| Case ID |
d60da713-ec56-4e0d-aa62-c5d8cf7c23ef |
| Body |
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| Case Number |
Civil Appeals Nos. 1262 of 2018 and 507 of 2017 |
| Decision Date |
May 15, 2019 |
| Hearing Date |
Nov 13, 2018 |
| Decision |
The Supreme Court ruled that the distinction between tax credit and exemption is significant for determining tax liabilities. It was concluded that tax credits and exemptions operate at different stages of tax imposition. The court emphasized that while tax exemptions can eliminate tax liabilities entirely, tax credits only reduce the payable amount after assessment is established. Therefore, the request for exemption certificates in terms of tax credits under section 159 was denied, affirming that the law does not permit issuance of exemption certificates for tax credits. The appeals were decided in favor of the Department, with directions for the refund of collected advance taxes to the taxpayers under certain conditions. |
| Summary |
In this landmark case, the Supreme Court of Pakistan addressed the complex issues surrounding tax credits and exemptions under the Income Tax Ordinance, 2001. The court analyzed the provisions regarding tax credits for newly established industrial undertakings, specifically section 65D, and contrasted them with tax exemptions under section 159. The pivotal argument was whether tax credits could be treated similarly to tax exemptions when applying for exemption certificates. The court's decision clarified that tax credits and exemptions serve different purposes within the tax framework, impacting the tax liabilities of corporations like H.M. Extraction Ghee and Oil Industries and Nishat Dairy. The ruling emphasized the necessity of adhering to legal definitions and requirements for tax privileges. This case is significant for legal practitioners and businesses navigating tax regulations, as it underscores the importance of understanding the distinctions between various tax relief mechanisms. |
| Court |
Supreme Court of Pakistan
|
| Entities Involved |
FEDERAL BOARD OF REVENUE,
H.M. EXTRACTION GHEE AND OIL INDUSTRIES (PVT.) LTD.,
Nishat Dairy
|
| Judges |
UMAR ATA BANDIAL,
MUNIB AKHTAR,
YAHYA AFRIDI
|
| Lawyers |
Ch. Aitzaz Ahsan, Senior Advocate Supreme Court,
Gohar Ali Khan, Advocate Supreme Court,
Riaz Hussain Azam, Advocate Supreme Court,
Sarfraz Ahmed Cheema, Advocate Supreme Court,
Dr. Tariq Masood, Member Legal,
Shehryar Kasuri, Advocate Supreme Court
|
| Petitioners |
,
H.M. EXTRACTION GHEE AND OIL INDUSTRIES (PVT.) LTD.
|
| Respondents |
,
FEDERAL BOARD OF REVENUE
|
| Citations |
2019 SLD 1485,
2019 SCMR 1081,
2019 PTD 1479
|
| Other Citations |
Pfizer Laboratories Ltd. v. Federation of Pakistan and others PLD 1998 SC 64,
Nishat Dairy (Pvt.) Ltd. v. Commissioner of Inland Revenue and others 2013 PTD 1883,
Oil World (Pvt.) Ltd. v. Federation of Pakistan and others
|
| Laws Involved |
Income Tax Ordinance, 2001
|
| Sections |
65D,
100C,
148,
159(1)(a)
|