| Case ID |
0ab24d5c-7256-420e-a3e7-33dd76c6f2d7 |
| Body |
View case body. Login to View |
| Case Number |
Civil Appeal No. K-6 of 1974 |
| Decision Date |
Dec 05, 1984 |
| Hearing Date |
|
| Decision |
The Supreme Court of Pakistan dismissed the appeal filed by Habib Insurance Company Limited, concluding that the appreciation in the value of investments and gains from properties sold were correctly brought to tax under section 10(7) of the Income-tax Act. The court emphasized that the assets and gains of the appellant company, which was solely engaged in the business of insurance, were all relatable to its insurance business. The court found that the appellant's investments, although derived from share capital and not from premium income, were still subject to tax as they were categorized as assets of the insurance business. Additionally, the court ruled that the Income-tax Officer acted within his competence in assessing these gains and that the arguments presented by the appellant did not establish a valid distinction between the investments made and the business of insurance. Consequently, the court upheld the interpretation of the Income-tax Act as applied to the case. |
| Summary |
This case revolves around the taxation of an insurance company regarding the appreciation of its investments and properties. The Supreme Court of Pakistan addressed the interpretation of the Income-tax Act, particularly section 10(7), and its application to the financial dealings of Habib Insurance Company Limited. The company contended that its investments were not part of its insurance business and thus should not be taxable under the provisions of the Income-tax Act. However, the court clarified that all assets and gains of an insurance entity are inherently linked to its business operations, affirming that the appreciation in value of investments and gains from properties sold were taxable. The ruling emphasized the importance of accurately categorizing income and gains as part of the core business activities of an insurance firm, thereby underscoring the broader implications for taxation in the insurance sector. This case highlights key legal principles regarding the taxation of insurance companies and the interpretation of income tax laws, making it significant for practitioners in tax law and the insurance industry. |
| Court |
Supreme Court of Pakistan
|
| Entities Involved |
Habib Insurance Company Limited,
Commissioner of Income Tax (Central), Karachi
|
| Judges |
MUHAMMAD AFZAL ZULLAH,
SHAFIUR RAHMAN,
ZAFFAR HUSSAIN MIRZA
|
| Lawyers |
Khalid Anwer, Advocate Supreme Court,
S. M. Abbas, Advocate-on-Record,
Shaiq Haider, Advocate Supreme Court,
Muzaffar Hassan, Advocate-on-Record
|
| Petitioners |
MESSRS HABIB INSURANCE Co. LTD.
|
| Respondents |
COMMISSIONER OF Income Tax (CENTRAL), KARACHI
|
| Citations |
1985 SLD 217,
1985 PLD 109
|
| Other Citations |
Liverpool and London And Globe Insurance Company v. Banett (Surveyor of taxes) 1913 A C 610
|
| Laws Involved |
Constitution of Pakistan (1973),
Income-tax Act (XI of 1922)
|
| Sections |
Art. 185(3),
Ss. 66(1),
S. 10(7),
First Schedule, rr. 3 & 6
|