Law: Income Tax Ordinance, 1979

Section: 12,12(9),2,2(20)(a),50,50(7),62,66,66A,S econdSched,Cl-108

Law: Finance Act, 1997

Section: Preamble

Law: Finance Act, 1995

Section: Preamble

Law: Companies Ordinance, 1984

Section: 235,241,248,251

(a) Income Tax Ordinance (XXXI of 1979)----Ss. 12(9), 66 A & Second Sched., Part I, Cl. (108) Companies Ordinance (XLVI of 1984), Ss.235, 241, 248 & 251 Finance Act (XXII of 1997), Preamble Finance Act (I of 1995), Preamble Income deemed to accrue or arise in Pakistan Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order Assessee transferred an amount to reserve for issuance of bonus shares during the year ending on 30 6 1997 Inspecting Additional commissioner found that assessee was liable to tax under S.12(9) of the Income Tax Ordinance, 1979 on the reserve for bonus shares created in the balance sheet which according to him amounted to declaration of bonus shares liable to tax as on 30 6 1997 and enhanced/modified the assessment made by the Assessing Officer under S.62 of the Income Tax Ordinance, 1979 Assessee pleaded that he had only transferred reserve for issue of bonus shares, from the general reserves account and it was merely a transfer entry and no bonus shares were declared, issued or paid during the period relevant to assessment year, 1997 98 Said bonus shares were paid in assessment year 1998 99 in which year the exemption under Cl. 108 of Part I of the Second Schedule of Income Tax Ordinance, 1979 was reinserted by Finance Act, 1997 and the said provision of Cl. 108 of Part I of the Second Schedule of Income Tax Ordinance, 1979 had exempted bonus shares from tax: which were between 1 7 1997 and 30 6 2000 Validity Declaration of bonus shares took place on 21 11 1997 when the Annual General Meeting of the Company approved the issue of bonus shares and were issued within period of 30 days provided under S.251 of the Companies Ordinance, 1984 Bonus shares issued between 1st day of December, 1997 to 30th June, 1995 were exempt Exemption was withdrawn vide Finance Act, 1995 but the exemption was again granted to bonus shares issued between 1st day of July, 1997 and 30th June, 2002 vide Finance Act, 1997 -Bonus shares were issued during the period of exemption and had wrongly been subjected to tax under S.66 A of the Income Tax Ordinance, 1979 Declaration of bonus shares was also within period of exemption i.e. 21 11…

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