Law: Income Tax Ordinance, 1979

Section: Sched.I,PartII

Income-tax Ordinance (XXXI of 1979)---Sched. I, Part II--Finance Ordinance (XIV of 1983), S. 5(9)-¬ C.B.R. Circular No. a of 1981--S.R.O. 891(11)/77, dated 25th September, 1977--"Public limited company"-- Definition-Amendment introduced by Finance Ordinance, 1983 defining "public limited company" overrides all pieces of subordinate legislation like S.R.Os. or Circulars by the C.B.R. ORDER FARHAT ALI KHAN (CHAIRMAN).-- These appeals are directed against 3 separate orders recorded by learned C.I.T. (A) on, 23-12-1984, 31-8-1987 and 13-4-1985 relating to assessment years 1983-84 and 1984-85: In first 2 appeals the point in issue is regarding the rate of super-tax to be applied or, dividends whereas the 3rd appeal is regarding the penalty imposed under section 91 in assessment year 1983-84. The brief facts giving rise to these appeals are that the appellant, a non-resident company incorporated in U.S.A. declared its income from dividend received from M/s. Exxon Chemical Pakistan Ltd., in assessment years 1983-84 and 1984-85. The I. T. O. , however, levied super-tax at the rate of 15% for the reason that the appellant was not a Public Limited Co., as defined by the Income-Tax Ordinance. He disposed of the appeals of the appellant with the following observation:--- "The reply of the assessee was filed vide letter: dated 22-5-1984 which is not acceptable. The company as observed above has not been notified as a Public Ltd., Co., in the light of SRO 891(1)/1977." Having been aggrieved and dissatisfied the appellant went up in appeal but the learned C.I.T.(A) rejected it with the following remarks:---- "Regarding the legal issues raised dealing with the application of tax rate at 15% by the I.T.O. instead of 5% applicable to a Public Limited Company with all due respect to the arguments and claims raised by the company through its authorised representative Mr. Rustumjee I find that the action of the I.T.O. in applying the rate of 15% and not 5% for the purpose of taxing dividend is justified because according to the provisions of law as defined in the Income-tax Ordinance, 1979 a public company means a company in which not less than 50% of the shares are held by the…

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