Law: Income Tax Ordinance, 2001

Section: 2(19)(a),4(4),4(5),5,8,39,150

Income Tax Ordinance (XLIX of 2001)---Ss. 2(19)(a), 4(4), 4(5), 5, 8 , 39---Dividend in specie---Income liable to tax---Scope---Dividend in specie received by the taxpayer is income and taxable under S. 5 of the Income Tax Ordinance, 2001 (‘the 2001 Ordinance’)---Dividends constitute a separate block of income that is brought to tax in terms of S. 5 of the 2001 Ordinance--- Dividends are to be taxed as a separate block of income under S. 5 but if for any reason any particular type, class or category of dividend, or the dividend involved in the facts and circumstances of a particular case, are found not to fall within the scope thereof, such dividend would then be brought to tax as “income from other sources” under S. 39 of the 2001 Ordinance---Either way a dividend is taxable unless exempt or otherwise taken out of the tax net by the application of any provision of the 2001 Ordinance. Maharaj Kumar Gopal Saran Narain Singh v. Commissioner of Income Tax [1935] 3 ITR 237, [1935] UKPC’ 29 and Kanga and Palkhiwala’s The Law and Practice of Income Tax (10th ed., 2014, pg. 193) ref. (b) Income tax---Each tax year is a separate unit of account and taxation and the law has to be applied as it stood in respect of that tax year alone. (c) Interpretation of statutes---Tax statute---Exemption clause---Retrospective effect---Scope--- Exemption clause has a beneficial effect---Simply because a statutory provision has a beneficial effect does not mean that it automatically has, or can have, retrospective effect---Such principle is not sacrosanct; it can be overridden by the legislative will, but that must be done either expressly or shown to be the necessary intendment of the provision sought to be applied retrospectively. (d) Income Tax Ordinance (XLIX of 2001)---Ss. 5 , 150---Dividends, tax on---Sections 5 , 150 of the Income Tax Ordinance, 2001 (‘the 2001 Ordinance’)---Distinction---Section 5 speaks of the dividend being “received” by a person from a company, while S. 150 speaks of the dividend being “paid” by the latter---Former is a general expression, bringing to tax all that is received by way of dividend, while the latter is limited to the requirements of S. 150,…

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