Law: Income Tax Ordinance, 1979

Section: 2(6),2(32),136(1),151,Clause99 ofPart-I of Second Schedule

Income Tax Ordinance (XXXI of 1979) [since repealed]--- ----S. 151 & Second Sched., Part-I, Cl. 99---Exemptions from total income---Partnership engaged in poultry business---Income of partnership exempted from tax---Prohibition on extending benefit of such exemption to partners (second recipients) when receiving their share of profits from the partnership/assessee was carrying on business of poultry in partnership with another person through an unregistered partnership firm---Total income of the firm was entitled to certain exemptions under Cl. 99 of Part-I of Second Sched. to the Income Tax Ordinance, 1979, which exemption was duly availed, however, also claimed the same exemption for his share of the profit received from the business of the firm, which was declined by the income tax officer in view of the provisions of S. 151 of the Income Tax Ordinance, 1979---Legality---Perusal of S. 151 of the Income Tax Ordinance, 1979 showed that the exemption available under Cl. 99 of Part-I of Second Sched. to the said Ordinance was limited to the original recipient of that income and did not extend to any person receiving any payment wholly or in part out of that income---Partnership firm whether registered or unregistered was an independent assessee and was treated as a legal entity; it was distinct from its partners for the purposes of filing returns, payment and calculation of taxes---In the present case, the income was admittedly received by the unregistered partnership firm which (as a legal entity) enjoyed exemption from payment of income tax, however, any part of its income which was received by the respondent (partner) was taxable in view of the provisions of S. 151 of the Income Tax Ordinance, 1979 which provided that exemption shall not extend to any person receiving payment from the original recipient---Second recipient, such as the respondent-partner, was not entitled to claim any exemption from tax---Appeal was allowed accordingly. Julian Housing Dinshaw Trust v. Income Tax Officer 1992 PTD 1 = 1992 SCMR 250 and Commissioner of Income Tax, Karachi (West), Karachi v. Muhammad Yousuf & Co. Karachi 1984 PTD 74 distinguished. THIS JUDGMENT DELIVERED…

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