Law: Income Tax Ordinance, 1979

Section: 50,50(2),SecondSched.,Cl.78

Law: Constitution of Pakistan, 1973

Section: 199

(a) Income Tax Ordinance (XXXI of 1979)]......S.50 (2) & Second Sched., Part I, C1. (78 E) Constitution of Pakistan (1973), Art. 199 Constitutional petition Conversion of foreign currency account Deduction of withholding tax Exemption Petitioner encashed his foreign currency account and deposited the same in saving scheme Investments and profits derived from such scheme were re invested by the petitioner Grievance of petitioner was that the amount and profits received by him from re investment were subject to exception from withholding tax in view of exemption granted under Cl. (78 E) of Part I of Second Schedule of Income Tax Ordinance, 1979 Validity Profit or interest derived from Pak. Rupee account or certificates of deposit which had been created by conversion of foreign currency account were exempted under CI. (78 E) of Part I of Second Schedule of Income Tax Ordinance, 1979, from withholding tax -Further investment of encashment of the amount converted and yield thereon in purchase of saving certificates could not be termed as conversion of a foreign currency account Such re investment did .not fall within the ambit of Cl. (78 E) of Part I of Second Schedule of Income Tax Ordinance, 1979 Petition was dismissed accordingly. Central Insurance Company v. Central Board of Revenue 1993 PTD 766 = 1993 SCMR 1232; The Central Board of Revenue v. Sheikh Spinning Mills Ltd. 1999 SCMR 1442 = 1999 PTD 2174 and Union Bank Limited v. Federation of Pakistan 199& PTD (Trib.) 2116 ref. (b) Taxation Levy of taxes Exemption Object, scope and purpose Exemption from taxes Principles Taxes are means by which State maintains its existence and anyone who claims exemption from such tax must on that account be clearly defined and founded on plain language There must not be any doubt or any ambiguity upon which the claim to an exemption is founded Where claim is based upon plain and clearly expressed intention of legislature, it is not justified to construe liberal interpretation Provisions regarding exemption from levy of tax are not required to be interpreted liberally rather such provisions are to be interpreted and complied strictly. (c) Interpretation of statutes…

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