Law: Income Tax Ordinance, 1979

Section: 25(c)

Law: Income Tax Ordinance, 2001

Section: 133(1)(5)

Income Tax Ordinance (XXXI of 1979) [since repealed]--- ----S. 25(c)---Companies Profits (Workers' Participation) Act (XII of 1968), Ss. 9 & 2---Investment of Workers' Profit Participation Fund---Tax treatment of the income of Workers' Profit Participation Fund---Amounts subsequently recovered in respect of deductions---Scope---Department assailed order of Appellate Tribunal and contended that it was justified to levy tax on an amount utilized by taxpayer in respect of Workers' Profit Participation Fund made upto the year 1998-1999, which amount remained payable till 2001 under S. 25(c), Income Tax Ordinance, 1979---Contention of taxpayer was that deduction made on account of Workers' Profit Participation Fund did not fall within the ambit of S. 25(c) Income Tax Ordinance, 1979 because the companies were allowed to use the fund for its business but the income arising out of the same was declared to be exempt under the Companies Profits (Workers' Participation) Act, 1968---Validity---Section 2 of Companies Profits (Workers' Participation) Act, 1968 dealt with investment of funds whereas S. 9 explicitly provided an exemption of income of the fund including capital gain---Taxpayer was granted an exemption by special law, therefore, the Appellate Tribunal had rightly observed that deduction made on account of Workers' Profit Participation Fund did not fall within the ambit of S. 25(c) of Income Tax Ordinance, 1979 and that the companies falling under the scheme of the Companies Profits (Workers' Participation) Act, 1968 were allowed to use the fund for their business operations, however, the companies were obliged to pay profit at the rate of 2.5 per cent above the Bank rate to compensate the use of the fund in the business operations---Reference application was dismissed. Syed Mushahid Shah and others v. Federal Investment Agency and others 2017 SCMR 1218 ref. THIS ORDER PASSED BY:JAWAD HASSAN, JUSTICE---.--- This Reference Application under section 133(1) of the Income Tax Ordinance, 2001 ("the Ordinance") is filed by the Applicant, being dissatisfied by the order passed by the Income Tax Appellate Tribunal, Lahore Bench, Lahore ("Appellate Tribunal") in…

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