Law: Income Tax Ordinance, 1979

Section: 136(2),First Schedule,15,22,9,10

Income Tax Ordinance (XXXI of 1979)--- ----First Sched. Part II, para. A (2)(a)---Assessee, a public limited company declared income under various heads and calculated tax on dividend derived from another Pakistani company at concessional rates---Amount of such dividend being not business income of the assessee-company was chargeable to tax at concessional rate. Pakistan Textile Mills Owners Association v. Administrator of Karachi PLD 1963 SC 137; Cape Brandy Syndicate v. Inland Revenue Commissioner (1921) IKB 65 and Government of Pakistan and others v. M/s. Hashwani Hotel Ltd. PLD 1990 SC 68 ref. JUDGMENT AHMAD SAEED AWAN, J.---This is an application under section 136(2) of the Income Tax Ordinance, 1979 under which it is prayed that the Income Tax Appellate Tribunal be ordered to refer the following question to this Court for opinion:--- "Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Rs.20,60,12,700 was not business income of the assessee company but from dividend and chargeable to tax at the concessional rate provided under the First Schedule?" The question is founded upon 'the following facts:--- The respondent/assessee is a public Limited Company set up for promotion of Fertilizer Industry empowered under its Memorandum and Articles of Association to hold shares or stocks of other companies or undertaking. For the assessment year 1983-84, the assessee declared income under various heads i.e. from Managing Agency, Commission, office allowance; Interest, Commission on guarantees and, dividends. The assessee calculated tax on the dividend income at 5 per cent under para. A (2) of para 2 of the First Schedule to Income Tax Ordinance, 1979. 2: The Income Tax Officer after issuing the notices subjected the total income including the dividends to normal rates of income-tax and super-tax on the ground that earning dividends was business of the company as the assessee itself in earlier years had been claiming adjustment and set off of losses under other heads against income from dividends treating the same as its business income. The assessee/respondent filed an appeal before the C.I.T.(Appeals)…

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