Law: Income Tax Ordinance, 2001

Section: 65B

INCOME TAX ORDINANCE, 2001 (XLIX OF 2001)---Section: 65B, 65B(1), 65B(2) & 65B(3) - Tax credit for investment - Amendment of section 65B vide Finance Act, 2018 - Reopening of past and closed transactions - Rescinding of vested rights created through a specific provision by amendment of the same provision, while construing a provision intending a retrospective effect - Dealing with vested rights and using words therein stretched to include matters that do not fall within the plain language therein - Confiscatory in nature - Challenge to - FACTS Briefly stated, section 65B was inserted into the Ordinance vide Finance Act 2010 and it conferred a tax credit of ten percent upon qualifying companies for investment, provided that the requisite investment and installation of the pertinent plant and machinery took place within a specified time. A glance at the evolution of the provision demonstrates that upon introduction it conferred the tax credit if the pertinent plant and machinery was purchased and installed at any time between 1st July 2010 and 30th June 2015. The Finance Acts of 2015, 2016 and 2018 extended the expiration date in the provision to 30th June 2016, 30th June 2019 and 30th June 2021 respectively. It is consciously reiterated that vide the Finance Act 2018, the Parliament expressly extended the benefit of section 65B of the Ordinance to qualifying investments, if the pertinent plant and machinery was purchased and installed until 30lh June 2021. The Finance Act 2019 reversed the expiration , date to 30Ih June 2019 and furthermore halved the credit for tax year 2019 to five percent. ARGUMENTS It was the petitioners' case that section 65B of the Ordinance, as it stood prior to the Finance Act 2019, had been acted upon by the petitioners and that they had accrued protected vested rights, which were unlawfully prejudiced vide the amendment introduced subsequently. Mr. Hussain Ali Almani characterized the petitioners in two distinct categories; firstly those having purchased and installed the plant and machinery by 30th June 2019, yet were considered disentitled to the entire tax credit by virtue of the proviso, whereby their entitlement was…

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