Law: Income Tax Ordinance, 2001

Section: 4C, 168

SUMMARY; The Court held that Super Tax imposed under section 4C of the Income Tax Ordinance, 2001 is adjustable against available tax credit under section 168. The key reasoning was that section 4C(3) expressly provides that all provisions of Chapter X of the Ordinance shall apply to Super Tax. Since section 168 forms part of Chapter X and provides a statutory mechanism for credit of tax deducted or collected, there is no legal basis to exclude it from the Super Tax regime. The Court emphasized that limiting the words “all provisions of Chapter X” to merely procedural provisions would amount to adding a restriction that Parliament did not impose. Accordingly, the Court answered the legal question in the affirmative, set aside the Islamabad High Court judgment dated 25.03.2026, and allowed the petitions. However, the Court clarified that it was not deciding whether the particular taxpayer was actually entitled to the adjustment or the amount thereof. That determination was left to the competent tax authority in accordance with the ITO and the judgment. The Court also distinguished tax adjustment under section 168 from a refund under section 170, holding that the taxpayer need not necessarily be forced to pursue the refund mechanism where a valid tax credit is available for adjustment against Super Tax   JUDGMENT OF THE COURT JUSTICE AAMER FAROOQ: The question that falls for determination before this Court is whether the Income tax in general and Super Tax in particular paid pursuant to section 4C of the Income Tax Ordinance, 2001 is adjustable where there is tax credit within the meaning of section 168 of the Income Tax Ordinance, 2001. For the reasons that follow, we answer the question in the affirmative. A The Petitioner is a company incorporated under the laws of Pakistan and forms part of a Chinese multinational enterprise engaged in the telecommunications sector. The controversy arises from the insertion of section 4C into the Income Tax Ordinance, 2001 (‘ITO’), whereby the legislature imposed a Super Tax on the income of specified high-earning sectors at the rates prescribed in Division II-B of Part I of the First Schedule to…