It could not have been intention of

Constitution that a conflict should exist, and, in order to prevent

such result the two provisions must be read together, and

language of one interpreted, and, where necessary modified by that of the other.‖

34. CBR‟s circular holding compensation under Golden

Handshake Scheme as taxable held unlawful

Nasir Mahmood Dar, etc. v. Federation of Pakistan and others

[(1998) 78 Tax 1 (H.C.Lah.) = 1998 PCLR 1382]

―The Central Board of Revenue has no jurisdiction to issue

any circular as to curtail the discretion vesting in the Adjudication

Authorities ... the circular issued holding that the amounts received

under the Golden Handshake Scheme were salaries is ultra vires the

powers of the Central Board of Revenue.

In this view of the matter, all these petitions are allowed

and the circular issued by the Central Board of Revenue on

6.11.1997 is declared to be without any lawful authority and of

no legal effect. The Adjudication Officer shall proceed to decide

independently of the circular as to whether the amounts received

by the petitioners are tantamount to salaries or not and are

taxable. The amounts, if any, withheld by the Banks and the

amounts disbursed to the Department under the impugned Circular, shall be refunded to the petitioners.‖

35. CBR has no authority to place judicial interpretation

on any provision of law

Union Bank Ltd. v. Federation of Pakistan

[(1998) 77 Tax 127 (H.C.Lah.)]

―It is not necessary to state the facts in view of the limited

nature of the controversy before this Court. Suffice it to stay that

according to the petitioner‘s learned counsel u/s 53 of the

Income Tax Ordinance, 1979 the liability of the assessee to pay


advance tax has to be worked out after giving due allowance for

the tax already paid u/s 50 of the Income Tax Ordinance, 1979

as mentioned in clause (b) of sub section 1 of section 53 itself

but the Central Board of Revenue while interpreting the above

section in the impugned circular has opined in para-2 of the

circular that the tax withheld u/s 50 shall neither be included in

the amount of tax assessed nor shall such tax be accounted for

as payment of quarterly advance tax instalments. According to

the learned counsel the direction of Central Board of Revenue

that the tax withheld u/s 50 be not accounted for as payment of

quarterly advance tax instalment is violative of section 53 itself

and cannot be given effect to. Relying upon pronouncement of

the Supreme Court of Pakistan in Messrs Central Insurance Co. vs.

The CBR and others (1993 S.C.M.R. 1232), learned counsel for the

petitioner has contended that authority of the Central Board of

Revenue to issue Circular No. 13 of 1997 is barred u/s 8 of

Income Tax Ordinance, 1979. The jurisdiction of Central Board

of Revenue for issuing instructions is confined only to administrative matters.

..... it may be stated that prima facie this contention appears

to have merit inasmuch as according to the wording of Section

53(1)(b) the liability of the assessee is to pay the advance tax

minus the tax already paid u/s 50. Further discussion in this

behalf is unnecessary as Mr. M. Ilyas Khan, Advocate has

conceded before this court that Circular No. 13 of 1997 dated

29-9-1997 issued by the Central Board of Revenue has no

binding force. He further says that neither any assessing officer

nor any appellate authority under the Income Tax Ordinance

has, therefore, adopted the said circular. Learned counsel has

assured that the authorities concerned shall interpret section 53

of the Income Tax Ordinance, 1979 irrespective of the view taken by the Central Board of Revenue.

It is a matter of some regret that the Central Board of

Revenue while issuing the circulars does not follow the law

declared by the Supreme Court of Pakistan which under Article

189 is binding on all authorities which are required to act in aid


of Supreme Court of Pakistan. The law on the subject was

clearly enunciated in Central Insurance Co.‟s case supra relied upon

by the petitioner‘s learned counsel in which it was held that

Central Board of Revenue is not one of the authorities in the

hierarchy of officers which has jurisdiction to interpret any

provision of the Ordinance. That being so, the Central Board of

Revenue would be well advised to desist from issuing any such

circular which influences the decision of the adjudicating authorities.‖

36. Powers of Appellate Tribunal

Karim Aziz Industries Ltd. v. CIT, Rawalpindi Zone

[(1997) 75 Tax 90 (H.C.Lah.)]

―A careful reading of sub-section (5) of the above

provision, clearly shows that if the Appellate Tribunal is not

satisfied with the orders passed by the forum below, it has the

power to cancel or vary such orders and can pass necessary

consequential directions as the situation may warrant. The

language of this section clearly indicates that the powers of the

Tribunal under this section have very wide amplitude and are almost to the power of Civil Court under Order XLI, rule 33, CPC.

The ratio, deducible from the foregoing discretion is that

the power of Appellate Income Tax Tribunal u/s 135 of the

Ordinance are almost analogous to the powers of Civil Court

under Order XLI, Rule 33, CPC. These powers are of a wide

sweep and arm the appellate court with the power to pass an

order of remand if it comes to a finding that the orders of the

courts below are illegal and there is an occasion for fresh

proceeding before the first authority/court. This power is

expressly embodied in the language of conclusion, we find that

question referred to by the Tribunal is of academic nature and

needs no further examination.‖

37. Interim stay should be given once writ is admitted

Tharparkar Sugar Mills Ltd. v. Federation of Pakistan through Secretary, Revenue Division and Chairman,

CBR, Islamabad and another [1996] 73 TAX 215 (H.C.Kar.)


―.....once a petition in tax matters is admitted that ispo facto

shows that the petitioner has made a prima facie case and

therefore interim stay may be granted.‖

38. CBR instructions are binding on tax authorities

Utman Ghee Industries v. CIT

[2002] 85 TAX 354 (H.C.Pesh.) = 2002 PTD 63

= PTCL 2002 CL. 146

―...the plain reading of the above mentioned section of law

would show that all the Officers and persons who have been

employed in the execution of Income Tax Ordinance are bound to

follow the orders and instructions issued from time to time by the

CBR in the shape of Circulars and Notifications. If any case-law in

support of this contention is required, reliance can be placed on

Messrs Julian Hoshing Dinshaw Trust and others vs. Income Tax Officer,

Circle XVIII South Zone, Karachi and others [1992 SCMR 250],

wherein it was held:-

After hearing the learned counsel for the parties we

are unable to agree with the High Court. It is not

disputed that Circular No. 8 issued by the Central

Board of Revenue was in force at the relevant time.

Under section 5(8) of the Income Tax Act, 1922 and

section 8 of the Income Tax Ordinance, 1979, the

orders, instructions and directions of the Central

Board of Revenue are binding on all the officers

entrusted with the execution of the Statue.

The detailed scrutiny and discussion of the above mentioned

case-law lead us to the irresistible conclusion that Circulars No. 3,

11 and 12 of 1992 and 1 of 1993 issued by the CBR on 27.1.92,

4.5.92, 19.5.92 and 11.1.93 in exercise of powers conferred under

section 165 of the Ordinance and were meant to tone down the

rigours of law and ensure a fair enforcement of its provisions. The

Federal Government after inserting sub-section (18) in section 12

of the Ordinance in the year 1987 realised that certain difficulties

were created for the assessees and that was the reason that the said

provisions of section 12(18) of the Ordinance were held in

abeyance till 30.6.90 through Notification No. SRO 838(I)/87


dated 26.10.87. Then in the year 1992 need was felt to insert sub-

section (18A) in section 12 whereby in private loan or advance

which was found not to have been paid on or before 30th day of

June, 1994 or within five years of the expiration of the Income

year in which the said amount was obtained, whichever was later,

the whole amount of the loan or advance or a portion thereof

remaining un-paid after the expiration of such date or paid, as the

case would be, was deemed to be income of assessee in the

income year immediately next following or any subsequent year in

which such finding was made. On the one hand sub-section (18A)

was made effective from 1.7.92, on the other hand the Circulars No. 3, 11 and 12 of 1992 and 1 of 1993 were issued.‖

Unique Enterprises, Lahore v. ACIT and 2 others [(1995) 71 Tax 139 (H.C.Lah)]

―The circulars issued by CBR are of binding nature on the

functionaries of Income Tax Department; and deviation from

the instructions contained in the circulars is nothing but misconduct.‖

39. CBR‟s beneficial circulars relating to section 12(18) are

held not ultra vires

Utman Ghee Industries v. CIT

[2002] 85 TAX 354 (H.C.Pesh.) = 2002 PTD 63

= PTCL 2002 CL. 146

―The said Circulars could not be declared as ultra vires of

section 12(18) of the Ordinance for the following reasons:

Firstly, through these Circulars, the genuine

transactions of the assessees which were verifiable and

identifiable were given protection.

Secondly, these Circulars were benevolent and

beneficial to the assessee. The basic and first principle

construing a beneficial legislation is to interpret its

provision to advance purpose rather than thwart or subvert it by specious sophistry. (1992 SCMR 2166).

Thirdly, the above mentioned circulars were issued to

tone down the rigours of the law and to ensure a fair


enforcement of the provisions of section 12(18) of the

Ordinance. The said Circulars were issued for purpose

of just, proper and efficient management of the work

of assessment in the public interest and for proper

administration of fiscal law so that no undue hardship

could be cause to the assessee and the fiscal laws be correctly applied. (1999 PTD 3752).

Fourthly, certain relaxations were given to the

assessees in order to promote justice and it is also a

recognised principle of law that a Court has to take

into consideration the object for which a particular

Circular was made and the mischief intended to

suppress and if two possible constructions of a

provision of such an instrument are possible, one

which favours the class of persons for whose benefit

the Circular has been made would be preferred. (1998 SCMR 440).

Fifthly, the legislation itself had felt that insertion of

sub-section (18) in section 12 of the Ordinance had

created headship and difficulties, therefore, the said

provisions were held in abeyance vide Notification

SRO No. 838(I)/87 dated 26.10.87 till 30.6.90.

Moreover, the pith and substance of the four Circulars

was later on incorporated in law in the shape of sub-

section (18A) which remained on statute book till

1996. The loans or advance taken by any means if not

paid within five years were made taxable after the

expiry of five years, which means that the Federal

Government had itself accepted the validity of the four Circulars issued by the CBR.

Sixthly, the said Circulars had been validly issued in

exercise of powers under section 165 of the

Ordinance and were binding on all the Officers and

persons employed in execution of the Ordinance under section 8 ibid. (1992 SCMR 250).


Seventhly, through the above mentioned Circulars,

neither interpretation of any Section of law was made

by CBR nor the same could be made in view of the

judgment of the August Supreme Court of Pakistan in

Messrs Central Insurance Co. and others vs. The Central

Board of Revenue, Islamabad and others (1993 SCMR 1232).

Eighthly, the above quoted four Circulars were neither

against the spirit of section 12(18) of the Ordinance

nor the CBR had deviated from the provisions of the Ordinance by issuing the said Circulars.‖

40. Courts cannot question the wisdom of legislature in

enacting provision of any law

Mian Anwar-ul-Haq Ramay v. Federation of Pakistan [(1993) 67 Tax 195 (H.C.Lah)]

―The law is firmly settled that it is not for the courts to

question the wisdom of legislature in enacting provision of any

law in any manner and their judicial function in this regard

primarily is to confine to the interpretation of the law as it is.

Under Article 199 of the Constitution under which this

petition has been made, this court is vested with the jurisdiction

to declare any law or any custom or usage having the force of

law as void to the extent so far it is inconsistent with the rights

conferred by chapter I of Part II of the Constitution known as

the fundamental rights beyond which the jurisdiction of this

court to examine the vires of law in our view does not extend.

Learned counsel for the petitioner has not been able to point out

any provision of the Constitution by which the legislature is

required to lay down guidelines in the law to regulate the exercise

of power which it confers on the executive. In the absence of

any provision, it is difficult to hold that this court has the

jurisdiction to declare any provision of law as ultra vires of the Constitution on that score.

Before parting with the discussion on this aspect of the

case we may observe that we should not be understood to have

held that the absence of any guide-lines for exercise of


discretionary power conferred under the statute gives to the

authority concerned a free hand to exercise the same arbitrarily

and whimsically. We may state here that in our considered view

to which no exception can be taken the authority is required to

exercise power reasonably, justly and fairly on the basis of

relevant consideration having legal nexus with the object of law,

with wisdom and maturity keeping in view above all the interest

of the state. In our opinion these principles shall be read in the

statute as guiding principles to regulate the exercise of powers

conferred on the functionaries of the state and they are of so

fundamental in character that they need not be expressly provided in the statute itself.‖

41. Presumption of irregularity with regard to official act

cannot be challenge on vague allegation of mala fide

Muhammad Hanif Monnoo v. ITO, Central Circle 1, Lahore

[1984] 50 TAX 37 (H.C.Lah.) = PLJ 1984 Lah. 423

―It is well settled that there is to start with, a presumption

is rebutted, the action cannot be challenged upon mere vague

allegations of mala fide. The petitioner has failed to rebut the

presumption of regularity attached to the impugned proceedings.‖

Abdul Rashid (c/o Union Traders Gole Cloth, Lyallpur) v.

Special Judge (Central), Lahore and another

[1976] 34 TAX 199 (H.C.Lah.)

―The first question is whether there is substance in the

argument that the Central Board of Revenue was required to be

constituted again in Pakistan u/s 9 of the Governor General‘s

Order 20. Before determining this question I may observe that in

my view the argument of Mr. Ilyas Khan that the point about

the necessity of the constitution of the Board of Revenue should

have been taken and urged before the Income Tax Authorities is

not without force. The Central Board of Revenue exercises

functions under various enactments e.g. The Income Tax Act,

the Central Excise & Salt Act, Wealth Tax Act, Gift Tax Act,

Sales Tax Act, Customs Act and Estate Duty Act. It is the first

authority described in section 5 of the Income Tax Act, other


authorities being the CIT, Income Tax Officers etc. Since the

year 1962 and by virtue of the provisions of Ordinance 31 of

1962 which amended the Income Tax, Act, the Central Board of

Revenue is also the appointing authority of other Income Tax

authorities. An attack on the existence of the Board of Revenue

by the petitioner who was assessee after 1962 is an attack on the

vires of the appointment of the other Income Tax authorities

and ultimately on the legality of the assessment. The challenge to

the constitution of Board of Revenue should have been thrown

at the time of assessment, otherwise it would lead to an

anomalous situation in so far as the assessment is treated as legal

while the approval for prosecution on the basis of that

assessment is attacked as a nullity. The dictum in Ghulam Mohy-

ud-Din vs. Chief Settlement Commissioner PLD 1964 S.C. 829 (840) applies to this case and the writ ought to be refused.

The other point that no member of the Central Board of

Revenue in Pakistan has been or can be treated to have been

appointed by the competent authority i.e. the Central

Government, cannot be allowed to be taken since this point was

neither raised before the Income Tax authorities nor before the

Special Judge nor in the writ petition. This objection is also

belated. I agree with the argument of Mr. Ilyas Khan that his

point raises a question in the nature of quo warranto even in

regard to existing members who would be necessary parties to

this petition. It falls within sub-clause (ii) of clause (b) of sub-

Article 1 of Article 199 which authorises the High Court to

require a person within its territorial jurisdiction holding or

purporting to hold a public office to show under what authority

of law he claims to hold that office. These words clearly make

the person holding office a necessary party to the writ petition

and in the absence of such party the petition cannot be treated

to be properly constituted. The impleading of Central Board of Revenue through its Chairman cannot cure this defect.‖

42. A question not raised before the Appellate Tribunal

cannot be raised before the High Court

Modern Silk Mills Ltd. Lahore v. CIT, Lahore


[(1979) 39 Tax 14 (H.C.Lah.)]

―Now it is well settled principle of law that unless a

question has been raised before the Appellate Tribunal or arises

out of its order the same cannot be raised for the first time before the High Court.‖

43. Provisions of the Income Tax Act can be challenged on

Constitutional grounds



[(1977) 36 Tax 8 (H.C.Lah.) = 1977 PTD 183 =

PLD 1977 Lah. 797]

―The learned counsel for the petitioners have submitted

that there is no right of appeal against the impugned orders and

that a revision or reference is no right of a litigant. Further, that

as the impugned provisions are being challenged on

constitutional grounds, inspite of alternate remedies, the

petitioners have a right to challenge the same by means of a

petition under the constitution and that, lastly, since the

questions raised in these petitions relate to the challenge of the

provisions in the Income Tax Act itself, to declare the same to

be invalid. It is submitted that a court interpreting the

constitution finally is an appropriate forum to raise the

questions. The submission is obviously sound and is sustained.‖

44. A legal plea going to the roots of the case was allowed

to be raised at belated stage

Chief Secretary, Govt. of Punjab, Lahore v. CIT, Lahore

[(1976) 33 Tax 176 (H.C.Lah.) = PLD 1976 Lah. 258]

―It was, therefore, alleged in this application that under

Article 184(1) of the Constitution of Islamic Republic of

Pakistan, 1973 only the Supreme Court has the exclusive

jurisdiction to entertain this dispute between the Central

Government and the Provincial Government .... This was an

altogether new plea which was for the first time raised in this

court belatedly after the conclusion of the arguments. But as it

was a purely legal plea gong to the root of the case we allowed


the permission to the respondent to raise the objection for

whatever its worth, even at this late stage.‖

[2003] 87 TAX 165 (Trib.)

―The additional grounds through which the issue relating to

the jurisdiction of the assessing officer regarding framing of

assessment is raised being purely of legal nature are admitted for

adjudication. It is a settled principle of law that an issue purely of

legal nature where no further enquiry or investigation of facts is

required can be raised at the appellate stage even though not

agitated before the lower forums.‖

45. Courts have inherent jurisdiction in the interest of

orderly dispensation of justice

CIT, Rawalpindi v. Wolf Gang Matzke

[(1975) 32 Tax 176 (H.C.Pesh.)]

―It is common knowledge, that a statute normally does not

provide for each and every conceivable eventuality and in

respect of some unforeseen events arising in a case for which it

has made no provision, the courts would be deemed to have

inherent jurisdiction in the interest of orderly dispensation of justice.‖

46. Courts have no concern with disputable questions of

distributive justice



―In construing a fiscal statute the Court has no concern with

disputable question of distributive justice - this upon the plainest

ground, that by very strong presumption the legislature has not

intended that questions of equality or fairness in taxation should be left to any decision save its own‖.

General rules in respect of writ petition

47. Petition challenging order u/s 53 held to be

maintainable

Chairman, Central Board of Revenue v.

Pak-Saudi Fertilizer Ltd.

[2001] 83 TAX 119 (S.C.Pak.)


―The petition under Article 199 of the Constitution was

maintainable and the learned members of Division Bench of Sindh High Court rightly held so.‖

48. Conditions for maintainability of writ petitions

explained

CIT, Karachi & other v.

N.V. Philip‟s Gloelampenfabriaken, Karachi

[1993] 68 TAX 35 (S.C.Pak.)

―Assessee filed return for assessment year 1980-81 and

claimed bad debt which was written off as a whole. Income Tax

Officer as well as CIT,(A) disallowed the same. Tribunal allowed

the bad debt. Four years after Income Tax Officer issued notice

for re-opening the case. Assessee challenged the validity of the

notice through Constitutional Petition before the High Court and

also filed a fresh return before the Income Tax Officer. High

Court permitted the Income Tax Officer to finalise the assessment

and Income Tax Officer passed a fresh assessment order which

was challenged before CIT(A) but without success. Appeal filed by

the assessee before Income Tax Appellate Tribunal was pending

Constitutional petition came up for hearing and High Court

declared the notice without lawful authority and of no legal effect.

Whether petition liable to be dismissed as notice served on the

assessee and the consequential order of assessment passed by the

Income Tax Officer having been merged in the appellate order

passed by the CIT,(A) which was not challenged by the assessee

before the High Court. Assessee opted the remedies provided

under the statute which was pending till the hearing of

Constitutional petition before High Court. Whether High Court

can not exercise its constitutional jurisdiction in the mid of the

proceedings in the absence of any compelling and justifiable reason.‖

49. The assessee has other options like filing a complaint

with Ombudsman

Hafiz Mohammad Arif Dar v. ITO [(1989) 60 Tax 52 (S.C.Pak) = PLD 1989 SC 109]


―In case the petitioner has not allowed any relief by the

departmental authorities (despite the observations by the

Supreme Court) the petitioner would have no immediate remedy

at all against the highhandedness of the department. In such

circumstances amongst other remedies, he can file a

complaint/grievance application before the Federal Ombudsman, who can provide effective redress.‖

50. Order passed without giving opportunity of being

heard is not sustainable

Muhammad Khan v. Shamsuddin and others

[1975] 31 TAX 94 (S.C.Pak.)

―On merit the point raised in the writ petition falls within

the principle laid down by this Court, in the case of Dina Sohrab

Katrak [PTD (1959) S.C. 45]. The order of the Provincial

Government setting aside the sale without hearing the appellant cannot be upheld.

As a result the appeal is allowed. The judgment of the High

Court is set aside and it is declared that the order dated the 5th

July 1955, passed by the Government of Sindh, was passed

without lawful authority. Respondent No. 4, the Province of

West Pakistan, is directed to dispose of the applications for

setting aside the sale filed by respondent Nos. 1 to 3 after notice to the appellant. Parties are directed to bear their own costs.‖

51. No time limitation for illegal orders

Pakistan Electric Fittings Manufacturing Co. Ltd. through Directors v.

CIT, and 2 others

[2000] 82 TAX 135 (H.C.Lah.)

―The principle of law that orders in contravention of

mandatory provisions of law are a nullity and no limitation runs

against such orders seems well settled; in this respect reference is

invited to Khawaja Muhammad vs. Marduman Babar Kahol 1987

SCMR 1543; also see Ali Muhammad vs. Hussain Bakhsh PLD 1976 SC 37.‖

52. Remedies not availed disentitles the party from relief

if constitutional petition also fails


Islamuddin and 3 others v. The Income Tax Officer and 4 others

[2000 PTD 306]

―It is also an established principle of law that when the

petitioner failed to avail himself of the remedies available to him

under any statute he would have no locus standi to file a

Constitutional petition in the High Court to challenge the legality and validity of the orders.‖

53. Writ cannot be converted into appeal u/s 136

Abdul Hameed Awan v. Tax Recovery Officer-04

Coys Zone, Income Tax Building at Rawalpindi and 3 others

[1997] 76 TAX 238 (H.C.Lah.) =

1998 PCTLR 440 = 1998 PTD 874

―The learned counsel for the petitioner in reply has

submitted that this writ petition be converted into a reference

u/s 136 of the Income Tax Ordinance, 1979. I am afraid this

cannot be done firstly because the last order passed by the

Income Tax Appellate Tribunal on review petition was made on

14.11.1993 and the reference was required to be filed within 90

days of the date of original decision of the Tribunal which was

rendered on 3.4.1991. However, instead of availing a proper

remedy u/s 136 of the Income Tax Ordinance, the petitioner

opted to move a miscellaneous application against the decision

of the Appellate Tribunal. This would hardly justify the

conversion of this writ petition to a reference which has now

been patently and hopelessly time-barred. Even otherwise all the

factual and legal issues have been thoroughly thrashed at the

level of Income Tax Appellate Tribunal and the learned counsel

for the petitioner has not been able to show me any material

from which a question of law may be framed u/s 136 of the

Income Tax Ordinance. Needless to say that the reference in the

High Court is to be dealt with by a Division Bench if at all it is to be preferred.‖

54. Where a finding of fact not based on evidence or where

a material evidence ignored, reference u/s 136 of

repealed Ordinance, 1979 is maintainable

Mst. Fazal Be and 6 others v. CIT,


[1996] 74 TAX 141 (H.C.AJ&K)

―From the perusal of the authority quoted herein before it

follows that a finding of fact not based on evidence or where a

material evidence is ignored a reference to the High Court will be maintainable.‖

55. Interim relief in the form of release of goods on

furnishing of indemnity bond held reasonable

Tharparkar Sugar Mills Ltd. v. Federation of Pakistan through Secretary, Revenue Division and Chairman,

CBR, Islamabad and another [1996] 73 TAX 215 (H.C.Kar.)

“Per Amanullah Abbasi, J. - The arguments and

contentions of the petitioner and respondents have been

examined. According to respondents SRO 484(I)/92 allows

exemption from Customs duty and Sales Tax to machinery

imported during the period commencing from 1st December

1990 and ending on 30.6.95. The value and rate is determined as

on the date the manifest is delivered and bill of entry is filed.

This SRO cannot be made applicable to the goods which arrived

after 30.6.1995. The goods of petitioner arrived on 30.6.1995

and manifest was filed after 30.6.1995 after the expiry of SRO

484(1)192. Accordingly it can be said that benefits of SRO

484(I)/92 were available in all cases where import General

Manifest was filed prior to 30.6.1995 and bill of entry was also

submitted before this date. There is_ a dispute of few days only

and according to petitioner delay was caused because of political

victimization otherwise he was entitled to benefits of SRO

484(I)/92. The counter affidavit filed by Mr. Ahmed Mujtaba

Memon Asstt Collector Customs mentions that duty is

chargeable on standard rate of duty/taxes. It is stated that vessel

arrived on 30.6.1995 but it has not been clarified in the affidavit

as to how much amount is payable by petitioner. The petitioner

wants the machinery for installation as allowed and the

respondents want duty/taxes. The amount is not mentioned.

The learned advocate for the petitioner has submitted that

vested rights were created because all contracts were prior to


30.6.1995. In similar cases to Hon‘ble Supreme Court and

Lahore High Court following the order of Supreme Court in

Petition No. 695-L/1995 dated 11.2.1996 we order that the

machinery in question be released to the petitioner on furnishing

of indemnity bond to the satisfaction of Collector of Customs,

Karachi. The petition may be fixed for regular hearing within three months.

Per Dr. Ghous Muhammad, J. - In view of these facts as

also because of the reason that the Government of Pakistan,

Finance Division, (Investment Wing) in 2 letters attached as

Annexures C-1 and E-3 has confirmed that any delay is not

attributable to the sponsors/petitioners and that the petitioner‘s

project has been politically victimized, I have come to the

conclusion that the petitioner has a prima facie case which

warrants further probe and analysis and it would be very

unreasonable to deny interim relief in the form of release of

goods till disposal of the petition, especially because the petition

already stands admitted on this score vide admission orders of

any other bench dated 17.12.1995.‖

56. Constitutional jurisdiction cannot be invoked to

enforce the rights which were not in existence at the

time when the offending enactments were passed

Metro Shipbreakers and another v. Pakistan through the Secretary,

Ministry of Finance, Islamabad, etc.

[1996] 73 TAX 85 (H.C.Queeta)

―In the light of what has been discussed above, It can be

safely inferred that the import fee was legally charged from the

petitioner at the relevant time when Letter of Credit was opened

in view of the provisions as contained in Import Fee Order,

1993, which have not been challenged. Since the facts of C.P.

No. 261 of 1994 C.P. No. 262 of 1994, and C.P. No. 193 of

1994 are common and law points involved are also similar and

indentical. therefore, all the petitions are disposed of by this

common judgment and keeping in view the above discussion being devoid of force merit dismissal.‖


57. Writs disposed of by consent of parties to avoid delay

in finalisation of cases as per law

Saleem and Co. v. Income Tax Authorities

[1993] 68 TAX 173 (H.C.Lah.)

―As against the arguments addressed by the learned

counsel for the petitioners, Mr. Muhammad Ilyas Khan,

Advocate learned counsel for the respondents has contended

that in Writ No. 404 of 1990 case of the petitioner Nos.1 and 2

has been decided so far whereas the case of other petitioners is

still pending adjudication with respondent No. 1 and, therefore,

in order to avoid the piecemeal decision of the matter in issue,

the respondents have no objection to the acceptance of both the

writ petitions and setting aside of the impugned order and

remission of the cases of the petitioners to respondent No.1 for

decision thereof in accordance with law. Learned counsel for the

petitioners has accepted the offer made by the learned counsel

for the respondents and has stated that in view of the

apprehension of the petitioners that decision of the cases shall

be delayed, the period of one month may be fixed for decision

of the cases of all the petitioners. Learned counsel for the

respondents has no objection to the fixation of the period of

one month for decision of the cases.

Resultantly, we accept both the writ petitions, set aside the

impugned orders and remit the cases of the petitioners which

have been decided and direct that their cases as well as the cases

of other petitioners which have not been decided as yet and

which are pending adjudication shall be decided within a period

of one month w.e.f. today. The assessment of income tax as

against the petitioners shall not be finalised till disposal of the

cases by respondent No. 1. It is observed, however that in case

the petitioners are not satisfied after the matter is finally decided

by the respondents, they shall be at liberty to move this Court again.‖

58. Respondent‟s contention that stay shall not be granted

unless the prescribed Law Officer has been given

notice of the application and an opportunity of being

heard. Whether argument was without merit - Held yes


Eastern Poutry Services v. Govt. of Pakistan and others

[1993] 68 TAX 171 (H.C.Kar.)

―He submits that stay cannot be granted in view of the

provisions of Article 199(4) of the Constitution. The argument is

without merit. Article 199(4) provides that stay shall not be

granted unless the prescribed Law Officer has been given notice

of the application and an opportunity of being heard. Such notice and opportunity have been given in this ease.‖

59. Extra-ordinary jurisdiction of the High Court could

not be invoked without first availing the remedies

available under the relevant law

Muhammad Ismail v. Income Tax Officer, Mirpur and 2 others

[1992] 66 TAX 226 (H.C.AJ&K)

―Even a right of appeal has been given before the Supreme Court. Any person who is affected by the order of any authority,

first of all, has to seek remedy under the relevant law on the

subject. The extraordinary jurisdiction of this Court could be

invoked only in cases where efficacious and alternate remedy is not available. No party can be allowed to avail writ jurisdiction

without first availing the remedies available to it under the

relevant law.

As said in the early part of the order, the right of appeal u/s

129 was available against the order of Income Tax Officer dated 20.9.1989. The petitioner had not availed this remedy. Therefore,

under these circumstances, the order of assessment passed by the

Income Tax Officer had attained finality.‖

60. Stay granted could not be given beyond six months

Siddique Trust v. Income Tax Officer and another

[(1987) 56 Tax 120 (H.C.Kar.)]

―Operation of notices u/ss 56 & 61. Stay granted for

extension of short period could be given beyond six months cannot be held.‖

61. Exercise of jurisdiction of high Court is confined only

to consideration whether authority had acted with or

without jurisdiction


Muhammad Hanif Monnoo v. ITO, Central Circle 1, Lahore

[1984] 50 TAX 37 (H.C.Lah.) = PLJ 1984 Lah. 423

―There is no cavil with the proposition that where the

question of jurisdiction of the authority passing the impugned

order is raised, the remedy of appeal is not an adequate remedy

and in such cases the constitutional jurisdiction can be invoked.

The exercise of jurisdiction is, however, confined only to

consideration whether the authority had acted with or without

jurisdiction. The precedents cited at the Bar by the learned

counsel for the petitioner, on closer examination, have been

found to be not applicable to the facts of the present case. The

scope of interference in this case, under Articles 9 of the

Provisional Constitution order is, therefore, limited to the

inquiry, whether the Income Tax Officer had definite

information on the basis of material on record or he had already

obtained previous approval of the Inspecting Assistant

Commissioner, If the answer in the affirmative, this Court will

stay its hand and will not substitute its belief for that of the

Income Tax Officer. If the answer is in the negative, an appropriate writ may be granted.‖

62. Where alternate and equally efficacious remedy is

available, the petitioner is not entitled to invoke

extraordinary jurisdiction of the High Court by way of

writ petition

Julian Hoshang Dinshaw Trust v. Income Tax Officer,

Circle XVIII, South Zone, Karachi and two others

[1981] 43 TAX 92 (H.C.Kar.) = 1981 PTD 53

―The petitions are not competent under Article 199 of the

Constitution as the petitioners have other alternate and equally

efficacious remedy, the learned counsel for the respondents is on

much firmer ground. In the first two petitions the petitioners

have still an opportunity to raise their plea before the Income

Tax Officer and in case of an adverse decision file an appeal

before the Appellate Tribunal and eventually the matter can

come up before the High Court in a reference u/s 136 of the Income Tax Ordinance.‖


Judicial Review : OVERRULED by the Supreme Court of Pakistan in

(1992) 65 Tax 102 = 1992 SCMR 250 = PTCL 1992 CL 181.

63. In writ court cannot assume jurisdiction of income tax

department

Singer Sewing Machine Co. v. CIT, and others

[1964] 9 TAX 273 (H.C.Kar.) = 1964 PTD 554

―Exercise of extraordinary jurisdiction is not called for

even where relief ought to be granted on ascertainment of facts

as High Court cannot assume functions of Income Tax Authorities.‖

Judicial Review : OVERRULED BY - The Supreme Court of Pakistan

in [1965] 11 TAX 364 (S.C.Pak). Their Lordships observed:

“. . . That such a proceeding in revision would be a judicial

proceeding and not merely departmental affair. The powers

of revision has to be exercised, according to judicial

principles. The provision of section 33A(2) apparently

envisages a remedy alternative to a regular appeal from

assessment. In the circumstances, it became the duty of

the Commissioner to grant relief if the entitlement was

clear. The learned Commissioner apparently misdirected

himself in holding that he had no power to interfere in the

matter.”

“. . . All these factors go to establish the bona fides of the

assessee-company in claiming that the assessment in

question were not appealed against, owing to

misapprehension of the correct position. The High Court

has observed, in this connection, that ignorance of law was

no excuse. That may be conceded, but section 33, sub-

section (20) provided on alternative judicial remedy to the

assessee, of which it availed itself and the relief was denied

to it, on an erroneous view of law by the Commissioner.

It must be found as a result of the above

discussion, that the Commissioner declined to exercise his

undoubled jurisdiction in the case, on a ground which was

legally not supportable. This fact calls for correction of his

order. We allow the appeal and quash the order passed by

the CIT, in this case.”

64. Where there has been suppression of material/acts,

writ of prohibition cannot be issued

U.C. Rekhi v. First Income Tax Officer


[1950] 18 ITR 618 (Punj.)

―A writ of prohibition is issued only where there is

something done in the absence of jurisdiction or in excess of

jurisdiction. Thus, where there had been suppression of material

facts in the affidavit which was filed by the petitioner, the court

would refuse a writ of prohibition without going into the merits of the case.‖

Writs when held to be maintainable 65. Writs held maintainable and exhaustion being no bar

Pakistan Oxygen Ltd, Karachi v. CBR, Islamabad and 2 others

[2003 88 TAX 108 (H.C.Kar.) = 2003 PTD 1301

―A perusal of Article 199 of the Constitution of Islamic

Republic of Pakistan shows that an appropriate writ can be

issued if the High Court is satisfied that no other adequate remedy is provided by law.‖

Attock Cement Pakistan Ltd. v. Collector of Customs, Collectorate of

Customs and Central Excise,

Quetta and 4 others

[(1999) 80 Tax 30 (S.C.Pak.) = 1999 PTD 1892]

―We have noticed that when this controversy was being

agitated in the Balochistan High Court and at the leave granting

stage, no such Tribunal had been constituted as envisaged by section

46 of the Act. On the other hand, instead of a Tribunal, a Member

of the Central Board of Revenue was performing these functions. In

the background of these circumstances, it cannot be said that the

appellant had the other adequate remedy. The view point of the

Central Board of Revenue had become crystal clear when having

opined that the accessories and spare parts were not the goods and

the deduction of input tax could be made, yet the Central Board of

Revenue in the same breath observed that in the past, such

deduction had been made, but that was illegal. In these

circumstances, how could a member in the Central Board of

Revenue adjudicate upon the controversy. Thus, we are of the view

that remedy by way of an appeal before the Member, Central Board

of Revenue was not an adequate remedy as envisaged under Article


199 of the Constitution and, therefore, in our view the writ petition was maintainable.‖

Gatron (Industries) Ltd. v. Government of Pakistan and others

[PTCL 1999 CL. 359 = 1999 SCMR 1072 (S.C.Pak.)]

―The rule about invoking the constitution jurisdiction only

after exhausting all other remedies, is a rule of convenience and

discretion by which the Court regulates its proceedings and it is not a rule of law affecting the jurisdiction.

A constitution petition is competent if an order is passed

by a Court or Authority by exceeding its jurisdiction even if the

remedy of appeal/revision against such order is available, depending upon the facts and circumstances of each case.‖

S.N.H. Industries (Pvt.) Ltd. v. Income Tax Department and another


―In view of the pronouncements made by the Supreme

court in a large number of cases to the effect that if the order or

action complained of was so patently illegal, void or wanting in

jurisdiction, that any further recourse to alternative remedy may

only be counter productive and by invoking of Article 199 the

mischief could forthwith be nipped in the bud then in such

matters existence of alternative remedy would not bar the exercise of constitutional jurisdiction by this Court.

Relief in writ/Constitutional jurisdiction would be available to a

party where impugned order was without lawful authority,

prejudicial, unjust and mala fide. In view of the discussions, the

objection raised by Mr. Aqeel Ahmed Abbasi relative to

Constitutional petition without recourse having been made by the

petitioner to the remedies available under the repealed Ordinance is without any substance and is overruled.‖

Gulistan Khan Bhittani v. Government of Pakistan and Others [(2004) 89 TAX 70 (H.C. Pesh.)]

―Before going into the merits of the objections of the

petitioner, it would be appropriate here to dispose of a


preliminary objection raised by respondents Nos. 3 and 4. This

objection is that as adequate remedies under the Ordinance and

the Act are available to the petitioner and before exhausting the

same, the present writ petition is not maintainable. In support of

this objection, the learned counsel for the respondents placed

reliance on 1993 SCMR 1108. However, this argument is

without force. It is correct that if adequate remedies would be

available to the petitioner either under the Ordinance or under

the Act, the High Court, in its discretionary powers, under

Article 199 of the Constitution would not interfere but if it is

proved that consciously, taking into account all materials

available on the record, then the issuance of the impugned

notices would amount to illegality and without waiting for the

finalization of the assessment, there would be no bar to the filing

of writ petition, availing the discretionary, equitable and

efficacious powers of the High Court under Article 199 of the

Constitution. In this connection, reference could be made to (i) 2001 SCMR 777 and (ii) 2002 PTD 679.‖

Pak-Saudi Fertilizer Ltd. through Managing Director v. Federation of Pakistan through Secretary Finance,

Islamabad and 4 others [(2000) 81 TAX 119 (H.C.Kar.) = 1999 PTD 4061]

―It is settled law that the availability of alternate remedy

would be no bar to the maintainability of constitutional petitions

where impugned orders are completely without jurisdiction, mala

fide, unlawful and of no legal effect. The latest pronouncement

of the Honourable Supreme Court in this regard in Gatron

Industries Ltd. vs. Government of Pakistan, 1999 SCMR 1072, which

reiterates this principle yet again, and which was earlier echoed

by this Court in Kamran Industries vs. Collectors of Customs PLD

1996 Kar. 68. When it is amply demonstrated that the impugned

order is completely without jurisdiction, it would be a travesty of

justice, as in the present circumstances, to decline relief as the

impugned exercise of power goes to the very root of the jurisdiction.‖

Tapal Energy Ltd. v. Federation of Pakistan [1999 PTD 4041 (H.C.Kar.)]


―We are of the view that the aforesaid Constitutional

petitions are maintainable notwithstanding the fact that the

adequate and alternate remedy by way of first and second

appeal......the pronouncement made in the case of M/s Ahram

Builders Ltd. vs. Income Tax Appellate Tribunal (1993 SCMR 29) to

the following effect would be attracted:

The tendency to bypass the remedy provided under the

relevant statute and to press into service the

constitutional jurisdiction of the High Court has

developed. However, in certain cases invoking

constitutional jurisdiction of the High Court instead of

availing remedy provided for under the statute may be

justified, for example when the impugned order/action is

palpably without jurisdiction and/a mala fide. To force

an aggrieved person in such a case to approach the

forum provided under the relevant statute may not be

just and proper.‖

Kawther Grain (Pvt.) Ltd. v. DCIT, Gujranwala

[(1999) 80 Tax 262 (H.C.Lah.)]

―As far as the maintainability is concerned, I will agree that

the assessment order in question on the face of it is a clear case

of misapplication of law. Reliance of the learned counsel in this

regard re: M/s. Jullien Hoshanj Dinshaw Trust (supra) is relevant

and pertinent. I will also agree that the alternate remedy in the

facts and circumstances of the case is only illusory in nature. In

such situation the apex Court in re: Collector of Customs vs. S.M.

Ahmed & Company (supra) approved the exercise of

constitutional jurisdiction by this Court. Learned counsel is

correct in pointing out that the Central Board of Revenue having

adopted the stated interpretation of the provisions in question

no officer in the hierarchy in all probability would show

indulgence for the petitioner.‖

Tri Star Industries (Pvt.) Ltd. & 8 others v.

CIT, Companies-I, Karachi & 5 others

[(1999) 79 Tax 255 (H.C.Kar.) = 1998 PTD 3923]


―Keeping in view the allegations of the plaintiffs as levelled

in the plaint and for the facts and law stated hereinabove, I am

of the considered view that in the peculiar circumstances of this

suit, the jurisdiction of this Court is not barred. For this view, I

am fortified by the observations made in the case of Al-Ahram

Builders (supra), also reported in (1993 SCMR 29) where at page

38/39 it was held that in certain cases invoking of Constitutional

jurisdiction of the High Court instead of availing of remedy

provided for under the relevant statute may be justified, for

example when the impugned order/action is palpably without

jurisdiction and/or mala fide. To force an aggrieved person in

such a case to approach the forum provided under the relevant statute may not be just and proper.‖

Mrs. Tahmina Daultana v. Hafiz Naeem-ud-Din

[(1997) 75 Tax 261 (H.C.Lah.) = 1997 PTD 821]

―I have given my anxious consideration to the arguments

addressed at the Bar. No doubt the petitioner directly

approached this Court without availing the rights of appeal,

revision and reference etc. as provided under Chapter VI of the

Act, the present writ petition was still maintainable as in such

circumstances where the efficacious and speedy remedy was not

available the writ petitions are maintainable. Reliance is placed

on Premier Cloth Mills vs. Sales Tax Officer (1974) 29 Tax 199

(S.C.Pak) = PLD 1972 SC 257 and Nagina Silk Mills Ltd. vs. ITO and another (1963) 7 Tax 442 (S.C.Pak) = PLD 1963 SC 322.

It is very clear from the impugned notice that the

respondent had under Tax Recovery Rules framed under

subsection (5) of section 93 of Income Tax Ordinance, 1979,

further proceeded to direct that the petitioner shall not sell or

deal with any property belonging to her except with the

permission in writing to that effect granted by the Tax Recovery

Officer. It is clear from the contents of the notice impugned that

prejudice in fact was caused to the petitioner and a legal right to

appeal which was available to her and which was to be notified

to her in Form-C, format of notice u/s 30 of the Wealth Tax

Act, was infringed. The provisions of section 45A of Wealth Tax


Act, 1963 do not cure the irregularity or omission on the part of

the respondent in not issuing the notice in the format prescribed

under Wealth Tax Act, 1963, resulting in substantial prejudice to

the petitioner.

In view of the above the notices issued to the petitioner

u/s 85 of Income Tax Ordinance, 1979 on 29-4-1995 for

payment of tax assessment at Rs. 1,10,301 for the year 1993-94

and 1,02,138 for the year 1994-95 and notice u/s 93(2) of the

said Ordinance for payment of assessed amount u/s 93(2)

thereof are declared to be without lawful authority and without any effect against the petitioner.‖

Dawood Hercules Chemical Ltd. v. Collector of Sales Tax Lahore

[(1997) 76 Tax 242 (H.C.Lah)]

―The ratio, deduced from the aforesaid discussion, is that

doctrine of exhaustion embodied in Article 199 of the

Constitution (1973) is not an absolute bar to exercise of

jurisdiction under Article 199 of Constitution. This rule is

regulatory in nature and ordinarily this court insists that

aggrieved person must in the first instance, avail of the statutory

remedies available to him and invoke the constitutional

jurisdiction of this court after undertaking that exercise.

However, this rule is not absolute and if this court comes to

conclusion that assailed order/action/ proceedings is/are wholly

without jurisdiction or in excess of jurisdiction or is/are

manifestly unjust and oppressive, then this court has power to

come to rescue of aggrieved party and keep functionaries of the

state within defined sphere of their powers.‖

Basharat Ali & Other v.

Deputy Superintendent C&E and Sales Tax

[(1995) 72 Tax 218 (H.C.Lah.)]

―No doubt the remedy of appeal and revision was

provided under Sales Tax Act, 1990 but whether the same was

efficacious also is to be seen in the circumstances of the writ

petitions. I am of the view that the remedy provided under the

law was not efficacious and speedy so far as the carriers were


concerned. The efficacy would be lost in the corridors of

departmental authority and placing reliance on Premier Cloth Mills

vs. Sales Tax Officer (1974) 29 Tax 199 (S.C.Pak) = (1972 SCMR

257), Salahuddin vs. Friend Sugar Mills (PLD 1975 SC 244) and

Nagina Silk Mills vs. ITO etc. (1963) 7 Tax 442 (S.C.Pak) = (PLD

1963 SC 322), it is, therefore, held that the writ petitions are maintainable.‖

Gulistan Textile Ltd. v. CBR etc.

[(1994) 70 Tax 272 (H.C.Kar)]

―While it is true that where alternative remedy is provided

by a statute those remedies should first be resorted to before

seeking relief under Article 199 of the Constitution, in cases

where an action is alleged to be mala fide or is obviously without

jurisdiction or where vires of legislation is in question, the petition under Article 199 would be maintainable.‖

Gulistan Textile Mills Ltd. v. CBR etc.

[(1994) 70 Tax 272 (H.C.Kar.)]

―Writ challenging action alleged to be mala fide or without

jurisdiction or vires of legislation called into question is

maintainable though appeal is pending before the Income Tax Appellate Tribunal.‖

Republic Motors Ltd. v. ITO & others

[(1990) 62 Tax 8 (H.C.Kar.) = 1990 PTD 889]

―....where the action of any authority is challenged on the

ground of lack of jurisdiction, the aggrieved party is entitled to

invoke constitutional jurisdiction without availing or exhausting

the alternate remedy.....As notice u/s 65 was without jurisdiction

all subsequent orders passed by the same authorities or other

authorities the whole series of such orders will be void. How an

appellate order which confirms such an order can become valid.‖


Car Tunes v. ITO etc.

[(1989) 59 Tax 115 (H.C.Kar)]

―.... it is quite clear that existence of another remedy under

the relevant law was not considered as a bar for issuance of

direction under Article 199 of the Constitution. It cannot be

denied that interference of notice can be made by this court in

exercise of its constitutional jurisdiction where the proposed

action lacks jurisdiction on the part of authority initiating the

action or on the basis of admitted facts the action proposed by the authority is shown to be unsustainable in law.‖

Abdul Hamid & Others v. Deputy Collector Excise & Taxation

[(1988) 57 Tax 14 (H.C.A.J&K)]

―Ordinarily a person aggrieved of an order of a statutory

authority under the Income Tax Ordinance, must avail of

himself the remedies provided in the Ordinance and he is not

entitled to by pass those remedies and seek civil judicial review

of the said, right away when the order was passed by the

authority, in exercise of the powers vested in him but if the

order sought to be reviewed or quashed, was passed by the said

authority without jurisdiction or in exercise of a colourful

jurisdiction or the spirit of natural justice was violated or the

order was passed without providing an opportunity of being

heard to the aggrieved person and it was patently illegal and no

adequate remedy was available against it, the relief sought for by way of writ petition, cannot be refused.‖

Hussain Sugar Mills v. Islamic Republic of Pakistan and others

[(1981) 44 Tax 59 (H.C.Kar.)]

―It is now a settled law that the jurisdiction of this Court

under Article 199 is always available to the party in cases where

the impugned orders are without lawful authority, partial, unjust

and mala fide even in cases where alternate remedy by way of appeal etc., is available.‖


Begum Nusrat Bhutto v. ITO Circle V, Rawalpindi

[(1980) 42 Tax 59 (H.C.Lah.)]

―The writ is not competent where an appeal is pending or

where a reference under the provisions of the Income Tax Act can be made to the High Court. Where there is another adequate and efficacious remedy open to the petitioner, a petition under

Article 199 of the Constitution of 1973 would be incompetent unless the legal remedies including remedies as provided in the Income Tax Act are exhausted. But one essential condition for

applicability of this rule is that alternative remedy should be adequate and efficacious. Where the question of jurisdiction of the authority passing the impugned order is raised, the remedy of

appeal is not as adequate or efficacious as the writ jurisdiction of the High Court and consequently in such cases a petition under Article 199 would be competent.‖

Eruch Maneckji & others v. ITO Central Circle III, Karachi

[(1980) 41 Tax 25 (H.C.Kar.) = 1979 PTD 461]

―It is, however, well settled that where a statutory

functionary and more so, a fiscal authority, acts in a partial, unjust or oppressive manner the High Court in exercise of writ jurisdiction has the power to grant the relief to the aggrieved

party.‖

International Body Builders v. Sales Tax Officer, Lahore

[(1980) 41 Tax 60 (H.C.Kar.)]

―It is also now well established that it is a rule of practice and not of law for this court to entertain a petition despite the fact that another remedy was available. The question to be considered in all

such cases is whether the remedy available under the law is adequate, efficacious, speedier and shall provide a petitioner with the relief claimed?‖

Kundan Bibi & others v. Walayat Hussain,

Controller Estate Duty, Karachi & another

[(1971) 23 Tax 295 (H.C.Lah.)]

―It is now well established that if an order is without

jurisdiction it can be challenged by means of a writ petition even

without exhausting the remedies provided by the statute itself. It


is now well established that no order imposing a liability can be

passed unless the person to be affected is afforded a reasonable opportunity to show cause against the same.‖

66. Writ is the appropriate remedy where order is void

and without lawful authority

Pakistan Oxygen Ltd, Karachi v. CBR, Islamabad and 2 others

[2003 88 TAX 108 (H.C.Kar.) = 2003 PTD 1301

―.....a full Bench of Hon‘ble Supreme Court in the case of

Al-Ahram Builders vs. Income Tax Appellate Tribunal [1992] 66 Tax

147 (S.C.Pak.) = 1992 PTD 1671. Mr. Justice Saleem Akhtar speaking for the Bench held as follows:

We may now revert to the question, whether the

appellant was justified to file above Constitution

Petition against the order of the Tribunal instead of

invoking section 136 of the Ordinance for making a

reference to the High Court. According to Mr.

Rehman Hassan Naqvi a reference under the above

Provision would not have been adequate and

efficacious remedy as it would have taken years before

it could have been heard. The same could be true for a

Constitution petition. The tendency to by-pass the

remedy provided for under the relevant statute and to

press into service constitutional jurisdiction of the

High Court has developed lately, which is to be

discouraged. However, in certain cases invoking of

constitutional jurisdiction of the High Court instead

of available of remedy provided for under the relevant

statute may be justified, for example when the

impugned order/action is palpably without

jurisdiction and/or mala fide. To force an aggrieved

person in such a case to approach the forum provided under the relevant statute may not be just and proper.

A perusal of the above dicta laid down by the Hon‘ble

Supreme Court clearly shows that, the tendency to bypass the

remedy provided under the relevant statute has been deprecated.

The learned counsel for the petitioner is not able to show that,


the impugned order is palpably without jurisdiction or mala fide.‖

Board of Intermediate & Secondary Education v. CBR, etc.

[1999] 79 TAX 28 (H.C.Lah.)

―The instant writ petition has been admitted to regular

hearing, therefore, the question of alternative remedy is not

available to the respondents. The order on its face is a void order

and made without lawful authority. The provision of section 50

and the provision of section 48 of the Income Tax Act on its

bare reading explain that it relates to a person who is liable to

pay tax in excess of what was required from him. It does not

apply to one who is exempted from payment of income tax.

Therefore, it was incumbent upon the respondents to see and

apply conscious mind to the facts that they had wrongly

deducted the income tax on the securities belonging to the

petitioner which were admittedly exempted from payment of income tax.

When an order is void and made without lawful authority

this Court has the jurisdiction to deal with the matters in order

to determine the legal rights of the parties. In the instant case

admittedly the petitioner on coming to know about the illegal

deduction had filed numerous reminders and appeal before the

respondents and the limitation of four years as envisaged in

section 50 and section 48 of the Income Tax Act was obviously

not applicable to the petitioner‘s case. Therefore, it was

incumbent upon the respondents to refund the income tax on

securities illegally deducted by them.

The petitioner was not liable to pay income tax, therefore,

was not governed by the provisions of Income Tax Act. He was

making hectic efforts but all the respondents were misapplying

their mind holding that the claim made by the petitioner is time

barred which was not time barred as their original action of

illegal deduction of income tax, from tax exempted security, was

void ab initio, and arbitrary in nature, was not sustainable in law.

Where any authority guided and governed by law exceeds

jurisdiction and interferes in any person‘s right by passing a void


order, this Court in the exercise of extraordinary jurisdiction can

determine the rights of such party against a void order and writ jurisdiction is available to such party.‖

67. In case of writ, political victimization, petition is

maintainable

Tharparkar Sugar Mills Ltd. v. Federation of Pakistan

through Secretary, Revenue Division and Chairman,

CBR, Islamabad and another

[1996] 73 TAX 215 (H.C.Kar.)

―I would now like to deal with the objection of the learned

D.A.G. that the petition is pre-mature and warrants dismissal

since no bill of entry has been filed and no assessment or

evaluation thereon has been made by the Respondents to

examine whether in the first place the petitioner is or not entitled

to the sought exemption. I am of the view that this objection is

not tenable. Article 199 of the Constitution clearly spells out that

the High Court in a writ jurisdiction has not only the power to

pass a corrective order by curing a defect in an existing order but

it also has the power to prohibit a functionary from passing an

illegal order. In other words the High Court under Article 199

has squarely the power to pass a prohibitory order of restrain

against a threatened action as well. Such interpretation is quite apparent from the language employed in Article 199(1)(a)(i).

I am of the view that there is nothing wrong with the

course adopted by the petitioner who became aggrieved the

moment the subsequent notifications dated 4.10.1995 and

29.10.1995 were issued by the CBR. There is every indication

that assessment on the bill of entry is a mere formality as is also

apparent by the stance taken in the counter affidavit. I,

accordingly hold that the petition is not pre-mature while in

doing so I may also point out that nowhere in the counter

affidavit has this objection been taken. The stance taken by the

learned D.A.G. in this regard is quite at variance with the stance

taken in the counter-affidavit wherein it had been categorically

stated that the petitioner is not entitled to relief under S.R.O.

484.


I feel that the courts while granting interim relief in a tax

mailer ought to consider that It would be completely against the

concept of writ jurisdiction to give such terms to the assessee

which would amount to directly or indirectly depositing the

demand amount. If the assessee is an identifiable person and also

holds assets it can be asked not to sell or dispose of that

property whereon some lien or charge can be created or

otherwise the assessee can be asked to arrange an insurance

guarantee to the satisfaction of Nazir of the Court according to

the directions given by the Hon‘ble Supreme Court in Trustees of

Port of Karachi vs. Manzoor Sons Corporation (1993 SCMR 69). I

have also noticed that in income tax matters since the assessees

are associated with the exchequer not only in a one-off

transaction the courts have been willing to grant unconditional

stays. In the end a lot would depend upon the facts and nature

of each individual case and the above are only some guidelines.

Although I was inclined to direct release of goods upon

submission of an insurance guarantee to the satisfaction of Nazir

and/or upon an undertaking of the petitioners that till disposal

of the petition the factory shall not be sold, however, in identical

petitions the Lahore High Court in W.P. No. 1174/95 and W.P.

No. 1221/95 has granted an interim relief by directing the

Respondents to release goods in terms of S.R.O. 484 subject to

the petitioner furnishing an indemnity bond for the disputed

amount, interestingly, in another identical matter the Lahore

High Court directed the petitioner to submit a bank guarantee

instead of indemnity bond while on appeal in that matter the

Supreme Court through order dated 11.2.1996 in Civil Petition

No. 695-L/96 modified the order of the Lahore High Court and

directed release of goods on furnishing of indemnity bond to the satisfaction of Collector of Customs.

It would not be out of point to cite Ashique Hussain vs. The

State (PLD 1994 SC 879) wherein a full bench of the Supreme

Court has sternly admonished the courts below to follow the

decisions of the Supreme Court. Accordingly the respondents

are directed to release the goods of the petitioners as per list


enclosed as annexure F-3 and F-4 (i.e. for goods where contracts

are finalized prior to 30.6.1995) of the petition in terms of

S.R.O. 484(I)/92 dated 14.5.1992 upon the petitioner submitting

an indemnity bond to the satisfaction of the Collector of

Customs. In view of the delay occasioned in disposing of the

listed interim application we direct the Collector of Customs to

comply with the instant order as expeditiously as possible without any further delay.‖

68. In cases involving fiscal rights even alternate,

adequate and effective remedies available to the

petitioner, High Court can step in to prevent excess, if

any, committed by public functionaries

GEC Avery (Pvt.) Ltd. v. Government of Pakistan

through CBR, Islamabad and 2 Others

[1995] 72 TAX 81 (H.C.Kar.)

―The Central Board of Revenue has already issued a

circular in this regard indicating a process to be followed by the

Assessing Officer while applying the provisions of sub-section

(5) of section 80C of the Ordinance. By working backward, a

figure of income is to be first determined, which if taxed at

normal rates, would have resulted into a tax liability equal to the

presumptive tax paid. Any sum in excess of that amount is to be

regarded as unexplained investment with reference to the

relevant provisions of section 13. Now, in view of such clear

instructions issued by the Board in the said Circular, it cannot be

understood what useful purpose would have been served if the

assessee had first availed the remedies provided in the

Ordinance. Many instances can be found where even the Income

Tax Appellate Tribunal has been found to endorse the opinion

held by the Board of Revenue. Even otherwise, as has been held

by the Supreme Court in the case of Julian Hoshang Dinshaw

Trust, in cases involving fiscal rights, the superior Courts have

always stepped in to prevent excess, if any, committed by public

functionaries. We are, therefore, not inclined to consider the preliminary objection.

69. Writ held maintainable even during the pendency of

appeals when demand of taxes was huge and ran into


millions and the department was pressing hard for its

recovery but orders passed were against the law as

held earlier by courts, though for different years

Hamdard Dawakhana (Waqf) Pakistan v. CIT, Central Zone, „B‟

Karachi and another

[1990] 62 TAX 98 (H.C.Kar.)

―Before considering the arguments on merit, in the above

cases, it will be appropriate to first decide the preliminary

objection raised by the respondents regarding maintainability af

the above petitions. The Contention of the learned counsel for

the respondents is that the petitioner in all the above cases while

filing petitions under Article 199 of the Constitution against the

orders of Income Tax Officer had also simultaneously filed the

departmental appeals which were subsequently decided during

the pendency of these petitions and thereafter, the petitioner

filed further departmental appeals before Income Tax Appellate

Tribunal which are still pending. It is. accordingly, contended

that the petitioner having opted for availing of the departmental

remedy in the cases under the Ordinance, was not entitled to

invoke the constitutional jurisdiction of this Court without

having first exhausted all the remedies provided under the Ordinance.

We are in respectful agreement with the above

observations of the learned Judges of the Division Bench and

applying the test laid down in the above case to the present

cases, we are of the view that the above petitions cannot be

dismissed as not maintainable. Besides, the fact that the

controversy involved in the above petitions rests mainly on the

interpretation and effect of the Judgments in case of the

petitioner by the Supreme Court, (reported in PLD 1980 SC 84)

and that of the Division Bench of this Court in Civil Reference

No. 5 of 1966 dated 24.3.1981 with reference to clause (93) of

the Second Schedule to the Ordinance, the admitted position in

the cases is that the appeals filed before the Tribunal by the

petitioner against the order of 1st Appellate Authority in 1986

have not been heard and disposed of as yet and the learned


counsel for the department is still unable to state when these are

likely to be decided. It is also admitted before us that demand of

taxes against the petitioner on account of rejection of their claim

for exemption is huge and runs into millions and the department

is pressing hard for its recovery and as there is no stay, the

petitioner had to agree to pay the same in instalments of ten

million each. We are, therefore, of the view that the

departmental appeals of the petitioner pending before the

Income Tax Appellate Tribunal since 1986 in the circumstances

of the case can neither be treated efficacious nor a speedy

remedy so as to dis-entitled the petitioner from invoking the

constitutional jurisdiction of this Court. We, therefore, do not

agree with the learned counsel for the department that in the

circumstances of the cases, the above writ petitions are not maintainable.‖

70. Writ maintainable provided order is unlawful even if

an alternate remedy available to the petition

Syed Ghulam Abbass Shah v. ITO, Mirpur and 3 others

[1985] 51 TAX 157 (H.C.AJ&K)

―Replying to the point whether there is an alternate

remedy, Ch. Muhammad Afzal Advocate has referred to me

section 30 of the Income Tax Act of 1922 = section 129 of the

Income Tax Ordinance of 1979. The appealable orders are

mentioned in this section. The impugned order does not fall

under this section, and, therefore, the learned counsel fox the

petitioner has submitted that he filed a Revision Petition before

the learned Commissioner Income Tax and when the learned

Commissioner Income Tax rejected the said revision petition,

there was no other remedy available to him, and therefore, he

knocked at the doors of the High Court and invoked its

constitutional jurisdiction u/s 44 of the Azad Jammu and Kashmir Interim Constitution Act of 1974.

I do not think that the petitioner was guilty of any laches or

delay. As soon as be came to know about the Recovery

Certificates he approached the learned Commissioner Income

Tax in Revision Petition but when his revision petitions failed,


he came to the High Court and invoked its constitutional

jurisdiction. Even otherwise, the objection of laches and delay or

acquiescence is not available to the respondents in this case

because the impugned Recovery Certificates have been issued

without a Notice of Demand and have been issued for the

recovery of the liabilities against a dead person (assessee). An

order which is a nullity in the eye of law is not an order at all and

can be ignored all together even if no Writ Petition is moved to impeach it.‖

71. Reference application pending disposal before the

High Court held not a bar to maintainability of

constitutional petition challenging vires of law taxing

“free reserve” to Income Tax



[1984] 49 TAX 76 (H.C.Kar.)

―The above observations on the contrary support the

contention of petitioner in the present case as it is an admitted

position that the petitioner specifically prayed before the Court

while withdrawing the earlier petition that he reserves the right

to bring fresh petition on the same cause of action and the Court

allowed withdrawal of the earlier petition but did not specifically

grant permission to bring the fresh petition. Mr. Fazeel,

contended that in view of the fact that the Court did not

specifically grant the permission it should be presumed that the

permission to bring a fresh petition asked for was declined. We are unable to accept this contention.

In our view in the absence of an express order by the

Court granting permission to file a fresh proceeding while

allowing withdrawal under sub-rule (2) of rule 1 of Order XXIII,

C.P.C. it will necessarily follow that such a permission has been

granted by the Court or otherwise the court while allowing

withdrawal in such a case cannot refuse to grant permission. We

may also mention here that Mr. Khalid Anwar the learned

counsel of the petitioner also referred us to the case of Durvas

and others vs. State of U.P. [AIR 1961 SC 1457] in which the


Supreme Court of India considered the scope of applicability of

principles of res judicata and constructive res judicata to

constitutional petition. The following observations were made

by the Indian Supreme Court at page 1465 of the report with which we fully agree.‖

72. Constitutional petition before High Court challenging

vires of taxing “free reserves” to Income Tax held

cannot be dismissed on ground of latches in view of

nature of relief claimed and the circumstances of the

case



[1984] 49 TAX 76 (H.C.Kar.)

―From the statement made in the counter-affidavit it

appears that the objection regarding delay is founded on the

ground that the impugned orders are challenged after about

10/12 years of the creation of liability against the petitioner. We

may mention here that the respondents did not mention in their

counter-affidavit the dates of orders impugned in the petition

and from the certified copies of the orders produced in the

petition we were unable to ascertain their dates. We, therefore,

enquired from the learned counsel for the respondents about the dates of these orders but they were unable to give the same.

The petitioner in its rejoinder has denied that 10/12- years

period had passed when the liability was created against them

and it is claimed that the final order imposing penalty was passed

against them only, on 30th May, 1979 and immediately thereafter

Petition No. 981/79 was filed by them challenging the action of

respondents and the vires of legislation but the petition was

subsequently withdrawn in the circumstances stated above and

as the matter was not settled amicably the present petition was

filed in this Court on 10.1.1980. It is, therefore. contended that

there was no delay at all in filing the present petition. Keeping in

view the nature of relief claimed in the petition and the

circumstances stated above we are satisfied that the present petition cannot be dismissed on the ground of laches alone.‖


73. Where alternate remedy available but not efficacious

and statutory functionary acting mala-fide or in a

partial, unjust and oppressive manner, High Court in

exercise of its writ jurisdiction has power to grant

relief to the aggrieved party

Kassam Haji Abbas Patel v. Income Tax Officer,

Contractors Circle, Karachi & another

[1983] 47 TAX 162 (H.C.Kar.)

―Since show-cause notice has been issued without there

being any sufficient reason or legal authority we should not

decline to exercise on jurisdiction. The availability of alternate

remedy in every case is not a ground to refuse the relief when

the remedy is not efficacious, for, if in spite of showing cause

any additional amount had been assessed the same could have

been recovered through coercive process, on petitioner‘s failure

to pay the same. In the case of East and West Steamship Co. vs.

Pakistan this Court has held that where a statutory functionary

acts mala-fide or in a partial, unjust and oppressive manner, the

High Court in the exercise of its writ jurisdiction has power to grant relief to the aggrieved party.‖

74. Order passed without lawful authority, partial, unjust

and mala-fide held assessee can invoke the extra-

ordinary jurisdiction of the High Court even if

alternate remedy is available by way of appeal, etc.

Hussain Sugar Mills v. Islamic Republic of Pakistan and others

[(1981) 44 Tax 59 (H.C.Kar.)]

―It is now a settled law that the jurisdiction of this Court

tinder Article 199 is always available to the party in cases where

the impugned orders are without lawful authority, partial, unjust

and mala-fide even in cases where alternate remedy by way of appeal etc., is available.

In the present case as observed by us that the impugned

orders passed by the Income Tax Officer under the provisions

of section 18A and 45A(b)(ii) were without lawful authority and unjust.‖

75. In the presence of assessee‟s objection to exercise of

jurisdiction on ground of bias assessment was made


without taking decision on the specific objection held

that even existence of alternate remedy would not

operate to debar the assessee from invoking

extraordinary jurisdiction of High Court

Sheikh Akhtar Ali v. Federation of Pakistan and 4 others

[1980] 42 TAX 47 (H.C.Lah.)

―It is contended that the petitioner in this case had an

adequate alternate remedy available to him by way of reference

under the provisions of section 66 of the Income Tax Act, 1922

and for. that reason it was not open to the petitioner to have

invoked the extraordinary jurisdiction of this Court. After giving

the matter our anxious consideration we are of the view that the

alternate remedy in this case was not adequate and equally

efficacious and even the existence of an alternate remedy would

not operate to debar a petitioner from invoking the extraordinary jurisdiction of this Court.‖

76. Where fact for determination was whether receipts

supported by payment certificates produced by

assessee were genuine and correct and claim was

rejected without application of mind to this aspect,

held High Court competent to interfere in its

constitutional jurisdiction

Shahid Hameed, Gulberg, Lahore v. Income Tax Officer,

Film Circle, Lahore and another

[1976] 34 TAX 31 (H.C.Lah.)

―The learned counsel for the respondent finally submitted

that in any case the orders passed by the authorities below

cannot be said to be without lawful authority and of no legal

effect in view of the rule laid down by their Lordships of the

Supreme Court in case of Muhammad Hussain Munir and others vs.

Sikandar and others (PLD 1974 S.C. 139), the relevant portion of

which reads as under:

―It is well-settled that where a Court or tribunal has

jurisdiction and it determines that question, it cannot

be said that it acted illegally or with

material irregularity merely because it came to an


erroneous decision on a question of fact or even of law.‖

The contention of the learned counsel that the High Court

cannot interfere in its constitutional jurisdiction in a case of this nature is not correct.

In view of what has been discussed above, I have no

option but to declare the impugned orders to be without lawful

authority and of no legal effect. The Income Tax Officer is

directed to reconsider the return filed by the petitioner and

complete the same in accordance with law.‖

77. If impugned action is patently without jurisdiction,

writ jurisdiction of the High Court can be invoked

even if alternate remedy is available

First National City Bank, Karachi v. Income Tax Officer, Karachi and

another

[1976] 34 TAX 1 (H.C.Kar.) = PLD 1976 Kar. 552

―Mr. S.A. Nusrat, Advocate for the respondents submitted

that the petition is not maintainable as the petitioner had not

availed of the other remedies provided under the Income Tax

Recovery Rules, 1969 which according to him, afforded adequate

remedy. No doubt upon receiving the recovery notice from the

Tax Recovery Officer dated 9.5.1975, the petitioner could have

objected to the attachment of the money under rule 9(1) of the

said Rules, which requires the Tax Recovery Officer to proceed

to investigate the objection. The order of the Tax Recovery

Officer was also appealable under 74 to the Inspecting Assistant

Commissioner of Income Tax, as is also provided in section

30(A) of the Income Tax Act A further revision and review is

also provided. But where the impugned action is patently

without jurisdiction, relief in Constitutional petition cannot be refused on the ground that an alternate remedy is available.‖

78. If assessment is suffering from lack of jurisdiction,

writ jurisdiction of the High Court can be invoked,

without availing remedies available under the law

Sind Industrial Trading Estate Ltd., Karachi v.

Central Board of Revenue and 3 others


[1975] 31 TAX 114 (H.C.Kar.)

―Mr. S.A. Nusrat, the learned counsel for the Income Tax

Department contended that the petitioners should in the first

instance, have exhausted the remedies available to them by way

of appeal and reference under the Income Tax Act, 1922. Mr.

S.A. Nusrat stated that, in fact some appeals filed by the

petitioners are still pending for adjudication. But, in our opinion,

the act of the Income Tax Department in assessing, or in

proposing to assess, the petitioners to income tax is without

jurisdiction altogether, and it is, therefore, not incumbent upon

the petitioners to avail themselves of the remedies provided to

them under the Income Tax Act or even to wait for adjudication of their appeals or references, if any.

79. Writ admitted during the pendency of appeals held

maintainable

Barnala Commission Shop, Chak-Jhumra v.

Income Tax Officer, B Ward, Lyallpur

[1963] 7 TAX 153 (H.C.Lah.)=1963 PTD 534=1963 PLD 311

―Failure of Income Tax Officer to comply with provision

of condition precedent to issuing notice to assessee u/s 34(1),

Income Tax Act (XI of 1922). Objection was not raised to any

part of proceedings on any ground at any stage before Income

Tax Officer. Petition, otherwise deserving dismissal in limine,

admitted to hearing since point of objection arose also in several other petitions.

Income tax assessment proceedings u/s 34, Income Tax

Act (XI of 1922), completed beyond time. Alternative remedy by

appeal under Income Tax Act (XI of 1922) availed but, without

waiting for result, assessee preferring petition invoked writ

jurisdiction of High Court. Petition otherwise deserving

dismissal in limine admitted to hearing, since point of objection arose also in several other petitions.‖

Writs when not maintainable 80. Writ when not maintainable

Collector of Customs, Lahore and others v. Universal Gateway Trading


Corporation and another

2005 PTR 45 [S.C. Pak.] = 2005 PTD 123 (S.C. Pak.)

= PTCl 2005 CL. 270]

―The Constitutional jurisdiction should not have been

exercised for the reason that alternate efficacious remedies should

have been invoked as were available under sections 179, 193, 194A

and 196 of the Customs Act, 1969, which could have been

conveniently availed by the respondents by approaching concerned forum available in the hierarchy of Customs laws.

Constitutional jurisdiction should be exercised with extra

care and caution bearing in mind that there is a basic difference

between want of jurisdiction and an illegal or irregular exercise

thereof. The defect, if any, in an order can, according to the procedure established by law, be corrected by appeal or revision.

The jurisdiction under this Article will not be made

available for interfering with the orders of the Courts below

simply on procedural matters or on the plane of propriety. The

power under this Article is not intended merely for correcting

their errors in law or on facts‖--Dr. Sajjad Ahmad v. Dr. Muhammad Bashir (PLD 1979 Lah. 304).

There is no cavil with the proposition that ―the provision

as contained in Article 199 does not empower the High Court to

interfere with the decision of a Court or Tribunal of inferior

jurisdiction merely because the same is wrong as in that case it

would make the High Court‘s jurisdiction as that of the

Appellate Court‘s jurisdiction as that of the Appellate Court

which is not the intention of the Legislature‖-- K.M. Asaf v. Abdullah Malik (PLD 1976 Lahore 158).‖

Adamjee Insurance Co. Ltd. & others v.

Pakistan through Secretary Ministry of Finance

[(1993) 68 Tax 176 (S.C.Pak)]

―Once the appellant had opted to avail of the hierarchy of

forums provided for under the Ordinance upto the stage of filing

of appeal before the Tribunal, it would have been proper on his

part to have invoked section 136 of the Ordinance for making a


reference to the High Court instead of filing of constitutional

petition. Once a party opts to invoke the remedies provided for

under the relevant statute, he cannot, at his sweet will, switch over

to constitutional jurisdiction of the High Court in the mind of the

proceedings in the absence of any compelling and justifiable reason.

Wealth Tax Officer & Other v. Shaukat Afzal & 4 others

[(1993) 68 Tax 145 (S.C.Pak)]

―Before parting with the judgment we may observe that in

cases where any party resorts to a statutory remedy against an

order he cannot abandon or bypass it without any valid and

reasonable cause and file constitutional petition challenging the

same order. Such practice, in cases where statute provides

alternate and efficacious remedy up to High Court, cannot be approved or encouraged.‖

H.M. Abdullah v. ITO Circle-V Karachi

[(1993) 68 Tax 29 (S.C.Pak)]

―Income Tax Ordinance is a complete code in itself which

creates rights in favour of an assessee, and in certain

circumstances in favour of the Revenue as well, and also

provides remedy for redress of the grievances of the aggrieved

party. In every tax case, Constitutional Jurisdiction as an

alternate remedy in terms of Article 199 of the Constitution

cannot be availed. Reference in this connection may be made to

the following observations appearing in CIT, Companies II, Karachi

& others vs. Hamdard Dawakhana (Waqf) Pakistan [1993] 67 TAX 1 (S.C.Pak) = PLD 1992 SC 847 at p.861:

―In cases where any party resorts to statutory remedy

against an order he cannot abandon or bypass it

without any valid and reasonable cause and file

constitutional petition challenging the same order.

Such practice, in cases where statute provides alternate

and efficacious remedy up to High Court, cannot be approved.‖

Abdul Rehman & Another v. ITO Mirpur & Another


[(1993) 68 Tax 132 (S.C.AJ&K)]

―It is, therefore, difficult to agree in the light of prevalent constitutional provisions that if an interpretation placed by an executive authority is palpably wrong and leads to miscarriage of

justice and High Court can directly entertain a writ petition. The High Court only directly entertain a writ petition if it finds that alternate remedy is not adequate. In our view existence of

another adequate remedy is a rule of law which ousts the jurisdiction of the High Court and we hold accordingly.‖

Shagufta Begum v. ITO, Circle XI, Zone B Lahore

[(1989) 60 TAX 83 (S.C.Pak.)]

―In all such cases where a Tribunal lacks jurisdiction and this aspect is discoverable on the record, it is permissible for an

aggrieved person to go directly to the High Court against the issuance of a notice without approaching the authority concerned in this behalf in the first instance. The oratical

speaking it might be correct; mainly, because wastage of time spent before the departmental authorities could be avoided by expeditious disposal of the writ petition in the High Court and if

the matter is brought higher up in the Supreme Court it would still be a speedier remedy. We do not agree with this submission. In practice, it takes longer time than the normal departmental

remedies. It is accordingly in the interest of litigants themselves first to choose the speedier remedy with departmental authorities and thereafter if need be, invoke the extraordinary jurisdiction of

the High Court.‖

Hafiz Mohammad Arif Dar v. ITO

[(1989) 60 Tax 52 (S.C.Pak) = (PLD 1989 SC 109)]

―One of the conditions for grant of relief in writ jurisdiction of the High Court is that the petitioner before it should not have any alternate remedy. Since the petitioner has availed the right of

appeal, the High Court correctly held that no relief could be granted under Article 199 of the Constitution.‖

Raja Habib Ahmad Khan v. Income Tax Officer

[(1974) 29 Tax 208 (S.C.Pak.)]


―The assessee preferred appeals against the assessment

orders, as also filed a petition under Article 98 of the

Constitution of 1962. Supreme Court while deciding the petition

for leave to appeal held that:

―That the writ petition was misconceived and not

maintainable. The petitioner should have been left to

pursue his remedy by the appeal which he had already

filed. He had elected first to follow that remedy. He

should not, therefore, have been allowed to

simultaneously pursue an alternate remedy under Article 98 of the Constitution of 1962.‖

Steel Brothers and Company Ltd. v. CBR and others [(1969) 19 Tax 97 (S.C.Pak.)]

―...that it would be circumventing the provisions of the

Income Tax Act if parallel proceedings are started, under Article 98 of the Constitution to deal with the same questions.‖

Nagina Dal Factory v. ITO and others [(1968) 18 Tax 1 (S.C.Pak) = (1968 SCMR 1035)]

―That when a statute under which action is taken itself

provides remedies, recourse must be had to those remedies first.

Direct access to the High Court for relief in writ jurisdiction thus

by-passing the special forum, which are created by the special law itself, is not permissible.‖

Crescent Sugar Mill. v. ITO [(1999) 80 Tax 273 (H.C.Lah.) = NLR 1999 TAX 170]

―Writ petition in income tax matter would not be

maintainable when petitioner had remedy of seeking reference

u/s 136, Income Tax Ordinance 1979. High Court disposing of

writ petition with observation that petitioner may apply for

reference u/s 136 along with application for condonation of

delay on plea that proceedings in writ jurisdiction were pursued with due diligence.‖

Saleem Automotive Industries (Pvt.) Ltd. v. CBR etc. [(1999) 80 Tax 9 (H.C.Lah.)]


―The petitioner has already travelled through some of the

forums provided under the law. His appeal before the Customs

Tribunal is still pending in which injunction order restraining the

recovery of disputed amount has also been made in his favour.

In such situation, the entertainment of the petition or to make

the kind of declaration prayed for by the appellant will not only

frustrate the whole scheme of the law providing for various

stages and forums of appeal but also will amount to pre-suppose

an order by a judicial authority namely the Customs Excise and

Sales Tax Appellate Tribunal.

The view of the Supreme Court as well as of this Court on

the issue is quite clear. Two cases decided by the Supreme Court

are directly relevant on the issue. These are reported as re: Wealth

Tax officer and another vs. Shaukat Afzal and 4 others (1993) 68 Tax

145 (S.C.Pak.) and re: H.M. Abdullah vs. Income Tax Officer, Circle-

V Karachi and 2 other (1993) 68 Tax 29 (S.C.Pak.). In the first

reported judgement the assessee respondents were before the

Tribunal for the redressal of their grievances. During the

pendency of the appeal, they approached the High Court in its

constitutional jurisdiction which was allowed by a Division

Bench of Sindh High Court whereby the order passed by the

Wealth Tax Officer treating the disputed properties as assets of

the assessee was declared as without lawful authority and of no legal effect.

Like-wise in a recent judgment reported as re: Sameer

Electronics vs. A.C. of Income Tax, Lahore (1996) 73 Tax 106

(H.C.Lah.) this Court refused to entertain a constitutional

petition under Article 199 of the Constitution and rejected the

contentions similar to those now being made by the learned counsel before me.‖

Navab Sons, Lahore v. The Assistant Commissioner Tax etc. [1999 P.C.T.L.R. 387]

―The contents of the writ petition revealed that the

petitioner has concealed material facts from this Hon‘ble Court

qua the appeal filed by the petitioner before the appellate

authority against assessment order, therefore, petitioner is not


entitled to get any discretionary relief under Article 199 of the

Constitution. I am not inclined to exercise discretion in favour

of petitioner who concealed the material facts from this Hon‘ble

Supreme Court. I am fortified by the following judgments:-

C.M. Malik‟s case (1990 CLC 1783);

Ronaq Ali‟s case (PLD 1973 SC 326);

Saif Ullah‟s case (PLD 1989 SC 166);

Rana Arshad‟s case (1998 SCMR 1462);

For what has been discussed above, this writ petition is

dismissed in limine, as the petitioner did not approach this Court

with clean hands as well as the petitioner has availed alternate remedy which is pending adjudication.‖

State Cement Corporation of Pakistan (Pvt.) Ltd. v. CIT [(1997) 76 TAX 110 (H.C.Lah.) = 1997 PTD 1104 =

1998 PCTLR 520]

―Before these petitions could be argued on merits, learned

counsel for respondent has raised a preliminary objection that

against the decisions of respondent dated 7-8-1994, the

petitioner has already filed appeals which are pending before the

Income Tax Appellate Tribunal where they have raised the same

dispute as to whether or not any income tax is payable on the

cement development funds received by the petitioner company

under Ordinance, II of 1979. This is not denied by the learned

counsel for respondent who has, however, submitted that the

petitioner had earlier filed W.P. No. 6584 of 1994 which was

disposed of with the direction that the plea raised in the

constitutional petition may be repeated before the CIT, before whom the proceedings are pending.

Learned counsel for the petitioner has attempted to argue

that notwithstanding filing of the appeal by the petitioner, these

petitions are maintainable as it has been held by the Supreme court

in various cases that it is not essential to file a departmental appeal

when the matter relates to the interpretation of statutory

instrument and the matter can be brought directly to this Court.

There may not be any cavil with this proposition but here the


position is different as the petitioner has itself invoked the

jurisdiction of the Income Tax Appellate Tribunal by filing appeals

and there is no reason also as to why the Appellate Tribunal

should not be allowed to decide the questions which are arising in

these petitions. In view of what has been stated above, these

petitions are held to be not maintainable at this stage and dismissed, leaving the parties to bear their own costs.

No doubt the petitioner had raised various pleas before the

CIT, who by his detailed order dated 7.8.1994 has rejected the

same and against his order the petitioner has gone to the Income

Tax Appellate Tribunal. As the petitioner has chosen its remedy

by filing appeals before the Appellate Tribunal, these petitions

are clearly not maintainable. It is also to be noted that if the

decision of the Appellate Tribunal goes against the petitioner, it

can come to this Court by filing an application u/s 136 of the

Income Tax Ordinance, 1979 which is to be heard by a Division

Bench of this Court. The petitioner cannot be allowed to bypass the normal procedure.‖

Rehmania Hospital v. Government of Pakistan etc. [(1997) 76 Tax 138 (H.C.Pesh) = 1997 PTD 1805]

―...... it seems the preponderance and the recent trend in

the judgments of the Superior Courts ..... is that in the presence

of statutory remedy under the Income Tax Ordinance approach to the High Court through a writ petition is disapproved.‖

Haji Gula Khan v. Special Officer, Income Tax and others [(1997) 75 Tax 117 (H.C.Pesh.) = 1997 PTD 7]

―It may be stated at the very outset that the petitioner can

file an appeal before respondent No. 3 against the impugned

order recorded by respondent No. 1. As an adequate remedy has

been made available to the petitioner under the relevant law,

therefore, he cannot be allowed to by pass the same and

approach this Court straightaway under Article 199 of the

Constitution of Islamic Republic of Pakistan, 1973. We are,

therefore, of the view that this writ petition is misconceived. The same is dismissed in limine.‖


Sante International (Pvt.) Ltd. and Another v. CIT, Zone-B, Lahore and Another

[(1997) 75 Tax 1 (H.C.Lah.) = 1997 PTD 819]

―Since the petitioner had alternate statutory remedies in the

hierarchy of the Income Tax Department, as already mentioned

above, this petition is not maintainable. Accordingly, the petition

being premature is dismissed in limine. However, all available

objections, including the one relating to the jurisdiction of the

Income Tax Officer, may be taken before the appropriate forum, if so advised.‖

Shamim Ali and others v. Govt. of Pakistan and another [(1973) 27 Tax 51 (H.C.Lah.)]

―As adequate alternate remedies exist for correcting any

assessment made to the detriment of a particular party or made

in an unjust and oppressive manner, in a given case, the present

writ petition is, therefore, premature.‖

Colony Textile Mills Ltd. Lahore v. Income Tax Appellate Tribunal (Pak) & another

[(1972) 25 Tax 140 (H.C.Lah.)]

―The Income Tax Act provides a complete machinery for

assessment of tax and for obtaining relief in respect of any

improper or illegal order passed by the Income Tax authorities

and an assessee cannot unless the order impugned, is without

jurisdiction or in excess of jurisdiction, invoke the jurisdiction of

the High Court under Article 98 of the Constitution when he had adequate remedy open to him under the Act itself.‖

Taj Din Maula Bux, Lahore v. Sales Tax Officer D-Circle Lahore

[(1972) 25 Tax 145 (H.C.Lah.)]

―That remedy provided under Article 98 is a discretionary

remedy and when an aggrieved person has an adequate relief

elsewhere, there is a bar for the High Court to entertain a petition.‖

81. Writ petition is not maintainable in the presence of

adequate alternate remedy under the statute

Amin Textile Mills (Pvt.) Ltd. v. CIT, and 2 others


PTCL 2000 CL. 316 (S.C.Pak)

―The High Court, was right to observe that the petitioner

should, in the first instance, approach the hierarchy of the forums

provided for under the Ordinance instead of filing a constitutional

petition. Apart from the bald assertion that the impugned order is

void ab initio there is nothing on record to substantiate the above

plea. In the case of Al Ahram Builders (Pvt.) Ltd. vs. Income Tax

Appellate Tribunal (1993 SCMR 29), this Court discouraged the

tendency to bypass the remedy provided under the relevant statute to press into service constitutional jurisdiction of the High Court.‖

Karachi Properties Investment Co (Pvt.) Ltd, Karachi v.

Income Tax Appellate Tribunal, Karachi and another

[2004 PTD 948 (H.C. Kar.)]

―First, we would take up the issue pertaining to the

maintainability of the petition. By now it is trite law that if

remedy by way of appeal/revision is available in statute, the

petition under Article 199 of the Islamic Republic of Pakistan,

1973 shall not lie with the exceptions that the orders passed

without jurisdiction or where the remedy provided in law is

illusory, an aggrieved person can directly invoke the

Constitutional jurisdiction of High Court. Since the petitioner

could file an appeal against the order of Tribunal, passed under

section 156 of the Income Tax Ordinance, 1979 and had actually

filed the appeal, which was subsequently withdrawn by the

learned counsel for the petitioner on account of wrong

perception of law, therefore, it is held that the petition is not

maintainable. However, we would not like to dismiss the petition

on this score and non-suit the petitioner, because it would

amount to technical knockout, which is not a desirable manner of disposing of the proceedings before this Court.‖

Data Distribution Services v. DCIT, and another

[2000] 82 TAX 156 (H.C.Lah.)

―In case aforesaid paragraphs of parawise comments and

writ petition are put in juxta position, then it brings the case of

petitioners in the area of disputed question of facts. It is settled


proposition of law that this Court has no jurisdiction to resolve

the disputed question of facts in constitutional jurisdiction as the

principle laid down by the Hon‘ble Supreme Court in Muhammad

Younas Khan‟s case (1993 SCMR 618). The petitioner‘s counsel

appeared in Pak-Arab Fertilizer (Pvt.) Ltd. vs. Deputy Commissioner

Income Tax (2000 PTD 263) and cited almost all the case law

which was considered by this Court and laid down the principle

that writ petition is not maintainable against show-cause notice

and also observed that party cannot be allowed to by-pass

jurisdiction vested by law in special Tribunal. As mentioned

above I have already dismissed the writ petitions qua the similar

controversy on the question of law in Pak-Arab Fertilizer (Pvt.)

Ltd.‟s case (supra). It is settled proposition of law that previous

decision should have been accepted and binding on me as per

principle laid down by the Hon‘ble Supreme Court in Muhammad

Muzafar Khan vs. Muhammad Yousaf Khan (PLD 1959 SC (Pakistan) (9).‖

Guarantee Engineers (Pvt.) Ltd. v. Federation of Islamic Republic of

Pakistan through Secretary,

Ministry of Finance, Islamabad and another

[2000] 82 TAX 131 (H.C.Lah.)

―The contents of the writ petition as well as contentions of

the learned counsel of the petitioner do not reveal that the

petitioner has challenged vires of the provisions of the Finance

Act, therefore, responsent No. 2 is well within his right to

deduct the income tax from the petitioner to the tune of 5 per

cent on the basis of provisions of Finance Act, 1995-96. It is

settled proposition of law that Court should save the laws

instead of declaring them ultra vires. I am fortified by the following judgements:-

PLD 1995 SC 432 (Multi National‟s case)

PLD 1983 SC 457 (Fauji Foundation‟s case)

The learned counsel of the petitioner does not mention any

provision of Finance Act in the contents of the writ petition

which was framed by the competent authority which is in


violation of Articles 2A, 3 and Article 25 of the Constitution. It

is settled proposition that Constitution should be read as organic

whole. The Articles of the Constitution do not reveal prohibition

that the Pakistani Legislature/Parliament and Provincial

Assembly do not possess the right to make retrospective

legislation which every sovereign legislature possesses. The only

express limit imposed upon the power of retrospective

legislation is that legislatures cannot make retrospective penal

laws meaning thereby any other law including Taxation Law

may, therefore, be made with retrospective effect under the

Constitution. In arriving to this conclusion I am fortified by the

leading judgement of the subjection by the Hon‘ble Supreme

Court in Salauddin‟s case PLD 1991 SC 546. The aforesaid

proposition of law is also supported by the judgement of

Hon‘ble Supreme Court in Haider Automobile Ltd. vs. Pakistan

(PLD 1969 SC 623). In the present case as mentioned above

there is no retrospective effect of the Finance Act since the

contention was raised by the learned counsel of the petitioner

and the contention of the learned counsel of the petitioner has

no force on the basis of the aforesaid judgement of the Hon‘ble

Supreme Court. In view of clause 54(2) of the Contract executed

between the petitioner and respondent No. 2 principle of Reciprocal Promises is not attracted.‖

Leather Connections (Pvt) Limited v. The Central Board of Revenue Govt.

of Pakistan, Islamabad through its Chairman

[2000] 82 TAX 42 (H.C.Lah.)

―In view of what has been discussed above, this writ

petition is not maintainable. Anyhow the letter issued by

respondent No.2 to respondent No. 3 on 16.5.1996 by fixing

cost of construction at the rate of Rs.400/- per sq. ft is not

borne out and is not in accordance with notification issued by

CBR dated 18.7.1993 under the aforesaid section 50(7BB). The

letter does not contain any comparative rates of the other

departments, therefore, same is not sustainable in the eyes of

law. The Notification of CBR is misconstrued by the

subordinate functionaries of CBR In view of these


circumstances, let a copy of this order judgment be sent to

Chairman CBR Islamabad, who is directed to issue general

instructions to all the functionaries to issue letters to the

Administrative Officer concerned in accordance with law and

Notification dated 18.7.1993, after comparison of the rates

mentioned by different departments in the Notification or the

Chairman CBR must issue a notification and fix rate either yearly

basis for each area or 2/3 years so that poor citizen should not

be penalized. He is also directed to issue direction in the light of

Notification, preferably within one month, after receiving the order of this Court.‖

Pak-Arab Fertilizers (Pvt.) Ltd. v. DCIT, and Others

[2000] 81 TAX 224 (H.C.Lah.) = 2000 PTD 263

―The nature of controversy between the parties to the

petition by itself falls in the area of factual controversy. In case the

contents of writ petitions and parawise comments are put in juxta

position which cannot be resolved in constitutional jurisdiction of

High Court. Even otherwise writ petition is not maintainable in

view of the law laid down by the Hon‘ble Supreme Court in Bashir

& Company‟s case [1968] 17 Tax 207 (S.C.Pak) = (1968 SCMR

997) in which it was held that a party cannot be allowed to bypass

jurisdiction vested by the law in special tribunal, and writ petition

cannot be invoked, special remedy is available under the Income

Tax Ordinance. I am fortified by the judgements of Abdul Rehman Mayet‟s case (1988 SCMR 1712).‖

82. In presence of arbitration clause in the agreement

executed between the parties, the writ petition is not

maintainable

Amir Nawaz Khan, etc. v. Government of Pakistan, through Secretary

Finance, Islamabad, etc.

[2001] 83 TAX 397 (H.C.Lah.)

―It is admitted fact that petitioner executed agreement with

the respondent No. 5 of his own free will which contains the arbitration clause.

In presence of arbitration clause in the agreement executed

between the parties, the writ petition is not maintainable. The


writ petition is also not maintainable on the well known principle of approbate and reprobate.

It is also settled proposition of law that the contract cannot

be enforced through constitutional jurisdiction as the petitioner

has alternative remedies either to file a civil suit or invoke arbitration clause.

It is also settled proposition of law that leave granting order by the Honorable Supreme Court is not judgment.‖

83. Writ held not maintainable where disputed question of

fact involved

Kohinoor Industries Ltd. v. Government of Pakistan through CBR, Islamabad

[2001] 83 TAX 17 (H.C.Lah.)

―In the present case learned counsel for the respondents or

any official of the respondents did not give any concession. It is

admitted fact that tribunals below have given con-current finding

of fact against the petitioner. Therefore, writ petition is not

maintainable as per principle laid down by the Hon‘ble Supreme

Court in the following judgments:

1974 SCMR 279 (Khuda Bakhsh‟s case)

PLD 1981 S.C. 246 (Muhammad Sharif‟s case)

PLD 1981 S.C. 522 (Abdul Rehman Bajwa‟s case).

It is also settled principle of law that this court has no

jurisdiction to substitute its own decision in place of the finding

of the tribunal below as per principle laid down by the Division

Bench of this court in Mussaduq‟s case PLD 1973 Lahore 600.

The tribunals below have given finding of fact against the

petitioner that bags were not warehoused at Karachi with the

connivance of the petitioner in original condition whereas the

case of the petitioner that petitioner is not responsible for that

mis-chief. It is the Paul corporation who committed this mis-

chief. This fact brings the case in the area of disputed question

of fact and this court has no jurisdiction to resolve the disputed

question of fact in a constitutional jurisdiction as per principle

laid down by the Hon‘ble Supreme Court in Muhammad Younis‟s


case 1993 SCMR 618. Petitioner has alternative remedy for

resolution of the disputed question of fact by filing civil suit u/s

9 of the CPC before the competent court. In this view of the

matter writ petition is also not maintainable as per principle laid

down by the Hon‘ble Supreme Court in Muhammad Ismail‟s case

PLD 1996 S.C. 246. In view of that has been discussed above, this writ petition is dismissed with no order as to costs.‖

84. Writ is not maintainable where parties themselves

agreed for arbitration in bilateral contracts

Muhammad Ansar etc. v. Administrator Town Committee Kabirwala District Khanewal and 4 others

[2000] 81 TAX 60 (H.C.Lah.)

―It is settled proposition of law that specific arbitration

clause has been provided in the agreement as mentioned above

and if the petitioners have got any grievance against the contents

of the said agreements they can avail their remedies before the

appropriate forum as it needs a detail inquiry. Since the petitioners

have voluntarily executed an agreement with arbitration clause

with the respondents then the petitioners are stopped to challenge

the same in writ jurisdiction on the well known principle of

approbate and reprobate as the principle laid down by the Hon‘ble

Supreme Court in Haji Ghulam Rasool‟s case PLD 1971 S.C. 376. It

is settled principle of law that contractual obligations cannot be

enforced through a writ petition as the petitioners have alternative

remedies to invoke the jurisdiction of a Civil Court by means of

regular suit. I am fortified by the following judgements of Hon‘ble Supreme court of Pakistan:-

(i) PTD 1981 S.C. 604 (Shameer‟s case);

(ii) PTD 1986 Quetta 181 (Pakistan Mineral Development Corp‟s case);

(iii) PTD 1958 S.C. 387 and PTD 1962 SC 108.‖

85. Writ not maintainable in case where no right to appeal

or reference is provided in law itself

Islamuddin and 3 others v. ITO and 4 others

2000 PTD 306


―It is also an established principle that where a statute does

not provide the remedy by way of appeal or reference against the

order then the same cannot be challenged by way of a

constitutional petition as it would amount to rendering the

provision of statute which does not provide an appeal for a

reference or any other remedy against a particular order. In

support of this proposition reliance is placed on the cases of Syed

Saghir Ahmed Naqvi vs. Province of Sindh and another reported in 1996

SCMR 1165 and Abdul Wahab Khan vs. Govt. of Punjab and others,

reported in PLD 1989 SC 508.‖

86. Selection of return for audit challenged through

constitutional jurisdiction held not maintainable

Agha Ice Factory, Sheikhupura v.

RCIT, Central Region, Lahore and 4 Others

[1996] 74 TAX 215 (H.C.Lah.)

―The manner, answers to questions raised in the petition;

have been sought by the petitioner is unwarranted and

misconceived; as the Income Tax Ordinance itself is a complete

code and procedure for referring a question of law to the High

Court has been provided u/s 136(1) of the Income Tax

Ordinance. The writ petition even otherwise being devoid of merits is not maintainable.‖

87. Writ is not maintainable where facts are controversial

Zam Zam Traders v. Income Tax Officer

[1996] 74 TAX 21 (H.C.Lah.)

―I am of the opinion that it is a controverted question of

fact and such a question cannot be resolved in constitutional

jurisdiction of the High Court; without prejudging the issue; the

petitioner, who has already submitted the returns in response to

the notice u/s 65. and proceedings have already been initiated by

the respondent by issuing the mandatory notice u/s 62 of the

Ordinance; ft is undesirable for the petitioner to switch over to

the constitutional jurisdiction of the High Court at his sweet will

in the mid of the proceedings in the absence of any compelling and justifiable reasons.‖


88. Legality and correctness of a factual controversy could

not be resolved in the constitutional jurisdiction

Sameer Electronics v. ACIT, Circle-B, Zone-A, Lahore

[1996] 73 TAX 106 (H.C.Lah.)

―Section 65(2) of the Income Tax Ordinance provides that

no proceedings under sub-section (1) shall be initiated unless

definite information has come into the possession of the Income

Tax Officer and he has obtained the previous approval of

Assistant Commissioner of Income Tax, in writing to do so. The

respondent No. 1 positively is in possession of information as

indicated in his letter dated 11.3.1995. The respondent No. 1 in

the said letter alleged that the petitioner is carrying on the

business of releasing Indian films after obtaining expensive

master prints from Karachi and hundreds of films are available

in the Video Market bearing the name of petitioner‘s concern.

The petitioner vide his letter dated 20.3.1995 in response to the

said notices denied the fact of ―releasing‖ Hindi films being

without any evidence and proof and added that neither the

import of Indian films is allowed into Pakistan nor violated any

provision of law in that regard; the nature of controversy,

particularly the legality and correctness of ―releasing‖ Indian

films is a factual controversy; such a question cannot be resolved

in constitutional jurisdiction of High Court and refrains (sic)

from substituting its own finding of fact as observed by their

Lordships in case Muhammad Younus Khan and 12 others vs.

Government of N.W.F.P. through Secretary Forest and Agriculture,

Peshawar and others (1993 SCMR 618) as it is a consistent view of

Supreme Court that in cases where factual controversies are

involved, constitutional petition is not the proper remedy.‖

89. High Court cannot go in the domain of factual

controversy

Saif Nadeem Electro Ltd. v. Collector of Customs and Central

Excise/CST, Peshawar and 3 Others

[1995] 72 TAX 274 (H.C.Pesh.)


―(a) In the first instance the questions of fact have been

raised and the High Court cannot go in the domain of

such controversy.

(b) In the next place, the petitioner instead of seeking

adequate and alternate remedy from the department

concerned, including the CBR has straight away come

to this Court, for the redress of his grievance, it may

be mentioned here that the petition in hand cannot be

entertained unless all the remedies available and open

to the petitioner are not exhausted, in the first

instance.‖

90. Writ petition not maintainable where adequate and

alternate remedy available

Muhammad Jameel v. Income Tax Officer

[1995] 72 TAX 1 (H.C.Lah.)

―The petitioners were provided proper opportunity to

represent their facts and were properly heard by the Assessing

Officer; rather the conduct of petitioners remained objectionable

and did not appear before him with clean hands. As already observed the Income Tax Ordinance is a complete code in itself.

In view of the above observations made by their Lordships, I

am of the view keeping in view the conduct of petitioners; who have

not come with clean hands before this Court even otherwise have

remedy by way of appeal. The instant petition is not entertainable and is dismissed in limine.‖

91. Factual inquiry involving controversial facts cannot be

undertaken by the High Court in exercise of its

constitutional jurisdiction


[2002] 86 TAX 138 (H.C.Lah.) = 2002 PTD 441

―It is settled proposition of law that this court has no

jurisdiction to resolve the disputed questions of fact in

Constitutional jurisdiction as the principle laid down by the

Hon‘ble Supreme Court in Muhammad Yunus Khan‟s case 1993

SCMR 618. This Court has considered almost all the case-law on

the subject and laid down a principle in Messrs Pak-Arab Fertilizer


vs. Deputy Commissioner of Income [2000] 81 TAX 224 (H.C.Lah.) =

2000 PTD 263 that writ petition is not maintainable against the

show-cause notice and also observed that party cannot be

allowed to bypass jurisdiction vested by the law in Special

Tribunal. It is pertinent to mention here that the learned counsel

for the petitioner has laid down much emphasis in Shahab-ud-

Din‟s case [1988] 58 TAX 106 (H.C.Kar,) = PLD 1988 Kar. 587

and in the aforesaid case the writ petitions were dismissed and laid down the following principle:

The petitioner has not availed the statutory remedy

available to him and he has rushed to the Court at the

initial stage when only notice has been served. He will

have the opportunity to examine the material if any

produced before the Income Tax Authorities and

rebut it, before any final order is passed. In the facts

and circumstances of the case in our view the notice

issued by the respondent No. 2 is neither arbitrary,

nor without jurisdiction. We therefore, dismiss the

petition with no order as to cost.‖

Allied Cans v. Income Tax Officer, Circle-8, Multan and others

[1995] 71 TAX 216 (H.C.Lah.)

―It is a field, experts of which are the Income Tax people,

and it is not that pure and simple legal proposition, which calls

for a determination by this Court. Estimation of income etc.

evidently involves a factual inquiry, which this Court in exercise

of its writ jurisdiction cannot possibly undertake. The petitioner

concern, if genuinely aggrieved, can avail of the remedies

available under the Income Tax Ordinance, 1979, and it would

not be correct to say that a writ petition is the only remedy,

which could be invoked for redressal of the grievances in question.

There is no worth-while explanation forthcoming to the

inordinate delay of two years and two months, with which this

Court was approached in the matter. This ground alone will

disentile the petitioner to the discretionary relief, for the move

made is ill-intentioned, as also misconceived and the object is to


derive an undue advantage, by making the Income Tax

Authorities helpless in the matter. I am not at all convinced

about the competence of the writ petition, as also bona fides of

the petitioner, and proceed to dismiss the petition.‖

92. Writ cannot be entertained where adequate remedy is

available

Azmat Farooq v. RCIT, Central Region Lahore and another

[1993] 68 TAX 74 (H.C.Lah.)

―Be that as it may, it stands admitted that no revision at all

was filed by the petitioner before the Commissioner but only a

representation was made to the RCIT, who forwarded it to the

CIT,. That being so, the Regional Commissioner, to whom the

representation was addressed being an officer higher than the CIT, was certainly entitled to interfere.

In the end, learned counsel for the petitioner has tried to

argue that even on the basis of the material which has been

annexed by the respondents alongwith the report to this petition,

it is evident that the assertion regarding the undervaluation of

the properties is incorrect. If that be so, it is open to the

petitioner to demonstrate this fact before the Income Tax

Officer and to satisfy him that the properties in question were

not undervalued. No interference is, however, called for in the exercise of this Court‘s constitutional jurisdiction at this stage.‖

93. If Income Tax Officer‟s action is jurisdictional, writ

jurisdiction of the High Court cannot be invoked

Zafar Usman v. Income Tax Officer etc.

[1989] 59 TAX 86 (H.C.Kar.)

―We are, therefore, of the view that we cannot at this stage

hold that the impugned notice is without jurisdiction as to

warrant the interference by this Court in exercise of

constitutional jurisdiction and deprive jurisdiction of the hierarchy of the forums provided under the Ordinance.‖

94. Issue being controversial involving inquiry into - held

not a fit case to be determined under supervisory

constitutional jurisdiction of High Court


Brilliant Farbics & Silk Factory, Karachi v.

Income Tax Officer, West Zone, Karachi & others

[1987] 56 TAX 24 (H.C.Kar.)

―His submission was that the person who had appeared before the Income Tax Officer was not authorised by him. On the other hand we find that Mr. Zakaria Loya had appeared

before Income Tax Officer in the first instance and had taken time. Moreover, the receipt of notice issued by the Income Tax Officer on 24th January, 1983 to the petitioner is not denied and,

therefore, it was incumbent upon the petitioner to keep track of the case and it could not take shelter under the plea that one Mr. Mansoor Ahmed who had appeared for him before the Income

Tax Officer was not entitled to appear. No affidavit of Mr. Zakaria Loya has been filed before us to substantiate allegation that Mr. Mansoor was not an associate of Mr. Zakaria Loya. It is

common knowledge that different associates of the lawyer firms of the Income Tax Consultants appear before the Courts or the relevant Authorities and they are allowed to appear as such. The

petitioner has not sought any damages from Zakaria Loya & Co. for not having represented the petitioner or for having sent a person who was not authorised to represent Zakaria Loya and

Co. or the petitioner for that matter. Therefore, the submission that the petitioner was not properly represented is unfounded. The appellate authority has stated that Mr. Mansoor was an

associate of Zakaria Loya & Co. and the said finding coming from the concerned department, which has knowledge of such facts, is binding.

The position that the petitioner was immune from scrutiny, as shown in this petition, has been taken up by the petitioner

from the initial stage, by a letter of 10th, January, 1983/18th January, 1983, is not entirely correct. The Department in its comments has clearly stated that such a letter of the assessee was

never received by them and we find that in the rejoinder affidavit filed by the petitioner there is no further contravention in respect of the receipt of the alleged letter of protest allegedly

sent by petitioner to the Department. Therefore, this becomes a


controversial matter of fact and not fit matter of controversy in the supervisory constitutional jurisdiction.

Moreover, in the assessment order passed by the Income

Tax Officer and the appellate orders the findings are that petitioner has been guilty of concealment and suppression. These findings are findings of facts and they have not been

shown to be completely wrong and, therefore, the petitioner is not entitled to seek the intervention of this Court which has supervisory jurisdiction and it should not exercise its discretion

in favour of a wrong doer. The learned counsel has also tried to show that certain findings of the Income Tax Officer were not justified but we are afraid that we are not the appellate authority

in respect of these findings and, therefore, the same could have been agitated only before the higher Income Tax Authorities. Petitioner had three opportunities in the Department but with no success.‖

95. Assessee cannot avail remedy of constitutional petition

before High Court being dissatisfied with the notices

Mustafa Prestressed R.C.C. Pipe Works Ltd. Karachi v.

Commissioner of Sales Tax (Investigation), Karachi

[(1990) 62 Tax 119 (H.C.Kar.)]

―Assessee‘s factory was still in process of erection and installation and had not yet started commercial production. Income Tax Officer made assessment after due scrutiny and tax demand created which was paid by the assessee. Assessee filed appeal before CIT, against the Income Tax Officer‘s order during pendency of appeal Income Tax Officer issued notices which were replied by the assessee. Assessee cannot avail remedy of constitutional petition before High Court being dissatisfied with the notices. Commissioner was satisfied on the material placed before him that an action has to be taken against assessee. The question of satisfaction of the Commissioner could not be challenged in writ petition.

Proposition that extraordinary jurisdiction of High Court cannot be sought on each and every case where alternate remedy available is not universal proposition of law. In case where an


authority had taken action when it had no jurisdiction on subject-matter of dispute and where absence of jurisdiction was apparent on face of record, constitutional remedy could be availed of. So also where alternate remedy was cumbersome and not effectual and would not give proper relief, in that case also High Court might entertain petition. But while dealing with matter on constitutional side, basic principle before Court would be that case could be decided on basis of available material and it did not require a detailed enquiry and facts were admitted and only question of law and its interpretation required decision of Court. In cases where no such conditions exist and an alternate remedy is provided under statute then High Court would not entertain writ petition.‖

96. High Court cannot examine the question of

controversial facts in constitutional jurisdiction



[1984] 49 TAX 76 (H.C.Kar.)

―The learned counsel for the petitioner attempted to argue

that the ‗free reserves‘ of the petitioner were consisted of several

sums of money received by the company through different

sources which may also have included sale of some of the capital

assets of petitioner and revaluation of some of the capital assets of

the company on account of devaluation of Pakistan currency etc.

which may not legitimately fall within the meaning of ‗income‘.

No such case is set out by the petitioner in the petition and in the

absence of any specific allegation in the petition in this regard we

cannot examine the same. We may however, observe that several

instructions issued by Central Board of Revenue, issued in this

regard were referred by Mr. Khalid Anwar, which laid down the

criteria for determining ‗free‘ and ―unfree reserves‖ of the

company. If the petitioner feels that its ‗free reserves‘ were not

constituted of those items as arc declared by the Central Board of

Revenue as ‗free reserves‘ he may agitate it before appropriate forum, if available to him under the law.‖


97. Remedies available under the law should be exhausted

before invoking the extraordinary jurisdiction of the

High Court

B.P. Biscuit Factory Ltd., Karachi v.

Wealth Tax Officer, II-Circle, Karachi & another

[1982] 45 TAX 17 (H.C.Kar.) = 1981 PTD 217

―They clearly lay down that in such a situation an illegality

in the exercise of jurisdiction by the assessing authority would

confer jurisdictions on this Court in the Constitutional Petition

rather than an assumption alone as has been done in the instant

case. It would, therefore, be clear that the assessing authority

would in the first instance exercise jurisdiction on the basis of

the evidence and the documents before it as to whether the

property in question is liable to assessment of taxes and to what

extent and that the available remedies are exhausted under the

ordinary law before the extraordinary jurisdiction of this court is invoked in the constitutional petition.‖

98. If question of jurisdiction of the assessing officer is not

challenged, writ petition is not maintainable

Meraj Sons, Contractors v.

Income Tax Officer Contarctors Circle-Il, Lahore

[1982] 45 TAX 2 (H.C.Lah.)

―A preliminary objection has been raised by the learned

Deputy Attorney-General that the writ petition under Article 9

of the Provisional Constitution Order No. I of 1981 is not

maintainable unless the petitioner exhausts adequate legal

remedies of appeal and revision available under the Ordinance. I

agree with the learned Deputy Attorney-General that where

there is another adequate and efficacious remedy open to the

petitioner, a petition under Article 9 of the Provisional

Constitution Order, 1981 would be incompetent unless the legal

remedies as well as the remedies provided in the Ordinance are

exhausted. There is, however, an ample authority on the

proposition that where the question of jurisdiction of the

authority passing the impugned order is raised, the remedy of

appeal is not adequate and efficacious as the writ jurisdiction of


the High Court and consequently in such cases, a petition under Article 9 of the Provisional Constitution would be competent.‖


99. Where appeal was dismissed by appellate authorities

on ground of limitation and this order was in

accordance with law, held writ petition against such

order was not competent

Ghulam Rasool v. Income Tax Officer,

Rahimyarkhan and another

[1975] 31 TAX 153 (H.C.Lah.)

―The Appellate Assistant Commissioner dismissed the

appeals holding that the appeals were barred by time as the

demand notice was served on 29.1.1971 and the appeals were

filed on 9.3.1971. The Appellate Tribunal affirmed the decision

and held that the delay in filing appeals before the Appellate

Assistant Commissioner remained unexplained and the

Appellate Assistant Commissioner rightly refused to interfere

with the orders of assessment. On these facts the High Court:

Held, that the petitioners have not succeeded in

bringing their petitions within the ambit of Article 199

of the Constitution. Each one of the orders passed by

the authorities in the hierarchy of the Income Tax

Department is perfectly within their jurisdiction and in

accordance with law. The writ petitions fail and are dismissed.‖

100. Writ not maintainable in the presence of adequate and

efficacious alternate remedy

Sh. Abdul Hakeem v. Centeal Board of Revenue, etc.

[1975] 31 TAX 105 (H.C.Lah.)

―The application dated 19.12.1970 submitted by the

advocate of the petitioner, clearly shows that the petitioner

agreed to be assessed on consolidated income for the ―years

agreed at‖ and according to the Authorities he has been assessed

to tax strictly according to his agreement. If this be the correct

position, then even if the impugned order is found to have been

passed without lawful authority, the petitioner is nevertheless

disentitled to any relief in the exercise of the equitable writ jurisdiction of the Court.‖


101. Constitutional petition does not become competent for

the mere fact that order-in-original has become final



[2004 PTD 1621 (H.C. Lah.)]

―This Court in extraordinary jurisdiction does not sit as a

Court of appeal against the orders of the Tribunals when these

have been recorded by a competent authority observing all

procedural rules including rule of natural justice….Mere fact that

the order-in-original has become final in absence of any appeal

before the hierarchy provided for under the law does not make a

Constitutional petition competent. The claim that the Revenue

refused to make a revision on the aforesaid ground again does not make a Constitutional petition competent.‖

102. Writ is converted into appeal u/s 136

Karachi Properties Investment Co. (Pvt.) Ltd, Karachi v.


[2004 PTD 948 (H.C. Kar.)]

―The request of Mr. Shahenshah Hussain for converting

the petition into the appeal is therefore, accepted and the

petition is treated as an appeal under section 136 of the Income

Tax Ordinance, 1979. However, we would like to clarify that this

indulgence is being shown for the reason that appeal was also

filed within the period of limitation, which was withdrawn under

wrong perception of law and this petition was filed within the

period of limitation provided for filing appeal. Any other person

ignoring the forum of appeal/reference provided in statute and

filing a writ petition only, particularly after expiry of period of

limitation for filing appeal/reference, shall not be entitled for

this concession. The reason being that such course would

tantamount to negate the provisions contained in Article 199 of the Constitution and the period of limitation prescribed in law.

It requires no emphasis that the scope of appeal is much

wider as compared to the rectification of mistake, as envisaged

under section 156 of Income Tax Ordinance, 1979. In


Appeal/Reference proceedings, an aggrieved party is allowed to

raise all the questions of law, arising out of the findings of facts

given by the Tribunal. However, in case of rectification before

the Tribunal, the objection, which is allowed to be raised is

restricted to the rectification of mistake apparent from the record.‖

103. Constitutional jurisdiction cannot be invoked for mere

fact that no further remedy by way of appeal/revision

is available

Mehtab Industries Ltd. Sahiwal v. DCIT/WT and 3 others

[2002] 86 TAX 65 (H.C.Lah.) = 2002 PTD 324

―Learned counsel for the petitioner is correct in point out

that after the order of the Tribunal, the assessee has no further

remedy to avail. However, that fact alone will not require this

Court to sit as a Court of appeal while exercising Constitutional

Jurisdiction to decide contentions matters both on fact as well as

on application of certain provisions of law in the given facts.

Where the law contemplates an end to proceedings after a

decision in appeal or revision, this Court will not convert itself

into a Court of further appeal where the law has not provided

one.‖

Chapter XII

Rule of Evidence

1. Income Tax Authorities to establish by positive

evidence that assessee‟s accounts are unreliable

Amin Bricks Company v. CIT, (Revision) etc.

[(1996) 74 Tax 227 (H.C.Lah)]

―The contention of the learned counsel for the department

that no obligation is cast on Income Tax authorities to establish

by positive evidence that the assessee‘s accounts are unrealisable,

seems to be misconceived; the power of assessing officer under

the law is not merely discretionary power but amounts to a

statutory duty; it is not a purely subjective or arbitrary exercise of

discretion and is required to be exercised judicially and adverse

inference cannot be drawn unless the assessing officer is satisfied that the accounts have been suppressed by the assessee.‖

2. Standard of proof

Syed Akhtar Ali v. CIT, Hyderabad

[(1994) 69 Tax 38 (H.C.Kar)]

―It is always to be remembered that the standard of proof

applicable to prove a positive fact and the one which is required

to prove a negative fact cannot be the same. A high standard is

always applied for the proof of a positive fact while the standard

of preponderance of probability is sufficient to prove a negative

fact. The assessee is required to prove that the failure to return

correct income did not arise from any fraud or gross or wilful

neglect. The assessee merely has to place materials of the

primary facts or the circumstances which in all reasonable

probability would show that he was not guilty of any fraud or

gross or wilful neglect. He may discharge this onus by placing the facts

393

found in the assessment order to show that the facts found therein

had not in the least given an inkling of fraud or gross or wilful


neglect, on the part of the assessee and, therefore, it must be held

without proof of any other fact that there was no fraud committed

by the assessee in his failure to return the correct income nor was he

acting grossly or wilfully negligently.‖

3. Qanoon-e-Shahadat Ordinance is applicable to Income

Tax Ordinance, 1979

Mrs. Rani v. Commissioner of Wealth Tax Lahore

[(1992) 66 Tax 89 (H.C.Lah.)]

―The Qanoon-e-Shahadat Order, 1984 has been made

applicable to all judicial proceedings before any court, a tribunal

or any other authority exercising judicial or quasi-judicial powers

or jurisdiction except an arbitrator. The scope of applicability of

Qanoon-e-Shahadat Order, 1984, is thus much larger than that

of Evidence Act, 1972. It cannot be doubted that the

proceedings before the Income Tax Authorities are judicial in

nature and further that they are exercising quasi-judicial, if not judicial powers.‖

The applicability of the Qanoon-e-Shahadat Order, 1984 to

tax proceedings under the Income Tax Ordinance, 1979 is, therefore, established.

4. A judge cannot be compelled to accept a piece of

evidence

Miss Asia v. Income Tax Appellate Tribunal etc.

[(1980) 41 Tax 1 (S.C.Pak)]

―There is no rule of law compelling a judge to accept

evidence, even though it is uncontradicted, which he believes to be a pack of lies.‖

5. Provisions of Evidence Act not applicable to

proceedings under Income Tax Act

CST/CIT, Rawalpindi v. Pakistan Television Corporation Ltd.

[(1978) 38 Tax 181 (H.C.Lah.)]

―It is correct that the Evidence Act is not applicable to the proceedings under the Income Tax Act.‖

6. Fresh evidence cannot be admitted in appeal unless

requirements of section 131(4) are fulfilled

395 Rule Of Evidence

[2003 PTD (Trib.) 307]

―After hearing both the parties we are of the opinion that the

provisions of section 131(4) are mandatory inasmuch as these

bar the AAC from admitting an evidence, except in special

circumstances which did not exist in this case. As learned DR

rightly argued neither the appellant was prevented by sufficient

cause from producing any evidence, nor the AAC has mentioned

any such eventuality in his order. Further, it is also evident that

during the hearing of the appeal of the assessee the AAC totally

ignored the written reply/comments of the DCIT. He even did

not allow her attendance to represent the departmental case during hearing of the appeal.

Note: This case is applicable prior to promulgation of Qanun-i-

Shahadat Order 1984.

7. Statement in power of attorney not proof in itself

Siva Pratab Bhattadua v. CIT


―It is argued that the power of attorney, which was filed by

the agent, stated that it was a joint family, but a statement in a

power of attorney would not prove itself. It will be like any other statement made by a person.‖

Chapter XIII

Doctrine of Binding Precedent (Stare decisis)

The doctrine of stare decisis is one of the policy grounded on

the theory that justice and certainty require that the established

legal principle, under which right may accrue, be recognised and

followed. In Constitution of Pakistan, this doctrine is reflected in Article 189 and 201 which read as under:

―189. Any decision of the Supreme Court shall, to the extent that it

decides a question of law or is based upon or enunciates a principle of law, be binding on all other courts in Pakistan.‖

―201. Subject to Article 189, any decision of a High Court shall, to

the extent that it decides a question of law or is based upon or

enunciates a principle of law, be binding on all courts subordinate to it.‖

1. Division Bench of a High Court cannot disagree with

another Division Bench without reference to a larger

bench or should leave the matter to be decided by

Supreme Court

Multiline Associates v. Ardeshir Cowasjee

[PLD 1995 SC 423]

―In such circumstances, legal position which emerges is

that the Second Division Bench of the High Court should not

have given finding contrary to the findings of the 1st Division

Bench of the same court on the same point and should have

adopted the correct method by making a request for constitution

of a larger Bench, if a contrary view had to be taken. In support

reference can be made to the cases of the Province of East Pakistan

vs. Azizul Islam PLD 1963 SC 296 and Sindheswar Ganguly vs. State of West Bengal

397


PLD 1958 SC (Ind.) 337, which is the case of Indian Jurisdiction.

We, therefore, hold that the earlier judgement of equal Bench in

the High Court on the same point is binding upon the Second

Bench and if a contrary view had to be taken, then request for constitution of a larger Bench should have been made.‖

Province of East Pakistan v. Dr. Azizul Islam

[PLD 1963 SC 296]

―If there is decision which constitutes direct authority on a

question by High Court another Bench of same strength of the

High Court if inclined to take to a different view they should

have referred the matter to a larger Bench. Alternately, they

could have expressed their doubts regarding the view taken in

the precedent case in a court of equal strength, while yet

following the view and left the matter to be raised in appeal before Supreme Court.‖

2. In case of difference of opinion between benches of

equal strength, larger bench should be formed

Government Employees Cooperative Society, Lahore

v. Income Tax Officer, Circle-07, Lahore

[2004 PTD 62 (H.C. Lah.)]

―Now we advert to the third question as to whether the

learned Tribunal should have referred the matter for decision to

a larger Bench in view of earlier judgment of a co-equal Bench in

I.T.A. Nos. 3381-3391/LB of 1984-85 and I.T.A. Nos. 3686-

3693/LB of 1984-85. It has been contended that in the above

referred judgments, dated 31.3.1986 and 20.11.1989 passed by a

learned Division Bench of Income Tax Appellate Tribunal in

earlier case, deduction on account of overhead expenses at flat

rate of 10% was allowed to Cooperative Housing Societies like

Lahore Cantonment Housing Society from bank interest income,

which could not have been denied by a subsequent Division

Bench through impugned order, dated 23.5.1995 to the present

assessee. In the referred judgments of Hon‘ble Supreme Court

of Pakistan in the cases of “Province of East Pakistan v. Dr. Aziz

Islam” (PLD 1963 SC 296), and ―Multiline Associates v. Ardeshir

Cawasjee and 2 others” (PLD 1995 SC 223), it has been held that

399 Doctrine of Binding Precedent (Stare Decisis)

where a different or contrary rule was reached by an equal Bench

in co-equal jurisdiction from an earlier judgment of the same

Court, the matter should normally be referred to a larger Bench

for decision or should be left to be raised in appeal before he

Hon‘ble Supreme Court of Pakistan. The ratio of these

judgments is that when a Bench of co-equal jurisdiction adopts a

view different or contrary to the view earlier expressed on

principles by a Bench of equal jurisdiction, the legal propriety

demands reference of the case for constitution of a larger Bench

or be left to be settled in appeal by the higher Court.‖

3. All judges of a High Court sitting together much less to

say of a Judge in Chambers cannot declare a judgment

of the apex Court to be per incuriam

Messrs International Tanners & Industries (Pvt.) Ltd. Lahore

v. Federation of Pakistan through Secretary Finance, Government of

Pakistan, Islamabad and 2 others

[2004 PTD 2180 (H.C. Lah.)]

―All judges of a High Court sitting together much less to

say of a Judge in Chambers cannot declare a judgment of the

apex Court to ber per incuriam. The term ―per incuriam‖ in

Concise Law Dictionary by Osborn 1964 Edition is defined as ―a

decision of the Court which is mistaken‖. A decision of the

Court is not a binding precedent if given per incuriam, i.e.,

without the Court‘s attention having been drawn to the relevant

authorities, or statutes.‖ The Dictionary of English Law by Earl

Jowitt, 1959 Edition defines the word ―per incuriam‖ through

want of care, a decision or dictum of a Judge which clearly is the

result of some oversight.‖ In Halsbury‘s Laws of England, Third

Edition, Vol. XXII, P-800 as summarized by Mr. S.M. Zafar,

Advocate in his book/Judge made Laws the subject has been treated as follows:–

―A decision is given per incuriam when the Court has

acted in ignorance of a previous decision of the House

of Lords, of its own or of a Court of coordinate jurisdiction which covers the case before it.


(2) A decision may also be given per incuriam when it is

given in ignorance of the terms of same inconsistent statute or a rule having the force of a statute.‖

4. Pre-partition judgements are binding unless overruled

by Pakistani courts

Ramkola Sugar Mills Ltd. v. CIT, Punjab & NWFP

[(1960) 2-Tax (Suppl.-29) (S.C.Pak)]

―The judgement of Indian courts are binding, unless

overruled by Pakistani Courts, having being pronounced prior to the partition of the Sub-Continent.‖

5. Where judgments of the Pakistani Courts are available

they will prevail over the Indian judgments.

[(2004) 90 TAX 128 (Trib.)]

―Now I come to the last para 29 of the learned Accountant

Member‘s order whereby he supported initiation of proceedings

u/s 66A at the behest of audit and inspection report. In

observing so he relied upon a case law reported as [(2000) 81

Tax 135 (HC)]. With due respect to learned Accountant Member

I am of the considered opinion that initiation of provisions of

section 66A is suo moto by the IAC and not on the direction,

report information, instruction etc. of some other authority

including the appellate authorities or the agency. It is a settled

principle of law and the learned Accountant Member has

unsettled the well established principle of law whereas in other

cases the learned Accountant Member has approved this

principle. It may be observed here that the case law relied upon

firstly relates to section 147(b) of the Income Tax Act which

corresponds to section 65 of the Income Tax Ordinance, 1979

whereas the proceedings in the present case have been initiated

u/s 66A which are quite distinct to section 65. Therefore, so

many judgments have been delivered by the Pakistan as well as

those of Indian Origin on this score which are in favour of the

appellant. Thirdly, when the judgments of the Pakistani Courts

are available those will prevail over the Indian Judgments. In the

case reported as [1989 PTD 591] it has been held that when a

case law of our country is available then there is no need to


follow the judgments of Indian origin. Fourthly, the facts and

circumstances of that case are distinguishable biz the available in

the present case. Further, the issue of initiation of proceedings

u/s 66A at the behest of the audit party/audit note has never

been approved by the higher courts. In this regard a case law

reported as [NTR 1991 Trib 21] is cited wherein it was observed as under:

―A bare perusal of the language of section 66A leaves

us in no doubt that power u/s 66A of the Ordinance

is independent and suo moto as it apparent from the

use of words ―if he considers‖. There is no doubt in

concluding that consideration is of the learned IAC

without any directions and after perusal and

examination of record of any proceedings. In PLD

1972 Lahore 316 it was laid down that the officer

having power is required to decide himself without

any directions. Same view was taken in 1990 PTD

974. In this view of the matter issuance of notice and

assumption of powers by the learned IAC u/s 66A of

the Ordinance on the directions of the learned CIT

(A) was without any lawful authority. Assumption of

powers by the learned IAC u/s 66A of the Ordinance

on the directions of the learned CIT(A) was without any lawful authority.‖


6. Per incuriam judgement of even the highest court is

not binding

Abdul Razzak v. The Collectors of Customs

[1995 CLC 1435 (Karachi High Court)]

―A per incuriam decision, even of the highest court, does not

bind any other court and it matters little that such court itself be at the lowest rung of the hierarchy of courts.‖

[(1999) 79 Tax 1 (Trib.)]

―.... Therefore, its conclusion which was otherwise based

upon the alleged commercial expediency, a term borrowed from

the aforesaid judgement from Indian jurisdiction, resulted in a

decision which can only be described as per incuriam.... We

accordingly, overrule the decision on this issue, of the Division Bench.....‖

[(1999) 79 Tax 153 (Trib.)]

―We are, therefore, not persuaded to agree with the

contentions of the learned representatives for the Department

that the issue already stands decided by the judgements of earlier

Division Benches and Full Bench of this Tribunal, which is

biding on us. It has been held by the erstwhile West Pakistan

High Court, Karachi Bench in the judgement reported as PLD

1963 (W.P.) Karachi, 280 that the law of precedent is not

applicable to per incuriam judgements, which carry no binding

force.‖

7. Deviation from an earlier finding without reference to

the same also makes a judgment per incuriam.

[(2004) 89 TAX 418 (Trib.) = 2004 PTD (Trib.) 752]

―Unfortunately this judgment [1998 PTD 3718 (Trib.) has

also not been produced by the either side before the said

D.B./Deviation from an earlier findings without reference to the

same also makes a judgment per incuriam. In this regard it is

worth-mentioning here the learned AR later conceded to the

extent that this acknowledgement slip is an order as have been

so declared by the Legislature. However, he repeated that the

same being not on the record of the Department, cannot be


cancelled. This argument is also not of any help. In fact the

return form is in triplicate, the first copy of which is kept by the

bank and the duplicate one is returned to the taxpayer after due

seal and signatures of the Income Tax Authority while the third

copy which is also duly filled in and stamped by the bank is

retained in the assessment record. It also bears the same

language as is obtaining in the other copies. It is subsequently

entered in Demand and Collection Register and all other

departmental formalities are also completed except dictating an

order by the designated departmental officer, which requirement

has already been completed in the prescribed pro forma by the

Legislature. One more factor which requires mentioning is that

in the second part of the said return which deals in total income

and payment of tax etc. the words used are ―total income and

Tax Assessed‖ it means that the pro forma has been prescribed

ultimately to make the same more as an order than an income tax return.‖

8. Reliance on foreign cases in the presence of contrary

view taken by Pakistani courts is strongly disapproved

Nishat Talkies Karachi v. CIT

[(1989) 60 Tax 45 (H.C.Kar.) = PTCL 1989 CL 660]

―We disapprove the practice of not considering and relying

upon the judgements of our Superior Courts. It is the duty of

every court and tribunal in Pakistan to follow the judgements of

Supreme Court. Under Article 189 of the Constitution any

judgement of the Supreme Court which decides a question of

law or enunciates a principle of law is binding on all Courts in

Pakistan. Likewise and in the same terms, Article 201 provides

that subject to Article 189 all judgements of the High Court are

binding on all the Courts subordinate to it. We hope in future

learned Tribunal will be careful in this regard.‖


9. Principles of “stare decisis”



[2004 PTD 1621 (H.C. Lah.)]

―Even in Messrs Pfizer Laboratories Ltd. (supra) the

Hon‘ble apex Court observed that a petitioner should not suffer

from laches which may defeat the claim. Further that a party

could not claim/refund of an amount paid to a Government

functionary under a mistake without any constraint of limitation

as that would adversely affect the good governance in financial

matters. The judgment of the Hon‘ble Supreme Court of

Pakistan in re: Pir Bakhsh v. Chairman, Allotment Committee (PLD

1987 SC 145) gives most valuable reading of the law of precedent, stare decisis and res judicata.‖

CIT, Lahore Zone, Lahore v. Badar Ice Factory, Lahore

[1981] 43 TAX 100 (H.C.Lah.)

―The Tribunal agreed with the departmental

representative‘s assertion that each assessment is final and

conclusive and should not be allowed to operate as estoppel or

res judicata on the other assessments, but it was of the view that

as a general rule it would not be permissible to abandon a

consistently applied formula. It accordingly directed the Income

Tax Officer to work out the assessee‘s income on the tank capacity basis, after taking into consideration admissible allowance.

The Income Tax Officer had in this particular case,

rejected the prevailing 1/3rd tank capacity formula and applied

his own formula, which according to him was a better one. The

formula suggested by the Income Tax Officer did not find

favour with the Tribunal, and we have no doubt that a more

accurate formula could have found favour with the Tribunal, as

it itself rejected the department‘s plea of stare decisis. Having

found that the formula suggested by the Income Tax Officer

was neither lucid nor certain and that it was dependent upon

varied and uncertain factors, which in turn were capable of

manipulation, and adoption of such a formula could result in


arbitrariness, it was within the competence of the Tribunal to reject the same.‖

10. Binding judgements and conduct of different Benches

Murad Ali v. Collector of Central Excise & Land Customs

[PLD 1963 W.P. Karachi 280]

―The decorum and dignity requires that a Division Bench

should have respect for the decision given by the other Division

Benches and in case it intends to take a different view it should made a reference to a Full Bench.‖

Bashir Ahmad v. State


―(1) The decision of the Full Bench of the Court cannot be

dissented from by a Division Bench or a Single Bench.

(2) The decision of a Division Bench of the Court cannot be dissented from by a Single Bench.

(3) The decision of a Division Bench of the Court can be

dissented from by another Division Bench or even by

the same Bench and may be overruled by a Full Bench

but it cannot be dissented from by a Single Bench and

(4) The decision of a Single Bench can be dissented from

by another or the same Single Bench and can be

overruled by a Division Bench or a Full Bench.‖

Jamal v. The State


―....a decision of a Division Bench was not binding on

another Division Bench. It is unnecessary to give here elaborate

reasons for that view and all that needs to be said is that it is not

obligatory for a Division Bench if it does not agree with the view

of another Division Bench to follow the views it does not agree

with, and in case it is not prepared to do this, to refer the case to a Full Bench.‖

11. Controversy prevailing between two Division Benches

resolved

[2004 PTD (Trib.) 2786]


―This answer to the proposition in hand settled the

controversy hat arose because of two different views given by

the two Division Benches of the Income Tax Appellate

Tribunal. However, the other issue in this case shall be decided

by the concerned Division Bench, as the same were not subject-matter of the Full Bench.‖

12. “Stare decisis”, meaning of

[2003 PTD (Trib.) 835]

―What emerges from the above in relation to per incuriam

is that any judgment, a statute or a precedent or given as a result

of lack of care or through inadvertence shall be said to be per incuriam.

13. Even obiter dictum of Supreme Court is binding on all

courts in Pakistan

[(1999) 79 Tax 100 (Trib.)]

―....but even if such pleas is raised for the reason that the

reference of revisional order in the judgement of Honourable

Supreme Court is an obiter dictum, the contention would not be

acceptable for the reason that even obiter dictum of the

Honourable Supreme Court is binding on all courts in Pakistan.

Thus after the above observation of Honourable Supreme Court

in the case of Glaxo Laboratories, no discretion is left with any court in Pakistan to take any contrary view.‖

14. Decisions of Income Tax Appellate Tribunal are

binding on all subordinate authorities

[(1996) 73 Tax 132 (Trib.)]

―.....a judgement of the Income Tax Appellate Tribunal has

the force of precedent which can be inferred from the fact that

the judgements of those Courts and Tribunal which are reported

in the law journals under the Law Reports Act, 1875 which have

the force of precedent. Explanation to Section 5 of the Law

Reports Act, 1875 reads as follows:-

―Explanation: For the purpose of this Act the

expression, Court or Tribunal includes the Federal

Shariat Court, A Service Tribunal, the Income Tax


Appellate Tribunal and the National Industrial Relations Commission‖.‖

15. English decisions in pari materia and their binding

value

Commr. Income Tax v. Anantapur Gold Mines


―As regards this particular case, I will only say that while

the Commissioner has rightly based his decision on the

language of the Indian section, which differs materially from

the corresponding section of the English Act, he has fallen into

error in supposing that in Imambandi vs. Mutsaddi [(1918) I.L.R.

45 Cal. 878; 45 I.A. 73: 35 M.L.J. 422; 16 A. L.J. 800: 24 M.

L.T. 330; 28 C.L.J. 409; 23 C.W. N. 50; 5 P.L.W. 276; 20 Bom.

L.R. 1022; (1919) M. W.N. 91; 9 L.W. 518; 47 Ind. Cas. 513],

the Privy Council deprecated the practice of referring to

English decisions, which are the basis of so much of our law in

India. The decisions in question were American decisions and

were correctly described as foreign, an adjective which is

inapplicable and would certainly not have been applied by the

Privy Council to the decisions of the English Courts. As

regards income tax, the Indian Act generally follows the lines

of the English Act, and where the provisions are similar,

English decisions are the best guide to their meaning. The

revenue authority no doubt may not always find it easy to apply

them, and that is one reason why the Act empowers and

requires it to make a reference to the High Court in appropriate cases.‖


16. Difference of opinion vis-à-vis controversy explained

[2004 PTD (Trib.) 2300]

―Per SYED NADEEM SAQLAIN (Judicial Member). – I

have gone through the observations made by my learned brother

the Accountant Member and examined the questions framed by

him. I would like to say that present appeal has not been

accepted for the reason that the Assessing Officer failed to

obtain double approval from the IAC and also that this issue has

not been discussed or made basis for adjudicating the appeals. It

is to be noted that current appeals were decided for the reason

that the Assessing Officer did not comply with the statutory

provisions of section 13, which fact stands admitted by the

learned CIT(A) in his impugned judgment and I am of the

considered view that he erred in law to set aside the case and

remand it back to the Assessing Officer, to provide him an

opportunity to make up the deficiencies which is not permissible

under the law. Therefore, in my view the question for adjudication of a 3rd Member should be framed as under:

Since difference of opinion has arisen between the two

members, the Honourable Chairman is requested to mark this case to a 3rd Member for his opinion on the following question:-

―Whether on the facts and circumstances of the case the assessee‘s appeal should be accepted or rejected?‖

17. A case is only an authority for what it actually decides

and cannot be relied on for a proposition that may

logically arise from it



[2004 PTD 1621 (H.C. Lah.)]

―In re: Trustees of the Port of Karachi v. Muhammad Saleem

(1991 SCMR 2213) the Hon‘ble Supreme Court of Pakistan

referred to the dictum settled in (1898) ACT 375 and Quinn v.

Leathem (1901) AC 495 to affirm the basic principle of law of

precedent, as we understand it in common law, that every

judgment must be read as applicable to the peculiar facts proved,


or assumed to be proved. Further that generality of the

expressions which may be found in the judgment are not

intended to be expositions of the whole law, that governed and

qualified by the particular facts of the case in which such

expressions are to be found. In view of their Lordships a case

was only an authority for what it actually decided and that it

would not be quoted for a proposition that may seem to follow

logically from it. Both the petitioners paid taxes and levies in

accordance with law or at least their understanding of law at the

relevant time without any objection on their part. Had there

been any reservation or objection on their party the would have

agitated the same whereupon the process of raising of demand on recording of an assessment order would have started.

The principle settled by the Hon‘ble apex Court in the

judgments relied upon was therefore, not available to them as

they were not party to it. The matter as far their cases were

concerned matured into a past and closed transaction after the

expiry of the statutory period to make an application for refund.

According to rule 11 of the Central Excise Rules, 1944 and

section 66 of the Sales Tax Act, 1990 refund of levy paid

through inadvertence, error or misconstruction can be claimed

and made only within a period of one year. The inadvertence,

error or misconstruction contemplated in the rule as well as

section 66 of the Act refers to the inadvertence, error or

misconstruction on the part of any of the parties, the taxpayers

or the Revenue, as it existed on the date of issuance of a notice

or actual payment of the levy. In both cases there cannot be said

to be an inadvertence, error or misconstruction on the part of

the petitioners or the Revenue as on the date the payment was

made or a demand was raised through an order-in-original. The

findings of the Hon‘ble Supreme Court recorded subsequently

though in similar facts cannot be made a reason or a basis to

allege existence of inadvertence, error or misconstruction on the part of any of the parties at the relevant time.‖

Chapter XIV

Doctrine of Merger

1. Doctrine of Merger

Glaxo Laboratories Ltd. v. IAC of Income Tax, & Others

[(1992) 66 TAX 74 (S.C.Pak.) = 1992 PTD 932 =

PLD 1992 SC 549]

―Section 66A authorises IAC to examine and initiate action

if the decision is erroneous and prejudicial to the interest of

revenue. The IAC did not have the jurisdiction or power to

initiate same action in respect of the orders passed by the

appellant authorities or the Tribunal. However, as observed

above such power has now been vested in IAC from the year

1991. The controversy is whether after the appellate authority

has passed an order the IAC can still go to take action u/s 66A.

In Corpus Juris Secundum, Volume 57, at page 1067 words Merge and Merger have been defined as follows:-

―The verb to merge has been defined as meaning to

sink or disappear in something else, to be lost to view

or absorbed into something else, to become absorbed or extinguished, to be combined or be swallowed up.

Merger is defined generally as the absorption of a

thing of lesser importance by a greater, whereby the

lesser ceases to exist, but the greater is not increased,

an absorption or swallowing up so as to involve a loss of identity and individuality.‖

CIT v. Farrokh Chemical Industries

[(1992) 65 TAX 239 (S.C.Pak) = 1992 SCMR 523]

―It was observed that the order of the ITO upon appeal

merged in the ......... order of the Income Tax Appellate Tribunal. Here the assessment order made by ITO was

411


reopened u/s 65 and a revised assessment was framed which has

been set aside by the Tribunal. Thus, the order of the ITO has merged in the order of the Tribunal which holds the field.‖

CIT, Karachi v. Sadruddin

[(1985) 51 Tax 83 (H.C.Kar.)]

―The view that has consistently been prevailing and has

been followed is that after the Appellate Court has passed an order, the order of the Original Court is merged into it.‖

2. On appeal original order ceases to exist and merges

itself in the appellate order

CIT, Faisalabad v. Chief Glass House

[(1992) 65 Tax 205 (H.C.Lah.)]

―Indeed it is well recognised general principle that on appeal the

original order ceases to exist and merges itself in the appellate

order of variance. As a necessary corollary, with all the

proceedings taken in pursuance to the original order would be washed away and obliterated.‖

Chapter XV

Legal Maxims

1. Audi alteram partem

CIT, Pakistan v. Fazlur Rehman & Sayeedur Rehman

[(1964) 10 Tax 49 (S.C.Pak)

―No man should be condemned unheard is not confined to

courts but extends to all proceeding by whomsoever held which

may affect the person a property or other rights of the parties

concerned in the dispute, and the maxim [audi alterm partem] will

apply with no less force to proceedings which affect liability to pay a tax.‖

Siemens Pakistan Engineering Ltd. v.

Federation of Pakistan & other

[(1999) 79 Tax 605 (H.C.Kar.) = 1999 PTD 1358]

―Audi alteram partem i.e. no one shall be condemned

unheard is a universally established principle of law. This rule is

applicable to both judicial and non-judicial proceedings (1994) SCMR 2232).‖

Anisa Rehman v. PIAC

[1994 SCMR 2232]

―No order is maintainable if affected person is denied his right of audi alteram partem.‖

Mian Aziz Ahmad, Lahore v. CIT, Lahore

[(1979) 39 Tax 1 (H.C.Lah.)]

―The right to be heard is not confined to proceedings

which are judicial in form. The maxim no man shall be

condemned unheard is not confined to courts but extends to all

proceedings, by whomsoever held which may affect the person

or property or other right of the parties concerned in the

dispute, and the maxim will apply with no less force to proceedings which affect liability to pay a tax.‖

413


Muhammad Khan and Others v. Ghazanfar Ali & Others

[AIR 1920 Lahore 247]

―Orders violating the principles of audi alterm partem are void.‖

[2003 PTD (Trib.) 307]

―The learned DR argued that dictum audi alteram partem

applies to all proceedings of judicial or quasi-judicial nature and

it squarely applies even when an appeal of the assessee against

the department is heard by the AAC or Commissioner of

Income Tax (Appeals), as the department is a party to the case.

In view of the above observations we set aside, the order of the

AAC with the direction to the first Appellate Authority to

examine the written reply/comments of the DCIT, the author of

the assessment order, and also give the DCIT a fair opportunity

of being heard and represent the case of the department. He

should, after hearing both the sides, pass such a judicious order as required under the law.‖

2. Approbate and reprobate

Guarantee Engineers (Pvt.) Ltd. v. Federation of Islamic Republic of

Pakistan through Secretary,

Ministry of Finance, Islamabad and another

[2000] 82 TAX 131 (H.C.Lah.)

―Mere reading of sub-clause (2) of clause (54) clearly

reveals that petitioner has to pay income tax in accordance with

the prevailing Income Tax Law of the Government of Pakistan,

therefore, petitioner is estopped to agitate the matter before

High Court on the well-known principle of approbate and

reprobate as per rule laid down by the Hon‘ble Supreme Court

in Ghulam Rasool‟s case (PLD 1971 SC 376). The petitioner wants

enforcement of contract, through constitutional jurisdiction

which is not permissible as per principle laid down by the Hon‘ble Supreme Court in the following judgements:-

PLD 1958 SC 267 (The Chandpur Mills Ltd. vs. The

District Magistrate, Tippera etc.).

415 Legal Maxims

PLD 1962 SC 108 (Messrs Momin Motors Co. vs. The Regional Transport Authority, Dacca etc.).

1999 YLR 950 (Muhammad Insar etc. vs. Administrator, Town Committee, Kabirwala and 4 others).‖

3. Casus Omissus

State Cement of Corporation (Pvt.) Ltd. v.

Collector of Customs Karachi

[PTCL 1999 CL 1]

―We are not impressed by this argument.... The provision

in question being clear and unambiguous it was not a case of casus omissus.‖

Hansraj Gupta v. Dhera Dun Mussorai

Electric & Tramway Co. Ltd.

[AIR 1933 PC 63, 65]

―A casus omissus cannot be supplied by the court except in

the case of clear necessity and when reason for it is found in the four corners of statutes itself....‖

4. Ejusdem generis







PLD 2000 S.C. 111

―The doctrine of ejusdem generis is well-settled. It means that where general words follow an enumeration of persons or

things, by words of a particular and specific meaning such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same

general kind or class as those specifically mentioned. However, the doctrine will apply when there is nothing in the provision or Act to show a wider sense was not intended or the intention to

give to the general term a broader meaning than the doctrine requires was not manifested.


General terms following particular ones apply only to such persons or things as are ejusdem generis with those

comprehended in the language of the legislature. In other words, the general expression is to be read as comprehending only things of the same kind as that designated by the preceding

particular expressions, unless there is something to show that a wider sense was intended. The rule of doctrine of ‗ejusdem generis‘ will apply unless intention to the contrary is clearly

shown.

Where general words follow the enumeration of particular

classes of persons or things, the general words, under the rule or maxim of construction known as ‗ejusdem generis‘, will be construed as applicable only to persons or things of the same

general nature or class as those enumerated unless an intention to the contrary is clearly shown.

The doctrine applies when the following five conditions exist:

(1) The statute contains an enumeration by specific words;

(2) the members of the enumeration constitute a class;

(3) the class is not exhausted by the enumeration;

(4) a general term follows the enumeration; and

(5) there is not clearly manifested an intent that the

general term be given a broader meaning than the doctrine requires.‖

Prime Commercial Bank and others v. ACIT

[(1997) 75 Tax 1 (H.C.Lah.) = 1997 PTD 605

= PTCL 1997 CL 29]

―....the provision itself which if read as a whole leaves no

room to hold that the words (special deposit receipt) must be

interpreted ejusdem generis and must take colour from the preceding and subsequent words.‖

5. “Expressio unius est exclusio alterius”

Micropak (Pvt.) Ltd., Lahore v. Income Tax Appellate

Tribunal, Lahore and 2 others

417 Legal Maxims

[2001] 83 TAX 451 (H.C.Lah.) = 2001 PTD 1180

―In the present case at the relevant time the express

mention of the word ―loan‖ excluded all other similar or

equivalent terms, transactions, or nature of the receipts. No

maxim of law was of more general and uniform application than

―expressio unius est exclusio alterius‖. Whenever a statute limits a

thing to be done in a particular form, it necessarily includes in

itself a negative, viz. that the thing shall not be done otherwise.

The purpose of introduction of the provisions of section 12(18)

of the Ordinance at the relevant time was to check fictitious

loans and it was after quite some time that it was realized that

the scope of the provisions needed to be expanded. No addition

of the kind could possibly be made nor the defence taken by the

assessees rejected without recording a finding of fact that these

sums were injected in the business and were used as capital,

circulating or otherwise. In other words the defence of the

assessees could have been demolished only by recording a

finding of fact that the alleged share deposit monies were

factually used in the business and therefore, could be taken as

―loan‖ taken for catering the capital needs of the companies.‖

6. “Expressio unius est exclusio alterius” (express

mention of one thing implies the exclusion of another)

was neither absolute nor was of universal application



[2000] 82 TAX 433 (H.C.Lah.) = 2000 PTD 2958

―The rule that express mention of one is exclusion of the rest is neither absolute nor is of universal application.‖


7. Ex abundanti cautela

Beli Ram & Bros. v. CIT

[(1935) 3 ITR 103 (Lah)

&

AG v. Aramago

[(1925) 9 TC 445 (HL)

―An assessment which is made ex abundanti cautela by the assessing authority is called protective or precautionary assessment or alternative assessment. When the department has any doubt as to person who is or will be deemed to be in receipt of the income, protective or alternative assessment is permitted. Thus there is no double assessment if the first assessment is

void.‖

8. Generalia specialibus non derogant

CIT, East Pakistan, Dacca v. Engineers Limited, Dacca

[1967] 16 TAX 81 (S.C.Pak.)

―The scope of clause (xvi) [parallel to section 23(i)(xviii) of Income Tax Ordinance, 1979] which is residuary in nature is thus wholly different from the sums included in clauses (xii), (xiv) and (xv). There being no similarity of subject matter between clauses (xii), (xiv) and (xvi) of section 10(2) the rule generalia specialibus non

derogant was clearly not attracted.‖



―No doubt the maxim generalia specialibus non derogant may be regarded as embodying a good working rule of construction, but when the intention of the legislature to abrogate or modify existing rights is manifest as a necessary implication from the language used, it matters not, in my opinion, that the existing rights are not therein expressly and specifically modified or cancelled.‖

9. Mens rea

Pakistan Hardcastle Wand (Pak) v. Federation of Pakistan etc.

[PLD 1967 SC 1]

―Even in the case of statutory offence, the presumption is that mens rea is an essential ingredient.‖

419 Legal Maxims

10. Noscitur a sociis

Kohinoor Industries Ltd. v. Government of Pakistan Etc.

[(1994) 70 Tax 11 (H.C.Lah)]

―The words used in statute are to receive the meaning

which the context in which they appear admits. Maxwell on

Interpretation of Statute 12th Edition at page 289 explains the principle of noscitur a sociis:-

―Where two or more words which are susceptible of

analogous meaning are coupled together, noscitur a

sociis. They are understood to be used in their cognate

sense. They take, as it were, colour from each other,

the meaning of the more general being restricted to a sense analogous to that of the less general‖.‖

11. No one can be judge in his own cause

New Jubilee Insurance Company Ltd., Karachi v.

National Bank of Pakistan, Karachi

[PLD 1999 S.C. 1126]

―Before delisting the name of the Insurance Company

from the list of approved Insurance Companies, the Bank was

not obliged to obtain adjudication as to the genuineness of its

claim against the Insurance Policy. The basic question was as to

whether there was material available on record on the basis of

which a reasonable unbiased person could have concluded that

there was no basis for rejection of the claim. In the present case

if the Bank would have invoked section 44-B, of the Insurance

Act, and if the second surveyor would have given report to the

effect that the Insurance Company‘s rejection of the Banks claim

was unjustified/unwarranted by law, it would have been justified

to delist the Company from the list of approved Insurance

Companies. Bank did not opt to get an independent surveyor

appointed by the Controller of Insurance under sub-section (1)

of section 44-B of the Act, nor it had recourse to the remedies

provided under the Insurance Policy, namely, arbitration, nor it

invoked the jurisdiction of a competent court of law. The Bank

had itself adjudicated upon the question of genuineness and


correctness of its claim. In other words it had become a judge in

its own cause and delisted the Company‘s name from the list of

approved Insurance Companies, and in consequence thereof it

carried with it a stigma to the effect that the Company was an

Insurance Company which did not honour its legal obligation

under the Insurance Policies. The Bank not only delisted the

Company from the list of approved Insurance Companies, but

circulated the copy of the same inter alia to all of their offices and branches.‖

12. Things should be done as per law as not to be done at

all

Muhammad Saleem Chotia, Advocate v. Zafar Iqbal Owasi, Advocate,

Bahawalnagar and 4 others


―Where law had provided a thing to be done in a particular

manner then it ought to be done in that manner and all other modes of doing it would stand excluded.‖

13. Ut res valeat quam pereat

CIT v. Mahaliram Ramjidas

[1940) 8 ITR 442 (PC)]

―It is a crucial rule of interpretation of statutes that the

words of the statute should be given a sensible meaning so as to

make them effective ..... The provisions in a taxing statute

dealing with machinery for assessment have to be construed

according to the ordinary rules of construction, that is to say, in

accordance with the clear intention of the legislature which is to

make a charge levied effectively.‖

Chapter XVI

Doctrine of res judicata/estoppel

1. Principle of res judicata - not applicable

CIT, Central Zone B, Karachi v. Farrokh Chemical Industries

[(1992) 65 Tax 239 (S.C.Pak) = 1992 PTD 523]

―The doctrine of res judicata does not strictly apply to

income tax cases. The previous decisions or findings can be

reopened if fresh facts come to light which on investigation

would lead to a conclusion different from that of his predecessor.‖

2. Doctrine of res judicata not applicable to income tax

proceedings

CIT v. Pakistan Industrial Engineering Agencies Ltd.

[(1992) 65 TAX 84 (S.C.Pak.) = 1992 PTD 576 =

PLD 1992 SC 562]

―It is now well-settled that principles of res judicata cannot

be applied to the cases on assessments under the Income Tax

Act in the same manner as it is applied in civil proceedings.

Reference can be made to CIT vs. Waheeduzzaman PLD 1965 SC

171, which was followed in a recent judgement namely

Commissioner of Income Centre Zone B vs. Farrokh Chemical Industries,

CAs Nos. 104 to 111 K of 1984. In both the cases the

applicability of principles of res judicata was restricted and in the

later case following Waheeduzzaman‘s case it was observed as follows:

―It may be reiterated that a previous decision of an Income

Tax Authority will not be a bar in the following cases:

(i) Where the earlier decision is clearly open to some objections;

(ii) if it is a decision which is not reached after proper inquiry;

421


(iii) if it is a decision as could not reasonably have been reached on the material before the authority;

(iv) it is a decision which suffers from a defect which falls

within the purview of the ground mentioned in

section 100, CPC and liable to correction thereunder

in second appeal, if it were a decision of a Civil Court;

and

(v) if fresh evidence having a material bearing on the point decided in the previous decision is available.

3. Income tax officer when not bound by res judicata

CIT, East Pakistan Dacca v. Wahiduzzaman [(1965) 11 TAX 296 (S.C.Pak.) = PLD 1965 SC 171]

―Where there is no statutory provision barring reopening

of a matter the applicability of the principle of res-judicata

depends on the necessity of giving finality to litigation and the

injustice of vexing a person twice in respect of the same matter

and these being only general considerations relating to

administration of justice with no technical and defined limits the

applicability of res judicata in such cases will be governed by

considerations arising with respect to the particular statute under

which a matter has been determined. The dominant

consideration always being that the cause of the justice be

advanced ..... under the circumstances the ends of justice will be

served by confining the bar of res judicata in relation to decision

of Income Tax Authorities to cases where the decision is not

clearly open to some objection.

On the basis of assessments for the year 1945-46 and 1946-

47, it was contended that the findings of the Income Tax

Appellate Tribunal, so far as the amounts in question were

concerned, operated as res judicata and these questions could not be

re-agitated in the subsequent assessment proceedings of the same

assessee. The Bombay High Court held in Seth Ram Nath Daga vs.

CIT, (1971, 82 ITR 287) that the question of res judicata need not

detain us long, as there is a plethora of decisions holding that the

income tax authority is not a court and the decision of an income

423 Doctrine of Res Judicata/Estoppel

tax authority in a prior year does not operate as res judicata in the

assessment proceedings of the subsequent years. To quote a few,

they are: Perianna Pillai vs. CIT, (1929, 4 TRC 217), Kaniram Ganpat

Rai vs. CIT, (1929, ITR 332 (Pat.), Tejmal Bhojraj vs. CIT, (1941, 22

ITR 208) (Nag.) Omar Salay Mohammad Sait vs. CIT, etc. vs. CIT,;

Colombo (1961, 2 All S.R. 436 (PC) and Joint Family of Udayan

Chinubhai, etc. vs. CIT, (1967, 63 ITR 416). In Kaniram Ganpat Rai

vs. CIT, (1941, 9 ITR 332) the Patna High Court held that the

Income Tax Officer is not bound by rule of res judicata or estoppel

and he can reopen the assessment if fresh facts came to light

which on investigation would entitle the officer to come to a

conclusion different from that of his predecessor. Similarly, in

Tejmal Bhojraj vs. CIT, (1952, 22 ITR 108) (Nag.) it has been held

that the principle of res judicata or estoppel by record has no

application and the previous finding or decision may be re-open

by the department when the previous decision has not been

arrived at after due enquiry, or the said decision is arbitrary or

fresh facts come to light. In view of this, if the assessee in a

subsequent year is able to satisfy the income tax authority that the

previous finding is not correct either because it was not arrived at

after due enquiry or because it is arbitrary or if the assessee has put

before the income tax authority fresh facts from which a different

conclusion can be arrived at, then in that case the income tax

authority would be justified in arriving at a different conclusion than what was arrived at in the previous proceeding.‖

4. Doctrine of promissory estoppel and legitimate

expectation applies to SAS

Ikhlaq Cloth House, Faisalabad v. ACIT, Circle-12,

Faisalabad Zone, Faisalabad and 3 others

[2001 PTD 3121]

―Besides the doctrine of adherence to the promise as enunciated by Islam our judicial system has also evolved doctrine of promissory estoppel and legitimate expectation. Reference for this is made to ―Federation of Pakistan vs. Muhammad Aslam 1986 SCMR 916, Salah-ud-Din vs. Federation of Pakistan PLD 1991 SC 546, Army Welfare Trust vs. Central Board of Revenue and another 1996 MLD 980.


The principle of promissory estoppel though based on modern jurisprudential trends of various systems of law but it is merely a shade of doctrine of adherence to the promise enunciated by Islam. The parametric computer ballot is also violative of principle of promissory estoppel and legitimate expectation. It, therefore, cannot countenance the just and fair exercise of jurisdiction and it is accordingly held that it is not only violative of promissory estoppel and legitimate expectation but is unjust, unfair and arbitrary and cannot be approved. In view of the conclusion drawn the selection of the case of the petitioner through parametric method of selection is held to be violative of para 6 of Self-Assessment Scheme for the year 2000-2001 and the same is declared to be without lawful authority and of no legal effect and in consequences thereof the notices issued to petitioners are also held to be illegal and of no legal effect.‖

5. Principles of waiver or estoppel do not apply against a

provision of law

CWT, Southern Region, Karachi v. Abid Hussain

[(1999) 80 Tax 89 (H.C.Kar.) = 1999 PTD 2895]

―There is no waiver or estoppel against a provision of law and furthermore the question of exemption, being a question of law, it could be raised at any stage of the proceedings. If any authority is required in support of this it is to be found in the case of Shad Muhammad vs. Pir Sabir Shah, reported in PLD 1995

SC 66.‖

6. Doctrine of promissory estoppel could not be invoked

against the legislature and the laws framed by it

Moin Sons (Pvt.). Ltd., Rawalpindi v.

Capital Development Authority, Islamabad

[1998] 78 TAX 168 (H.C.Lah.)

―The Capital Development Authority would be under an obligation under the law to deduct income tax on all the bills to

be paid to the petitioner in accordance with the rate or rates specified in the First Schedule to the Income Tax Ordinance, 1979, pursuant to sub-section (4) of section 50 thereof. In the

case of failure to deduct tax in accordance with the rate specified in the First Schedule to the Ordinance, the Capital Development Authority will be liable to penal action specified in section 52 of


the Income Tax Ordinance, 1979, meaning thereby that irrespective of sub-clause 73.1 of the agreement between the

petitioner and the Capital Development Authority the liability of payment of tax at the rate or rates specified in the First Schedule to the Ordinance will remain intact. As held by the Supreme

Court in Pakistan through Secretary Ministry of Commerce and 2 Others vs. Salahuddin and 3 others (PLD 1991 SC 546). The doctrine of promissory estoppel cannot be invoked against the legislature or the laws framed by it.

It was held by the Court that payments received by the contractors are deemed to be their income in terms of section 80C of the Income Tax Ordinance, 1979, which does not

contain any provision that the rate of tax shall relate back to the date on which agreement was entered into and not when the payments were received. It was, thus, held therein that the

contractors were liable to, pay tax on the‘ payments received by them under the contracts of the nature specified by sub-section (2) of section 80C of the Income Tax Ordinance, 1979, at the

rate prevailing at the time of receipt of payments and not on the date the contract under which these payments were made were entered into.

In the instant case, the petitioner is not being asked to pay tax at the enhanced rate on the payments which had been made to him

prior to the first of July, 1995, but the tax at the prevailing rate of 5% is being collected on the payments to be received by him on and after the first July, 1995, when the rate of tax was enhanced under

the Finance Act, 1995, from 3% to 5% on the payments to be made to the contractors. Hence, in view thereof, the deduction of tax at the enhanced rate cannot be claimed to have been given retroactive operation.‖

7. Executive actions are not excluded from the operation

of promissory estoppel

Ahmed Maritime Breakers Ltd. v. Central Board of Revenue etc.

[(1992) 65 Tax 268 (H.C.Kar.)]


―Bare perusal of the above citation would make it clear that

executive actions are not excluded from the operation of the

doctrine of promissory estoppel.‖

8. Equitable doctrine of estoppel

Afzal Construction Co. (Pvt.) Ltd. v. Chairman CBR

[(1990) 62 Tax 91 (H.C.Lah.)]

―As regards technical objection to the sustenance of the

writ petition, it may be observed that estoppel does not flow out

of the proceedings which are violative of law. The rule that a

litigant on account of his conduct may be disentitled to

discretionary relief under writ jurisdiction, is an equitable

doctrine by which the court regulates its jurisdiction and is not

an absolute rule.‖

9. Principle of res judicata and estoppel

S.M. Abdullah v. CIT

[(1966) 14 Tax 161 (H.C.Kar.)]

―The doctrine of res judicata or estoppel by record cannot be

applied to proceedings pending before the Income Tax

authorities. Admittedly the proceedings before them are not

judicial proceedings in the sense that they are before the courts

of law. The assessment of Income Tax authorities for a

particular year is binding on the parties to the extent of that

assessment.

But the question is whether the Income Tax authorities are entitled to change the basis of assessment or the footing on

which the previous assessment was made in subsequent years. In other words, whether they are entitled to blow hot and cold in the same breath. On principles of natural justice, finality and

certainty of decision is expected and desirable even before quasi-judicial tribunals like the Income Tax authorities, and if such a tribunal arbitrarily and capriciously comes to a different

conclusion from another tribunal on the same question, it will create uncertainty in the minds of the assessee. In order to avoid resulting injustice, there is an implied limitation on the power of

such tribunal, namely, that it cannot reopen a question unless some fresh facts come to its notice or the previous decision was


arrived at without equity and is perverse. This implied restriction is inherent in every quasi judicial tribunal and there is no reason

why it should not be applied in the case of Income Tax Authority.‖

10. “Res judicata” and “merger” explained

Karachi Properties Investment Co. (Pvt.) Limited, Karachi v.


[2004 PTD 948 (H.C. Kar.)]

―Keeping the above principles in view we will examine, whether the Tribunal committed any illegality, irregularity or impropriety in dismissing the Rectification Application. The

admitted facts are that, during the course of hearing of appeals before the Tribunal, it was contended that the issue pertaining to ALV of property held by the appellants was already decided by

the Tribunal vide judgment, dated 12.1.1989, pertaining to the assessment year 1978-79 to 1985-86 (reported as 1989 PTD (Trib.) 859 and therefore, Inspecting Additional Commissioner

had no jurisdiction to take action under section 66A of the Income Tax Ordinance, 1979 and that the assessment orders, revised by the Inspecting Additional Commissioner, were not

erroneous as the Assessing Officer had merely followed the orders of the Tribunal for the earlier years. This contention was fully considered by the learned Members of Division Bench of

Tribunal, who after consideration of contentions and the earlier order of the Tribunal gave deliberate and conscious findings to the effect that later judgment of the Tribunal 1996 PTD (Trib.)

122 was applicable. Same contentions were reiterated through Rectification Application and while deciding Rectification Application vide order, dated 14.7.1997 impugned in these appeals, it was observed that:-

―Most of submissions made at the bar for the assess

pertains to the merits of the case which cannot be

considered or ruled upon in these applications under section 156 of the Ordinance.‖

The submission is totally fallacious. The concept of merger

in judicial/quasi-judicial proceedings is based on the principle


that the appeal is a continuation of original proceedings and

when an Appellate Authority hears appeal against the order of

original/lower forum, all the issues, considered and adjudicated

upon by the Appellate Court; merge in the order of the

Appellate Court. The condition precedent for the law of merger

is the existence of an original/lower forum order, and the appeal

against the said order. Now coming to the facts of the present

case, we find that the earlier order of the Tribunal is dated

12.1.1989 relating to the assessment years 1978-79 to 1985-86

and assessment orders for the assessment years 1991-92 to 1993-

94 have been completed several years after the orders, dated

12.1.1989 and no appeal was preferred against the said

assessment orders before any appellate forum. The law of merger is, therefore, not attracted at all.

There is another important aspect, which is always to be

kept in view. The principle of res judicata is not applicable to the

Income Tax Law. Every assessment year and order is an

independent unit. The Assessment order has to be made on the

basis of facts, obtaining in that particular year. If the facts and

circumstances are changed in the subsequent year then neither

Assessing Officer nor assessee are bound by any assessment

order or any finding by the Appellate Court given in the earlier

assessment years. With the changed facts and circumstances, the

assessment and the finding can also be changed, to which no

exception can be taken. (CIT, Central, Zone “B”, Karachi v. Farrokh Chemical Industries, 1991 SCC 805).‖

Chapter XVII

Doctrine of mutuality

1. Five-point criteria for applying “doctrine of mutuality”

CIT, Lahore v. The Lyallpur Central

Co-operative Bank Ltd., Lyallpur

[1959] 1-TAX (III-150) (H.C.West Pakistan, Lahore Bench)

=1959 PTD 639 = 1959 PLD 627

―The assessee was registered under the Co-operative

Societies Act 1912. Up to 1948, income of all co-operative

societies and banks was exempt from payment of tax, but on the

20th August 1948, the exemption was withdrawn. Shortly after

this, the Central Board of Revenue issued a circular that profits

earned by co-operative credit societies registered under the Co-

operative Societies‘ Act 1912 from dealing with their own

members would continue to be exempt under the doctrine of

mutuality. The Income Tax Officer while making assessment for

the charge year 1950-51 declined to exclude such profits from

the income of the assessee on the ground that it was not derived

on the basis of mutuality. The Appellate Assistant Commissioner

upheld the Income Tax Officer‘s order on the ground that since

the assessee‘s business consisted of financing Co-operative

Societies and other parties and loans were not restricted

exclusively to members, the income in question had arisen not

because of the relationship between the assessee and its

members but because of the loans advanced to them. The

Appellate Tribunal accepted the assessee‘s contention that

doctrine of mutuality was applicable in case of income derived

from members because one could not assess income arising to oneself.

After discussing a good deal of the case law the

Department‘s reference failed and the Tribunal‘s finding was upheld.

429


Their Lordships while examining the cases cited, observed that each of those cases was based on its own peculiar facts.

Judicial review : This is perhaps the only case in Pakistan where their

Lordships have considered the doctrine of mutuality at a great length,

considering a number of cases cited at Bar. Their Lordships laid down

five point criteria in determining the applicability of the doctrine of

mutuality. After applying the said criterion, their Lordships observed

that interest on loans advanced to members of the assessee should be

exempt from tax.”

Chapter XVIII

Natural justice/duties of court

1. True meaning of statute vis-a-vis duty of court

Jamat-i-Islami Pakistan through Syed Munawar Hassan, Secretary General v. Federation of Pakistan through Secretary, Law, Justice and

Parliamentary Affairs & Muttahida Qaumi Movement (MQM) through Deputy Convener, Senator

Aftab Ahmad Sheikh v. Federation of Pakistan through Secretary, Ministry of Interior,

PLD 2000 S.C. 111

―It is the duty of the Court to find out the true meaning of

a statute while interpreting the same. The general rule is that the

Courts adopt as uniform an approach as possible to the reading

of ambiguous Acts of Parliament which are sometimes

imperfect, obscure and vague. The primary rule of interpretation

of statutes is that the meaning of the legislature is to be sought in

the actual words used by him which are to be interpreted in their

ordinary and natural meanings. The cardinal rule for the

construction of Acts of Parliament is that they should be

construed according to the intention expressed in the Acts

themselves. Where the language of the statute is plain and

unambiguous, and conveys a clear and definite meaning, there is

no occasion for resorting to the rules of statutory interpretation,

and the Court has no right to impose another meaning or to read

into its limitations which are not there, based on a prior

reasoning as to the probable intention of the legislature. Court

can resort to the proceedings of the legislature when the language employed is ambiguous.‖

431


2. Opportunity of being heard is a must even in quasi-

judicial proceedings

Munir Mushtaq v. Collector of Customs (Exports),

Customs House, Karachi and another

[PLD 1999 S.C.1111]

―Due opportunity of hearing and furnishing of the

necessary particulars for which the allegations emanating from

the Customs directly arose was a requirement of such

proceedings notwithstanding the fact that the proceedings at best were of a quasi-judicial nature.‖

3. Article 4 of Constitution of Pakistan 1973 vis-a-vis “due

process of law”

New Jubilee Insurance Company Ltd., Karachi v.

National Bank of Pakistan, Karachi

[PLD 1999 S.C.1126]

―There are certain basic norms of justice. One of the

cardinal principles of such basic norms is that one cannot be a

judge in his own cause. The breach of the said cardinal principle

of jurisprudence will in fact be violative of the right of access to

justice to all which is a well-recognised inviolable right enshrined

in Article 4 of the Constitution. This right is equally founded in

the doctrine of due process of law. The right of access to justice

includes the right to be treated according to law, the right to

have a fair and proper trial and the right to have an impartial

court or tribunal. The term due process of law can be summarised as follows:

(1) A person shall have notice of proceedings which affect his rights.

(2) He shall be given reasonable opportunity to defend.

(3) That the tribunal or court before which his rights are

adjudicated is so constituted as to give reasonable assurance of its honesty and impartiality, and

(4) That it is a court of competent jurisdiction.

Above are the basic requirements of the doctrine due

process of law which is enshrined, inter alia, in Article 4 of the

433 Natural Justice/Duties Of Court

Constitution. It is intrinsically linked with the right to have

access to justice which is a fundamental right. This right, inter

alia, includes the right to have a fair and proper trial and a right

to have an impartial Court or Tribunal. A person cannot be said

to have been given a fair and proper trial unless he is provided a

reasonable opportunity to defend the allegation made against him.‖

4. Affording of an opportunity is a prerequisite for taking

penal action

CIT, East Pakistan & 2 others v. Aswab Ali & others

[(1975) 31 Tax 101 (S.C.Pak)]

―It is an elementary principle of law that no person can be

subjected to an obligation without affording him an opportunity

to show cause. Similarly, an order favouring a person passed by a

competent authority cannot be varied to his disadvantage without hearing him.‖

5. An order affecting the rights of a party cannot be

passed without an opportunity of hearing to that party

CIT, East Pakistan v. Fazlur Rahman & Saeedur Rahman

[(1964) 10 Tax 49 (S.C.Pak)]

―We do not think the mere absence of a provision as to

notice can override the principle of natural justice that an order

affecting the rights of party cannot be passed without an

opportunity of hearing to that party. Yet it cannot be said that it

is not necessary to hear the parties affected in a proceeding u/s

115, CPC. The fact that the proceedings are judicial or quasi-

judicial in nature is sufficient to entitle a party to a hearing in the

absence of specific provision to the contrary.‖

6. Mere technicalities should not be allowed to defeat the

ends of justice

Haji Mehr Din, Lahore v. CIT, Zone-A, Lahore

[(2001) 84 TAX 471 (H.C.Lah.)]

―The rules of procedure are meant to advance the cause of

administration of justice than to thwart it. These technicalities

should never undermine the advancement of purpose for which


judicial or law establishes quasi-judicial forums. Every kind of

such technicality can even be ignored if directly or in-directly it

hinders the process of justice or due relief to which a party is

found entitled to. The Hon‘ble Supreme Court of Pakistan while

considering the place of these technicalities in the administration

of justice observed that laws some time are called an ass, but the

judge should, as far as possible, try not to become one. This

view of the Court is stated in re: Manager Jammu and Kashmir State

Property in Pakistan vs. Khuda Yar and another (PLD 1975 SC 678).

The apex Court in that case reiterated that mere technicalities

should not be allowed to defeat the ends of justice and a

departure could justifiably be made if required by the circumstances of the case.‖

7. If a person charged with a simple crime to felony can

be the most favourite child of law then why an assessee

should not be facilitated in his defence against revenue


[(2001) 84 TAX 471 (H.C.Lah.)]

―The interpretation of the rules of a court or judicial forum

is totally different from the Rules by which the administrative

wings of the State proceed to curb crime, regulate the conduct of

a particular relationship between the citizens or ensures peace,

tranquility, franchise, enjoyment of civil liabilities etc. The rules

of a court or a judicial forum must have only one aim it is that

the person approaching to seek justice must be facilitated and

the rules of Court or procedure should not be used against his

adversary or to destroy the credibility of the forum itself. If a

person charged with a simple crime to felony can be the most

favourite child of law then why an assessee should not be

facilitated in his defence against revenue. A person contributing

a single peny to the exchequer but contesting the remaining

pound deserves more respect than a person who will be

acquitted of killing a human being merely for some minor discrepancy in the evidence here and there.‖

8. Rules must not take away a right conferred by the

relevant statute and should be struck down if found to

be arbitrary or unreasonable



[(2001) 84 TAX 471 (H.C.Lah.)]

―A negative and restrictive interpretation of rules of the

Court or a judicial tribunal in fact abridges the right of an

appellant conferred by a statute. In re: Cannon Products Ltd. and

others vs. Income Tax Officer and others (1985) 51 Tax 114 their

Lordships were of the view that the rules could not take away or

abridge a right conferred by the relevant statute. Also that rule

could be struck down if it is found to be arbitrary or

unreasonable. In a recent judgment while interpreting various

rules of the Income Tax Tribunal a Division Bench of this Court

in re: Pakistan Industrial Gases Ltd. vs. CIT and another (2002) 82

Tax 126 (H.C. Lah.)=(2002 PTD 2903) disapproved the

dismissal of appeal by the Tribunal for the reason that memo of

appeal contained arguments which were violative of rule 10 of

the said rules. In another recent judgment in re: CIT vs.

Muhammad Tariq Javaid (2002) 82 Tax 67 this Court observed that

in matters of collection of revenue the dispute should not be

allowed to be determined in a perfunctory manner as had been

done by the Tribunal. In that case the Tribunal proceeded to

dismiss a departmental appeal on the ground that certified copy

of the impugned order was not attached with the memo of

appeal. Since the refusal of audience by a judicial Tribunal is an

extreme step, it should not normally be resorted to as a matter of

course. The Tribunal in this case having done the same in a

casual manner. Resultantly, the appeal of the assessee/petitioner

to the extent of impugned addition u/s 13(1)(d) of the Income

Tax Ordinance, 1979 shall be deemed pending and will be

decided on merits after allowing the assessee an opportunity of being heard.‖

9. Departmental instructions in conflict with the

statutory law or tends to undo any such law have no

legal effect

United Refrigeration Industries (Pvt.) Ltd. through General Manager v.

Federation of Pakistan through Secretary, Ministry of Finance, Government

of Pakistan, Islamabad and another


[PTCL 2001 CL. 423]

―In absence of any evidence of the sale of compressors by

PEL in the market, the mere establishment of a plant of

compressors by the PEL for the use of the same in the

refrigerators being manufactured in its industrial unit would not

permit the respondents to take away the concession of customs

duty on the import of compressors under the S.R.O. No.

504(I)/90 in question, which would amount to restrict the

market to the refrigerators being manufactured by the PEL and

allow the said Unit to create monopoly in the business at the

cost of healthy and free competition in violation of Constitution

for providing fair opportunity of lawful business under Article 18 of the Constitution of Islamic Republic of Pakistan, 1973.

Without technical interpretation of the term ―knocked

down condition‖ withdrawal of the concession through Custom

General Order was violative of S.R.O. 504(I)/90, dated

07.06.1990 and such withdrawal is of no consequence.

The refusal of the legitimate statutory concession made

available by the Government through the departmental

instructions in the form of Customs General Order would

amount to undo the effect of notification issued u/s 19 of the

Customs Act, 1969. The departmental instructions such as

Customs General Order is issued for guidance of the field staff

to achieve the purpose of the Statute, and if such departmental

instructions are issued in conflict to Statutory law or to undo any

such law, the same would not have any legal effect.‖

10. In presence of a specific provision of law applicable to

the situation, the Assessing Officer could not have

resort to any other provision of law

CIT, Zone-A, Lahore v. Sohaib Nasir

[PTCL 2001 CL. 405]

―In presence of a specific provision of law applicable to the

situation, the Assessing Officer could not have resort to any

other provision of law as the method of calculation of amount

of penalty was totally different from the applicable provisions of

section 110 of the Ordinance, the view adopted by tribunal that


no penalty for default could be imposed u/s 108 was therefore

justified.‖

11. Public power and administrative discretion ought to

be exercised fairly

Neelam Textile Mills Ltd. v. State Bank of Pakistan and 2 others

[PLD 1999 Karachi 433]

―We may further observe that it is by now settled law that all

public power and administrative discretion ought to be exercised

fairly and reasonably and a burden imposed must bear a

reasonable nexus with the harm caused. The concept of

proportionality in the exercise of public power has been

recognised and approved by our Courts and in the case of

Independent Newspaper Corporation vs. Chairman Fourth Wage Board

(1993 SCMR 1533) the Honourable Supreme Court observed the

principle is well-settled that when express statutory power is

conferred on a public functionary, it could not be pushed too far,

for such conferment implies a restraint in operating that power, so

as to exercise it justly and reasonably. In the words of Scarman, L.J

excessive use of lawful powers is itself unlawful.‖

12. Duties of courts in administration of justice

Mustafa Prestressed R.C.C. Pipe Works Ltd., Karachi v.

CST, (Investigation), Karachi

[(1990) 62 Tax 119 (H.C.Kar.)]

―The Courts and quasi-judicial officers are required not

only to do justice but to perform their duties in such a manner

that justice is seen to have been done. In discharge of such

duties no steps should be taken which may create apprehension in

the mind of a litigant that justice may not be done. If a

subordinate officer submits his proposed order to his revisional

appellate or superior authority and after his approval announces it

then it will furnish a strong ground for challenging it, although

such authority may not have amended the order. Such reference

indicates that the judicial mind of the officer passing the

judgment was not free and sufficiently tainted as he had in the

mind the feeling that he has to submit the proposed order to his


superior officer and thus may have thought fit to make such an order which may be acceptable to him.

....if the documents are such which a party has to produce

the same may not be looked into if not produced at the relevant

time, but if reference is to be made to the notifications or

gazettes then they have to be treated differently from the

documents which require proof. Duly notified order can be

referred by looking to the gazettes. It is the primary duty of

every party to produce all the records and documents relevant to

the case. But so statute, rules and notifications which are notified

and gazetted are concerned they should not escape notice of the

court and all efforts should be made to find them out so that a

wrong order may not be passed. Therefore, the court should not

entirely rely upon the parties and their advocates for producing

these documents, but should make search, to find out the state of law applicable to a case.‖

13. Public functionaries are duty bound to decide

controversies between parties after application of

independent mind, supported with reasons

Wapda v. C.I.T., Companies Zone-I, Lahore and 2 others

[(2004) 90 TAX 246 (H.C. Lah.) =

2004 PTD 1973 (H.C. Lah.)]

―It is admitted fact that the petitioner has filed

Constitutional Petition No. 3250 of 1996, which was disposed of

by this court vide order, dated 23.1.1997 in the following terms:-

―The learned counsel of the Department assures the

Court that the revision petition sent to the

Commissioner of Income Tax Peshawar will be

withdrawn with necessary record and will be decided

by the Commissioner of Income Tax, Companies

Zone I, Lahore/herein respondent No. 1 within the

period of two months. He further assures the Court

that the aforesaid authority shall determine the

grievance of the petitioner strictly in accordance with

law and not otherwise. In this view of the matter,

learned counsel for the petitioner does not want to


press this petition at this stage and reserves his right to

come to this court again if his grievance is not redressed within the parameters of law.‖

It is pertinent to mention here that the aforesaid order was

passed by this Court with the consent of the learned counsel for

the parties, therefore, order, dated 23.1.1997 is final between the

parties, thus, the Commissioner of Income Tax has to decide the

revision petition of the petitioner within parameters prescribed

by this Court vide order, dated 23.1.1997. The Revisional

Authority has decided the revision petition without application

of mind and counter-signed the order of the Assessing

Authority, which is not sustainable in the eye of law, as per

principle laid down by the Honourable Supreme Court in

“Ghulam Mohy-ud-Din‟s case (PLD 1964 SC 829). Even otherwise,

after addition of section 24A in the General Clauses Act which is

procedural in character and has retrospective effect, the public

functionaries are duty bound to decide the controversy between

the parties after application of independent mind with reasons,

as per principle laid down by the Honourable Supreme Court in the following judgments:-

“Messres Airport Suport Service v. Airport Manager” (1998

SCMR 2268) and “Zainyar Khan v. Chief Engineer, C.R.& B.C.” (1998 SCMR 2419.‖

It is also settled principle of law that the public

functionaries are duty bound to decide the controversy between

the parties in accordance with law, as per principle laid down by

the Honourable Supreme Court in ―Utility Store‟s case” (PLD 1987

SC 447). This Court has ample jurisdiction to give direction to

the public functionaries to act in accordance with law in view of

Article 4 of the Constitution, while exercising powers under

Article 199 of the Constitution, as per principle laid down by the

Honourable Supreme Court in ―H.M. Rizvi‟s case” (PLD 1981 SC 612) and ―Gull Muhammad Hajuano‟s case” (2003 SCMR 325).

In view of what has been discussed above, this writ

petition is accepted and impugned order is set aside, meaning

thereby the revision petition filed by the petitioner before


Commissioner Income Tax (Respondent No. 1) shall be deemed

to be pending adjudication. Parties are directed to appear before

Respondent No. 1 in his office at 11:00 a.m. on 28.4.2004, who

is directed to decide the revision petition of the petitioner afresh

in terms of aforesaid direction of this court, after applying his

independent mind in accordance with law as expeditiously as possible.

14. Public functionaries must act justly, fairly and

honestly and cannot seek refuge in irrational and

arbitrary classification

Bank Al-Habib and another v. Central Board of Revenue

[(2004) 90 TAX 9 (H.C. Lah.)]

―Examination of the aforementioned precedents leads me to

conclude that public functionary like the respondent cannot treat

with discrimination to persons equally placed. The public

functionaries are required to act justly, fairly evenly, honestly and

cannot seek refuge on the plea of classification which is arbitrary or not found on rational basis.

The argument of the learned counsel for the respondent

that the assessment stood completed under the law, then in

force, the same cannot be re-opened now, being past and close

transaction, has been responded by the petitioner that the

proceedings are still pending in the hierarchy established under

the Income Tax Ordinance. The petitioner can seek benefit in

the proceedings pending adjudication before the Income Tax

Forums and the repeal, will not affect its right, if the same was available and could be granted legitimately by the respondent.

In view of the above discussion, this constitutional petition

is allowed, the impugned order dated 10.11.1999 passed by the

respondent is declared to be illegal and without lawful authority.

Resultantly, the respondents are directed to approve the Special

Reserve created by the petitioner in terms of section 23(1)(ix) of

the Income Tax Ordinance.‖

15. No adverse order should be passed against a party

without affording an opportunity to meet the case

Karachi, Textile Dyeing and Printing Works, Karachi v.


CIT, (Central), Karachi

[(1984) 49 Tax 18 (H.C.Kar.)]

―No party can be condemned on basis of evidence or

information adduced behind his back and without any notice to

him. It is true that technicalities of Evidence Act cannot fetter

the exercise of power of the Assessing Authority but rule of

justice demands that before any adverse order, penalty or liability

is passed or imposed upon a party he should be afforded full

opportunity to meet the case and rebut the evidence used against him.‖

16. Justice should not only be done but must also appear

to have been done

Sheikh Akhtar Ali v. Federation of Pakistan and 4 others

[(1980) 42 Tax 47 (H.C.Lah.)]

―Justice should not only be done but must also appear to have been done.‖

17. Principles of natural justice should be read in all

statutes unless the same are expressly excluded

Kundan Bibi and others v. Walayat Hussain,

Controller of Estate Duty

[(1976) 34 Tax 219 (H.C.Lah.)]

―It is well-established by authority that principles of natural

justice should be read in all statutes unless the same are expressly excluded.‖

18. The court must consider the intention and not merely

the form, while examining a document

Crown Bus Service Ltd. Lahore v. CBR and others

[(1976) 34 Tax 54 (H.C.Lah.)]

―We may observe as a matter of principle, all that the courts of

law are required to examine while considering a document or an

instrument is the intention and not merely the form of any order or

direction continued therein depending upon the facts, circumstances and the context of each case.‖

19. Judicious exercise of discretion

CIT, Rawalpindi Zone, Rawalpindi v.


New Afza Hotel Rawalpindi

[(1973) 27 Tax 212 (H.C.Lah.)]

―Since the discretion is objective it is to be exercised

according to the rules of reason and justice and not according to

the private opinion, according to law, and not humour. It is to

be not arbitrary, vogue and fanciful but legal and regular. And it

must be exercised within the limit to which an honest man competent to the discharge of his office ought to exercise.‖

20. Discretion in law exercised by competent authority is

not open to any exception

Allied Motors Ltd. through Manager Finance v.

Commissioner of Income Tax and another

[2004 PTD 1173 (H.C. Kar.) = (2004) 90 Tax 24 (H.C. Kar.)]

―In the context of the facts and law involved in this case,

the Income Tax Authority competent under the Income Tax

Ordinance, 2001, to exercise the power of IAC is the

Commissioner of Income Tax. Although he is empowered to

delegate his authority to an IAC but the non-delegation of power

to IAC cannot be objected to, as it is within the discretion of

Commissioner of Income Tax and when discretion in law is

exercised by competent authority, it is not open to any exception.

Consequent, to above view it is held that the respondent

No. 1, (Commissioner of Income Tax) has complied with

direction of Hon‘ble Supreme Court in accordance with law and

has passed the order under section 66A of the repealed

Ordinance, in accordance with the substantive law contained n

the said Ordinance in the capacity of IAC. Such order is open to

appeal before the Income Tax Appellate Tribunal, where the

appeal has been preferred and is pending. The Income Tax

Appellate Tribunal shall decide the appeal on merits in

accordance with law. The impugned order passed by the

respondent No. 1, does not suffer from any lack of jurisdiction

and consequently, the appeal stands dismissed in limine.‖

21. Once an authority has jurisdiction, an irregularity in

exercising it will not vitiate the decision


[(2004) 89 TAX 372 (Trib.) = 2004 PTD (Trib.) 769]

―The Court or Tribunal is always clothed with certain

jurisdiction, which is defined as power of Court to hear and

determine a cause to adjudicate or exercise power in relation to it

which includes power to hear and determine issues of law and

fact in accordance with settled provision of law. Once the Court

or Tribunal has jurisdiction, it possess inherent power to decide

the question of their own jurisdiction and its adjudication right

or wrong is binding upon the parties and the remedy against

incorrect or wrong decision is provided by way of appeal,

revision and review and in case remedies are not exhausted, the

order, even if erroneous, will attain finality, and shall be binding

upon the parties. However, if the term jurisdiction refers to be

legal authority to administer justice in accordance with the

means provided by law subject to the limitation imposed by law

and subject to certain terms, such terms must be complied with

in its real spirit while recording order and in case mandatory

conditions for the rightful exercise of jurisdiction are not

fulfilled, the order would not be treated as void but voidable and

in such circumstances, the proceedings cannot be termed as

illegal and without jurisdiction. Absence of inherent jurisdiction

is distinguished from exercise of jurisdiction ignoring law of

procedure, the former would render judgment a nullity and the

latter would be an irregularity and if not objected to in time,

would be accepted as a legal order. In our opinion, jurisdiction

vests with the Panel but Panel has improperly exercised its

jurisdiction and while making distinction between the existence

of jurisdiction and the exercise of jurisdiction in an irregular

manner, the law shall not permit to declare the proceedings to be

impugned at the behest of the person who invoked it in an

irregular manner. Reliance is placed on case-law reported as PLD

1979 SC (AJ&K) 109. In the circumstances supra, we find that

once an authority has jurisdiction, an irregularity in the exercise

of it will not vitiate the decision. Even otherwise it is a procedural lacuna which is curable by all means.‖


22. Principles of natural justice are part and parcel of

every statute unless there is specific provision in a

particular statute to the contrary

Sh. Diwan Muhammad Mushtaq Amad, Karachi v. CBR & others

[(1969) 19 Tax 198 (H.C.Kar.)]

―It has been irrevocably held by decisions of the Supreme

Court that the rules of natural justice are to be read as part and

parcel of every statute unless and until there is a specific provision in a particular statute to the contrary.‖


23. Principles of natural justice cannot be invoked in

deciding a legal issue with reference to the statutory

provision

CIT v. Surridge and Beecheno

[(1968) 18 Tax 72 (H.C.Kar.)]

―We are doubtful of the application of the principles of

natural justice by the learned Tribunal inasmuch as the matter

has to be decided in the first instance strictly in legal plane with

reference to the statutory provision whose proper application clinches the issue.‖

Chapter XIX

Rule of Limitation

1. Where a judgment has not been conveyed to a party

limitation starts running from the date of knowledge

Qureshi Vegetable Ghee Mills Ltd. v. CIT, and 3 others

[2002] 85 TAX 397 (S.C.AJ&K) = 2002 PTD 399

―It is well settled by now that where a judgment has not

been conveyed to a party limitation starts running from the date of

knowledge. The proposition canvassed on behalf of the appellant-

company is that unless result of the appeal is communicated

limitation would not start running cannot be accepted because

then it would mean that it will not be possible to file an appeal if

the Tribunal does not intimate the result to the party. In that case

even the appellant‘s appeal before the High Court was defective

because it has not been filed on the basis of intimation but on the

basis of knowledge.

There is no averment in the memorandum that the decision of

the Tribunal was not in the knowledge of the directors of the

company. Consequently there was no affidavit on this point. As

already stated, on behalf of the company the plea taken in the

memorandum of appeal was that the appeal was within time

because decision of the Tribunal was not communicated to the appellant as required u/s 135(8).‖

2. Time limitation for filing appeal u/s 136 vis-a-vis section

5 of Limitation Act

CIT, Sukkur Zone, Sukkur, through DCIT v.

Gatron (Industries) Ltd.

[(1999) 79 Tax 161 (H.C.Qut.)]

―It is an admitted feature of the case that the order of

Appellate Tribunal was received on14-5-1997, and reference

application could have been made within 60 days, but it was made on 21-7-1997 which is time-barred and it should have

447


been filed on or before 14-7-1997 and as such, it is time-barred

by 7 days for which no explanation whatsoever has been given

but factum of delay has been taken very lightly and even the

exact number of days were not mentioned regarding which

condonation is required.

Insofar as section 5 of Limitation Act is concerned it is

well-settled by now that once limitation starts running no

subsequent event can stop or suspend it and that matters dealt

with by the Limitation Act shall be determined according to the

true construction of the word used by the legislature and the

doctrine of equity, justice and good conscience cannot be

applied as to over-ride and abrogate the express provisions of

the Limitation Act. The statutes of limitation should

consequently be applied without regard to equitable

consideration.‖

3. The provisions of Limitation Act are mandatory and

cannot be waived

CIT, Companies Zone Lahore v. Mst. Khursheed Begum

[(1995) 71 Tax 280 (H.C.Kar.)]]

―The words of section 3 of the Limitation Act are

mandatory in nature and that every suit or application instituted

after period of limitation shall, subject to the provisions of

section 4 to 25 of that Act, be dismissed although limitation has

not been set up as defence. The law, therefore, does not leave

the matter of limitation to the pleadings of the parties as it

imposes a duty in this regard upon the court itself. The limitation

being a matter of statute and the provisions being mandatory

cannot be waived and even if waived can be taken up by the

party waiving it and by the Courts themselves.‖

4. Period of Limitation - factors to be considered while

computing period of limitation

Eastern Poutry Services v. Govt. of Pakistan and others

[1993] 68 TAX 171 (H.C.Kar.)

―Section 160(b) of the Income Tax Ordinance provides

that the period during which any assessment or other

449 Rule Of Limitation

proceedings under the Ordinance are stayed by any Court shall be excluded while computing the period of limitation.‖

5. A reference application made beyond the prescribed

time should be dismissed

CIT, Central Zone A Karachi v. S.M. Naseem Allahwala

[(1991) 64 Tax 31 (H.C.Kar.)]

―So far as the second issue is concerned, it has been dealt

with in several cases, holding that if the reference application is

made beyond the prescribed time Tribunal has no discretion but

to dismiss the same unless the statutory provision to the contrary is made.‖

6. Where a matter is barred by limitation each and every

days delay must be explained

CST Zone A Lahore v. Chenab Textile Mills Ltd., Lahore

[(1980) 42 Tax 140 (S.C.Pak.)]

―We have repeatedly held that where a matter is barred by

limitation each and every day‘s delay must be explained before it can be condoned.‖

7. Delay of each day must be explained

Khalid Cotton Factory, Multan v. ITO A Circle Multan

[(1979) 40 Tax 60 (H.C.Kar.)]

―It is settled principle of law of limitation that each days

delay in filing of reference application has to be explained.‖

8. Time spent in obtaining a certified copy should be

excluded while computing period of limitation

CIT/CST Rawalpindi v.

Pakistan Television Corp. Ltd. Rawalpindi

[(1978) 38 Tax 181 (H.C.Lah.)]

―An intending appellant has got the right to get excluded

the time requisite for obtaining a certified copy even though an

attested copy had been supplied to him by the Income Tax

Officer, alongwith the notice of demand or even if he is not

required to file one with an application for reference.‖

9. Application of provisions of Limitation Act to

proceedings under Income Tax Law


Aftab Medical Stores, Dera Ghazi Khan v. CIT, Lahore

[(1976) 34 Tax 10 (H.C.Lah.)]

―We are, therefore, of the considered opinion that section

14 of the Limitation Act is applicable to the proceedings before the Income Tax Authorities.‖

10. Court holidays falling on the day of expiry of the

prescribed period of limitation should be excluded in

counting the period of limitation

Alyani Cotton Ginning and Pressing Factory,

Rahimyar Khan v. Assistant Income Tax Officer and another

[(1974) 29 Tax 238 (H.C.Lah.)]

―Only court holidays which are to be allowed in addition to

the prescribed period of limitation for filing suit, appeal or

application are those which fall on the day of the expiry of that

period or immediately following it. If the period of limitation is

still running when the court re-opens, the plaintiff or the appellant cannot claim the exclusion of such holidays.‖

11 Time required for obtaining certified copy should

extend the period of limitation

Alyani Cotton Ginning and Pressing Factory,

Rahimyar Khan v. Assistant Income Tax Officer and another

[(1974) 29 Tax 238 (H.C.Lah.)]

―The principle, that the period of limitation comprises two

elements namely, the primary period plus the periods allowed by

the various provisions of the Limitation Act itself, is certainly

not open to any exception, and as long as this period has not

expired, the right of appeal subsists. Such being the case an

application for obtaining a certified copy of the judgement or

decree can be made within this period, with the result that the

period shall stop running until such time as the copy is delivered.

To put it more simply, the period of limitation would stand extended by the time requisite, for obtaining the certified copy.‖

Chapter XX

Miscellaneous

1. Claim for refund of money paid under mistake is not

barred by time

Pfizer Laboratories Ltd. v. Federation of Pakistan

[(1998) 77 Tax 172 (S.C.Pak)]

―The above resume of the case-law of Indian, English and

Pakistani jurisdiction, indicates that the latest judicial trend is to

deprecate and to discourage withholding of a citizens money by

a public functionary on the plea of limitation or any other

technical plea if it was not legally payable by him. It is also

evident that the claims for the refund of the amount paid as a tax

or other levy on account of mistake as to want of

constitutional/legal backing or because of exemption are at par.

It is also apparent that such payments are held to be not covered

by rule 11 of the Central Excise Rules, 1944, or section 27(1) of

the Indian Customs Act, 1951, or section 33 of the Act etc. The

refunds of such amounts are allowed by the Superior Courts

inter alia in India on the basis of section 72 of the Contract Act

which provides that a person to whom money has been paid or

anything delivered by mistake or under coersion must repay or

return it. Such refunds can be claimed either by filing a suit for

the recovery of the amount for which the period of limitation

applicable would be three years under Article 96 of the First

Schedule to the Limitation Act (which provides period of three

years from the date mistake becomes known to the plaintiff) or

the same can be recovered through a constitutional petition if no

disputed fact is involved. The Indian Supreme Court and the

various High Courts referred to in the cited case-law,

hereinabove had ordered the refund of the amounts involved in

exercise of their constitutional jurisdiction under Article 226 of the

451


Indian Constitution. In Pakistan, Sindh and Lahore High Courts

have also allowed the refund of such amounts under Article 199

of the Constitution in exercise of their constitutional jurisdiction

in the cases of Ghulam Abbas vs. Member (Judicial), CBR and Kohinoor Industries Ltd. Faisalabad vs. Ministry of Finance.

But it may not be understood that we are laying down that

a party is free to claim refund of a tax or any other levy paid

under a mistake of fact or law at his sweet will at any time even

after the expiry of 20 years. If a suit is to be filed for the refund,

it should be within statutory period provided under the relevant

Article of the First Schedule to the Limitation Act, or if the

refund of the same is to be claimed by invoking in aid the

constitutional jurisdiction of a High Court, the petitioner should

approach the court promptly. The petition should not suffer

from laches which may defeat the claim. We can‘t approve the

view that a party can claim the refund of an amount paid to a

Government functionary under a mistake without any constraint

of limitation as it would adversely affect the good governance in

financial matters.‖

2. Power to levy taxes is an attribute of sovereignty of a

state



[(1997) 76 Tax 5 (S.C.Pak) = 1997 PTD 1555 =

PTCL 1997 CL 260 = PCTLR SC(Pak) 845]

―The power to levy taxes is sine qua non for a state. In fact it

is an attribute of sovereignty of a state. It is a mandatory

requirement of a state as it generates fiscal resources which are

needed for running a state and for achieving the cherished goal,

namely, to establish a welfare state. In this view of the matter,

the legislature enjoys plenary power to impose such conditions

as to liability or as to exemption as it chooses, so long as they do

not exceed the mandate of the Constitution. It is also apparent

that the entries in the legislative list of the Constitution are not

powers of legislature but only fields of legislative needs. The

allocation of the subjects to the lists is not by way of scientific or

453 Miscellaneous

logical definition by way of mere simple enumeration of broad

catalogue. A single tax may derive its sanction from one or more

entries and many taxes may emanate from one single entry. It is

needless to reiterate that it is a well settled proposition of law

that an entry in the legislative list must be given a very wide and

liberal interpretation. The word income is susceptible as to

include not only what is in ordinary parlance it conveys or it is

understood, but what is deemed to have arisen or accrued. It is

also manifest that income tax is not only levied in conventional

manner i.e. by working out the net income after adjudicating

admissible expenses and other items, but the same may also be

levied on the basis of gross receipts, expenditure etc. There are

new species of income tax, namely presumptive tax and minimum tax.‖

3. Legislature, particularly in economic activities, enjoys

wide latitude in the matter of selection of person,

subject-matters, events etc., for taxation

Call Tell (Pvt.) Limited through Authorized Representative and another v.

Federation of Pakistan through Secretary, Ministry of Law Justice and

Human Rights Division, Islamabad and others

[2004 3032 (S.C. Pak.) = (2005) 91 TAX 1 (S.C. Pak.)]

―The learned counsel pointed out that the Chief

Automation (D.T.), Data Processing Centre, Income Tax

Department, Karachi, by letter dated 15.8.2002, had pointed out

that it was not practicable or humanly possible to provide names

and addresses, NTN etc., for the purpose of collection of

income-tax. It was lastly contended that the Central Board of

Revenue had failed to provide any structure for the workability

and collection of tax. Therefore, this Court was required to lay

down necessary guiding principles by applying doctrine of

reading down a statute so as to make the provisions of section

236 of the Ordinance workable and practicable. Reliance was

placed on the cases Elahi Cotton Mills Limited (supra), Rauf Bakhsh

Qadri v. the State (2003 MLD 777) and Sunil Batra v. Delhi

Administration (AIR 1978 SC 1675).


On the other hand, Mr. Makhdoom Ali Khan, the learned

Attorney General of Pakistan submitted that the other

companies dealing with the pre-paid telephone cards were

collecting and paying tax without any difficulty as required under

section 236 of the Ordinance. It was pointed out that letter

dated 15.8.2002 by the Chief Automation (D.T.), had nothing to

do with the workability or otherwise of the provisions of section

236 of the Ordinance or the collection of advance tax on the

pre-paid cards. The charging provisions of the tax did not suffer

from any taint of invalidity. Therefore, the machinery provisions

of the statute providing the manner and method for collection of

such a tax were to be construed so that it would not defect a tax.

In this regard, the learned Attorney General relied on the cases

of Commissioner of Income Tax Bengal v. Mahaliram Ramjidas (AIR

1940 PC 12) and Khan Abdul Ghafoor Khan DAHA v. Controller of

Estate Duty, Government of Pakistan (1969 PTD 128). It was

brought to our notice that as against 4.6 million P.T.C.L. line

phones and three million mobile phones there were only one

million taxpayers in the country. As many as 279 companies had

been authorized by the Pakistan Telecommunication Authority

to extend the facility of Public Call Offices. The amount of

advance tax deducted from the value of the pre-paid telephone

cards was automatically collected by the petitioner and other

companies for onward payment to the Income Tax Department.

The inter-city telephone cards were used through the PTCL

lines. It was argued that the plain duty of the Court was to

ascertain the intention of the Legislature and to carry it out. It

was not for the Courts to question the policy or motive of the

Legislature or to refuse to give effect to a statute merely because

it appeared to be harsh or unreasonable. Reference was made to

the cases of the Punjab Province v. Malik Khizar Hayat Khan Tiwana

(PLD 1956 Federal Court 200) and Air League of PIA Employees

Union and another v. Federal of Pakistan/The President/Chief Executive

and another 2003 PLC (C.S.) 145). It was lastly argued that the tax

on ―deemed income‖ were examined and upheld by this Court

in cases of Elahi Cotton Mills Limited (supra) and Commissioner of

455 Miscellaneous

Income Tax v. Asbestos Cement Industries Limited and others 1993 PTD 343.

The question of Constitutional validity of advance tax was

exhaustively considered and upheld by this Court in the case of

Elahi Cotton Mills Limited (supra) while interpreting the provisions

of section 80C, 80CC and 80D of the Income Tax Ordinance,

1979. It will be useful to reproduce, in extensor, the relevant portions of the aforesaid judgments:-

―(17) We may now refer to the background which

necessitated the enactment of the impugned sections.

In this regard, it may be pertinent to refer to the final

report of the National Taxation Reforms

Commission, hereinafter referred to as the NTRC, or

December, 1986, which mostly comprised the

representatives of business community representing

various trade associations. NTRC in the above report

commented upon the corruption obtaining in the

Government and semi-Government department as under:-

―So far as corruption is concerned, there is no

doubt in the mind of the public that most

Government and semi-Government

departments are corrupt; many know it from

personal experience, while others have just to

look at the standard of living of the

comparatively low-paid officials, their cars, their

houses, the type of parties they give, the

expensive schools their children attend and the

clothes and jewelry their wives wear to realize

that all this costs a lost of money and that such

expenses could not be covered by the

emoluments of the officials concerned.

Inquiries, suspensions and periodic wholesale

removals have been tried but the basic weapon

against corruption is confiscation of the ill-


gotten gains. This has not been practiced so far.‖

The menace of tax evasion is not a new discovery but

it has been so since the imposition of the same but the

degree of tax evasion has alarmingly increased and so

also the malpractices in the Income Tax Department

entrusted with the levy and collection of tax. Lord

Green in the case of Lord De Walden VIR TC 134

(CA) (1942) 10 ITR Suppl 90, 94 touched upon the question of tax evasion as follows:-

―For years a battle of maneuver has been waged

between the Legislature and those who are

minded to throw the burden of taxation off their

own shoulders on to those of their fellow

subjects. In that battle the Legislature has often

been worsted by the skill, determination and

resourcefulness of its opponents, of whom the

present appellant has not been the least

successful. It would not shock us in the least to

find that the Legislature has determined to put

an end to the struggle by imposing the severest

of penalties. It scarcely lies in the mouth of the

taxpayer who plays with fire to complain of burnt figures.‖

From the above case-law and the treaties, inter alia the following principles of law deductible:-

(vii) That the policy of a tax, in its operation, may

result in hardships or advantages or

disadvantages to individual assessees which are

accidental and inevitable. Simpliciter this fact

will not constitute violation of any of the fundamental rights.

(viii) That while interpreting Constitutional

provisions Courts should keep in mind, social

setting of the country, growing requirements of

457 Miscellaneous

the society/nation, burning problems of the day

and the complex issue facing the people which

the Legislature in its wisdom through legislation

seeks to solve. The judicial approach should be

dynamic rather than static, pragmatic and not pedantic and elastic rather than rigid.

(ix) That the law should be saved rather than be

destroyed and the Court must lean in favour of

upholding the constitutionality of a legislation

keeping in view that the rule of Constitutional

interpretation is that there is a presumption in

favour of the constitutionality of the legislative

enactments unless ex facie it is violative of a Constitutional provision.

(xii) That what is not ―income‖ under the Income

Tax Act can be made ―income‖ by a Finance

Act. An exemption granted by the Income Tax

Act can be withdrawn by the Finance Act or the

efficacy of that exemption may be reduced by

the imposition of a new charge, of course, subject to Constitutional limitations.

(xvii) That generally the effect of a deeming provision

in a taxing statute is that it brings within the tax

net an amount which ordinarily would not have

been treated as an income. In other words, it

brings within the net of chargeability income not

actually accrued but which supposed to have accrued notionally.

(xviii) That when a statute enacts that something shall

be deemed to have been done which in fact and

in truth was not done, the Court is entitled and

bound to ascertain for what purposes and

between what persons the statutory fiction is to

be resorted to.


(xix) That where a person is deemed to be something

the only meaning possible is that whereas he is

not in reality that something, the Act requires

him to be treated as he were with all inevitable corollaries of that state of affairs.

(xxx) That the theory of reading down is a rule of

interpretation which is resorted to by the Courts

when they find a provision read literally seems

to offend a fundamental right or falls outside the competence of the particular Legislature.

(xxxi) That though the Legislature has the prerogative

to decide the questions of quantum of tax, the

conditions subject to which it is levied, the

manner in which it is sought to be recovered,

but if a taxing statute is plainly discriminatory or

provides no procedural machinery for

assessment and levy of the tax or that is

confiscatory, the Court may strike down the impugned statute as unconstitutional.

(xxxii) That the rule of interpretation that while

interpreting an entry in a Legislative List it

should be given widest possible meaning does

not mean that Parliament can choose to tax as

income as item which in no rational sense can

be regarded as a citizen‘s income. The item

taxed should rationally be capable of being considered as the income of a citizen.

(xxxiii) That before charging tax, an assessee must be

shown to have received income or the same has

arisen and accrued or deemed to be so under the

statute. Any amount which cannot be treated as

above is not an income and, therefore, cannot be subject to tax.

(xxxiv) That there is a marked distinction between a tax

on gross revenue and a tax on income, which

459 Miscellaneous

for taxation purposes, means gains and profits.

There may be considerable gross revenues, but

no income taxable by an income tax in the

accepted sense.

(32) we have summarized hereinabove in para 31 the ratio

decidendi of the above discussed cases and certain

pertinent observations made therein. A perusal of

above sub-paras (i) to (xxx) of para. 31 indicates that

the same does not advance the case of the appellants.

On the contrary, they reinforce the principle of law

that the Legislature, particularly in economic activities,

enjoys a wide latitude in the matter of selection of

person, subject-matters, events etc., for taxation. The

presumption is in favour of the validity of the

legislation. The burden to prove that the same is invalid is on the person who alleges it.

However, one can urge that the general observations

contained in sub-paras (xxxi) to (xxiv) of para 31 lend

support to some extent to the appellants case.

However, it should not be overlooked that in none of

the cases from the judgments of which the above

observations have been lifted the questions, as to

whether there can be presumptive tax or the

minimum tax, in view of Entries 47 and 52 of the

Legislative List, was in issue. In this view of the

matter, it would be inappropriate to apply the tests

traditionally prescribed by the Income Tax Act and/or

any other statute.

(34) Keeping in view the above case-law and the treaties

and the aforesaid legal inference drawn therefrom, we

may now revert to the question of vires of impugned

sections. It may again be observed that the power to

levy taxes is a sine qua non for a State. In fact it is an

attribute of sovereignty of State. It is mandatory

requirement of a State as it generates financial

resources which are needed for running a State and


for achieving the cherished goal, namely, to establish a

welfare State. In this view of the matter, the

Legislature enjoys plenary power to impose taxes

within the framework of the Constitution. It has

prima facie power to tax whom it chooses, power to

exempt whom it chooses, power to impose such

conditions as to liability or as to exemption as it

chooses, so long as they do not exceed the mandate of

the Constitution. It is also apparent that the entries in

the Legislative List of the Constitution are not powers

of legislation but only fields of legislative heads. The

allocation of the subjects to the lists is not by way of

scientific or logical definition but by way of mere

simple enumeration of broad catalogue. A single tax

may derive its sanction from one or more entries and

many taxes may emanate from one single entry. It is

needless to reiterate that it is a well-settled proposition

of law that an entry in the Legislative List must be

given a very wide and liberal interpretation. The word

―income‖ is susceptible as to include not only what is

in ordinary parlance it conveys or it is understood, but

what is deemed to have arisen or accrued. It is by

working out the net income tax after adjusting

admissible expenses and other items, but the same

may also be levied on the basis of gross receipts,

expenditure etc. There are new species of income tax, namely, presumptive tax and minimum tax.

(42) We may again point out that the NTRC, which mostly



December, 1986, quoted hereinabove in para 17,

highlighted the corruption obtaining in Government

and semi-government departments and so also to

dishonest tendency on the part of the tax-payers to

evade the payment of lawful taxes by using unfair

means. In such a scenario, the Legislature is bound to

461 Miscellaneous

adopt modern and progressive approach with the

object to eliminate leakage of public revenues and to

generate revenue which may be used for running of

the State and welfare of its people. The imposition of

minimum tax under section 80D is designed and

intended to achieve the above objectives. The rate of

half per cent of minimum tax adopted under section

80D seems to be on the basis of the minimum rate of

tax suggested by the Exports Enhancement

Committee. In our view the above provision falls

within the Legislative competence under Entry 47

read with Entry 52. The approach of this Court while

interpreting the Constitution should be dynamic,

progressive and oriented with the desire to meet the

situation effectively which has arisen keeping in view

the requirement of ever changing society. Applying

the above rule of interpretation, we do not find any

infirmity in the impugned section 80D of the Ordinance.‖

A somewhat similar view was taken by this Court in the

case of Commissioner of Income Tax versus Asbestos Cement Industries Ltd. and others (supra).

The learned Judges of the High Court of Sindh came to the

following conclusion in para. 11 of the impugned judgment that:-

―The advance tax impugned in this petition does not

fall within the purview of presumptive tax regime. The

advance tax collected by the petitioner No. 1 from the

petitioner No. 2 and all other buyers of the pre-paid

telephone cards shall be merely credited with the

Government which can be utilized and adjusted to the

extent found necessary towards the ultimate liability of

income tax due, after it has been determined and the

excess amount if any is to be refunded to the purchasers of pre-paid telephone cards…‖


In our view, the impugned judgment by the High Court of Sindh

is in conformity with the ratio laid down by this Court in the

case of Elahi Cotton Mills Limited (supra) and he same does not

suffer from any legal infirmity so as to warrant interference by this Court.‖

4. Assessment order passed by ITO can‟t be called a final

order

CBR & others v. Chanda Motors

[(1992) 66 Tax 132 (S.C.Pak.) = 1992 PTD 1681]

―Legally speaking order of assessment passed by Income

Tax Officer is an order of original authority but is not final for

the reason that it can be challenged in appeal or revision as the

case may be and would be final only when it goes through all the

forums and the finding of the last forum shall be binding as conclusive.

It can be said without fear of contradiction that order

passed in original proceedings is not final unless it crosses all the

forums set up under that law in which it can be challenged and the order of the last forum would become final.‖

5. IT-30 cannot be a substituted for an assessment order

CIT/WT, Zone-C, Lahore v. Haroon Medical Store, Sheikhupura

[2003] 88 TAX 50 (H.C.Lah.) = 2003 PTD 1530

―An IT-30 form simply comprises of different blocks and

columns meant to be filled in containing all information with

regard to nature, volume and extent of business or occupation of

an assessee and also other relevant information, which

department will normally require of an assessee. This printed

form owes its legitimacy to ingenious arrangement of a host of

information needed by department, rather than any provisions of

law or the rules framed thereunder. In law, there is a concept of

an assessment order in writing, which not only betrays an

application of mind, but also the fact that concerned human

mind was adequately possessed with faculty to demonstrate its

application. An IT-30 form filed in by subordinate officials in

the Department and though signed by an officer will not answer

463 Miscellaneous

the legal requirement of an order in writing, which goes to

―determine‖ the tax payable on the basis of an assessment made prior thereto.‖

6. Islamic jurisprudence and rules of law are equally

applicable to fiscal laws

CIT, Peshawar Zone, Peshawar v. Siemen A.G.

[(1991) 63 TAX 130 (S.C.Pak.) = PLD 1991 SC 368]

―So long as the existing statutes were not brought in

conformity with the injunction of Islam [Article 227 of the

Constitution of Pakistan, 1973] their interpretation, application

and enforcement wherein discretionary judicial elements were

involved, only that course will be adopted which was in accord

with the Islamic philosophy, its common law and jurisprudence.

It was noted that the courts were bound to apply Islamic

rules of interpretation. Unless excluded otherwise, in preference

to the contrary so-called accepted rules of interpretation under

the other jurisprudential concepts and fiscal laws were no exception in that behalf.

As a necessary conclusion drawn from the foregoing, it can

be safely held in this case also that on the touchstone of Islamic

rules of interpretation, which unless excluded otherwise, under

the present Constitutional set-up the courts are bound to apply

in preference to the contrary so-called accepted rules of

interpretation under the other jurisprudential concepts (and the

fiscal laws are no exception in this behalf), the income tax

authorities cannot change the nature of the contract intended by

the parties thereto, under the pretext that the rule of interpretation of a fiscal law in this behalf, is different.‖

Mian Aziz A. Sheikh v. CIT, Investigation Lahore

[(1989) 60 Tax 106 (S.C.Pak)]

―Article 227(1) not only requires that all existing laws shall

be brought in conformity with the injunctions of Islam but it

also commands as a mandate that ―no law shall be enacted

which is repugnant to such injunctions‖. It is command to all

law-making bodies and functionaries. It will be anomalous to


assume that although in Article 227 there is a command to all the

legislative bodies not to enact any law which is repugnant to

Islamic injunctions, nevertheless it permits the functionaries of

the State at all levels to go on enacting rules like those of

evidence which have the force of law and which are repugnant

to the injunctions of Islam. It is in this context that the earlier

made remarks about the conduct of State functionaries in

Pakistan get illustrated, i.e., none would ever assert that he has

power or would lay down a rule having the force of law, which is

repugnant to Injunctions of Islam. In the context of the present

case, neither the legislature, under the command contained in

Article 227(1), has the power to enact a law in any field including

those relating to taxes, which is repugnant to injunctions of

Islam; nor any other functionary including the Income Tax

Authorities have any such power to lay down any un-Islamic rule

which has a force of law.

It is true that with regard to the statutory enactments

Article 227 in its clause (2) commands that: effect shall be given

to the aforediscussed negative command in clause (1), ―only in

the manner provided in this part (Part IX)‖. And thus it may be

argued, it also applies to statutory rule. But, this prohibition in

clause (2) of Article 227 does not apply to decisions by

functionaries of State where in the judicial, quasi-judicial or other

spheres involving exercise of judgment, as distinguished from

exercise of law-making or statutory rule-making authority, they

take decisions. In other words whatever decision is contained in

any such judgment of any such functionary which lays down a

rule of law or declares so as a rule of law the superior Courts,

shall be within their competence in a properly instituted

proceedings to strike it down both under the general mandate

contained in Clause (1) of Article 227 as well as under Article 2A read with the Objectives Resolutions.

This is in addition to the reasoning which prevailed in the

case: Muhammad Bashir vs. The State (PLD 1982 S.C. 139) which

had approved the judgment of the Lahore High Court in the

case of Haji Nizam Khan vs. Additional District Judge, Lyallpur and

465 Miscellaneous

others (PLD 1976 Lahore 930). The approach then was that

although it was not possible for the Courts to enforce Islamic

Law in those fields which were fully occupied by statutory

dispensation, yet, it was not only open to the Courts but they

were duty bound to apply common law of Islam, its

jurisprudence and philosophy, in fields which were not occupied

by statutory dispensation. Various examples of those subjects are

enumerated in the concluding part of the judgment of Haji

Nizam‟s case. What was held in Muhammad Bashir‟s case and for

that matter Haji Nizam‟s case, can now be further supported with

reference to Articles 2A and 227(1) of the Constitution; as also,

what has been held and enforced from amongst the principles of policy by this Court, in the case of Miss Benazir Bhutto.

The foregoing rules of interpretation, would apply to the

present case, to the decision of the Income Tax Authorities

laying down in their judgment, a rule of evidence which goes

against Islamic Law and jurisprudence. It was upheld by the

High Court, though with respect wrongly, It has to be set aside

and declared as of no effect. That being so, while setting aside

the High Court judgment the question referred to the High

Court, quoted in Paragraph 5 supra, is answered in the negative.

The result is that the Income Tax Tribunal was not ‗right in

holding that the sum of Rs.50,072 was properly included in the income of the assessee u/s 16(3)(iii) of the Income Tax‘.‖

7. Remedy to be sought within four corners of Act

Batala Engineering Ltd. v. ITO Lahore [(1974) 29 Tax 190 (S.C.Pak)]

―In the first place, prima facie, a suit does not lie u/s 67 of

Income Tax Act. The Income Tax Act is a complete code by itself

and any grievance in regard to the assessment can be remedied

within the four corners of that Act. Besides, the petitioner had a remedy under the Income Tax Act u/s 30 and 33.‖

8. Realistic approach should be applied for

determination of value of property

Sitex Spinning Mills, Lahore v. CIT, Zone-3, Lahore

[2003 PTD 808 (H.C.Lah.)]


―In the cases of the kind in hand an Assessing Officer

must identify the source where from the understated funds

emanated. That will obviously mean that excess amount was

expended by directors and an addition, if it could be made,

would be possible only in their hands and not in the hands of

the company which is yet to start business. However, as

observed earlier, the idea that the directors of a public limited

company will understate the value of the property purchased

immediately on the incorporation of the company appears far-

fetched, unrealistic and unsupported by general human

experience. Also we are of the view that generally the sale price

of a property cannot be measured by any hard and fast rule

inasmuch as mostly it is the need of the seller and desire of the

purchaser that determines the real value. In case of real estate

particularly, the location or situation of an immovable property

merits high in settling the price.‖

9. Payments (golden handshake etc.) on termination of

services held taxable

Iftikhar Ahmad Butt and 4 others v. Government of Islamic Republic of

Pakistan through Secretary, Ministry of Finance, Economic Affairs and

Statistics, Islamabad and 5 others

2002 PTD 562 (H.C.Lah.)

―The argument that the payment for loss of employment

cannot be taken as salary is of no avail at all. It is repeated that

the law has created a legal fiction that amounts received as

compensation on termination of employment or modification of

a contract of employment will amount to salary and to that

proposition the clear words of the statute bear witness. It is

equally immaterial if subsection (2) of section 16 of the

Ordinance first created a legal fiction of profits in lieu of salary

and then proceeded to extend the same further. We are not

aware of any rule of interpretation which restricts the power of

legislature to create legal fictions one after the other or to

presume the existence of another fact when a fact presumed has

come into existence. Learned counsel for the Revenue is correct

in pointing out the extreme situation as contemplated in the

467 Miscellaneous

definition clause that the provision as framed will bring into tax

net any amount of compensation which is only due to an employee and has not even been from the employer.‖

10. Scope of protection under the Economic Reforms

Protection Act of 1992 - Special Law vs. Income Tax

Zahur Textile Mills Limited v. CBR through Chairman,

Government of Pakistan, Islamabad and 2 others

[2000] 82 TAX 275 (H.C.Lah.) = 2000 PTD 303

―From a perusal of various provisions of Act, 1992 it

becomes clear that it provides protection to the various

economic measures taken on or after 7.11.1990. Although it is

true that section 6 of the Act, 1992 does not use the words

―economic reforms‖ but it is to be seen that this word does not

appear anywhere except in the preamble and the definition

clause. In case of doubt about interpretation of this statutory provision preamble can validly be referred to. It reads as under:-

―Whereas it is necessary to create a liberal

environment for savings and investments and other matters relating thereto;

And whereas a number of economic reforms have

been introduced and are in the process of being introduced to achieve the aforesaid objectives;

And whereas it is necessary to provide legal protection

to these reforms in order to create confidence in the

establishment and continuity of the liberal economic environment created thereby.‖

The definition of ―economic reforms‖ in the Protection of

Economic Reforms Act, 1992 is contained in section 2(b) which reads as under:-

2(b) ‗economic reforms‘ means economic policies and programmes, laws and regulations announced, promulgated or implemented by the Government on and after the seventh day of November, 1990, relating to privatization of public sector, enterprises, and nationalized banks, promotion of savings and


investments, introduction of fiscal incentives for industrialization and deregulation of investment, banking, finance, exchange and payment systems, holding and transfer of currencies; and;‖

A cumulative reading of section 2(b) and the preamble would show that the saving clause apply only to the economic measures taken after 5th November, 1990 pursuant to the economic policy of the Government which granted the incentives. The intention of the legislature becomes manifest from a perusal of the Schedule. If the argument of the learned counsel is correct that section 6 applies to all the notifications issued before the promulgation of the Act, then there was no necessity of specifically mentioning two notifications in the Schedule. It is thus obvious that what section 6 says is the measures taken by the Government after 5th November, 1990 which was the date on which the then Government came into power.‖

11. Civil suit in the absence of mala fide order is not

maintainable

Chemitex Industries Ltd v.

Superintendent of Sales Tax and 3 others

[1999 PTD 1184]

―It is settled law that where the legislators have provided a particular forum for redressal of the grievance, the same could not be circumvented by invoking jurisdiction of the Civil Court. It is not shown in the plaint that the authority which passed the impugned order was not lawfully constituted; that the order under challenge is mala fide and without jurisdiction or that the plaintiff‘s right to natural justice was violated while passing impugned order. All these ingredients being missing in the plaint, the ouster of jurisdiction of a Civil Court as provided in section 51 of the Act, 1990 is complete and this Court has no jurisdiction. Reliance is placed on a Full Bench case of Honble Supreme Court in Abbasia Cooperative Bank and another vs. Hakeem Hafiz Muhammad Ghaus and 5 others PLD 1997 SC 3. This suit being incompetent and barred u/s 51 of the Act, 1990, is liable to be buried at the initial stage.‖

12. Power to make rules is subject to certain limitations

469 Miscellaneous

Pakistan through Secretary Finance, Islamabad and 5 others v. Aryan Petro

Chemical Industries (Pvt.) Ltd. Peshawar and others

2003 PTD 505 (S.C.Pak.)

―A statutory rule cannot enlarge the scope of the section

under which it is framed and if a rule goes beyond what the

section contemplates, the rule must yield to the statute. The

authority of executive to make rules and regulations in order to

effectuate the intention and policy of the Legislature must be

exercised within the limits of mandate given to the rule making

authority and the rules framed under an enactment must be

consistent with the provisions of said enactment. The rules

framed under a statute, if are inconsistent with the provisions of

the statute and defeat the intention of Legislature expressed in

the main statute, same shall be invalid. The rule-making

authority cannot clothe itself with power which is not given to it

under the statute and thus the rules made under a statute, neither

enlarge the scope of the Act nor can go beyond the Act and

must not be in conflict with the provisions of statute or repugnant to any other law in force.‖

Munir Ahmad & Others v. Federation of Pakistan

[(1998) 78 Tax 217 (H.C.Lah) = 1998 PTD 3900]

―The power has been delegated to the Board to frame rules

so as to determine the market value of the asset. The use of the

word market is not without significance, for it requires that the

value should be such which a willing buyer shall pay to a willing

purchaser. If in a rule, valuation fixed has no reference to the

market value, it would be ultra vires of the Act as it is against section 46.‖

13. Discrimination in rule-making is ultra vires

Munir Ahmad & Others v. Federation of Pakistan

[(1998) 78 Tax 217 (H.C.Lah) = 1998 PTD 3900]

―The rule provides for working out the market value i.e.

break up value of the share. If this measure has been adopted for

fixing the value of the share, there could possibly be no

objection. Furthermore, if in the case of listed companies it is


either the listed value or the face value whichever is less which

constitutes the market value, the same treatment should have

been meted out in case of non-listed companies by providing

that the value shall be either the face value or the break up value

worked out by the Wealth Tax Officer whichever is less. The rule is thus clearly discriminatory.‖

14. Civil suit does not lie against tax authorities unless

order is malafide or illegal

Abbas S. Sharoff and another v. Income Tax Officer and others

[(1998) 78 Tax 119 (H.C.Kar.) = 1998 PTD 2884]

―I am of the considered view that a suit seeking setting

aside or annulment of an assessment order passed by Income

Tax Authority will not be maintainable. In order to maintain a

suit challenging any order passed under the Income Tax

Ordinance, 1979, it is incumbent upon the plaintiff to show

presence of these three elements i.e. mala fides, illegality and

absence of jurisdiction to pass such order, otherwise provisions of Section 162 of the Ordinance, 1979 will come into play.‖

15. Basis of taxation in Islam

Khawaja Textile Mills Ltd. v. DCIT & 2 others

[(1998) 77 Tax 1 (H.C.AJ&K)]

―In so far as the violation of Islamic provision is

concerned, it was argued that money collected on a turnover of

business become the property of the individual and cannot be

snatched away through the imposition of taxes. Even in Islam,

the imposition of taxes has a background, Zakat, Ushr, Jaziah are

various forms of taxes. Zakat is not realized only on new income

of the individuals rather it is levied on the entire belongings of

an individual even if there is no income. The tax on the turnover

of a business is thus of a lesser gravity than that of Zakat. Jaziah

is realized from non-Muslims, for defence services rendered by

the state.

In the present day world, the state is managing various

affairs and also provides different services to the people in the

shape of, defence, health, education and so many other

471 Miscellaneous

developments for the benefits of the citizens. All this requires a

huge sum of money which has to be collected from the people.

Without taxes, it is not possible for a Government to defend the

country and to provide other services and facilities or perform

certain functions for the welfare and well being of the people.

Thus the taxes have to be levied for different purposes in

different shapes on different classes of persons. The question of

classification has been discussed in detail in the judgement

delivered by the Supreme Court and justified. The Islamic

Shariah does not prohibit the collection of taxes, from any

particular class of persons in the Islamic Society. The

categorization of the people for the purpose of realizing the tax

is not against the injunctions of Islam. The learned council for

the petitioners had argued that realization of this type of tax is

fraud, lie, deception, cheating, falsification, injustice and

switching of the property of the petitioners through Zulam. The

various references made by the learned counsel to the books on

Islamic jurisprudence, do not support his contention.‖

16. Provisions of Economic Reforms Act, 1992 overrides

Income Tax Law to the extent protections are provided

in the former enactment

Hudabiya Engineering (Pvt.) Ltd., Lahore v. Pakistan through Secretary,

Ministry of Interior, Govt. of Pakistan, Islamabad

[(1997) 76 Tax 302 (H.C.Lah.)]

―In our opinion on its plain reading, section 5 not only

grants full immunity to the holders of foreign currency accounts

but also provides that complete secrecy be maintained in respect

of the transactions in these accounts. We are also of the view

that section 5 and 9 of the Act have different scope and operate

in different fields and are, therefore, not complementary to each

other. While section 5 of the Act in itself provides complete

code so far as foreign currency accounts are concerned, section 9

applies to transactions other than those in foreign currency.

There may be no cavil with the principle of interpretation relied

upon by the learned single Judge that various provisions in the

Act must be read together and the Act should be construed as a


whole but that principle has no application in the present case.

Be that as it may, all principles of interpretation of statutes are

nothing but tools which the courts employ to find true legislative

intent which cannot be defeated by relying upon some abstract principle.

It will be seen from the above that Protection of Economic

Reforms Act, 1992 was promulgated pursuant to the Policy of

the Federal Government to protect various economic reforms

undertaken by it in order to provide incentives to investors and

to encourage inflow of foreign currency into Pakistan. While

interpreting such a law relating to economic matters the Courts

should so far as possible adopt that interpretation which furthers

the object for which the same has been promulgated.

The grant of immunity to the foreign exchange accounts is

not something new or unique. In the past, the Government time

and again introduced various schemes with a view to attract

investment particularly in foreign currency in the country. These

include the issuance of foreign exchange bearer certificates,

foreign currency bearer certificates and foreign deposit bearer

certificates. All these measures are part of fiscal policies which a

Government is entitled to lay down keeping in view the national

and economic interest.

It is also to be seen that as section 4 and 5 of the Act, both

deal with foreign currency, while interpreting section 5, section 4

of the Act cannot be lost sight of. It provides complete freedom

to all citizens of Pakistan and all other persons to bring, hold,

sell and take out foreign currency in any form. It specifically

provides that no person shall be required to make any foreign

currency declared at any stage and also ordains that no one shall

be questioned in regard to the same. This clearly brings out the

legislative intent that no question can be asked from the person

holding any foreign currency in respect of the same. That being

so, no inquiry either into the source or the holding of the foreign

currency can be initiated or made by any agency especially when

non-obstante clause in section 3 of the Act provides that the Act shall over-ride all other laws.

473 Miscellaneous

On consideration of various provisions of the Protection

of Economic Reforms Act, 1992, we have reached the

conclusion that so far as foreign currency accounts are

concerned, the holders thereof, have complete immunity from

inquiry and scrutiny and complete secrecy must be maintained in

respect of those accounts which cannot be violated by any

Agency or functionary. That being so, neither the Income Tax

Authorities nor Federal Investigation agency had any jurisdiction

to hold any inquiry in respect of the transactions in the foreign

currency accounts nor could the same be made basis of criminal prosecution.‖

17. If notice is prima facie defective and error is incurable,

the entire proceedings are null and void

Baby-own v. Income Tax Officer

[1997 PTD 47]

―Provisions of section 65 stipulate three conditions for

issuance of notice u/s 65 of the Ordinance; firstly, the income

chargeable to tax has escaped; secondly income has been under-

assessed; or assessed at too low a rate or has been the subject of

excessive relief for a refund and thirdly if assessment is made u/s

59(1) and there are reasons to believe that any of the aforementioned defects exists in assessment order.

The notice, dated 21-2-1995 u/s 65 aforementioned issued

to the petitioner does not indicate under what subsection of the

section has been issued; when confronted, the learned counsel

for the department contended that as already show-cause notice

was issued to the petitioner; to which the petitioner had

submitted explanation; is understood that the notice has been

issued under sub-para (c) of section 65(1) of the Ordinance,

which is misconceived; as under the law, the assessing officer is

required to apply his mind cautiously and to indicate the assessee

u/s 65(1) under what reason his assessment is sought to be

reopened as reopening of a case to some extent is a penal action,

so the assessee be prepared to meet the consequences of

reopening of an assessment. As the notice prima facie is defective

and the error is not curable as it does not indicate the reason to


reassess the said income already assessed in the hands of the petitioner. The entire proceedings are null and void.‖

18. Powers of CBR - territorial & administrative

jurisdiction

National Electric Co. (Pvt.) Ltd. Gujranwala v.

CIT, Gujranwala Zone

[(1996) 74 Tax 89 (H.C.Lah.)]

―Learned counsel for the petitioner has argued that the

Tribunal was not justified in holding that Central Board of

Revenue had exercised its authority with law by assigning the

cases to the Inspecting Assistant Commissioner of Central Zone,

Lahore. This argument need not be adverted to as almost on the

similar ground the petitioner had challenged the order of the

Central Board of Revenue by filing writ petition which was dismissed with the following observations:

I do not think I can accept the contention of the

learned counsel. Apportionment or distribution of

work among the various officers of the Income Tax

Department is essentially an administrative matter and

is to be regulated by considerations mainly of

convenience. The Central Board of Revenue stands at

the apex in the hierarchy of Income Tax Authorities.

Under section 8 of the Income Tax Ordinance it can

give binding directions to all other Income Tax

Authorities. It is, therefore, difficult to accept the

contention of the learned counsel that in exercise of

its powers u/s 8, it cannot transfer a case or a class of cases from one authority to another.

The order passed by this court was upheld by the

Supreme Court. The petitioner cannot, therefore, be allowed to reagitate the same matter again.‖

19. Budget speech has no legal sanctity

Metro Shipbreakers and another v. Pakistan through the Secretary,

Ministry of Finance, Islamabad, etc.

[1996] 73 TAX 85 (H.C.Queeta)

475 Miscellaneous

―We have also focused our attention to the budget speech

of the Minister made before National Assembly and the relief

claimed for also revolves around it. Insofar as such speeches are

concerned, in our view the same are without legal sanctity

behind it and the Minister‘s speech is of no importance till the

policies as highlighted in such speeches are given legal effect or

cover by way of notification or instruction duly issued by Ministry concerned.

Such speeches are usually motivated by political

consideration and there is considerable difference in between

such speeches and that of a policy recognized by some statute or

enactment. The possibility of exaggeration in such speeches

cannot be ruled out. The pivotal question is whether the points

as highlighted in the speech or the policy intended to be

formulated was subsequently given effect by issuance of a

notification based on some enactment or statute meaning thereby that whether any legal coverage was given or otherwise.

The Minister‘s speech can be termed as representation

made on behalf of Government to highlight certain fiscal

policies intended to be formulated but it must not be lost sight

of that a representation must relate to an existing fact or a past

event; mere statement of intention or a promise-de futuro does not

create an estoppel. A representation, in order to give rise to an

estoppel must be a statement which purports to affirm, deny,

describe, or which otherwise relates to, an existing fact, circumstances or thing, or any past event.

No doubt that the Minister‘s speech has created false

hopes and high expectations which could not be materialized but

the speech having no legal sanctity behind it at the best it can be

declared as promise-de futuro which cannot be enforced by

invoking the constitutional jurisdiction of this court.‖

20. Duty of Government employees working in non-taxable

territories to pay income tax

Sanaullah Khan etc. v. Province of Balochistan etc.

[(1995) 71 Tax 45 (H.C.Quetta)]


―Perusal of above provision manifestly discloses that every

Government employee, receiving salary from Federal

Government, Provincial Government or any local authority of

Pakistan is bound to pay income tax at prescribed rates

irrespective of his status of residence, place of posting or nature

of work. The question about applicability of Income Tax

Ordinance, 1979 in tribal areas has absolutely no relevancy

because income tax deductions are based upon entitlement of

persons for receiving salaries from State exchequer. Therefore,

we are inclined to respectfully observe that reference to above

quoted judgment or bar under Article 227 of the Constitution

which considering liability of Government employees regarding

payment of Income Tax has no nexus with the proposition

under consideration. We, therefore, feel no difficulty in

concluding that once Government employee is receiving his

salary from State exchequer, he automatically becomes liable to

pay tax on his income, without any bar of locality, place of service or nature of duties unless specifically exempted.‖

477 Miscellaneous

21. The de facto doctrine

ITO, Mirpur & 2 others v. Ch. Muhammad Bashir

[(1994) 69 Tax 109 (S.C.AJ&K)]

―The de facto doctrine which is to the effect that if an

appointment order is found to be defective the acts performed

by a functionary are not invalidated. However, it has been clearly

laid down in the judgement that this doctrine has no application

to a person who has not been appointed to a post and starts

functioning without any order, valid or invalid. Coram non judice

functions performed by such a person would not qualify for validation under the de facto doctrine.‖

22. Proceeding taken subsequent to grant of stay order are

nullity in the eyes of law

Shoaib Bilal Corp. Faisalabad v. CIT, Faisalabad & another

[(1993) 67 tax 233 (H.C.Lah.)]

―It is well-settled that stay order, unlike injunctions,

operates from the moment, it is passed irrespective of the time

of its communication ........ legally speaking, the communication

of the stay order granted by this court is not relevant. Even if the

Income Tax Officer was not aware of the stay order granted by

this court, all the proceedings taken subsequent to it are nullity in the eye of law.‖

23. Appeal is continuation of original proceedings

Chanda Motors, Karachi v. CBR

[(1990) 62 Tax 67 (H.C.Kar.)]

―.... appeal is merely a continuation of the original proceedings.

Supreme Court of India reported in [PLD 1957 SC India

(448)] wherein the SC of India after an exhaustive review of

cases held that the legal pursuit of a remedy, suit, appeal and

second appeal are really but steps in a series of proceedings all

connected by an intrinsic unity and are to be regarded as one

legal proceedings.

It is well settled legal position that an order of the original

authority when challenged in appeal or revision and the appellate


or the revisional authority disposes of that appeal or revision, the

original order is merged in the appellate or revisional order, must

also challenge the appellate or the revisional order are too

elementary and admit and no doubt and formerly concluded by the Superior Courts.‖

24. Only natural/legal persons have the vested rights and

not the government/state

CIT v. Olympia

[(1988) 57 Tax 71* (H.C.Kar.)]

―We may observe here that when reference is made in any

law, legal document, legal language or law book or dictionary,

about vested rights, the reference is to the vested right of a

person natural or legal, and never to vested right of the state.

Legal theories relating to vested rights never contemplate vested rights of state.‖

25. It is the duty of the legislature to save income from

escaping assessment

Highland Manufacturers (Pak) Ltd. v. CIT, (West), Karachi

[(1985) 51 Tax 66 (H.C.Kar.)]

―We may observe here that the appellate tribunal or the

courts can barely assume themselves the position of saving the

income from escaping assessment. That jurisdiction vests in the

legislature and those problems are, therefore, really for the

legislature to solve and not for the courts and tribunals to worry about.‖

26. Caption given to a particular provision of law would

not change purport of the provision

[(1983) 47 Tax 5 (Trib.)]

―In our view, the mere caption given to a particular

provision of law would not legally change the real intention and purport of the provision.‖

27. Inordinate delay in seeking discretionary relief under

Article 199 of the Constitution - hit by laches


479 Miscellaneous

S. Muhammad Din & Sons Ltd. v. STO, Special Circle I, Lahore

[(1977) 36 Tax 74 (H.C.Lah.)]

―Regardless of whether the respondents raised this

objection in the written statement or not, the court may refuse

to grant a discretionary relief under Article 199 of the

Constitution if the petitioner is found to be negligent in seeking

it. The fact that the wrong sought to be redressed is a continuing

one does not in the circumstances of this case detract from the

effect of laches.‖

28. Proceedings under the Income Tax Act are judicial

proceedings

Sh.Diwan Mohammad Mushtaq Ahmad, Karachi v. CBR & others

[(1969) 19 Tax 198 (H.C.Kar.)]

―The proceedings under the Income Tax Act are judicial proceedings.....‖

29. General Act - whether overrides the provisions of

Specific Act - held no

Essential Industries, Dacca v. CIT, East Pakistan, Dacca

[1969] 19 TAX 3 (H.C.Dacca)

―For the charge year 1958-59 an application for registration

u/s 26A was made on behalf of the assessee-firm comprising of

five partners and constituted under a partnership deed dated the

12th February. 1954. Applications for renewal of registration for

the subsequent two years were also made on the basis of the

same partnership deed. The Income Tax Officer refused to grant

registration and renewal of registration for all these years on the

ground that these applications were not signed by all the partners

of the firm. When the matter reached the High Court it was

contended on behalf of the assessee that (i) the provisions of

subsections (1) and (2) of section 26A and section 18 of the

Partnership Act do not provide that application for registration

or renewal of registration should be signed by all the partners;

(ii) Rule 3 of the Income Tax Rules which requires that such as

application shall be signed by all the partners is ultra vires of

sub-section (1) and (2) of section 26A of the Income Tax Act;


and (iii) if the application for registration had not been decided

after a lapse of over four years the assessee could have filed the

subsequent applications duly signed by all the partners well

within the period of limitation.

Held, that

(i) the expression such person or persons occurring in

sub-section (2) of section 26A clearly shows that the

power of fixing the number of persons requiring to

file such application has been delegated to the rule

making authorities. Therefore, the contention that rule

3 of the Income Tax Rules is ultra vires of section 26A is of no substance;

(ii) it is clearly laid down in the Rules that the application

should be signed by the partners and the Income Tax

authorities have, therefore, rightly refused to entertain this application in question;

(iii) the Partnership Act is a General law which will govern

the business transaction of the firm but it cannot

override a specific provision. In fact, this specific

provision shall override the general provisions made in the Partnership Act; and

(iv) it is indeed deplorable that such applications are left

unattended by the department for years and then are

turned down for technical defects. Had this

application been disposed of expeditiously the

assessee would have been spared some financial loss.

At the same time it is also true that a firm should be

vigilant about its rights and should be aware of the rules required to file.‖

30. Where a withholding agent fails to deposit tax in the

Treasury, the department instead of penalizing the

taxpayer should take action against the defaulting

withholding agent

[(2004) 89 TAX 365 (Trib.) = 2004 PTD (Trib.) 441]

481 Miscellaneous

―Before parting with the appeal we would like to observe

that under section 50(8) of the Ordinance the sums deducted or

collected, or purported to have been deducted or collected under

section 50 are to be treated as payment of tax on behalf of

assessee and under section 51 of the Ordinance every person

deducting or collecting tax under section 50 is to issue a

certificate at the time of making payment of the sum from which

tax has been deducted or collected, and therefore, an assessee

becomes entitled to the credit of tax when withholding agent as

representative of the Federal Government withholds tax from

the payment made to the payee. In case the withholding agent

does not comply with the statutory requirements of timely

depositing the tax into the Government exchequer, then the

department can proceed against the withholding agent with all consequences as provided under the law.‖

31. Right of appeal is a creature of statute and there can

be no right of appeal unless the statute confers it

Sui Southern Gas Company v. Federation of Pakistan

[2002] 86 TAX 254 (H.C.Kar.) = 2002 PTD 150

―As such the petition is misconceived and without

jurisdiction. We do not however agree with the learned counsel

for the respondent as what has been impugned is an order

passed under section 53 of the Ordinance according to which

advance income tax of the 1st quarter for the assessment year

2001-2002 has been adjusted/recovered from the determined

refund due to the petitioner. The said order is an order passed

under section 53 of the Ordinance is not appealable as has been

held by the Hon‘ble Supreme Court of Pakistan in re: Chairman,

Central Board of Revenue, Islamabad and 3 others vs. Messrs Pak-Saudi

Fertilizer Ltd. reported as [2001] 83 TAX 119 (S.C.Pak) = 2000

PTD 3748 (S.C.Pak) which is as under:

The right of appeal is a creature of statute and there

can be no right of appeal unless it is conferred by the statute. Perusal of section 129 of Ordinance, 1979 would show that the Legislature has purposely not

mentioned section 53 of the Ordinance, 1979 in


respect of payment of advance income-tax so as not to make it appealable, considering that non-payment

of the advance income-tax was to be subsequently dealt with under section 87 of the Ordinance, 1979, which order if passed would have the effect of

enhancement or increase of liability of the assessee/the respondent. The instant case is not even of the charge of additional tax for failure to pay

advance income-tax under section 87 of the Ordinance so as to treat the impugned order to be one of increase or enhancement of the liability of the

assessee or part of process of assessment. In the circumstances, we are of the view that the petition under Article 199 of the Constitution was

maintainable and the learned members of Division Bench of Sindh High Court rightly held so.

Perusal of section 129 of the Ordinance, 1979 would show that the legislature has purposely not mentioned section 53 of this Ordinance, 1979 in respect of payment of advance income tax so

as not to a make it appealable. Considering that non-payment of the advance income tax was to subsequently dealt with under section 87 of the Ordinance, 1979, which order if passed would

have the effect of enhancement or increase of liability of the assessee the respondent.

In view of the enunciation of law on the subject by the Hon‘ble Supreme Court of Pakistan and the circumstances of the case, we are the considered view that the petition is

maintainable and the preliminary objection advanced by the learned counsel for the respondents repelled.

In our view the contention of the learned counsel for the

petitioner has force and therefore, the ratio of income tax for the

purpose of computing advance income tax installment under

section 53 of the Ordinance for the first quarter is 0.57% of turnover and should be calculated accordingly.‖

32. Once the assessee had supported the claim on the basis

of a receipt issued by the Postal Authorities burden of

proof shifted on the Department to rebut

483 Miscellaneous

Noble Petroleum Co. (Pvt.) Ltd., Lahore v. IT/WTO and 3 others

[2003] 87 TAX 100 (H.C.Lah.)

―After hearing the learned counsel for the parties and on going through the postal receipt issued by the concerned Departmental Authorities, we are of the view that it sufficiently supports the case of the assessee. Once the assessee had supported the claim on the basis of a receipt issued by the Postal Authorities burden of proof shifted on the Department to rebut that no such statement was ever sent through post as alleged. Instead the Assessing Officer relied upon the reply of his alleged query made to the staff of RCIT Office if such statement had ever been received in that office. The assessee in response to a notice, dated 19.2.1997 took up the plea that the required statement was submitted to RCIT Office which was well in time. A photocopy of the postal receipt was also submitted with the reply. Neither the Revenue authorities nor the learned Tribunal ever disputed that Postal Authorities did not indicate the receipt of a registered letter by them. Instead they attempted to discard the receipt on the basis which were totally irrelevant to the fact in hand. Admittedly the postal receipt was issued on receipt of a letter addressed to RCIT. Therefore, a presumption did arise that the said letter must have reached its destination in usual course of business. That being so we are of the view that after discharge of the initial burden by the assessee the Revenue could not bring home in clear terms that no statement under section 143B of the Ordinance was ever sent to the Revenue.‖

33 In the presumptive tax regime notice under section

61/62 of the Income Tax Ordinance, 1979 cannot be

issued

Gear Hobbing Limited v. CIT and another

[2003] 88 TAX 38 (H.C.Kar.) = 2003 PTD 739

―The presumptive tax regime is entirely different to the normal assessment of tax and in the presumptive tax regime neither any total income is computed nor any expenses are allowed. No total income is determined and the entire sales are deemed to be income on which fix rate of tax is recovered. In the presumptive tax regime there is no concept of probe, inquiry


or proceedings enunciated under section 61 and 62 of the Income Tax Ordinance, 1979, and therefore the question of issuing any notice under section 61/62 of the Income Tax Ordinance, 1979 does not arise. In the facts and circumstances of the case when presumptive tax regime is adhered to there is no question of issuance of notice under section 61/62 of the Income Tax Ordinance, 1979. Mr. Ather Saeed has further submitted that, he was not confronted on the point that, the income was covered under the presumptive tax regime. In view of the admitted position that, the appellant/assessee was served with the notice for reopening of assessment and the appellant choose not to file the return and not to appear initially before the Assessing Officer and subsequently addressed a letter only to the Deputy Commissioner of Income Tax, the Assessing Officer had no option but to finalise the assessment in the absence of the appellant. The appellant disentitled himself from the benefits which he could have availed by making compliance of the notice issued to him by Assessing Officer. No body can be allowed to take advantage of his own wrong. In the above circumstances, when the assessment has been finalized under section 80C of the Income Tax Ordinance, 1979 under presumptive tax regime, the question of issuance of notices under section 61/62 does not arise. No substantial question of law arises, requiring any consideration or interpretation by this Court and consequently the appeal is dismissed in limine.‖

34. Presumption as to service by post is available only

where posting by registered post is proved

Hussain Food Corporation, Multan v. CIT, Multan Zone, Multan

[2003] 88 TAX 44 (H.C.Lah.) = 2003 PTD 1516

―The provisions of section 154 of the late Ordinance

provided for service of notice, order or requisition on a person

named therein ―either by post or in the manner provided for

service of a summons issued by a Court under the Code of Civil

Procedure‖. Section 27 of the General Clauses Act, 1897

provides that where-ever in a Provincial or a Central Statute the

expression ―served by post‖ or any others similar expression is

used, then ―the service shall be deemed to be effected by

485 Miscellaneous

properly addressing, prepaying and posting by registered post a

letter containing the document‖. This section further provides

for raising of a presumption in that specific background. It is laid

down that unless the contrary is proved the service of addressee

shall be deemed to have been effected at the time at which the

letter would be delivered in the ordinary course of post. It

naturally means two things. Firstly, that where a letter containing

the document is posted in the manner laid down in the section,

it shall be presumed to have reached the addressee at the time it

would be delivered in the ordinary course of post. Secondly, that

the presumption raised is rebuttable which was so found by this

Court in a case reported as re: Messrs Muhammad Abdullah and

Sons vs. The Commissioner of Income Tax Lahore (PLD 1955 Lah.

417). Where a letter has been addressed in the manner given in

the section, a person denying service shall have to prove that

service of notice was not in fact effected on him. In the

aforesaid judgment this Court expressed the opinion that a

further presumption arose on account of an endorsement made

on the letter by the postal authorities. It was held that where a

postal notice served in accordance with the requirements of

Displaced Persons (Compensation and Rehabilitation) Act, 1958

was returned with the endorsement ―refused‖ on it, there was

preponderance of authority in favour of raising a presumption

and holding that the registered cover has been refused by the

assessee. However, the presumption so drawn was again held to

be rebuttable and the onus for which rebuttal was held on the

addressee. In re: Messrs Sampak Paper & Board Mills (Pvt.) Limited

vs. Rana Maqsood Ahmad 1995 PLC 429 this Court expressed the

view that presumption as to service by post would not be available when posting by registered post was not proved.‖

35. Legality of service through Postal Certificate cannot

be challenged after compliance as section 154(6)


[2003] 88 TAX 44 (H.C.Lah.) = 2003 PTD 1516

―The provisions of section 154(i) of the late Ordinance and

those of section 27 of the General Clauses Act, 1897 when read


together mean that presumption of effective service will arise

only if the method explained in section 27 of the Act has been

strictly followed. This naturally means that a notice, order and

requisition issued in a manner not prescribed in that section will

not give rise to a presumption of effective service. It will

however, be seen at the same time that if an assessee, witness or

other person actually appears or is represented after receipt of a

notice issued under UPC then sub-section (6) of section 154

providing for a bar to challenge the validity of service will come

into play.‖

36. Legal formalities for proper services of notice are to be

fulfilled


[2003] 88 TAX 44 (H.C.Lah.) = 2003 PTD 1516

―The second mode of service of summons provided for in

section 154 is explained in Rules 17 and 20 of Order-V of CPC.

This method can be resorted to both as alternative as well as

alongwith the method provided for service through post. Rule

17 of Order-V of CPC provides for service of notice upon an

agent of a party while rule 20 of that Order provides for

substituted service. The provisions of sub-section (1) of section

154 to our understanding do not contemplate any bar that a

notice, order or requisition must first be served through post and

if that method does not succeed then in the manner provided for

Order-V CPC. The purpose of law obviously being to employ

every mode so that the respondent, a party or a witness has

sufficient knowledge that some proceedings are pending before

Income Tax Authorities including the Tribunal. The two

methods given in the section are, therefore, not exclusive of each

other. However, the requirement of law or the presumption of

service given in section 27 of the General Clauses Act, 1897 will

be available if the procedure in sending that notice under section has been followed.‖

37. Issuance of a notice under postal certificate is neither

illegal nor improper


487 Miscellaneous

[2003] 88 TAX 44 (H.C.Lah.) = 2003 PTD 1516

―The upshot of the above is that issuance of a notice under

postal certificate is neither illegal nor improper. Therefore, a

person appearing in response to notice will be hit by the

mischief of sub-section (6) of section 154 of the late Ordinance.

However, a presumption of effective service under these

provisions of Ordinance read with section 27 of the General

Clauses Act, 1897 will arise only if the letter, document or

summonses are sent in the manner given in the section. The

presumption of effective service will arise at the time at which the letter would be delivered in the ordinary course of post.‖

38. SAS and maxim ubi jus ibi remendium explained

Mian Travel and Trade Pvt. Ltd. v. Federation of Pakistan

[2003] 88 TAX 69 (H.C.Lah.) = 2003 PTD 1821

―Ubi Jus Ibi Remendium is an elementary maxim, which

means that if a person has a right, he should also have a means

to vindicate and maintain it, and a remedy if he is injured in the

exercise and enjoyment of it; and, indeed, it is a vain thing to

imagine a right without a remedy, for want of right and want of

remedy are reciprocal. Obviously, entitling every assessee to

submit his assessment under the Self-Assessment Scheme, in

bestowing a right on him which is of course subject to the

condition that if there was any skepticism about it, may fail on

ground of eligibility. But this skepticism has to be well based and

calls for scrutiny and check. Otherwise, the rights bestowed

would be nullified on basis of guess, whims and bias, and this

way the progressive ideas needing caress and protection would get destroyed.‖

39. Selection of SAS cases for total audit remanded back to

a three-member committee for de novo action

Mian Travel and Trade Pvt. Ltd. v. Federation of Pakistan

[2003] 88 TAX 69 (H.C.Lah.) = 2003 PTD 1821

―As this Court has not been informed whether such a body

exists, it would like to remit all these cases to a body of three

person to be constituted by the Board of Revenue for each zone


headed by a Regional Commissioner and Membered by the

Commissioners for taking a majority decisions through a

speaking order on the question of validity of the objections

raised by a assessee before this case is put to total audit. This can

be the minimum safeguard to be provided to a citizen in our

difficult system. As in these cases before embarking upon setting

aside of the returns under SAS no hearing was afforded to the

assessee for personal explanation, the Committee to be formed

in the next fourteen days shall study each of the cases

aforementioned and will then determine in the light of the

observations aforementioned the guidelines, the rationale of SAS

and the instructions issued from time to time by the Board of

Revenue the merits of each case. The Committee shall finalize all

these cases after passing speaking and objective orders to be

signed by all the members within a period of ten weeks from

today and during which time the orders impugned through these

writ petitions shall be kept in abeyance. Copy of the orders thus

passed shall be sent to this Court through its Deputy Registrar (Judicial).‖

40. Compensation not for an injury to the capital asset is

not capital receipt

Model Town Cooperative Society Limited, Lahore v.

ITAT, Lahore and 2 others

[2003] 88 TAX 96 (H.C.Lah.) = 2003 PTD 1436

―Having heard the parties we will agree with the Revenue

that the learned Members of the Tribunal rightly distinguished

the Judgment of the Kerala High Court in re: CIT vs. Periyar and

Pareekanni Rubbers Ltd. (supra). Also they were right in

maintaining that the principle applicable to the facts in hand was

the one as settled by the Hon‘ble Supreme Court of India in at

least four cases referred to in para-8 of this order. The case of

Kerala High Court in re: CIT Kerala vs. Periyar and Pareekanni

Rubbers Ltd. (supra) on which the learned counsel for the

appellant heavily relies rather supports the case of the Revenue.

The payment of interest was not a part of the sale price or a

compensation for an injury to the capital asset as rightly held by

489 Miscellaneous

the learned Members of the Tribunal. It was a compensation for

depriving the owner of the sale price of the land for some

period. The amount of interest could not be held as part of the

sale price for another two reasons as well. Firstly, the amount of

interest was not fixed as such because it was to decrease after

payment of every instalment and secondly, the transferee Messrs

Lahore Development Authority could always avoid the payment

of interest by paying the remaining sale price in lump sum at any

time after the execution of the agreement. In cases of such

nature the recitals of the transfer deed are crucial. The relevant

portion of the agreement as reproduced above does not support

the proposition that the interest for delayed payment was in any

manner directly or indirectly related to the proprietary interest of

the seller or the price of the land earlier settled between the

parties at Rs.7,32,38,280. It was not a compensation for an injury

to the capital asset either. It is only the actual value of the capital

asset that forms a capital receipts. The learned Members

therefore, correctly stated the law that any payment made either

as disturbance for earlier vacation of land or as compensation

for postponement of the payment of price not being itself a

capital asset the amount received in lieu thereof will also not be a

capital receipt. The view so held finds support from a number of

precedents of the Courts. In re: CIT, Bengal Muffassil vs. Burdhan

Kuti Wards‟ Estate [1960] 2-TAX (Suppl.-1) 285 the Hon‘ble

Supreme Court of India held that compensation paid for

compulsory vacation of premises after acquisition of building by

the Government for disturbance and loss of business was a

revenue and not a capital receipt.‖

41. Justice cannot be denied on technicalities

Saleem Haji Rehmatullah Dada, Karachi v

CIT, Companies-V, Karachi

[2003] 88 TAX 137 (H.C.Kar.) = 2003 PTD 593

―In the facts and circumstances of the case the provision

contained in section 96(2) is to be read with section 100 of the Income Tax Ordinance, 1979.


The learned CIT(A) and the learned Income Tax Appellate

Tribunal proceeded in the same direction, little realizing that

relief available to a person in law is not to be denied on account

of technicalities.

It is the duty of the tax officials to act in accordance with

the spirit of law and keeping the principles of justice in view.

The justice should not be crucified on the altar of technicalities

and an assessee should not be required to perform the impossibilities, which in itself amounts to negation of justice.

We are, of the considered opinion that, in the facts and

circumstances of the case, the period of limitation provided in

section 99 is not attracted because this period shall be relevant

when a refund is assessed in the assessment order for a particular period.

It was not a case of rectification as well, because

assessment for the assessment year 1987-88 was completed on

the basis of facts and circumstances as prevailing on 30th April,

1988. At that time neither any addition under section 2(20)(e) of

the Income Tax Ordinance, was made in any assessment year

prior to the assessment year 1987-88, nor any claim for the

refund could be made on 30.4.1988. The refund became

available when the addition under section 2(20)(e) of the Income

Tax Ordinance, 1979, attained finality on 31.3.1998. Thus, it is a

case of consequential relief to the appellant as a result of

assessment for the assessment year 1986-87, dated 31.3.1998.

In the facts and circumstances of the present case, we are

of the considered opinion that, the refund became available to

the appellant as a consequential relief on account of addition

made under section 2(20)(e) of the Income Tax Ordinance, 1979

vide assessment order, dated 31.3.1998 and the issue pertaining

to the refund in this case is not governed by the provisions

contained in section 99 and 156 of the Income Tax Ordinance,

1979, therefore, the period of limitation provided in these two

sections are not relevant at all. We are of the opinion that, the

learned ITAT, failed to consider the issue of refund of the

appellant in its right perspective and thereby fell in error in

491 Miscellaneous

holding that, the application for consequential relief was an

application for rectification and that, the refund was rightly

refused by the Assessing Officer, because of the provisions

contained in sections 99 and 156 of the Income Tax Ordinance,

1979. We, further hold that, the appellant is entitled to the

refund of addition made under section 2(20)(e) of the Income

Tax Ordinance by way of consequential relief. Consequential to

the above findings, the question formulated above, is replied in

affirmative and the appeal is allowed accordingly. A copy of this

judgment be sent under the seal of the Registrar High Court, to

the Registrar of the Income Tax Appellate Tribunal Karachi.

The ITAT shall pass necessary orders to dispose of the case conformably to this judgment.‖

42. Prosecution proceedings can be taken under the

repealed ITO 1979 in view of section 239(6) of ITO, 2001

Suleman Spinning Mills Ltd., Lahore v. IAC of Income Tax, Lahore and

another

[2003] 88 TAX 147 (H.C.Lah.) = 2003 PTD 1343

―Hearing the learned counsel for the parties, the record

annexed with the petitions as well as the provisions of law referred

to were examined with able assistance of the learned counsel for the

parties. The chronology of events and facts re-counted above shows

that the facts in the present case are not disputed. Petitioners

specifically admit having deducted tax under section 50(4)(a) of

repealed Income Tax Ordinance, 1979 for the assessment year

1998-99 from the payments made to Messrs Zafa Farhat Industries

(Pvt.) Ltd., who had supplied goods to the petitioners and that the

petitioners did not pay the same in the Government treasury for

about a period of four years. As a result of this non-payment of the

deducted amount, Zafa Farhat Industries (Pvt.) Ltd. was not given

the credit on account of the tax so deducted from their proceeds

and Department delayed or failed to refund all the deducted

amounts in excess of their assessed liability. Zafa Farhat Industries

(Pvt.) Limited thus filed Complaint No. 1596 of 2001 before learned

Federal Tax Ombudsman. Proceedings upon this complaint were

initiated. These proceedings ultimately culminated in order, dated


10.6.2002, relevant parts of which have been reproduced in para 3

above. Adequate to state here that learned Federal Tax Ombudsman

taking serious view of non-timely payment of the deducted amounts

by the petitioners to the credit of the Government, termed such

action as unlawful retention, embezzlement and misuse of

Government money by withholding agents like petitioners, who

were observed to have deducted a huge sum of Rs.45,43,675 from

the payment of the said complainant in 1997-98, but did not deposit

the same till 8.2.2002 i.e. for a period of about four years. Learned

Federal Tax Ombudsman holding action of the Revenue in non-

recovery of Government funds as maladministration, recommended

reference of the matter by CIT ―to the Legal Advisor for

prosecution proceedings against them‖, (the petitioner) it was upon

the recommendation that respondent No.1 referred the matter to

Legal Advisor under section 117 of the repealed Ordinance, 1979

for advice, who, on the basis of facts and law, recommended

proceedings for recovery of additional tax under section 86 and also

for prosecution under section 117 read with section 124 of the

repealed Ordinance. Computer copy of the advice has been placed

on record during hearing. Upon receipt of such advice, respective

show-cause notices were issued by respondent No.1 to the

petitioners in the second week of July, 2002. Reply was given by

each of the petitioners. Their defence was that Zafa Farhat

Industries (Pvt.) Ltd. verbally requested them not to deposit the

deducted tax as they had obtained Exemption Certificate from the

Commissioner of Income Tax (Companies), Multan, but it was

upon non-production of the Certificate that the amount was

deposited and delay so caused, was because of the verbal request

and non-production by Zafa Farhat Industries of the Exemption

Certificate. Bare reading of the above said reproduced provision

shows that proceedings for prosecution in respect of an income tax

year ending on or before 30th June, 2002, have specifically been

permitted by the above said subsection (6) of section 239 of Income

Tax ordinance, 2001 ―to be taken and continued as if this Ordinance has not come into force.‖

43. Impositions of additional tax or prosecution for an

offence are independent actions

493 Miscellaneous

Suleman Spinning Mills Ltd., Lahore v. IAC of Income Tax, Lahore and

another

[2003] 88 TAX 147 (H.C.Lah.) = 2003 PTD 1343

―The petitioner‘s action attracted provisions of section 86

as well as those of section 117(a) of the repealed Ordinance,

1979. Section 86 relates to imposition of additional tax on the

amount not paid. Additional tax has been imposed upon the

petitioners. Additional tax is admittedly in the nature of interest

for delayed payment of the amounts due and is a civil liability.

Such imposition does not, in any way, affect the liability of the

petitioners to be criminally prosecuted under section 117 ibid.

Section 86 itself provides that imposition of additional tax for

violation of the provisions of section 50 ―shall be without

prejudice to any other liability‖ which such person may incur.

Furthermore, section 124 of repealed Income Tax Ordinance,

1979 caters for a converse situation. It states that a prosecution

for an offence against the Ordinance may be instituted ―without

prejudice to any other liability incurred by any person under this

Ordinance...‖ As such, provisions of section 86 and 124 ibid

read together show that imposition of additional tax or

prosecution for an offence are independent actions which do

not, in any way, affect or prejudice or exclude each other and can both be resorted to at the same time in appropriate cases.‖

44. Proper and regularly-employed method of accounting

cannot be rejected on mere surmises and conjectures

[2003] 87 TAX 148 (Trib.) = 2003 PTD (Trib.) 1146

―The first case relied upon by the learned A.R. to

substantiate his contentions was reported as (1993) 68 Tax 41

(S.C. Pak) in Re: Commissioner of Income Tax, Companies-III, Karachi

vs. Krudd Sons Ltd. wherein it was held:

It is the duty of the Income Tax Officer to determine

whether the assessee has adopted method of

accounting from which income, profits and gains can

properly be deduced. In this case the Assessing

Officer did not proceed in the indicated manner

although from the accounts laid and on its


examination true income and profit could be deduced.

This judgment is of no help to the appellant. There

can be no cavil that a regular method of accounting in

the past cannot be accepted as a matter of routine

without examining it and if the Assessing Authority

comes to be conclusion that it is defective and true

income, profit and gain cannot be deducted from it

then on the principle, stated above it can be rejected.

In the present case the reasons given for rejecting the

accounts are not proper, sufficient and valid.

Perusal of the above mentioned paragraph of supra

judgment clearly shows that if income, profit and gain are

properly deducted from the method of accounting adopted by

the assessee and reasons given for rejecting the account are not

sufficient and valid then the same cannot be discarded without assigning any cogent reason.‖

[2003] 87 TAX 193 (Trib.) = 2003 PTD (Trib.) 1189

―The respondent is employing mercantile system therefore,

the liability will be incurred the moment, any expense or

payment is entered in the books of account. The respondent has

made provision for payment of bonus and thus incurred the

payment in terms of section 10(5). We may further observe that

actual payment made afterwards in the next assessment year will

deprive the assessee of the benefits of section 10(2)(x) provided

he has adopted mercantile method of accounting and entry has

been made during the relevant assessment year. The provision

for bonus in the present case, therefore, cannot just be

disallowed. The department having no case with regard to its un-

verificability or that it is not as per terms of the employment or

that it is against the previous practice of the Bank or a part of

which has not been paid in the subsequent year, cannot disallow

the same under the garb that it is only a provision. The amount

of bonus, therefore, having properly been claimed as per terms

of the employment with the employees and normal practice of

the Bank and also for the reason that the bank has mercantile

method of accounts is allowed full. The parameters fixed by us

495 Miscellaneous

in the above paras, therefore, leave no doubt in holding that the addition was illegal. The same is hereby deleted.‖

45. Miscellaneous application can only be filed if the final

order has been passed by the bench and there arises a

mistake, which is apparent from the record

[2003] 88 TAX 114 (Trib.)

―It is imperative to mention here that at the first place,

while adjudicating the questions posed by the dissenting

members, this Bench will act as a ―third member‖ or as a

―referee‖ and in the second place, while disposing of the Misc.

Applications, this Bench will step into the shoes of the Division

Bench which was earlier constituted in order to dispose of the

main appeals. Hence, this bench is fully competent to settle the

issue of maintainability of these miscellaneous applications.

According to section 156 of the Income Tax Ordinance, 1979, a

misc. application can only be filed if the final order has been

passed by the bench and there arises a mistake, which is

apparent from the record, and that mistake is being brought to

its notice either by the assessee or by the Income Tax Authority.

So, this is the only occasion upon which the provisions of

section 156 can be invoked and not otherwise. Even sub-section

(2) of section 135 of the Income Tax Ordinance would not

come at the assessee‘s rescue particularly when the final order is

in pipeline. This sub-section only refers to affording an

opportunity of being heard to each one of the parties who are in

appeal before the Tribunal and nothing else, which is duly being

afforded to the applicant. In fact, the assessee should have

waited till the receipt of the final order by the Tribunal and if he

finds that any mistake has arisen therein, only then he could file

the Misc. Application against that order in terms of section 156

of the Ordinance. In view of foregoing scenario we are of the

considered view that the miscellaneous applications filed at the

instance of the assessee applicant are pre-mature and as such are not maintainable.‖

46. ITAT is fully competent to adjudicate upon the point or

points stated by the dissenting members after having

taken regard to the real controversy of the case


[2003] 88 TAX 114 (Trib.)

―According to sub-section (7) of section 133 of the Income Tax Ordinance, 1979, if there arises a difference of opinion in between the learned members, they shall state point or points on which they differ and the case shall be referred by the Chairman of the Tribunal for hearing on such point or points by one or more of the opinion of the majority of the members of the Tribunal who have heard the case including those who first heard it. Viewing the assessee‘s contentions in this perspective, the third member is not competent to modify the questions proposed by the dissenting members. Anyhow, the decision on all those points shall rest after thrashing out and evaluating legal as well as factual controversy arisen therein. Hence, this contention of the assessee is not sustainable as well. This Tribunal is fully competent to adjudicate upon the point or points stated by the dissenting members after having taken regard to the real controversy of the case. So far as the questions appearing at Serial Nos. 1 to 4 are concerned, these are duly covered in the questions proposed by the dissenting members in their orders. As regards Question No. 5, this is the question, which should be taken up by the assessee in the reference application and not by way of filing miscellaneous application. But this could only be done once the final order is passed by the Tribunal, and not when the final order is in the offing. In no way this question can be posed at this stage. We therefore, feel satisfied that the questions proposed by the dissenting members do cover the real controversy set out by the assessee in its reframed questions re-produced supra.‖

47. In the absence of final order by ITAT, provisions of

section 135(2) read with section 156 do not come into play

[2003] 88 TAX 114 (Trib.)

―In fact, there is no final order in existence. Rather,

formulation of points by the dissenting members is in the nature

of issue(s) framed on which the learned Members differed. Once

this has been done and the third member(s) has/have heard the

parties and expressed his/their opinion, the point or the points

are to be decided in accordance with the opinion of the majority.

The final result or decision in accordance with the opinion of the

497 Miscellaneous

majority is to be recorded and singed by all the members who

had heard the case. Since the opinion of the dissenting members

has yet to attain finality meaning thereby no final order is in the

field at this stage, therefore, the provisions of section 135(2) read with section 156 will not come into play at this juncture.‖

48. Tribunal is competent to grant stay of demand created

as a result of reassessment order provided the main

appeal is pending before it

[2003] 88 TAX 127 (Trib.) = 2003 PTD (Trib.) 2410

―We have heard both the learned representatives appearing

at the bar and find the prayer of the learned AR to be quite

legitimate. Though the appeal against the reassessment order

made under sections 62/65/132 of the Income Tax Ordinance,

1979 is pending for adjudication before the first appellate

authority yet the facts remain that if the Tribunal ultimately

declares reopening of the assessment under sections 62/65 of

the I.T. Ordinance, 1979 to be made without lawful jurisdiction

in the appeal pending before it the entire structure built on the

reassessment order made under sections 62/65/132 of the

Income Tax Ordinance, 1979 would dash to the ground. This

would also result into striking down the illegal tax demand

created against the assessee. It is also pertinent to mention that

reassessment proceedings initiated by the assessing officer u/s

62/65/132 of the Income Tax Ordinance, 1979 are ancillary or

incidental to the main appeal pending for adjudication before the

Tribunal under sections 62/65 of the Income Tax Ordinance,

1979, therefore, the Tribunal is competent to grant stay of

outstanding tax demand created as a result of reassessment order

made under sections 62/65/132 of the Income Tax Ordinance,

1979 provided the main appeal is pending for adjudication

before it. The case of the present assessee involves legal

repercussion and also substantial amount of tax. So, we direct

that recovery proceedings against the assessee, initiated by way

of issuing notice under section 93(2) of the Income Tax

Ordinance, 1979 dated 2.10.2001 will be stayed for a period of

45 days from the date of passing this order or till he final


disposal of the assessee‘s appeal whichever is earlier. Let the

assessee‘s appeal be fixed for hearing before any available

Division Bench of the Tribunal in the 2nd week of November,

2001.‖

49. Order passed consequent to proceedings under section

66A unless reaches ITAT cannot be taken cognizance of

for granting stay by the Tribunal

[2003 PTD (Trib.) 1941]

―The Income Tax Appellate Tribunal comes into picture

after an appeal has been filed by the assessee or by the

Department under section 134(1). It is now within its power to

modify, cancel, reject or set aside the order impugned. The

Tribunal does have inherent power to grant stay of demand or

of proceedings. It is a trite law that one who has the power to

give a decision can also grant temporary injunction. It is for the

same reason that the legislature has not provided any specific

provision to that respect. It has in respect only created an

embargo on the power of stay of demand by restricting it to six

months in aggregate. The Income Tax Appellate Tribunal,

therefore, cannot extend its arms so as to include what is not

intended by the legislation. So a combined reading of the two

subsection of section 134 leads to the conclusion that an order

passed consequent to the order under section 66A unless reaches

ITAT by itself cannot be considered as contiguous or ancillary

or auxiliary to an order under section 66A so as to invoke the

power of granting stay by the Tribunal. In this regard the

judgment referred by A.R. registered as M.A. (Stay)

No.597/LB/2001, is distinguishable in the manner that the

Assessing Officer had issued order and the same had been

served on the assessee. Furthermore, the language produced

above is very clear. These miscellaneous applications, therefore,

are considered devoid of any legal sanction and the same are dismissed.‖

50. Agreement between parties cannot overrule the law

Messrs Mahmood & Company v.

Assistant Collector, Sales Tax (Enforcement & Collection), Shalimar

499 Miscellaneous

Division, Lahore and 2 others

2005 PTR 89 [H.C. Lah.] = 2005 PTD 67 (H..C Lah.)]

―As the agreement between the Association and the

Revenue was never converted into law through the process

prescribed in that behalf, no person could be forced to comply

with the same. The plea that a person did for some time

accepted the terms of an agreement and acted upon the same would not convert that agreement into a law.‖

51. Statutory order must be speaking and judicial

2005 PTR 1 [Trib.] = 2005 PTD (Trib.) 135]

―There is yet another aspect of the case, which cannot be

ignored. After the examination of the impugned order we find

that the same is sketchy, slip shod and devoid of reason. The

said order is not at all a speaking order and cannot be called a

―quasi judicial order‖ within the parameters set up by law. The

tenor of the order amply manifests non-application of judicial

mind and no reasons have been assigned by the learned

Adjudicating Officer in coming to the impugned conclusions.

Even it has been enjoined upon an executive authority, as per

section 24A of General Clauses Act, 1897 (inserted by General

Clauses Amendment Act, 1997, Act No. XI of 1997) to give reasons for making the order.

The Honourable Supreme Court of Pakistan has time and

again disapproved the passing of such perfunctory orders in the

cases ―involving valuable rights of the parties. It is settled law

that a quasi-judicial order must be a speaking order manifesting

by itself that the Tribunal has applied its judicial mind to the

issues and the points of controversy involved in the cases.

Furthermore, when the reasons would not be forthcoming,

obviously the Appellate Court would be deprived of the views of

the subordinate forum. Anyways the impugned order, which is

not a speaking order and devoid of reasons is not sustainable in law.

Chapter XXI

Workers’ Welfare Fund

1. Workers‟ Welfare Fund Ordinance authorises the

Income Tax officer to levy WWF


[2002] 86 TAX 39 (H.C.Kar.) = 2002 PTD 14

―From perusal of the aforesaid subsection 4 of section of

the Workers‘ Welfare Fund Ordinance it is absolutely clear that

the Assessing Officer has been authorized to deal with the

question/issue of charge/levy of Workers‘ Welfare Fund while

finalizing the assessment proceedings of an assessee, who had

furnished a return of income under section 55 of the Income

Tax Ordinance. Thus the aforesaid section 4 has empowered or

conferred the powers on the Assessing Officers in their capacity

as Income Tax Assessing Officers exercising powers under the

Income Tax Ordinance. The order relating to charge/levy of

Workers‘ Welfare Fund being part of the assessment order made

by the Assessing Officer could be challenged by an aggrieved

party only in accordance with the provisions of the Income Tax

Ordinance as the same would be incapable of being separated

from rest of the assessment order. It is also pertinent to note

that there is no provision in the Workers‘ Welfare Fund

Ordinance providing a forum for challenging the order relating

to the charge/levy of Workers‘ Welfare Fund by the Assessing

Officer and this fact also leads to a strong inference that a

grievance of an assessee with regard to an order/finding relating

to the charge/levy of Workers‘ Welfare Fund under section 4(1)

of the Workers‘ Welfare Fund Ordinance can be challenged by

filing an appeal against the assessment order containing the

finding/order relating to the charge/levy of Workers‘ Welfare

Fund, else the aggrieved party would have no alternate forum or

503

501 Workers’ Welfare Fund

authority for redress of his grievances relating to any illegality or

irregularity in charging/levying Workers‘ Welfare Fund by the Assessing Officer.‖

2. Appeal does lie against the WWF as if levy under the

Income Tax


[2002] 86 TAX 39 (H.C.Kar.) = 2002 PTD 14

―In view of our above observation it follows that an appeal

under section 129 of the Income Tax Ordinance would be

maintainable then an appeal under section 134 of the Income

Tax Ordinance by a party aggrieved by the order passed by the

Appellate Authority under section 129 of the Income Tax

Ordinance would be further appealable before the Income Tax

Appellate Tribunal under section 134 of the Income Tax Ordinance.‖

3. No Workers‟ Welfare Fund on income exempt under

any provision of the Income Tax Ordinance


[2002] 86 TAX 39 (H.C.Kar.) = 2002 PTD 14

―Mr. Muhammad Fareed does not controvert the arguments

advanced by the learned counsel for the assessees/respondents

and conceded that in view of the pronouncement made by the

Supreme Court in the afore-cited petitions the question had to

decide and that Workers‘ Welfare Fund would not be

charged/levied on income of an assessee which was exempt from

charge to tax under any of the clauses of the 2nd Schedule to the

Income Tax Ordinance. Accordingly, this question stands

decided/ answered in the negative and no Workers‘ Welfare Fund

would be charged/levied on income exempted under any of the clauses of the 2nd schedule to the Income Tax Ordinance.

In view of the contentions advanced by the learned counsel for

the parties, we are of the view that there is no dispute with

regard to the contention advanced on behalf of the

assesses/respondents as the learned counsel appearing on behalf

of the department/appellant had conceded that the assessees


would be entitled to the benefit or claim of set off in respect of

the losses, which they had declared in the earlier years and which

had been determined/settled/ computed as losses by the

Assessing Officers in accordance with section 34 and carried

forward in accordance with section 35 of the Income Tax

Ordinance. Accordingly, this question stands decided/answered in the affirmative.‖

4. Assessees not required to file return relating to

presumptive tax regime cannot be subjected to the

charge/levy of Workers‟ Welfare Fund


[2002] 86 TAX 39 (H.C.Kar.) = 2002 PTD 14

―Words ―total income as is assessable‖ appearing in section

4(1) of the Workers‘ Welfare Fund Ordinance and no Workers‘

Welfare Fund would be charged/levied thereon. We have come to

the above conclusion as according to the principles of the

interpretation of the statutes this is the only possible

interpretation, which can be had. The general principle of

interpretation is that the words used in a section of the statute are

to be given their ordinary meaning if not already defined in the

statute. By giving the ordinary meaning of the word ―assessable‖

there can be no other possible interpretation than the one which

we had arrived at hereinabove. From the above discussion the

only conclusion which can be had is that assessees who are not

required to file return of total income under the Income Tax

Ordinance, relating to presumptive tax regime cannot be subjected

to the charge/levy of Workers‘ Welfare Fund. According this question stands decided/answered in the negative.‖

5. Issue relating to non-levy or wrong levy of WWF fall

within the ambit of mistakes apparent from record


[2002] 86 TAX 39 (H.C.Kar.) = 2002 PTD 14

―The Assessing Officer is under a statutory obligation/duty

to make an order for levy of Workers‘ Welfare Fund while

finalizing the assessment under the Income Tax Ordinance.

When a statute imposes duties/obligations on a person or


authority then they are bound to perform the same diligently,

prudently and in accordance with provisions of the statute,

which has conferred such duties/obligations on them and such

duties and obligations would not be brought to an end or vanish

on technicalities, inadvertence or negligence more so when such

duty/obligations is for the welfare of a particular class.

Provisions of laws of beneficial nature are to be interpreted with

a view to facilitate the adjudication on merits as propounded by

the Supreme Court in the case of (i) Muhammad Hanif and others

vs. Muhammad and other reported in PLD 1990 SC 859; and (ii)

Jameel Ahmad vs. Late Saifuddin through Legal Representatives

reported in 1997 SCMR 260. Order for levy of Workers‘ Welfare

Fund if not made within thirty days of the framing of

assessment, such an omission would not only be violative of the

provisions of the Workers‘ Welfare Fund Ordinance but would

also render the income tax assessment order illegal and contrary

to the provisions of the Income Tax Ordinance inasmuch as it

would not be possible to calculate the correct income tax

payable by an assessee in view of the method of determining

Workers‘ Welfare Fund on the total/taxable income, deduction

of such fund from the total/taxable income and calculation of

income tax on the total/taxable income after deduction of

Workers‘ Welfare Fund as laid down by the Supreme Court in

the case of Pakistan Tobacco Company (Pvt.) Ltd. vs. Commissioner of

Income Tax, reported in 1992 PTD 1648. Such assessment order

would suffer from an error or a mistake, which as discussed

above, would be patently apparent on the face of the record,

would be floating in the order would be so clear and manifest as

could not be permitted by any Court to remain on record, which

for its correction would not require long drawn arguments,

reassessment or re-examination of the material on record or

interpretation of any provision either of the Income Tax

Ordinance or the Workers‘ Welfare Fund Ordinance and would

be rectifiable in accordance with the provision of section 156 of

the Income Tax Ordinance. It is immaterial as to whether such

mistake or error is a mistake of fact or of law and the


requirement is whether it is a mistake of fact or of law, it must self-evident and floating on surface.

It will be appropriate to sum up our answers/decisions on

all the four questions referred to in the aforesaid I.T.As. and I.T.C. as under:

Question No. 1:

Negative, Workers‘ Welfare Fund would not be

leviable on income exempted under the various

clauses of the 2nd Schedule to the Income Tax Ordinance.

Question No. 2:

Affirmative. An assessee would be entitled to the

benefit of set-off of the losses, which have been

determined/settled in accordance with provisions of sections 34 and 35 of the Income Tax Ordinance.

Question No. 3:

Negative. The Workers‘ Welfare Fund would not be

leviable on the income declared under the

presumptive tax regime which is not to be subjected

to assessment for determining the total/ taxable

income as such not coming within the scope of the

words ―total income as is assessable‖ used in section 4(1) of the Workers‘ Welfare Fund Ordinance; and

Question No. 4:

A period of 30 days would be a reasonable period

during which the Assessing Officer would be required

to make an order for levy of Workers‘ Welfare Fund

on this failure to do so in the assessment order.

However, if such order is not made even within thirty

days of the original assessment order, then on expiry

of thirty days the provisions of section 156 of the

Income Tax Ordinance would be attracted and the

error/mistake in not levying Workers‘ Welfare Fund would be rectifiable thereunder.


All the aforesaid Income-tax Appeals and Income-tax

Case stand disposed of in terms of the above observations and decisions.‖

6. WWF is not leviable on incomes covered under

presumptive tax regime

CIT/WT, Sialkot v. Thapur (Pvt.) Ltd.

[2002] 86 TAX 274 (H.C.Lah.) = 2002 PTD 2112

―The change brought about by the presumptive tax regime

has been overwhelming inasmuch as not only that second

proviso the sub-section (1) of section 55 has done away with the

liability of an assessee covered by section 80C or 80CC to file a

return but also the other procedural requirements prescribed for

returns have undergone a complete change. The presumptive tax

regime having done away with the concept of assessment of

―total income‖ of an assessee, the levy contemplated in section 4

of the W.W.F. has necessarily faltered away in respect of the assessees covered by such regime.

As noted earlier, sub-section (7) of section 4 of W.W.F.

Ordinance allows the payment made by an industrial

establishment to the Fund to be treated as an expense for the

purpose of assessment of income tax. However, in cases covered

by section 80CC since no assessment is made the question of

allowing of such payment as an expense does not arise at all. The

provisions of section 80CC are clear that where any amount

referred to under various sub-sections of section 50 has been

received by a person the whole of such amount is to be deemed

the income of that person and tax therefore is charged at the

rates specified in the First Schedule. Sub-section (2) of section

80CC creates a bar to claim or to authorise any allowance or

deduction against the income so presumed. Under sub-section

(3), the tax so deducted is deemed to be the final discharge of

the tax liability of the person covered by these provisions and he

―shall not be required to file the return of total income under

section 55‖.

The charging provisions of section 4 of W.W.F. Ordinance

and those of presumptive tax regime under section 80CC to our


mind cannot be reconciled or be interpreted in a way to justify a

charge. The charge as noted earlier necessarily bears a reference

to and follows pattern of a regular assessment framed on

observation of usual formalities and following computation of

income keeping in view the different provisions of the Income

Tax Ordinance. Since that does not happen in cases covered by

section 80CC, the charge and computation of Fund in such cases

is neither legally justified nor otherwise possible. The charging

provision of section 4 of W.W.F. Ordinance are clear that the

legislature intended the charge on the real income of an

industrial concern. There is nothing in these provisions which

can possibly be extended, enlarged or stretched to hold that the

levy was contemplated on presumptive income as well. That an

industrial establishment covered by provisions of section 80CC

of the Income Tax Ordinance, 1979 is not liable to the charge of

the Fund contemplated in section 4 of the W.W.F.‖

Chapter XXII

Income Tax Appellate Tribunal

1. Tribunal has powers and jurisdiction to remand the

case to assessing officer.

Karim Aziz Industries Ltd., Hasanabad v. Commissioner of Income Tax,

Rawalpindi Zone, Rawalpindi

[(1997) 75 Tax 90 (H.C. Lah.)]

―If the Appellate Tribunal is not satisfied with the orders

passed by the forum below, it has the power to cancel or vary such

orders and can pass necessary consequential directions as the

situation may warrant. …..the powers of the Tribunal …..have

very wide amplitude and are almost to the power of Civil Court

under Order XCI, rule 33, C.P.C. The ratio, deductible from the

foregoing discussion is that the power of Appellate Income Tax

Tribunal under section 135 of the Ordinance are almost analogous

to the powers of Civil Court under order XLLI, rule 33, C.P.C.

These powers are of a wide sweep and arm the Appellate Court

with power to pass an order of remand if it comes to a finding that

the orders of the courts below are illegal and there is an occasion

for fresh proceedings before the first authority/Court. This power

is expressly embodied in the language of conclusion, we find that

question referred to by the Tribunal is of academic nature and

need no further examination. On the above conclusion, we find

that the Appellate Income Tax Tribunal had jurisdiction to

remand the case of applicant-Company to the Income Tax Officer for de novo proceedings under section 156 of the Ordinance.‖

2. Tribunal is not empowered to award damages decree

against the assessing officer

[(1999) 80 TAX 7 (Trib.)]

―The assessee company be paid damages of Rs. 70,000/-

per month as the assessing officer violated the provisions of

511


section 81 of the Ordinance. This contention of the assessee is

misconceived. This Tribunal is not empowered to award

damages decree against the assessing officer. Actually no remedy

is available with the assessee within the four corners of the

Income Tax Ordinance for this purpose. It is worth mentioning

that where the assessing office has made or passed any order, the

appropriate remedy available in the Income Tax Ordinance is

either to institute appeals before the appellate forums or

revisional jurisdictional can be invoked before the Tax

Authorities. In any case, section 81 of the Ordinance does not

relate to finalization of assessment within 15 days from the date

of service of the notice upon the assessing officer under sub-

section (1) of this section, where a person is likely to leave

Pakistan. In fact, the assessee was obliged to accompany return

or returns of income alongwith the notice as is laid down under

section 81(2) of the Ordinance but it failed to do so.‖

3. Appeals and judicial process explained

[(1999) 79 TAX 145 (Trib.)]

―In addition to the question of right of appeal conferred on

a particular person it pertains to the authority vested in an

appellate court Tribunal. If it is conceded that any person can file

appeal in respect of any assessment order it would not only be

manifest by against the specific provisions of law but would be

destruction of the entire judicial discipline. Secondly the appeal is

the continuation of an original proceeding and if any person who

is not an assessee, as such; and is not liable to pay tax under an

assessment order is conceded the right of appeal, then necessarily

such person has to be conceded a right to make any statement

during the course of appellate proceedings and we fail to

understand as to how any statement by or on behalf of any person

other than the assessee itself can be binding on an assessee.

Moreover, if such right is conceded in appeal, a similar right has to

be conceded in the original proceedings also on the analogy that

appeal is the continuation of the original proceedings and we are

of the considered opinion that no such right can be allowed to be

exercised in the original proceedings. No body except the assessee

513 Income Tax Appellate Tribunal

or its authorized representative can participate in the assessment

proceedings and give any statement of binding nature. It will be

seen that the consequences of allowing such course would be

violative of several substantive and procedural laws and would be

of far reaching undesirable consequence. Thirdly, it is bound to create anomalies and confusing consequences.‖

4. Duty of the registrar to return appeal if deficient

Allied Bank of Pakistan Ltd., Azad Kashmir Branches, Mirpur through

Inam Elahi Azhar, EVP and Provincial Chief, PHQ (Punjab) v.

Income-Tax Appellate Tribunal, AJK Council, Muzaffarabad and others

[2000 PTD 2872]

―Where the memo of appeal is not filed in the manner

specified, then, the Registrar or the Officer authorized under rule 7,

may return it to the appellant or his authorized representative, if any,

to bring it in conformity with the provisions of the said Rules within such time as he may think.‖

5. Rule 11-Dispensation of justice

Commissioner of Income-Tax v. Messrs Rehman Traders


―After hearing the learned counsel, we will agree at the outset

that the issue in hand already stands resolved in favour of the

petitioner/Revenue by a Division Bench of this Court in re: CIT vs.

Muhammad Tariq Javaid 2000 PTD 2165. In that case, it was inter alia,

held that Rule 11 of the ITAT Rules, 1981 had an independent status having no nexus with Order XLI, Rule 1 of C.P.C.

6. Rule 11 of ITAT Rules, 1981 – Scope of

Commissioner of Income-Tax v. Messrs Rehman Traders


In matters of collection of Revenue the disputes could

not be allowed to be determined in a perfunctory manner as

had been done by the Tribunal. In another recent judgment in

re: Pakistan Industrial Gases Ltd. vs. CIT and another 2000 PTD

2903 another Division Bench of this Court disapproved the

dismissal of appeal by the Tribunal for the reason that memo


of appeal contained argumentative grounds which was violative of rule 10 of the said rules.‖

7. Tribunal must pass speaking order

Mahmood Barni vs. Inspecting Additional Commissioner of Income-Tax,

Gujranwala and another


―Respondent No. 2 is not an administrative Tribunal and

discharges judicial functions and such an order is not expected from

it. The settled principles regarding administration of justice are that

officials/authorities dispensing justice and exercising judicial powers

are supposed to apply their mind to the cases and to determine

respective stances taken by the parties and after evaluating those to

give their own verdict justified by reasons, I am sorry that I am

remarking with a very heavy heart that the order impugned can in no manner be placed in the arena of judicial orders.‖

Subject-Index

A

Accounts

- rejection through positive evidence 393

- standard of proof for rejection 393

Accrue and arise

- meaning of 109

- vis-a-vis effect of book entries 110

Actual and futuro liability

- distinction between 44

Adjudicate

- necessarily implies settling a matter 110

Adjudication

- requires passing of a speaking order 111

Administration of justice

- duties of courts 437

Affording of an opportunity

- a prerequisite for taking a penal action 433

Agreed assessment

- framed outside the four corners of Act 116

- violative of contract act will be avoidable 117

Agricultural income

- when remains to be exempt in the hands of recipient 112

Agriculture and agricultural purposes

- meaning of 112

Ambiguity in language

- be resolved in the favour of taxpayer 212

- must go in favour of taxpayer 211

- non-application of literal rule 212

- statement of objects and reason, can be relied upon 212

Ambiguous words

- proceedings of the Legislature can be resorted to 226

Amending law

- cannot reopen past and closed transactions 88

Annual value

- meaning of 113

515


Appeal

- rejection for non-fulfillment of relevant provisions of law 300

- continuation of original proceedings 478

Appeal in Supreme Court

- governed by Income Tax Law 313

- relevant procedure 299

Appealable orders

- every order increasing tax obligation of an assessee or reducing

the refund is appealable 318

Appellate Tribunal

- powers of 324

Application of law

- as on first day of assessment year 220

- duty of the officer to apply correctly notwithstanding

the claim of assessee 46

- for the purposes of assessment of income as in force on the

first day of the relevant assessment year 221

- not one in existence during the income year 220

- in presence of a specific provision of law applicable to the situation,

the assessing officer could not have resort to any other

provision of law 437

- in the case of government employees working in

non-taxable territories 477

Application of tax rates

- through a Finance Act 53

Approbate and reprobate

- meaning of 414

Approval and permission

- are not synonymous 113

Article 165 & 165A of Constitution

- corporations created by provincial statutes are not governments 90

- constitutional power of Federation to tax certain corporations 95

Artificial juridical person

- meaning of 114

Assess

- meaning of 114

Assessable income

- meaning of 115

Assessment

- meaning of 115

Assessment consciously completed

- meaning of 239

517 Subject Index

Assessment year

- stable interpretation of term should be adopted 117

Audi alteram partem

- meaning of 413

B

Best judgements

- must reflect fair and proper estimate 117

Binding judgements

- conduct of different Benches 404

Business

- meaning of 118

Business connection

- meaning of 118

C

Capital and dividend

- distinguished 118

Capital losses

- not allowable unless specifically provided 68

Case

- meaning of 119

Casus Omissus

- meaning of 415

CBR

- no authority to file representation against

Wafaqi Mohtasib (Ombudsman) 320

CBR instructions

- binding on tax authorities 325

- held illegal re taxation of Golden Handshake payments 322

Certified copy

- meaning of 119

Change of previous year

- condition when held unlawful 106

Charging and machinery provisions

- interpretation of 220

- interpretation of machinery provisions of a fiscal statute 220

Charging section

- cannot be overlooked on hypothesis of history of exemption 48


- effect of subsequent provision 48

- scope of 48

Charitable purposes

- meaning of 119

Charity and charitable purposes

- meaning of 120

Circulars/Administrative instructions

- departmental instructions in conflict with statutory provisions

have no legal effect 305

Civil suit

- does not lie against tax authorities unless order is

malafide or illegal 323

- in the absence of mala fide order is not maintainable 322

Commerce

- meaning of 122

Commercial

- meaning of 122

Company and shareholders

- relationship between 122

Company limited by guarantee

- meaning of 123

Complete

- meaning of 124

Computer balloting

- held contrary to the law 240

Constitution remedy

- cannot be enforced when rights were suspended 229

Constitutional issues

- judicial approach should be dynamic 205

Constitutional powers of levying taxes

- by Federation and provinces 218

Constitutionality of provisions

- public interest must prevail 92

Construction of statutes in general 21

- internal aids 21

- explanation 21

- marginal notes 22

- punctuation marks 22

- preamble 22

- title of a chapter 22

- long title 23

519 Subject Index

- non-obstante clause 23

- proviso 23

- context 24

- ambiguity in amending legislation 24

- external aids 24

- dictionary meanings, when applicable when not applicable 25

- interpretation of a statute 25

- tax committee report not relevant 25

- statement of objects and reasons appended to a Finance Bill

not to be considered 25

- memoranda prefixed to bills 25

- minister‟s speech 26

- contemporanea exposition 26

- definition from other statutes 27

Construction of statute

- benefit of ambiguity should go to the assessee 124

- benefit of doubt is the right of taxpayer 126

- caption given to a particular provision of law would not

change purport of the provision 330

- courts while interpreting a statute must adhere to the

plain meaning of the words 126

- doubtful words - how to be construed 126

- imposition of tax by clear words only 128

- in fiscal laws no addition or omission is permissible 127

- must be taken in its true perspective 117

- not to lead to startling results 128

- rule of strict construction applies to charging provisions 123

- rule of strict construction does not apply to machinery provisions 123

- tax must be imposed by clear and unambiguous language 124

- when not ambiguous should be construed strictly 123

Consultancy fee

- falls under industrial and commercial profits 125

Courts

- have inherent jurisdiction in the interest of orderly

dispensation of justice 332

- have no concern with disputable questions of

distributive justice 332

- not allowed to deviate from the definition given

in the statute 314

D

„Debt‟, „loan‟, „owe‟ and „due‟

- difference between 127


Declaratory statutes

- generally apply retrospectively 190

Deemed income

- scope of 104

Deemed order

- scope of 129

Deeming provisions

- in the Ordinance 30, 32

- significance of 27

- section 80C:

- gross receipts excludes value of material supplied 43

- in respect of income 101

- to be construed strictly 77

- how to be construed 103

Default

- meaning of 129

Definite Information

- meaning of 130

Definitions

- restricted and cannot be extended to other laws 232

- restricted to the statute in which provided 175

Determination of value of property

- realistic approach should be applied 466

Direct tax

- distinction with indirect tax 39

Discard

- meaning of 133

Discretion

- ought to be exercised fairly 306

- judicious exercise 309

Dispute between government

- only Supreme Court is competent to adjudicate 211

Dividend

- meaning of 134

Division Bench

- bound to follow orders of other Benches 277

- in case of disagreement case to be referred to larger Bench 277

Doctrine of de facto

- meaning of 478

Doctrine of estoppel 421

521 Subject Index

Doctrine of exhaustion

- explanation of 321

Doctrine of favourable interpretation

- applies to charging and not machinery provisions 135

- in case of exemption clause must favour revenue 135

- in the case of ambiguous words, one leading to

injustice should be avoided 135

Doctrine of merger

- how to be applied 411

- on appeal original order ceases to exist and merges

itself in the appellate order 412

Doctrine of mutuality

- five-point criteria for applying 429

Documents

- be examined by the Court in substance 308

Double taxation

- income cannot be taxed twice 39

- imposition of income tax and super tax on the same

income is constitutional 71

- presumption against 53

Doubtful words

- should be interpreted by reference to meaning of

words associated with it 200

Due process of law

- Article 4 of Constitution of Pakistan 1973 302

Duty of the legislature

- to save income from escapement 479

E Ejusdem generis

- meaning of 415

Employee

- meaning of 135

Enduring benefit

- meaning of 135

„Enemy‟, „enemy territory‟ and „aggrieved party‟

- meaning of 136

Equality in fiscal laws

- principle of 40

Erroneous

- meaning of 137


Evasion and Avoidance

- difference between 138

Evasion of tax

- meaning of 138

Evidence

- a Judge cannot be compelled to accept a piece of 274

Evidence Act

- not applicable to income tax proceedings 394

Ex abundanti cautela

- meaning of 418

Execution of contract

- meaning of 139

Executive actions

- not excluded from the operation of promissory estoppel 297

Executive orders/notifications

- can be given a retrospective effect 185

Exemption clauses

- rules of interpretation of 187, 230

- provided under industrial incentives should be construed

liberally 225

- to be construed strictly 245

Exemptions

- cannot be allowed if not claimed 197

- claimant to prove beyond ambiguity 241

- modification must be express and not by implication 57

- to be allowed if claimed 48

Expenditure & reserves

- meaning of 139

Explanation

- as a general principle applies retrospectively 190

- applies retrospectively 192

- object of 18, 166

- to elaborate the meanings 166

- to facilitate its proper interpretation 166

- to remove any possible confusion or misunderstanding 166

Explanatory amendment

- always applicable retrospectively 191

- applies to pending cases 191

Explanatory clarificatory amendments

- to apply retrospectively 188

Expressio unius est exclusio alterius

- meaning of 417

523 Subject Index

F

Failed and default

- are not synonymous 140

Failure

- meaning of 141

Fiction of law

- is restricted to the extent specified in statute and

its scope is not to be extended 231

Finality of proceedings

- assessment order passed by ITO cannot be called a final order 462

Financial liabilities

- determination of 41

Fiscal statute

- be construed strictly 187

- no room for any intendment, inference or presumption 187

- rule of strict interpretation 244

Fixed capital

- meaning of 141

Fixed capital and circulating capital

- meaning of 141

Foreign case-law

- cautious approach is necessary when adopting 152

Foreign cases

- reliance in the presence of Pakistani contrary judgements

strongly disapproved 279

Fresh evidence

- cannot be entertained in appeal 395

G

General Act

- does not override Special Act 480

General and specific words


General language

- not infrequently intended sub modo 216

General public

- meaninf of 142

Generalia specialibus non derogant

- meaning of 418


Goods

- do not include immovable property 142

Goodwill

- meaning of 143

Guess work

- meaning of 144

H

Harmonious construction of statutes

- rule of 228

Hearing

- meaning of 144

High Court

- only holds advisory jurisdiction under Income Tax Law 302

I

Immovable property

- not included in goods 142

Immunity

- meaning of 145

Include, includes, including

- meaning of 104, 145, 146

Income

- meaning of 146

Income Tax Authority

- ITAT is not covered 149

Income Tax Act

- provisions can be challenged on constitutional grounds 224

Income Tax Law

- basic features of 1

- scheme of the Ordinance 2

- chapters & schedules 2

- division of 6

- sections 6

- sub-sections 6

- clauses 6

- definitions 8

- kinds of 14

- exclusive 14

- inclusive 15

525 Subject Index

- exclusive as well as inclusive 15

- inconsistencies are in-built in income tax 140

Indirect tax

- distinction with direct tax 31

Individual & association of persons

- meaning of 149

Individual and such individual

- meaning of 150

Industrial undertaking

- meaning of 150

Interest

- meaning of 152

Interpretation of fiscal statutes

- principles of 45

- natural meanings be adopted 45

Interpretation of law

- CBR and Federal government has no power to resort to 307

- CBR is not competent to issue instructions of

judicial/quasi judicial nature 308

- duty of the courts 431

- language employed should be adopted 314

- no authority to add, delete or subtract any word 314

- two equally possible interpretation emerge leave to

appeal granted 206

Interpretation of statute

- basic rules to construe charging and machinery provisions 251

- be considered in totality and not in isolation 235

- be interpreted strictly in accordance with letter of law 216

- budget speech has no legal sanctity 476

- court can‟t imply anything 229

- court must stick to letter of law 203

- departmental construction can be used in aid of interpretation 254

- departmental instructions cannot be used in aid of interpretation 261

- equitable construction is not permitted 190

- fiscal statutes to be strained in favour of the subject, if at all 51

- for rule of golden principle 157

- harmonious construction is recommended 228

- inapt and inaccurate phraseology of draftsman cannot nullify

a provision made by legislature 170

- interpretation leading to destructive ends should be

avoided by Courts 254

- marginal notes to the section of an Act cannot be referred to

for the purpose of construing the Act 257


- must be intelligibly expressed and reasonably

definite and certain 223

- no equitable construction in fiscal statutes 52

- no provision of a statute should be considered in isolation 235

- not CBR‟s domain 226

- not for the Courts to supply for deficiency in the

language of law as framed 157

- not to be adopted as abrogating International Law 230

- nothing is to be read in and nothing is to be implied 176

- person sought to be taxed must come within the letter of law 153

- provisions should be interpretated in accordance with the

plain meaning of the language used therein 261

- punctuation marks and construction 262

- role of history of legislation in interpreting a

provision of law/statute 170

- rule of fair and reasonable construction 51

- rule of literal approach 191

- should be given its ordinary meaning 261

- speech of the Federal Minister has no legal consequences or effect 252

- subject must fall within letter of law 203

- subject not taxable just within spirit of law 203

- subject to be taxed on strict rule of interpretation 202

- when intention of legislature is clear 262

- words used in a section of the statute are to be given

their ordinary meaning 236

Interpretation of taxing statutes

- no room for any intendment 40

Interpretation of words

- cautious approach needed while interpreting another statute 258

Islamic jurisprudence

- rules of law are equally applicable to fiscal laws 463

J Judicial interpretation of law

- CBR has no authority to place judicial interpretation 322

Jurisdiction

- effect of where its lacking 312

- objections in relation to are to be decided before adjudication 319

- objection as to jurisdiction can be raised at any stage 320

- transfer of 209

Justice

- not to be defeated on mere technicalities 433

- should not only be done but must also appear to have been done 441

527 Subject Index

L

Laws

- when can be strike down 302

- when held not retrospective 288, 290

Leave to appeal

- rule of consistency is to be followed 32

Legal fiction 26

- fiction upon fiction 33

- miscellaneous 32

- regarding receipts 30

- regarding place of accrual 30

- regarding time in which income should be deemed

to have accrued or arisen 31

- regarding certain incomes deemed to be income of the transferor,

despite the transfer 32

- in one act does not extend to the other 34

Legal Maxims

- audi alteram partem 413

- approbate and reprobate 414

- casus Omissus 415

- ejusdem generis 415

- expressio unius est exclusio alterius 417

- ex abundanti cautela 418

- generalia specialibus non derogant 418

- mens rea 418

- noscitur a Sociis 419

- no one can be judge in his own cause 290

- things should be done as per law as not to be done at all 420

- ut res valeat quam pereat 420

Legal plea

- can be raised at any stage if going to the root of the case 224

Legality of an action

- if an action is deemed illegal, the whole superstructure

built upon it is also illegal 39

Legislative entries

- words occurring in constitutional entries to be construed

liberally 38, 71

Liable

- meaning of 153


Life

- meaning of 154

Limitation Act

- applies to income tax proceedings 450

- provisions are mandatory 448

Loss of source of income

- Capital receipt; when taxable 320

- golden handshake payments held taxable 467

M

Machinery provisions

- amendments being procedural apply to pending proceedings 197

- cannot be construed to go beyond the spirit of law 240

- rule of liberal construction of 243

- should be construed so as not to destroy recovery mechanism 241

- to be construed liberally 193

Mandatory or directory provision of law

- principles for determining 237

Manufacture

- meaning of 154

Material

- meaning of 156

May

- meaning of 156

- sometime be construed as “shall” 104

Mens rea

- meaning of 290

Merge & Merger

- meaning of 156

Mistake apparent from record

- scope of section 156 157

N

Natural justice

- an order affecting the rights of a party cannot be passed without

an opportunity of hearing to that party 433

No one can be judge in his own cause

- meaning of 419

Non-obstante clause

- effect of 225

529 Subject Index

- overrides conflicting provision 225

Noscitur a Sociis

- meaning of 419

Notice

- meaning of 157

- not curable if prima fiacie defective 326

Notifications

- guiding principles 224

- no undue advantage for scholarly interpretation 224

- plain language to be read 224

- imposing new liability cannot operate retrospectively 276

O Occupation

- meaning of 159

Official acts

- cannot be challenged on vague allegation of mala fide 329

Omission of provision from statutes

- not to operate retrospectively 293

Opinion

- meaning of 159

Opportunity of being heard

- order denying the same is not maintainable 334

- a must even in quasi-judicial proceedings 432

Or

- meaning of 159

Owners, ownership and own

- meaning of 159

P

Paid

- meaning of 160

Party in default

- meaning of 161

Pay

- meaning of 162

Penalty

- meaning of 162

Pending

- meaning of 165


- not only means actually pending but also what is proposed 165

- revision petition repealed ITO 164

Per incuriam judgement

- not binding of even the highest court 399, 401

Period of Limitation

- factors to be considered while computing period of limitation 448

Permanent establishment

- meaning of 163

Person

- meaning of 165

Plain words and patent meanings

- court must confine itself to language of law 215

- liability of withholding agent is restricted to plain

language of statute 215

- no patent meanings are allowed 215

Power of assessing officer

- unveiling of colourful transaction 48

Power of attorney

- statement itself is not proof 395

Power of legislature

- authority to promulgate Ordinance include power to levy tax 99

- can enact law having retroactive application 288

- competent to levy presumptive taxes 81

- court cannot question its wisdom 328

- curative legislation is allowed 98

- double taxation is its prerogative 89

- for framing laws 71

- levy of Corporate Asset Tax is constitutionally valid 90

- levy of minimum tax upheld 83

- levy of presumptive taxation 81

- limitation of framing 86

- new change can be introduced in tax code or through Finance Act 96

- of taxing „non-residents‟ 89

- redundancy cannot be readily attributed 97

- restriction on power to levy tax 77

- should not be violative of fundamental rights 77

- unlimited rights so long not confiscatory 80

Power to levy tax

- an attribute of sovereignty of a state 452

- no taxation except by express words 58

Power to make rules

- subject to certain limitations 470

531 Subject Index

Powers of CBR

- territorial & administrative jurisdiction 475

Pre-partition judgements

- binding unless overruled 399

Presumptive tax regime

- meaning of 166

Previous year

- meaning of 166

Principles of interpretation

- court cannot make up for any deficiency of legislature 57

- courts are not to be influenced by doctrine of hardship 57

- in dubio construction which imposes burden on taxpayer

should be avoided 57

- new obligation cannot be extracted 57

- no scope for equitable construction 56

Principles of natural justice

- be read in all statutes unless the same are

expressly excluded 442

- cannot be invoked in deciding a legal issue with reference

to the statutory provision 445

- part and parcel of every statute unless there is specific provision

in a particular statute to the contrary 445

Proceedings and pending proceeding

- difference of 167

Proceedings under the Income Tax

- are judicial proceedings 331

Processing

- meaning of 166

Profit

- meaning of 169

Promissory estoppel

- doctrine of 423, 424

- and legitimate expectation 423

- applies to SAS 423

- could not be invoked against the legislature and the laws framed by it 424

Property

- meaning of 170

Provisions of earlier Act

- when become part of later Act 53

Proviso

- scope of 45

- object of 17


Q

Qanoon-e-Shahadat Ordinance

- applicable to income tax 394

Question

- not raised before the Appellate Tribunal cannot be raised

before the High Court 331

Question of law

- declined lacking substance and being academic in nature 317

- in case of anomalies should be sent back to ITAT for

clarification 311

R

Recalling of orders

- courts/tribunal have inherent powers independent of any

statutory provisions 320

Receivable

- means actually received and not due 170

Received

- a person cannot receive a thing from himself 172

Reconstruction

- of sections and rules 33

Redundancy

- should not be readily assigned by courts 244

Reference

- when a finding of fact can be challenged 336

Reference to High Court

- only question of law which has substance in it to be referred 311

Refund due

- claim is not barred even if law so provides 451

Remedial and curative laws

- should be applied retrospectively unless specifically debarred 272

Remedy

- to be sought within four corners of Act 466

Repeal & amendment

- meaning of 172

Repeal of law

- rights once conferred cannot be taken back 294

- vested rights cannot be destroyed 67

533 Subject Index

Repealed statute

- history of decisions may be an aid for new statute 61

Repealing law

- cannot cover any period prior to coming into force

of the Act/Ordinance 293

Res judicata

- doctrine of 493

- income tax officer when not bound by 494

- not applicable to tax proceedings 493

- and principle of estoppel 493

Reserve

- meaning of 172

Retroactivity of the law

- limitation period extended retrospectively by legislation

held not valid 288

Retrospective application of law

- must be by explicit words 266

Retrospective laws

- should be avoided if results in injustice 272

Retrospective legislation

- benefit can be given in pending proceedings 269

- parliament is competent to apply law with retrospective effect 269

- scope of 266

Retrospectivity

- application in fiscal laws 265

- not applicable to penal provisions 285

- rules for determination 466

Right of appeal

- correct interpretation of Rule 15 238

Right to be heard

- no adverse order should be passed against a party

without affording an opportunity to meet the case 441

Rights of taxpayers

- a delinquent taxpayer deserves a favourable treatment 412

Role of certain expressions 16

Rule generalibus specialia derogant

- application of 219

Rule of benefit

- in favour of taxpayer if two interpretations possible 208

- where two interpretation possible, one favouring taxpayer

is to be adopted 208


Rules of interpretation

- in general 21, 42

- statute should be read as a whole 55

- of words and expressions 189

Rule of law

- things should be done as required by law 244

Rule of limitation

- a reference application made beyond the prescribed time

should be dismissed 449

- court holidays falling on the day of expiry of the prescribed

period of limitation should be excluded 450

- delay of each day must be explained 449

- time limitation for filing appeal u/s 136 vis-a-vis section 5

of Limitation Act 447

- time required for obtaining certified copy should extend the

period of limitation 448

- time spent in obtaining a certified copy should be

excluded while computing period of limitation 449

- where a judgment has not been conveyed to a party limitation

starts running from the date of knowledge 447

- where a matter is barred by limitation each and every days

delay must be explained 449

Rule of reading documents

- to be read as a whole and not in piece 237

Rule-making

- no discrimination is allowed 470

Rules

- cannot take away the vested rights 435

- delegated authority can frame rules if permitted expressly 99

- in case of discrepancy in language of section and rules,

section is to prevail 47

- limitation of 43, 47

- rule of interpretation 43

S

Sales and supplies

- meaning of 175

Shall

- use in section 134(5) of the Income Tax Ordinance, 1979

does not make it mandatory in nature 175

Shall be deemed to be included

- meaning of 78

535 Subject Index

Specify

- meaning of 175

Stare decisis

- decisions of Income Tax Appellate Tribunal are binding on

all subordinate authorities 405

- even obiter dictum of Supreme Court is binding on all courts

in Pakistan 405

- English decisions in pari materia and their binding value 406

- meaning of 405

- principles of 403

- per incuriam

- All judges of a High Court sitting together much less

to say of a Judge in Chambers cannot declare a judgment

of the apex Court to be per incuriam 399

- Per incuriam judgement of even the highest court

is not binding 402

- Deviation from an earlier finding without reference to

the same also makes a judgment per incuriam 402

Statutory construction

- practice as a guide 62

- practice of revenue authorities as contemporanea expositio 62

- practice not a guide where language of statute is clear 63

- practice under repealed Act as an aid for construction of later Act 65

- principle of contemporary exposition 63

Stay order

- proceeding taken subsequent to grant of stay order are

nullity in the eyes of law 478

Subordinate legislation

- can be applied retrospectively only if expressly mentioned 285

Subsequent general law

- not to interfere with special provision 61

Supply

- meaning of 176

Supreme Court

- limited jurisdiction in tax matters 313

T

Tax

- meaning of 177

Tax and fee



Tax on income

- scope of 102

Tax paid and tax payable


Tax payable on the basis of such return

- scope of 236

Taxable for total world income

- taxation of “resident” 49

Taxation in Islam

- basis of 471

Taxation of “resident”

- Taxable for total world income 49

Technical words 34

- example of “minor child” 34


- significance 34

Terms and phrases

- prima facie should be construed in their popular sense 260

The Protection of Economic Reforms Act of 1992

- overrides Income Tax Law to the extent protections are

provided in the former enactment 471

- scope of 468

- Special Law vs. Income Tax 468

Things should be done as per law as not to be done at all

- meaning of 420

Time limitation

- does not apply to illegal orders 335

True meaning of statute

- duty of court 431

Turnkey project

- meaning of 178

Turnover

- meaning of 181

U

Unjustified enrichment

- not attracted 42

Unlawful action

- does not force any law of limitation 173

537 Subject Index

Ut res valeat quam pereat

- meaning of 420

V

Vested rights

- cannot be taken away by implication 221

- only natural persons/legal persons possess and not the

government 479

W

Wafaqi Mohtasib (Ombudsman)

- CBR has no authority to file representation against its orders 216

- powers of 216

Waiver or estoppel

- do not apply against a provision of law 424

- principles of 424

Word and phrases

- accrue and arise 109

- effect of book entries 110

- agreed assessment

- assessment at par 116

- violative of Contract Act will be voidable 117

- agricultural income

- when remains to be such in the hands of recipient 112

- agriculture and agricultural purposes 112

- annual value 113

- approval and permission are not synonymous 113

- artificial juridical person 114

- assess 114

- assessable income 115

- assessment 115

- assessment year

- stable interpretation of term should be adopted 117

- best judgment assessment 117

- business 118

- business connection 118

- capital and dividend distinguished 118

- case 119

- certified copy 119

- charitable purposes 119

- charity and charitable purposes 120


- commercial 122

- commerce 122

- company and shareholder relationship between 122

- company limited by guarantee 123

- complete 124

- consultancy fee 125

- debt, loan, owe and du difference between 127

- deemed order 129

- default 129

- definite Information 130

- discard 133

- dividend 134

- employee 135

- enduring benefit 135

- enemy, enemy territory and aggrieved party 136

- erroneous 137

- evasion and avoidance difference between 138

- evasion of tax 138

- execution of contract 139

- expenditure & reserves 139

- failed and default 140

- failure 141

- fixed capital 141

- fixed capital and circulating capital 141

- general public 142

- goodwill 143

- guess work 144

- hearing 144

- immovable property does not cover “goods” 142

- immunity 145

- includes 145

- including 146

- income 146

- income tax authority 149

- individual & association of persons 149

- individual and such individual 150

- industrial undertaking 150

- interest 152

- liable 153

- life 154

- manufacture 154

- material 156

- may 156

- merge & merger 156

539 Subject Index

- mistake apparent from record

- scope of section 156 157

- notice, give notice and opportunity 157

- occupation 159

- opinion 159

- or 159

- owners, ownership and own 159

- paid 160

- party in default 161

- pay 162

- penalty 162

- permanent establishment 163

- pending 164, 165

- person 165

- presumptive tax regime…166

- previous year 166

- processing 166

- proceeding and pending proceeding 167

- profit 169

- property 170

- receivable 170

- received a person cannot receive a thing from himself 172

- repeal & amendment 172

- reserve 172

- sales and supplies 175

- shall

- use in section 134(5) of the Income Tax Ordinance, 1979

does not make it mandatory in nature 175

- specify 175

- supply 176

- tax 177

- tax and fee, distinction between 177

- tax paid and payable 177

- turnkey project 178

- turnover 181

- working capital, current assets and current liability 183

- year how to be understood 185

Words in statutes

- cannot be treated as surplusage or redundant 227

- no assumption for surplusage 229

Working capital, current assets and current liability

- meaning of 183

Writ

- admitted during the pendency of appeals 365


- alternate remedy no bar where order is unlawful 358

- appropriate remedy 352

- appropriate remedy where order is void and without

lawful authority 352

- assessee cannot avail remedy of constitutional petition before

High Court being dissatisfied with the notices 387

- assessee has other options like filing a complaint with

Ombudsman 334

- cannot be entertained where adequate remedy is available 384

- cannot be invoked when ITO‟s action is within jurisdiction 385

- challenge to vires of law having perpetual effect laches

not applied 359

- conditions for maintainability 333

- could not be invoked without first availing the remedies

available under the relevant law 340

- court cannot assume jurisdiction of income tax department 341

- extra-ordinary jurisdiction 340

- factual inquiry involving controversial facts cannot be undertaken

by the High Court in exercise of its constitutional jurisdiction 383

- granting of stay order only after listening the prescribed

law officer 300

- High Court cannot go in the domain of factual controversy 382

- in case of excess committed by public functionaries

adequate remedy is no bar 365

- in presence of arbitration clause in the agreement executed

between the parties, the writ petition is not maintainable 378

- inordinate delay in seeking discretionary relief under

Article 199 of the Constitution - hit by laches 480

- interim stay should be given once admitted 325

- issue being controversial involving inquiry into -

held not a fit case 385

- legality and correctness of a factual controversy could

not be resolved in constitutional Jurisdiction 382

- limitation for grant of stay 339

- maintainable if assessment is suffering from lack of jurisdiction 364

- maintainable when impugned order is patently without

jurisdiction 363

- maintainable where interpretation of law is involved 318

- maintainable where order is lawful 359

- maintainable where order is partial and unjust even if

alternate remedy is available 361

- not competent where order is in accordance with law 390

- not maintainable if jurisdiction of assessing officer is

not challenged 389

541 Subject Index

- not maintainable in case where no right to appeal or

reference is provided in law itself 380

- not maintainable in the presence of adequate alternate remedy 375

- not maintainable in the presence of adequate and

efficacious alternate remedy 390

- not maintainable where adequate and alternate remedy

available 382

- not maintainable where alternate and equally efficacious

remedy is available 341

- not maintainable where disputed question of fact involved 379

- not maintainable where facts are controversial 381

- not maintainable where parties themselves agreed for

arbitration in bilateral contracts 379

- political victimization, petition is maintainable 354

- question of controversial facts in constitutional jurisdiction 388

- reasonable interim relief when due 336

- remedies available under the law should be exhausted

before invoking the extraordinary jurisdiction 389

- selection of return for audit challenged through constitutional

jurisdiction - held not maintainable 380

- when doctrine of exhaustion is no bar 343

- when maintainable 333

- when maintainable even during the pendency of appeals 357

- when not maintainable 365

- where alternate remedy is no bar 362

- where order is illegal alternate remedy is no bar 362

- where there has been suppression of material/facts,

writ of prohibition cannot be issued 341

- where vires of law challenged, pendency of reference is no bar 359

Writ jurisdiction of High Court

- confined only to consideration whether authority had acted

with or without jurisdiction 341

Writ petition

- dismissed as withdrawn, second petition on the same

issue is maintainable 311

- not maintained when disputed questions of facts involved 316

Y

Year

- how to be understood 185