Law: Income Tax Ordinance, 1979

Section: 30,Second SchedulePart1stClause122C

ORDER The two appeals have been filed against the CIT(A) 's order No.CIT/A-2, dated 27.04.2000 for the assessment year 1996-97 and CIT(A) 's order No.543. dated 27.10.1997 for the assessment year 1997-98. The common ground taken in this appeal is that the interest income earned by the appellant company being an industrial under taking exempt under clause (122C) of the Second Schedule of the Income Tax Ordinance 1979 was held to be taxable by the officers below. For the assessment year 1996-97 the amount of interest so taxed was Rs.33,14,000/- while for the assessment year 1997-98 the amount involved is Rs.19,97,000/- 2. The learned counsel for the appellant and the learned D.R. have been heard. 3. The brief facts are that the assessee company was incorporated in Pakistan as a Private Limited Company under the companies Ordinance 1984. The principal activity of the company was to manufacture basic chromium Sulphate. One of its manufacturing facilities enjoyed tax holiday from normal provisions of the Ordinance under Clause (122C) of the Second Schedule to the Ordinance since it was setup in Gadoon Amazai N.W.F.P. The Government of Pakistan not only granted the units setup in Gadoon Amazai exemption from the levy of Income Tax but also granted them exemption from the levy of Sales Tax, Custom duties etc. by virtue of S.R.O.517(I) /89, dated 03 June 1989. The Government also granted the units setup in Gadoon Amazai area to pay electricity charges at 50 percent of the normal rates vide order No. 2125/CID/Tariffs/T-78. dated June 03, 1987 and to import plant and machinery's free of any import duty/surcharge etc. Vide SRO.1119(I) /91, dated 09 May 1991 the G.O.P. rescinded Its earlier SRO No.517(I) /89, dated 03, June 1989 and withdrew exemption regarding import duty etc. Being aggrieved with the decision of Government of Pakistan. The company filed a writ Petition before the High Court of Peshawar and then to the Supreme Court of Pakistan challenging the vide of SRO.1119(I) /91, dated 09 May 1991. The Hon'ble Supreme Court of Pakistan not only admitted the petition filed by the Company but also allowed them, vide their order dated 04 June 1994, to import the raw…

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