| Case ID |
1baf808f-a4db-4fc8-bd10-586bb676ea90 |
| Body |
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| Case Number |
I.T.A. No. 683/KB of 2018 |
| Decision Date |
Nov 22, 2018 |
| Hearing Date |
Oct 09, 2018 |
| Decision |
The Appellate Tribunal Inland Revenue ruled in favor of the taxpayer, M/S NIT Income Fund, allowing the appeal against the decision of the lower authorities. The Tribunal found that the taxpayer had not issued any bonus units, and thus the application of the proviso to clause (99) of Part I of the Second Schedule was misapplied. The Tribunal clarified that the dividend distribution included reinvested profits, which did not constitute a violation of the Income Tax Ordinance. The previous order was set aside as the authorities misinterpreted the law, leading to an unjustified tax liability. |
| Summary |
In the case of M/S NIT Income Fund vs. The C.I.R., the Appellate Tribunal Inland Revenue addressed the complexities of income tax law concerning dividend distribution and reinvestment. The taxpayer, a mutual fund, contested the tax authority's determination which rejected their claim for exemption based on alleged improper bonus shares issuance. The Tribunal highlighted the importance of correct interpretation of the Income Tax Ordinance, particularly regarding sections related to dividend distribution. It was determined that reinvestment of dividends into new shares, as requested by unit holders, was lawful and consistent with regulatory provisions. The ruling emphasized the need for clarity in tax regulations to avoid misinterpretations that could unfairly burden taxpayers. This decision sets a precedent for mutual funds and their compliance with tax laws, ensuring that legitimate reinvestment strategies are recognized as valid under current legislation. |
| Court |
Appellate Tribunal Inland Revenue
|
| Entities Involved |
Central Depository Company of Pakistan Limited,
National Investment Trust Limited
|
| Judges |
MRS. AMBREEN ASLAM,
SYED TAHIR RAZA ZAIDI
|
| Lawyers |
Amin Malik, F.C.A.,
Muhammad Aslam Jamro
|
| Petitioners |
M/S NIT INCOME FUND
|
| Respondents |
THE C.I.R., ZONE-I, C.R.T.O.
|
| Citations |
2019 SLD 1165,
2019 PTD 1100
|
| Other Citations |
Not available
|
| Laws Involved |
Income Tax Ordinance, 2001,
Income Tax Ordinance, 1979
|
| Sections |
122,
122(9),
122(5),
122(5A),
129,
150,
2nd Schedule,
9(1A)
|