Law: Income Tax Ordinance, 2001

Section: 14,27,62,136,Second SchedulePartI,Clause128

Law: Export Processing Zones Authority Ordinance, 1980

Section: 2(e)

(a) Income Tax Ordinance (XXXI pf 1979)- -Ss.27, 62 & 136-Assessment of income-Income of Banking Company-Capital Gains-Income derived in respect of Securities - "Rollover of securities/bonds"-Scope-Question before High Court was whether taxpayer Banking Company could claim capital gain on rollover of certain bonds (securities) or whether capital gain could arise only after transfer / sale of such bonds-Held, that profit or gain would arise only from transfer of a capital asset which would be deemed to be income of an assessee; and where no transfer of such asset took place, then claim of taxpayer with regard to capital gain on such bonds / securities was not justified-Only on transfer of an asset, as referred to in S. 27 of Income Tax Ordinance, 1979, the taxpayer would be justified to claim income by way of capital gain and therefore rollover of bonds would not be considered capital gain - Reference was answered, accordingly. (b) Income Tax Ordinance (XXXI of1979)- -S.14 & Second Sched. Part ,1, Cl. 128-Export Processing Zones Authority, Ordinance (IV of 1980) S.2(e)-Exemptions from total income-Industrial undertaking, definition of-Export Processing Zones ("EPZ")-Banking Companies-Income of Branch of Banking Company located within an EPZ-Scope-Question before High Court was whether income derived by a Banking Company from Branch located within an EPZ was entitled to exemption provided under Cl. 128 of Part I of the Second Schedule to the Income Tax Ordinance, 1979- Held, that any income accruing to an industrial undertaking outside Pakistan, set up in EPZ, was exempt from tax and such undertakings working in EPZs were to be considered to be working outside Pakistan-Any industrial undertaking accruing income in an EPZ was therefore exempt from tax-Claim of exemption of Banking Company in respect of its Branch located within an EPZ did fall within exemption provided for in Cl. 128 of Part I of the Second Schedule to the Income Tax Ordinance, 1979 read with S.14 of the same- Reference was answered, accordingly. JUDGMENT IRFAN SAADAT KHAN, JUSTICE:---.--- The instant Income Tax Appeal (ITA) was filed by raising the following questions of law which were…

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