| Case ID |
42b7aa73-c53e-4132-8b0d-4f2f57112472 |
| Body |
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| Case Number |
I.T.Rs. Nos. 48 and 74 of 1982, 5, 20, 26, 30, 55 |
| Decision Date |
Sep 17, 1987 |
| Hearing Date |
Sep 02, 1987 |
| Decision |
The Sindh High Court delivered a common judgment concerning 36 Income Tax References. The primary issue was whether the Income Tax Liability for the relevant assessment year could be included in calculating retained income for surcharge purposes. The court concluded that provisions for proposed dividends and taxation are considered retained income and thus not subjected to surcharge, especially for new setups where such provisions would not be necessary until operations generate profits. This reflects the court's understanding of working capital as it relates to current assets and liabilities, emphasizing the importance of distinguishing between operational needs and tax obligations. |
| Summary |
This case revolves around the interpretation of the Income Tax Act, 1922, particularly sections related to retained income and the calculation of surcharges in the context of working capital. The Sindh High Court addressed multiple references concerning the inclusion of advance tax payments and provisions for dividends in the calculation of retained income. The court's ruling emphasizes the distinction between liabilities and operational needs, clarifying that provisions for taxes and dividends do not constitute working capital in certain contexts, especially for newly established entities. This decision is crucial for understanding tax liabilities and their implications on corporate financial planning. The ruling also discusses the definitions and applications of working capital, current assets, and current liabilities, providing a comprehensive view of how these terms are applied within the framework of the Income Tax Act. This case contributes to the legal precedent regarding taxation and financial management within corporate structures, making it a significant reference for future cases involving similar issues. |
| Court |
Sindh High Court
|
| Entities Involved |
|
| Judges |
AJMAL MIAN,
HAIDER ALI PIRZADA
|
| Lawyers |
Shaikh Haider,
Waheed Farooqui,
Nasarullah,
Iqbal Naeem Pasha,
Ali Akhtar,
Sirajul Haq,
K. Salah-ud-Din,
R.F. Virjee,
Anwar Mansoor Ahmad Khan,
Ibrahim Pishori,
Rafique Comani
|
| Petitioners |
COMMISSIONER OF Income tax
|
| Respondents |
Messrs PAKISTAN TOBACCO CO. LTD
|
| Citations |
1988 SLD 10,
1988 PTD 66,
(1988) 57 TAX 118
|
| Other Citations |
1987 C L C 1408,
A I R 1955 S C 74,
P L D 1959 S C Pak. 21,
A I R 1963 S C 1185,
A I R 1964 S C 892,
1987 P T D (Trib.) 247,
1979 40 Tax 47 (Trib.)
|
| Laws Involved |
Income Tax Act, 1922
|
| Sections |
18A,
21,
22,
22A,
23a,
23
|