Law: Income Tax Ordinance, 1979

Section: 78,79

(a) Income tax Ordinance (XXXI of 1979)---Ss. 78 & 79 Convention for the Avoidance of Double Taxation entered into between Pakistan and U. S. A., Arts. II (i) & III (i)¬Categories of income not "industrial or commercial property and subject to Pakistan tax remunerated". From perusal of aforesaid provision of law it appears that if income falls under any of the categories laid down hereinbelow, it would not be industrial or commercial profits, hence subject to Pakistan tax. The categories are as follows : (1) Income derived from trade or business in Pakistan through a permanent establishment situated therein ; (2) Rent or royalties of motion picture films or of oil wells, mines and quaries ; (3) Income earned in the form of dividends, interest or rents ; (4) Income derived from other type of royalties than those mentioned above ; (5) Income derived by way of fee or other remuneration from the management, control or supervision of the trade, business or other activity of another enterprise or concern ; (6) Income derived as remuneration for labour or personal services, and (7) Income derived from operation of ships. (b) Income tax Ordinance (XXXI of 1979) -------Ss. 78 & 79 Convention for the Avoidance of Double Taxation entered into between Pakistan and U. S. A., Arts II (i) & III (i)¬Words and phrases Expressions "the trade business" "Other activity" Meaning. Since the expression "trade" "Business" means and implies simply and merely trade or business, the expression "other activity" would naturally mean and imply any activity, which is other than "trade", or "business" activity. The question then is what this other activity can be ? Such activity, in any case, should be connected with or related to the trade or business of an enterprise because the expression "or other activity" has been preceded by expression "trade business". It would, therefore, not mean and imply an activity which is not related to or connected with business or trade. For example it cannot be said that the expression "other activity" means and implies political, social or religious activity. Moreover, the expression "other activity" includes all activities which are necessary to carry on…

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