Law: Income Tax Ordinance, 1979

Section: 26(a),136,Rule5 ofFourth Schedule,Second Schedule

THIS JUDGMENT DELIVERED BY: NASIM SIKANDAR, JUSTICE:-------------- In these four further appeals under section 136 of the late Income Tax Ordinance, 1979 the Revenue claims that following common question of law has arisen out of the consolidated impugned order of the Tribunal, dated 14-1-1998: "Whether under the circumstances and facts of the case, the learned ITAT was justified in holding that the dividend income of an Insurance Company was to be taxed separately on lower rate at 5% instead of General rate of tax in the presence of Rule 5 of Fourth Schedule to the Income Tax Ordinance, 1979 read with section 26(a) of the said Ordinance." 2. The respondent is a public limited company and during the period relevant to the assessment years 1993-94 to 1996-97 derived income from General Insurance dividend and capital gain on sale of shares. In all these years it was, inter alia, aggrieved of the charge of tax on dividend income at the rate and its treatment as income from General Insurance. The learned Members of the Tribunal on the basis of the ratio settled by the Hon'ble Sindh High Court, Karachi as well as Hon'ble Supreme Court of Pakistan in re: Adamjee Insurance Co. Ltd. And others v. Income Tax Officer and others 1995 PTD 761, re: Messrs E.F.U. General Insurance Co. Limited v. The Federation of Pakistan and others PLD 1997 SC 700 = 1997 PTD 1693 re: General Insurance Company v. C.B.R. (1993 SCMR 1232) allowed the contention of the company that the computation of income profits and gains from insurance business and the tax payable thereupon were two different concepts altogether. 3. Learned counsel for the respondent, Dr. Ikram-ul-Haq, Advocate, states and we will agree that the issue in hand having already been finally decided by the Hon'ble Supreme Court of Pakistan, the department should not have filed an appeal unless they could establish a distinction between the case of the respondent company and the facts falling for consideration by the Hon'ble Supreme Court of Pakistan in the cases of E.F.U. General Insurance Co. Ltd., (Supra) and General Insurance Company (Supra). 4. Also points out that in the very case of the respondent-Company for early years a…

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