Law: Income Tax Ordinance, 2001

Section: 4, 4C, 4C(1), 4C(2), 9, 10, 11, 39, 39(1), 39(5), 40, 56, 120

    Brief Facts   1.    Background of the Appeal The taxpayer, M/s BPS (Private) Limited, Lahore, filed four appeals (ITA Nos. 2139 to 2142/LB/2026) along with stay applications (MA(Stay) Nos. 2324 to 2327/LB/2026) for Tax Years 2022, 2023, 2024 and 2025 before the Appellate Tribunal Inland Revenue, Lahore Bench. The appeals challenged the orders of the Commissioner Inland Revenue (Appeals-VIII), Lahore, all dated 15.06.2026, which had confirmed the Super Tax assessments under Section 4C of the Income Tax Ordinance, 2001. 2. Initial Allegations and Assessment The taxpayer’s returns were treated as assessments under Section 120. The Assessing Officer initiated proceedings under Section 4C on the ground that income exceeded the prescribed threshold and computed Super Tax by taking property/rental income and adding profit on debt (and, for Tax Year 2024, accounting gain on sale of assets) separately. Balance demands after credit of tax already paid ranged from approximately Rs. 7.66 million to Rs. 31.19 million across the four years. 3. Taxpayer’s Defense The taxpayer contended that: Profit on debt had already been included in the taxable/business income declared in the returns; adding it again under Section 4C(2)(i) resulted in double-counting. For Tax Year 2024, the accounting gain on disposal of fixed assets and the set-off of business loss against property income required proper examination. Reliance was placed on the Tribunal’s earlier order in the Zameen Medallion case and the Federal Constitutional Court’s judgment on Section 4C. 4. CIR(A) Decision The CIR(A) confirmed the Assessing Officer’s treatment for all four years. 5. Tribunal’s Findings Section 4C is a standalone levy whose vires and applicability stand upheld by the Federal Constitutional Court. “Income” under Section 4C(2) is the sum of specified categories, but the exclusionary language in clauses (ii) and (iii) is designed to avoid double-counting of the same source. The Assessing Officer mechanically added profit on debt without examining whether it was already embedded in taxable income and without recording a…