| Case ID |
e21452a3-4690-4050-81d0-781e8da5801f |
| Body |
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| Case Number |
Civil Appeal No. 28-K of 1978 |
| Decision Date |
Aug 07, 1989 |
| Hearing Date |
|
| Decision |
The Supreme Court ruled that the categorization of heads and the determination of taxable income under the Income Tax Act, 1922 are irrelevant in computing the profits and gains of the insurance business. Specifically, the court held that the provisions in Section 10(7) and the rules in the First Schedule govern the computation of profits and gains of the insurance business, excluding the ordinary methods of profit calculation. Therefore, the exemption under clause (xii) of section 4(3) is applicable only where the income is calculated under 'Income from property'. The court dismissed the appeal, confirming that the income from newly constructed properties claimed by the appellant was not chargeable under the exemption due to the nature of its calculation under the First Schedule. |
| Summary |
This case revolves around the interpretation of the Income Tax Act, 1922, specifically regarding the taxation of insurance companies. The Supreme Court of Pakistan addressed whether an insurance company, not engaged in life insurance, could claim an exemption under section 4(3)(xii) for income derived from house property. The ruling emphasized that the First Schedule's rules govern the computation of profits for insurance businesses, rendering traditional methods irrelevant. The court concluded that the exemption only applies to incomes calculated under the 'Income from property' category, leading to the dismissal of the appellant's claim for tax exemption. This case highlights critical aspects of tax law as it pertains to the insurance sector, making it a significant reference for similar future cases. |
| Court |
Supreme Court of Pakistan
|
| Entities Involved |
Messrs HABIB INSURANCE CO. LTD.,
COMMISSIONER OF Income tax, CENTRAL, KARACHI
|
| Judges |
MUHAMMAD HALEEM, C.J.,
ZAFFAR HUSSAIN MIRZA,
SAAD SAOOD JAN,
ALI HUSSAIN QAZILBASH
|
| Lawyers |
Noorul Arifin, Advocate of Supreme Court,
Nizam Ahmad, Advocate-on-Record for Appellant,
Sheik Haider, Advocate of Supreme Court,
Muzaffar Hasan, Advocate-on-Record for Respondent
|
| Petitioners |
,
Messrs HABIB INSURANCE CO. LTD.
|
| Respondents |
COMMISSIONER OF Income tax, CENTRAL, KARACHI
|
| Citations |
1990 SLD 276,
1990 PTD 196,
(1990) 61 TAX 88
|
| Other Citations |
Commissioner of Income tax v. The Asian Insurance Co. Ltd. (1962) 46 I.T.R. 560,
Commissioner of Income tax v. Alpha Insurance Co. Ltd. Karachi P L D 1981 S C 293,
Vanguard Fire and General Insurance Co. Ltd. v. Commissioner of Income tax (1966) 60 I.T.R. 496
|
| Laws Involved |
Income Tax Act, 1922
|
| Sections |
4(3)(xii),
10(7),
First Schedule
|