Law: Income Tax Ordinance, 2001

Section: Second Schedule,1,Cl.92

Tagline : The assessee, the Oxford University Press, claims exemption from tax under clause 86 of Part I of the Second Schedule (“Clause 86”) of the Income Tax Ordinance, 1979 for different assessment years in relation to income arising out of its Pakistan operations. Clause 86 comprises of three components (i) any income; (ii) of any university or other educational institution; (iii) established solely for educational purposes and not for purposes of profit. The purpose therefore throughout remains solely educational and not profit. The assessee is, therefore, entitled to the benefit of Clause 86 for all of the assessment years concerned.(a) Interpretation of statutes-------Fiscal statute---Exemption clause---Application and interpretation---Firstly, onus laid on the taxpayer to show that his case came within the exemption; secondly, if two reasonable interpretations were possible the one against the taxpayer would be adopted; thirdly, if the taxpayer's case came fairly within the scope of the exemption then he could not be denied the benefit of the same on the basis of any supposed intention to the contrary of the legislature or authority granting it.(b) Income Tax Ordinance (XLIX of 2001)-------Second Sched., Pt. 1, Cl. 92 [since omitted]---Income Tax Ordinance (XXXI of 1979) [since repealed], Second Sched, Pt. 1, Cl. 86---Exemption from tax---Scope---University or other educational institution established solely for educational purposes and not for purposes of profit---Publishing press of a foreign university (Oxford University Press) operating in Pakistan---High Court found that the publishing press/assessee was not entitled to exemption from tax under Cl. 86, Part 1 of Second Schedule to the Income Tax Ordinance, 1979 ("Clause 86") for the reasons that "in Pakistan", it was not engaged solely in imparting education, which was one of the primary requirement for availing the benefit of Cl. 86, and further it had failed to prove that the income earned by it through its business of printing, publication and sale of books or otherwise, was solely used for educational purposes "in Pakistan"---Held, that the High Court had laid a great deal of emphasis on the…