Law: Income Tax Ordinance, 2001

Section: 37A, First Schedule, Part-1, Division-VII, first proviso

1. Income Tax Ordinance (XLIX of 2001)---

----S. 37A & First Schedule, Part-1, Division-VII, first proviso [as amended/inserted through the Finance Act, 2022]---Disposal of securities---Capital gains accrued---Chargeability to tax---Scope---Vested rights of taxpayer--Petitioner/taxpayer acquired the securities in the year 2011 and disposed them of in the year 2023---Plea of the petitioner / taxpayer was that the securities were retained for over one year, hence, disposal thereof could not be subjected to capital gains under the provisions of S. 37A of the Ordinance, 2001, applicable at the time of acquiring said securities---Stance of the Department was that question of applicability of S. 37A of the Ordinance, 2001 would be the date of disposal of securities and by then impugned amendment was in place, effective and enforceable---Validity---In the present case, the securities were acquired in the year 2011 and sold during Tax Year 2023 and amendment was introduced through Finance Act, 2022---Apparently, petitioner failed to underpin significance of omission of proviso to subsection (1) of S. 37A of Ordinance, 2001, through Finance Act, 2014---As per text of S. 37A of the Ordinance, 2001 (being applicable at the time of disposal of securities - during tax year 2023), it was evident that no protection was available to the petitioner at the time of disposal of the securities, a triggering point for the determination of tax under S. 37A of the Ordinance, 2001--In absence of the proviso to S. 37A omitted since 2014, no question of inapplicability of S. 37A arises---Petitioner failed to show any statutory representation/ promissory estoppel, allegedly extended before amendment was introduced in Division VII---No question of availability, let alone accrual of vested right, was made out---No inconsistency between S. 37A of the Ordinance, 2001 and impugned amendment was found, since proviso to subsection (1) of S. 37A was earlier omitted through Finance Act, 2014, and even the expression "held for a period of less than a year" appearing in S. 37A of the Ordinance 2001 stood omitted through Finance Act, 2015---At the time of leviability of tax, for the purposes of gain tax accrued, no protection was available to support claim of any exemption or concession, whatsoever---Right to claim zero percent of tax on the securities acquired in 2011 cannot be recognized or granted perpetually---There is no cavil that legislature is otherwise competent to tax capital gains by changing the benchmark requirements, in absence of any promise made [which promise based on proviso to subsection (1) of S. 37A was omitted since 2014, save past and closed transactions]---No case for interference was made out---Constitutional petition, being merit-less, was dismissed.

Anwar Yahya and 3 others v. Federation of Pakistan through Secretary and 4 others 2017 PTD 1069; Commissioner Inland Revenue v. Federation of Pakistan and others (Civil Appeals Nos. 930 and 931 of 2017); Dr. Muhammad Anwar Kurd and 2 others v. The State through Regional Accountability Bureau, Quetta 2011 SCMR 1560; D.S Nakara and others v. Union of India 1983 SC 305; Mohabat Khan and 77 others v. Road Transport Board N.W.F.P, Peshawar through its Chairman and 4 others 1993 SCMR 833; Pakistan through Chairman FBR and others v. Hazrat Hussain and others 2018 SCMR 939; Collector of Customs Model Customs Collectorate, Peshawar v. Waseef Ullah and another 2023 SCMR 503 and Sapphire Textile Mills Limited v. Federation of Pakistan and others 2024 PTD 955 distinguished.