| Case ID |
1acbd2b8-cb04-4659-84b4-b32013051a6e |
| Body |
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| Case Number |
Civil Appeal No.123-K of 1983 |
| Decision Date |
Oct 08, 1991 |
| Hearing Date |
Aug 29, 1991 |
| Decision |
The Supreme Court of Pakistan dismissed the appeal, holding that the Free Reserve of a company does not constitute income within the meaning of Entry No.43 of the Third Schedule of the Constitution of Pakistan (1962). The Court found that the amendments made by the Finance Acts of 1967 and 1968, which treated free reserves as income, were ultra vires as they taxed what was not income. The judgment clarified that income cannot be taxed twice and that once income has been assessed and treated as free reserve, it cannot be subjected to income tax again. The decision emphasized the interpretation of income under the Income Tax Act and the Constitution, ensuring that taxation is imposed within the limits of legislative authority. |
| Summary |
This case addresses the interpretation of income tax law in Pakistan, particularly regarding the taxation of free reserves held by corporations. The Supreme Court examined whether free reserves qualify as income under the Income Tax Act of 1922 and the Constitution of Pakistan, 1962. The case is significant for its implications on corporate taxation, legislative power, and the principle of avoiding double taxation. The Court concluded that free reserves do not constitute income, thereby preventing the government from imposing additional taxes on amounts already assessed. This decision is crucial for businesses in Pakistan as it clarifies the legal framework surrounding corporate taxation and income definitions, ensuring compliance with constitutional provisions. Keywords like 'corporate taxation', 'income tax law', 'free reserves', and 'double taxation' are essential for SEO optimization, attracting legal professionals and businesses seeking clarity on tax obligations and rights under the law. |
| Court |
Supreme Court of Pakistan
|
| Entities Involved |
Not available
|
| Judges |
SHAFIUR RAHMAN,
MUHAMMAD RAFIQ TARAR,
SALEEM AKHTAR
|
| Lawyers |
Khalid Anwar, Advocate Supreme Court,
S.M. Abbas, Advocate-on-Record for Appellant,
Shaikh Haider, Advocate Supreme Court,
Ali Ahmed Fazeel, Advocate Supreme Court,
Muzaffar Hassan, Advocate-on-Record for Respondent
|
| Petitioners |
Not available
|
| Respondents |
Not available
|
| Citations |
1992 SLD 258,
1992 SCMR 891
|
| Other Citations |
Maharajkumar Gopal Saran v. Commissioner of Income Tax (1935) 3 ITR 237,
Navinchandra Hafatlal, Bombay v. Commissioner of Income Tax (154) 26 ITR 758,
K.P. Varghese v. Income Tax Officer AIR 1981 SC 1922,
Mst. Samina Shaukat Ayub Khan v. Income Tax Officer PLD 1981 SC 85,
Commissioner of Income Tax, Rawalpindi v. Messrs Haji Maula Bux Corporation, Sargodha PLD 1990 SC 990,
United Provinces v. Mst. Atiqa Begum and others AIR 1941 FC 16,
C.I.T. v. Bombay Trust Corporation 4 ITC 312,
Keshav Mills Limited v. C.I.T. 23 ITR 230,
C.I.T. v. Ahmedbhai Umerbhai 18 ITR 472 (SC)
|
| Laws Involved |
Income Tax Act, 1922,
Constitution of Pakistan, 1962
|
| Sections |
2,
2(6c),
3,
4,
55,
ThirdSched.
|