Law: Income Tax Ordinance, 2001

Section: Cl.110,Part1,Second Schedule,53,122(5A),133

Law: Companies Ordinance, 1984

Section: 2(30A)

Income Tax Ordinance (XLIX of 2001)- -Cl. 110, Part 1, Second Sched., Ss.53 & 133-Companies Ordinance (XLVU of 1984), S.2(30A)-Exemption from tax-Income chargeable under head of "capital gains"-Sale of redeemable capital-Term "Finance Certificate"-Question before the High Court was whether return obtained on Term Finance Certificates (TFCs) was exempt from tax under Cl. 110 of the Second Schedule to the Income Tax Ordinance, 2001-Held, under provisions of Cl. 110, Part I of the Second Schedule to the Income Tax Ordinance, 2001; any income chargeable under head of "capital gains" being income from the sale of, inter alia, instruments of redeemable capital as defined in the Companies Ordinance, 1984 were exempt from levy of tax-Redeemable capital had been defined under S. 2(30A) of the Companies Ordinance, 1984 which included finance obtained on the basis of "Participation Term Certificate (PTC)", "Musharika Certificates" as well as "Term Finance Certificate" (TFCs)-Contention that exemption for TFCs had not been specifically mentioned in the Second Schedule to the Income Tax Ordinance, 2001 was misconceived as intention of the Legislature had been expressed therein, where exemption to any income chargeable under the head of capital gains from sale of redeemable capital had been included and such legislative intent was clear and unambiguous- Reference was answered, accordingly. THIS ORDER PASSED BY: AQEEL AHMED ABBASI, Justice:---.--- Through instant reference application the following two questions have been proposed by the applicant, which according to learned counsel for the applicant, are questions of law, arising from the impugned order dated 15.11.2012 passed by the Appellate Tribunal Inland Revenue (Pakistan) in I.T.A. No.70/KB/2012 (Tax year - 2010 under section 122(5A):- 1. Whether on the facts and in the circumstances of the case, the learned Appellant Tribunal Inland Revenue, Karachi was justified in holding that the Return of TFCs are exempt from tax under the provisions of clause 110 of Part 1 of 2nd Schedule to the Income Tax Ordinance? 2. Whether on the facts and in the circumstances of the case, the learned Appellate Tribunal Inland Revenue,…

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