| Citation(s) |
|---|
| 1987 SLG 34 1987 SLD 34 = 1987 PTD 289 (1987) 55 TAX 163 |
Lahore High Court
Writ Petition No. 20 of 1986, decision dated: 1st February,1987
MANZOOR HUSAAIN SIAL, J
Muhammad Amin Butt with A.H. Najfi and Abdul Qayum Bhatti for Petitioner. Muhammad Ishaque for
Respondents
Writ Petition No. 20 of 1986, decision dated: 1st February,1987
MANZOOR HUSAAIN SIAL, J
Muhammad Amin Butt with A.H. Najfi and Abdul Qayum Bhatti for Petitioner. Muhammad Ishaque for
Respondents
Messrs DAWOOD HERCULES CHEMICAL LTDvsTHE Income Tax OFFICER, CENTRAL CIRCLE VI, LAHORE and another
Law: Income Tax Ordinance, 1979
Section: 18,65
Law: Chemical Fertilizers (Development Surcharge) Act, 1973
Section: 2(c)&(d)
Law: Companies Act, (VII of 1913)
Section: 87C(3)
(a) Income-tax Ordinance (XXXI of 1979)---Ss. 18 & 65--Companies Act (VII of 1913), S. 87-C(3)--Companies Profits (Workers' Participation) Act (XII of 1968), Sched. & S.3-�Chemical Fertilizers (Development Surcharge) Act (XLI of 1973), Ss. 3. 2(c)(d) & 6--Central Board of Revenue Circular, dated 13-8-1985-�Subsidy--Differential margin- -Assessee, a Joint Stock Public Company engaged in manufacturing Chemical Fertilizers, computed and claimed deduction of "workers' participation fund" on entire profit including the amount recovered by way of subsidy from Federal Government to arrive at the taxable income--Legality.The company is a Joint Stock Public Company engaged in manufacturing Chemical Fertilizers and is assessee under the provisions of Income-tax Ordinance, 1979. The assessee's annual assessment returns were scrutinised and final orders passed by the concerned Income-tax Officers. The Income-tax Officer issued notices under section 65 of the Income-tax Ordinance, 1979 for re-opening assessments made in respect of the years 1979-80, 1980-81 and 1981-82 on the ground that the assessee computed and claimed 'workers participation funds' hereinafter referred as 'Fund' on the entire profits including the amount allegedly received by way of subsidy from the Federal Government. This in the opinion of Income-tax Officer could not be included under subsection (3) of section 87-C of the repealed Companies Act, 1913 and worked out excess participation funds, for that period. The assessee replied to the notices and maintained that the amount paid to the 'fund' is an allocation made to the 'fund' and assessee was entitled to claim deduction, the amount so allocated to the scheme to arrive at taxable income. The fiscal concessions to the company are admissible under the provisions of paragraph 8 of the Schedule read with section 2-C of the Companies Profits (Workers' Participation) Act, 1968, whereas subsidy is a donation or a grant given by Government to the private persons or company to assist in the establishment or to support enterprise deemed advantageous to the public. The Income-tax Officer did not agree to the explanation tendered by the…