Law: Finance Act, 1991

Section: ThirdSched,Cl.7(c)

(a) Income Tax Ordinance (XXXI of 1979)...Third Sched., Cl.7(c) Finance Act (XII of 1991) Assessment year 1991 92 Disposal of assets and treatment of resultant gains or losses -Capital gain arose out of single asset, i.e. sale of car prior to 30 6 1991 which was taxed by applying amendment made in Cl. 7(c) of the Third Schedule of the Income Tax Ordinance, 1979 by Finance Act, 1991 Validity Transaction completed prior to amendment could not be charged to tax Argument of Department that Finance Act relevant to the accounting year ended prior to the same was of no help Provision created a charge which was not there when the transaction was completed and thus could not be applied retrospectively Addition made for the assessment year 1991 92 was deleted by the Appellate Tribunal. (1983) 47 Tax 5 (Trib.); Maxwell on Interpretation of Statute 12th Edn., at p.216 and PLD 1969 SC 599 ref. (b) Interpretation of statutes Charging provisions are always prospective unless otherwise provided. (c) Interpretation of statutes Legislature is fully competent to legislate a provision with retrospective, operation Unless a charging provision has not been made retrospective, the same should always be treated as prospective. (d) Interpretation of statutes Retrospectivity in respect of a statute cannot be presumed. (e) Interpretation of statutes Retrospectivity even in a procedural law is to be avoided if it affects an existing right or otherwise causes inconvenience or injustice to any one. ORDER KHAWAJA FAROOQ SAEED (JDICIAL MEMBER). In this assessee appeal the terminal profit of disposal of a Suzuki car charged to tax is being contested to be unjustified. 2. Brief facts of the case are that the assessee sold a car during the year for Rs.80,006. The I.T.O. found that the written down value of the same on 30 6 1990 was Rs.38,962. He, therefore, charged Rs.41,038 to tax as terminal profit during the impugned year. Prior to the amendment in Clause 7(c) of the Third Schedule, sale proceeds of any class of assets over its written down value was being treated as income of the assessee. In case, however, if the sale was restricted to one asset out of the class of assets its sale proceeds…

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