Law: Income Tax Ordinance, 2001

Section: 24,24(1)(a),97,97(2)(c),100A,122(5A),133 (5)

Income Tax Ordinance (XLIX of 2001)---.--- ---.---Ss.24, 97 & 122(5-A)---.---"Goodwill"---.---Intangible assets---.---Amalgamation of Banking companies---.---Taxpayer assailed show cause notice issued under S.122(5-A) of Income Tax Ordinance, 2001---.---Validity---.---Transferor Banking company was 'generator/creator' of goodwill and would have been entitled to amortize the same and entitled to benefit of deductions allowable under S.24 of Income Tax Ordinance, 2001 and as provided in S.97(2)(c) of Income Tax Ordinance, 2001 the benefit thereof passed on to the transferee company, the petitioner---.---Even if the authorities were correct in ascertaining that S.97 of Income Tax Ordinance, 2001 applied to amalgamation situation, that would not materially alter the position and bring it in its own favour---.---Taxpayer was required under S.24(1)(a) of Income Tax Ordinance, 2001, wholly or partly 'use' intangible in tax year to derive income from business chargeable to tax---.---Intangible was 'available for use' on any day (including a non-working day) in the tax year was to be treated as having been used on that day---.---"Goodwill" was inextricably linked to, and based on, transferor Bank's banking business which was acquired by taxpayer as a whole and a going concern and that business was continued and operated by the latter, it was clear that the goodwill was not merely 'available for use' during tax year concerned but was so in fact used---.---To operate business was, in effect, to use goodwill---.---High Court restrained the authorities from taking any proceedings on the basis or in terms of first part of the show cause notice which was set aside and quashed---.---Constitutional petition was allowed accordingly. Dr. M.B. Ankalsaria v. Commissioner of Wealth Tax Karachi 1992 SCMR 1755; Commissioners of Inland Revenue v. Muller and Co.'s Margarine Ltd. (1901) AC 217 and Commissioner of Income Tax Kolkota v. Smifs Securities Ltd. (2012) 348 ITR 302 ref. This order passed by: MUNIB AKHTAR, JUSTICE---.--- These two matters, filed by the same taxpayer ("Petitioner"), a banking company incorporated under the laws of Pakistan, arise under the Income Tax…