Law: Income Tax Act, 1922

Section: 33,12,23A,12B,17,6

A. Income-tax Act, 1922 (XI of 1922)-Sections 12B, 17(5)-Capital' gains-Non-resident-Exemption-Nonresident British company holding shares of other limited company in Pakistan-Not engaged in trade or business in Pakistan through permanent establishment- Sale of shares outside Pakistan-Surplus arising out of the transaction-Whether revenue gain-Held no-Whether capital gain exigible to tax in Pakistan-Held yes B. Agreement for Avoidance of Double Taxation between Pakistan and United Kingdom-Articles I(II), II(k), III, XVII-Capital gains---Non-resident British holding company--Agreement concluded between Pakistan and United Kingdom when there was no tax on capital gains in either country-Capital gains leviable on non-resident under subsequent enactment in Pakistan - Whether covered by the Agreement and exempt from tax -Held no. The assessee was a non-resident British company holding shares of a limited company in Pakistan. In respect of the assessment year 1964-65 it declared dividend income at Rs. 44,10,000 and income outside Pakistan at £ 1l,20,188. Subsequently a revised return was filed showing thereof an income of Rs. 83,75,486 representing surplus arising out of sale of shares of 4,900,000 of Rs. 10 each. This income was claimed to be exempt from tax on the main ground that (i) the sale of shares were effected out-side Pakistan and the gains arising therefrom arose outside Pakistan; (ii) the gains arising as a result of the transaction was of a casual and non-recurring nature; and (iii) even if the surplus could be deemed to have arisen in Pakistan it was exempt from tax in Pakistan under Article III of the Double Taxation Avoidance Agreement between Pakistan and United Kingdom, the assessee being a resident of UK and non-resident of Pakistan and having not been engaged in trade or business in Pakistan through permanent establishment. The Income-tax Officer rejected the assessee's claim holding that Article III of the Agreement did not apply and the surplus was assessable under Section 17(5) of the Income-tax Act. On appeal the assessee contended before the Appellate Tribunal that the case was fully covered by the Agreement and the surplus was nothing but…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492