| Case ID |
174deead-7340-44f4-bde8-7db33cc5ffee |
| Body |
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| Case Number |
I.T.Rs. Nos. 1 to 49 of 2003 |
| Decision Date |
Nov 06, 2008 |
| Hearing Date |
|
| Decision |
The court upheld the actions taken under Section 65 of the Income Tax Ordinance, 1979, concluding that the gains from the sale of shares acquired through stock options were taxable. The Tribunal's rationale was based on the fact that the applicants had not reported these gains in their income tax returns. It was determined that the provisions of the Protection of Economic Reforms Act, 1992 had not been violated since no inquiries were made regarding the source of the deposits in the foreign currency accounts. The court emphasized that income earned outside Pakistan is taxable when brought into the country, regardless of the currency used. The appeals were dismissed, affirming that the income derived from the sale of shares was subject to tax as outlined in the Income Tax Ordinance. |
| Summary |
This case revolves around the taxation of capital gains earned by employees of Merck Sharp and Dohme Pakistan Limited from the sale of shares acquired through stock options. The Sindh High Court reviewed the actions of the Income Tax Appellate Tribunal, which had reopened the assessments of the employees based on new information regarding their stock options. The court analyzed the implications of the Income Tax Ordinance, 1979, particularly Sections 65, 11, and 15, alongside the Protection of Economic Reforms Act, 1992. Key arguments included whether the gains were taxable and if the foreign currency accounts held by the employees were exempt from taxation. The court found that the employees had indeed earned taxable income from the sale of shares and that the provisions of the Economic Reforms Act did not provide immunity against taxation for such gains. The decision underscores the importance of accurate reporting of income and the obligations of taxpayers under Pakistani tax law. |
| Court |
Sindh High Court
|
| Entities Involved |
Merck Sharp and Dohme Pakistan Limited,
Merck Incorporation USA
|
| Judges |
MUHAMMAD ATHAR SAEED,
ARSHAD NOOR KHAN
|
| Lawyers |
Muhammad Fareed,
Jawaid Farooqui
|
| Petitioners |
Mst. HALEEMA PERVAIZ
|
| Respondents |
COMMISSIONER OF INCOME TAX, ZONE F KARACHI
|
| Citations |
2009 SLD 1453,
2009 PTCL 162,
(2009) 99 TAX 128,
2009 PTD 131
|
| Other Citations |
Hudabiya Engineering (Pvt.) Ltd. v. Pakistan and 6 others 1998 PTD 34
|
| Laws Involved |
Income Tax Ordinance, 1979,
Protection of Economic Reforms Act, 1992
|
| Sections |
65,
11,
15
|