Law:

Section:

(a) Income-tax--- ----Local authority---Qualifications and characteristic of local authority---An entity will be "local authority" if it (i) has its own juristic personality distinct from its members (ii) within its own local area, exercises considerable powers of local self-government (iii) chalks out its schemes for the development of a local area under its control and provides civic amenities for the inhabitants of the area (iv) prepares its own annual budget for submission to the Provincial Government (v) exercises its powers within a limited territory included in a Province (vi) exercises powers which belong to the Province but, which by statute, are delegated to the local authority (vii) has powers of imposing taxes; and, (viii) maintains/administers a local fund. 1976 PTD 56 rel. (b) Income Tax Ordinance (XLIX of 2001)--- ----Ss. 49(2)(4), 2(31A) & 122(5A)---Income Tax Ordinance (XXXI of 1979), Second Sched: Part-I, Cl. 124AA, 88 & S.80D---General Clauses Act, (X of 1897), S. 3(31)--National Highway Authority Act, (XI of 1991), Ss. 10, 12, 13, 19 & 21---Finance Act (IV of 2007), Preamble---C.B.R. Letter C. No.2(3) WT/93, dated 25-11-2000---C.B.R. Letter C.No.4(2) WHT/91-Pt., dated 27-12-2004---Constitution of Pakistan, 1973, Art. 165A---Federal and Provincial Government, and local authority income---Exemption---Assessee was engaged in construction of national highways and strategic roads filed return declaring "nil" income claiming exemption in the status of local authority---Assessment was finalized by the Assessing Officer for the reason that Authority's income was not exempt from tax---Assessee contested that claim of exemption was wrongly rejected by the Assessing Officer--Assessment was set aside with certain directions---Assessee contended that First Appellate Authority did not discuss the claim of exemption for being a local authority and he was not justified to set aside the assessment---Validity---Given conditions had to be simultaneously and cumulatively fulfilled for any entity to qualify as local authority that it has its own juristic personality distinct from its members---National Highway Authority fulfills these conditions…

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