Law: Income Tax Ordinance, 2001

Section: 2(20),12,18(b),120,122(9),133, ScheduleII,Part-IIIClause1(2)

NOTES: Clinical supplements and incentives Tax payer, a permanent employee of a Hospital Taxpayers (assessees) were aggrieved of show-cause notice issued to them to include clinical supplements and incentives received by them from their employers as part of salary Such income of taxpayers was excluded from purview of admissible rebate, earlier it was not excluded If it had not been admissible earlier, there would have been no need for inserting the proviso to Sched.II, Part-III Cl.1(2) to Income Tax Ordinance, 2001 vide Finance Act, 2019, for exclusion such particular income Legislative intent by not giving retrospective effect to the proviso showed that what was not excluded earlier was excluded with effect from Finance Act, 2019 Legislature was deemed to be aware of previous state of the law and if knowing that it made a change when repealing it and re-enacting some of its provisions the intention was to effect a change Provision of proviso to Sched. II, Part-III Cl. 1(2) of Income Tax Ordinance, 2001, showed intent of the Legislature and even otherwise benefit / rebate was admissible at least prior to Finance Act, 2019 Authorities below failed to appreciate correct proposition of law and Income Tar Ordinance, 2001, to conclude that two heads of income did not fall within the definition of salary in terms of S.12 of Income Tax Ordinance, 2001 High Court answered question in affirmative in favour of taxpayers and against the authorities. Engro Vopak Terminal Ltd. v. Pakistan 2012 PTD 130 Standard Chartered Bank (Pakistan) Ltd. v. Pakistan 2017 PTD 1585 Dr. A. Razzak Kazi v. Commissioner of Income Tax Hyderabad 1990 PTD 810 Commissioner of Income Tax v. Dr. Mrs. Usha Verma (2002) 254 ITR 404 Commissioner of Income Tax v. I.B.M. SEMEA 2011 PTD 2275 Malik Muhammad Inam v. Federation of Pakistan 2006 SCMR 1670 Qasim Ali v. Commissioner of Income Tax 2000 PTD 1288 ref. Pakistan Tobacco Co. Ltd. v. Karachi Municipal Corporation PLD 1967 SC 241 rel. JUDGMENT: MUHAMMAD JUNAID GHAFFAR, JUSTICE:---.--- The question in this Reference Application is identical in the connected ITRAs and Constitutional Petitions as mentioned in Annexure "A" to this opinion and by consent,…

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