Law: Income Tax Act, 1922

Section: 15BB(4AA)

A. Income Tax Act, 1922 (XI of 1922)-Section 15BB(4AA)-Dividend-Dividend received by the assessee from a company enjoying tax holidays-Whether liable to be taxed in the hands of the assessee-Held no-Sub-section (4A A) added by Finance Ordinance, 1972-Whether had its operation retrospectively-Held no As regards the first question, it has been held that the dividend received by the assessee from the profit of a Company which enjoyed exemption of tax under Section 15BB is not liable to be taxed in the hands of the assessee/shareholder as well. The second question has also been adequately dealt with in the of the Karachi High Court cited above to which we have respectfully agreed in Tax Reference No. 305/1972 and accordingly the answer to question No. 2 would be that sub-section (4AA) added by virtue of Finance Ordinance, 1972 would not operate retrospectively. Cases followed:- C.I.T. and other v. Mst. Surriya Farooq and other (1987 SC MR 1297) and C.I.T. (East), Karachi v. Ebrahim D. Ahmad (1982) 45 Tax 232 (H.C. Kar.)=(PLD 1982 Kar. 470). B. Income Tax Act, 1922 (XI of 1922)-Section 45A-Additional tax Imposition of additional tax-Whether suffered from any legal infirmity-Held no. Section 45A of Income Tax Act 1922 was held to be not suffering with any infirmity. Nothing has been urged before us to show that the view as expressed in PLD 1976 Lahore 616 referred to above can be differed with Resultantly the answer to third question is that additional tax could be lawfully levied under Section 45A of the Income Tax Act, 1922. Case referred to:- M. Shakeel Saigol v. I.T.O. (Companies), etc. (1976) 33 Tax 237 (H. C. Lah.)=(PLD 1976 Lahore 616). THIS JUDGMENT DELIVERED BY: M. MAHBOOB AHMAD, CHIEF JUSTICE:---.--- This Reference has been made by the Income Tax Appellate Tribunal, Lahore to answer the following three questions :- (i) "Whether dividend received by the applicant from the Company enjoyed Tax Holiday under Section 15BB is liable to be taxed in the hands of the applicant? (ii) "Whether sub-section (4AA) added by Finance Ordinance, 1972 is intravires and whether said income which was exempt when received by the assessee could be retrospectively made taxable?"…

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