Law: Income Tax Ordinance, 1979

Section: 4 ,

Law: Constitution of Pakistan 1973

Section:

  Income Tax Ordinance (XXXI of 1979)-- ----Second Schd., cl. 93---Income Tax Act (XI of 1922), S.4(3)---Comparison of both the provisions bring out change in the language---Effect of change elaborated. A comparison of the provisions of the Act and the Ordinance brings out change in the language. In clause 93 of the Second Schedule to the Ordinance, after the word "property" words "or business" have been added. The other change has been made in the first proviso by adding "itself is the subject of after the words "unless the business". The addition of the words in clause 93 and the first proviso has been made in view of the judgment in Hamdard Dawakhana v. CIT PLD 1980 SC 84 where controversy raged whether the word "property" as used in clause (i) of subsection (3)(i) of section 4 included business as well. While interpreting clause 93 the historical background upto the judgment in Hamdard Dawakhana PLD 1980 SC 84 must be kept in mind. The additions in clause 93 are with a purpose. Now clause 93 distinguishes between "property" and "business". Previously the use of the word "property" alone compelled the Court to interpret it in a wide manner and give effect to its general meaning and connotation as understood in the, jurisprudence. Now it clarifies and distinguishes between income derived' from property and income 'from business The applicability of the first proviso to clause 91 is restricted to the   business only. The business income which qualifies for exemption should be the income of a business which is subject of the trust, should be carried on, on behalf of the trust and further that the income or as set apart is applied solely for religious or charitable purposes. Supreme Court distinguishing between the business held under the religious or charitable trust and business carried on? behalf of the religious or charitable trust held that the proviso to section 4(3) of the Act applied to income derived from business falling under the latter category and not to the former category. The first proviso to clause 93 is a deviation from the proviso to section 4(3) of…