July 20, 2023 (MLN): Pertaining to the petition filed on super tax the Islamabad High Court has given directions to exclude certain income while calculating the income taxable to super tax, including income covered under final tax and adjustment of carry-forward business losses.
“Super tax is held to be against the scheme of the Constitution and should either be read down or declared ultra vires,” the order reads.
Further, it says that the super tax will have prospective application only, and will not apply to any transactions or events past and closed on or before June 30, 2022.
Moreover, the super tax will not apply to the benevolent funds holding exemptions from tax under the other provisions of the Ordinance.
Super tax will not be applicable on petroleum and exploration companies to the extent its application results in the taxation of such companies exceeding the thresholds stipulated in Rule 4 of the Fifth Schedule to the Ordinance.
It is worth noting that all notices of demand or recovery impugned in the petitions are set aside, without prejudice to the revenue’s right to issue fresh notices not inconsistent with this judgment.
Fauji Fertilizer Company Limited (PSX: FFC) along with other companies filed this petition as they are dissatisfied with the imposition of the “super tax" under section 4C of the Income Tax Ordinance 2001.
It is important to mention that the Supreme Court's judgment is in different directions, while the Sindh High Court and Lahore High Court have also provided conflicting instructions.
