Law: Income Tax Ordinance, 2001

Section: 2(29),9,10,11,80(2)(b)(v),133,SecondSche d.,Part-1,Cl.58(2)(1)

Law: Income Tax Ordinance, 1979

Section: 2(24),11,15,23(1)(x),SecondSchedule,Part -1,CL62(1)

(a) Income Tax Ordinance (XLIX of 2001)--Ss.2(29), 9, 10, 11, 80(2)(b)(v), 133, Second Sched., Part-1, Cl.58(2)(1)�Income Tax Ordinance (XXXI of 1979), Ss.2(24), 11, 15, 23(1)(x), Second Schedule, Part-1, CL 62(1)�Income of trust�Tax exemption�Overriding title�Applicant IT rust sought exemption on the plea that its income was diverted by virtue of overriding title of Directorate of Army controlling the affairs of applicant/Trust and other projects�Validity�Concept of overriding title leading to diversion of income had no application when had come to income of a trust or society or a charitable institution�Constituent documents of such entity constrain its ability to determine freely how the income was to be used once it had reached the entity, who was not free and autonomous to use it as it pleased�Constituent documents of the entity determined how income was to be employed or even who all would be the beneficiaries of such income�Such constraint did not transform income of welfare entity (whether constituted as a S. 42 company or a trust or a society) into that of the beneficiaries�Once income had reached the entity (i.e. the taxpayer), it qualified as income under Ss.2(24), 11 of the Income Tax Ordinance, 1979 and Ss. 2(29), 9, 10 of Income Tax Ordinance, 2001�Manner in which such income was to be employed was a question of its utilization and not that of overriding title� Income that had reached a taxpayer or accrued to it, notwithstanding the manner of its utilization, remained income in the hands of taxpayer and was to be taxed as such�What qualified as �income� under Income Tax Ordinance, 1979 or Income Tax Ordinance, 2001 was income liable to tax in the hands of taxpayer who was in receipt of such income�Applicant / Trust was under no legal obligation to transfer its entire income to the Directorate due to legal necessity�Even in the event that the constituent documents of applicant / Trust stated that its entire income would be employed in welfare activities through another organization such as the Directorate, such arrangement for utilization of income of applicant / Trust would still not create any overriding title…