Law: Income Tax Ordinance, 2001

Section: 7E,7E(2),7E(2)(g)

Law: Constitution of Pakistan, 1973

Section: 3,25,70253-EntriesNo.47,49,50,82oftheFou rthSchedule

Tax on deemed income - Introduction of section 7E of the Income Tax Ordinance, 2001 through Finance Act, 2022 - Ultra vires to the Constitution - Discriminatory, confiscatory - Impugned levy u/s 7E is not a tax on income, but a tax on immovable property, which in terms of entry 50 of the Fourth Schedule to the Constitution is not within the competence of the Federal Legislature - Contention of the petitioners - Hence, void ab-initio and liable to be struck down - Prayer for - FACTS The Petitioners have challenged the provisions of section 7E of the Income Tax Ordinance, 2001 (“Ordinance”) introduced through Finance Act, 2022, on the ground that it is ultra vires to the Constitution and so also discriminatory; confiscatory; hence, void ab-initio and liable to be struck down. ARGUMENTS Petitioners’ counsel have contended that section 7E of the Ordinance imposes tax on property which is not within the competence of the Federal Legislature pursuant to Entry 50 of the Federal Legislative List provided in the Fourth Schedule to the Constitution of the Islamic Republic of Pakistan (“Constitution”); that it is only the Provincial Legislature who can tax an immovable property; that section 7E ibid within itself is discriminatory as it provides certain exceptions and exclusions without providing any rationale to such exclusions and or exemptions; that it amounts to violating the fundamental rights as enshrined in Article 23 read with Article 253 of the Constitution; that if at all, the impugned levy is to be sustained vis-a-vis. the speech of the Finance Minister, it ought to have been levied through an Act of Parliament by following the procedure as contemplated under Article 70 of the Constitution; that in fact it is an attempt to control ownership of immoveable properties; hence, by way of a Finance Bill or a Money Bill introduced through Article 73 of the Constitution, no valid legislation can be made; it is not a tax on income or deemed income; that even otherwise, it has been imposed retrospectively for the current tax/financial year, whereas, it could only have been levied, if at all, from the next tax year; that it is confiscatory in nature inasmuch as there are…

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