| Case ID |
39c03c71-89b9-484d-90b5-8ac1cee05755 |
| Body |
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| Case Number |
Income Tax Reference Application No.272 of 2007 |
| Decision Date |
Feb 18, 2010 |
| Hearing Date |
|
| Decision |
The Sindh High Court ruled that the bonus shares declared by the applicant were taxable as income under Section 12(9) of the Income Tax Ordinance, 1979. The court emphasized that the declaration of bonus shares on January 30, 1997, was significant, as it fell within the first assessment year after the expiration of the tax holiday period. The court found no merit in the argument that the bonus shares were exempt under the Economic Reforms Act, as the relevant tax exemption had expired. The ruling clarified that the provisions of the law must be adhered to, and the interpretation of statutes must not add or supply provisions that are not explicitly stated. |
| Summary |
This case revolves around the taxation of bonus shares declared by Ansari Sugar Mills Ltd. in 1997. The Sindh High Court examined the applicability of the Income Tax Ordinance, particularly Section 12(9), which deems bonus shares as income for the year they are declared. The court highlighted that the company had enjoyed a tax holiday under Clause (118D) of the First Schedule to the Income Tax Ordinance, which ended in October 1996. The court ruled that as the bonus shares were declared post-holiday, they were subject to tax. The decision reinforced the principle that laws should be interpreted without adding provisions not present in the statute. The ruling has implications for corporate tax practices, particularly regarding the declaration and taxation of bonus shares, which are often treated as dividends under the Companies Ordinance. The case emphasizes the importance of adhering to legal provisions and the need for companies to understand their tax obligations thoroughly. |
| Court |
Sindh High Court
|
| Entities Involved |
Commissioner of Income Tax, Karachi,
Ansari Sugar Mills Ltd.
|
| Judges |
GULZAR AHMED,
IRFAN SAADAT KHAN
|
| Lawyers |
Mr. Muhammad Aleem,
Mr. Javed Farooqui
|
| Petitioners |
Messrs ANSARI SUGAR MILLS LTD.
|
| Respondents |
COMMISSIONER OF INCOME TAX, KARACHI
|
| Citations |
2010 SLD 2153,
2010 PTD 755
|
| Other Citations |
PLD 1997 SC 582,
1997 PTD 1555,
1993 SCMR 39,
1992 PTD 1681,
1993 SCMR 73
|
| Laws Involved |
Income Tax Ordinance,
Companies Ordinance
|
| Sections |
12(9),
2(20),
251(1)
|