| Case ID |
d855fb68-1087-4698-b7ed-9d1eccf07f74 |
| Body |
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| Case Number |
Civil Appeals Nos. 150, 151 and 152 of 2006 |
| Decision Date |
Jul 10, 2015 |
| Hearing Date |
|
| Decision |
The Supreme Court of Pakistan allowed the appeals of Lucky Cement Ltd. and set aside the judgments of the lower courts. The court held that the income generated from the investment of surplus funds by Lucky Cement Ltd. should be classified as income from business rather than income from other sources. The court emphasized that the Memorandum of Association of the company permitted such investments as part of its business activities, thus ruling that earnings from these investments were integral to its business operations. The dissenting opinions highlighted the potential misinterpretation of the company's primary business focus and the implications of the prohibitory clauses in the Memorandum of Association regarding investment activities. |
| Summary |
This case revolves around the classification of income earned by Lucky Cement Ltd. from investments made with surplus funds during the construction of its cement manufacturing plant. The main legal question was whether this income should be viewed as business income or income from other sources. The Supreme Court of Pakistan ruled in favor of Lucky Cement, asserting that the company's Memorandum of Association allowed for such investments as part of its business activities. By interpreting relevant sections of the Companies Ordinance and Income Tax Ordinance, the court determined that the income derived from these investments was indeed business income, thereby overturning the lower courts' decisions which classified it as income from other sources. The ruling emphasizes the importance of the Memorandum of Association in defining the scope of a company's business activities and the potential for companies to engage in investment activities as part of their business strategy, aligning with contemporary practices in corporate law. |
| Court |
Supreme Court of Pakistan
|
| Entities Involved |
Lucky Cement Ltd.,
Commissioner Income Tax, Zone Companies, Circle 5, Peshawar
|
| Judges |
Mian Saqib Nisar,
Sh. Azmat Saeed,
Mushir Alam
|
| Lawyers |
Khalid Anwar, Senior Advocate Supreme Court,
M.S. Khattak, Advocate-on-Record,
Ghulam Shoaib Jally, Advocate Supreme Court,
Raja Abdul Ghafoor, Advocate-on-Record
|
| Petitioners |
Lucky Cement Ltd.
|
| Respondents |
Commissioner Income Tax, Zone Companies, Circle 5, Peshawar
|
| Citations |
2015 SLD 2112,
2015 SCMR 1494
|
| Other Citations |
PLD 1962 SC 128,
1997 Supp. (1) SCR 528,
156 ITR 543,
2004 SCMR 1319,
2009 PTD 331,
2010 SCMR 1236
|
| Laws Involved |
Companies Ordinance (XLVII of 1984),
Income Tax Ordinance (XXXI of 1979)
|
| Sections |
15,
16,
17,
22,
30,
30(2)(b),
15(d),
15(f)
|