Law: Income Tax Act, 1922

Section: 66,66(2)

Law: Pakistan International Airlines Corporation Act, 1956

Section: 26

Pakistan International Airlines Corporation Act (XIX of 1956)----S. 26 read with Income-tax Act (Xl of 1922), S. 66(2)-Amount -paid by Government to Pakistan International Airlines "Corporation to make good loss sustained by Corporation-Falls within income receipts, liable to tax under Income-tax Act, 1922. [pp. 925, 930]A & B Seaham Marbeur Dock Co. v. Crook 16 T C 333 distinguished. Smart v. Lincolnshire Sugar Co. Ltd. 20 T C 543 ; Black v. Imperial Brazillian Railway 2 T C 58 ; Nizam's Guaranteed State Railway Co. v. Wyatt 2 T C 584 and Pretoria-Pietersburg Railway Company Limited v. Elwood 6 T C 5C8 ref. In re : Ahmedpur Katwa Railway Co. Ltd. (1935) 3 M R 277 ; Miggs v. Wrightson 26 T C 73 ; C. I. T., Madras v. Madras and Southern Mahratta Railway Company Limited (1940) 8 I T R 280 and C. 1. T., Madras v. The Madras & Southern Mahatta Aailway Company Limited (1943) 9 ITR 388 rel. JUDGMENT JAMALUDLIN H. AHMED, J.-The following question has been referred to this Court under section 66(2) of the Income-tax Act, 1922 by the Income. tax Appellate Tribunal: "Whether the amount of Rs. 1,05,13,609.00 paid by the Government t the assessee under section 26 of the Pakistan International Airline Corporation Act, 1956 for making good the loss sustained by the A assessee is in the nature of income receipt liable to tax under the Income-tax Act, 1922." 2. Briefly stated the facts of the case as shown in the statement submitted by the Tribunal are, that the Pakistan International Airlines Corporation, Karachi the assessee in the present case, was created by the Pakistan International Airlines Corporation Ordinance (Ordinance I of 1955) which was subsequently replaced by the Pakistan International Airlines Corporation Act (Act No. 19 of 1956). Under section 26 of the said Act, the Central Government under took to make good any losses sustained by the Corporation during the three years next after 30th September 1953. In the account period relevant to charge year 1956-57 the Central Government paid a sum of Rs. 1,05,13,609.00 in terms of the said section 26 of the P. 1. A. C. Act, 1956. The assessee claimed this payment as a replenishment of its capital which,…

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