Law: Income Tax Ordinance, 1979

Section: 2(43),9,10,69(4)(a)

[Income Tax Ordinance (XXXI of 1979)]......Sections 2(43), 9, 10 & 69(4)(a)---Computation of allowable income to be distributed amongst partners of registered firm---Scope---Both super tax and penalty would be deducted from total income to arrive at such allowable income---Principles. The words used in section 69(4) with which the proportionate share has to be reduced is "tax" only, whereas the words used in section 9 is "income tax" and in section 10, which directly applies to the registered partnership firm, is "super tax" and "surcharge". If the legislature wanted to restrict the reduction from the allowable income to the extent of tax payable on the income of registered partnership firm then there was no difficulty in using the word "super tax" and "surcharge" in place of the word "tax" used in this section and once the legislature has used the word "tax" without restricting it to any item which is included in the definition of "tax" given in section 2(43) of the Income Tax Ordinance, then to restrict such reduction only to super tax is a violation of the intention of the legislature and is not permitted by the principles of interpretation. (b) Interpretation of statutes Fiscal statute---More than one interpretation possible---Effect---Interpretation more beneficial to and in favour of taxpayer would be adopted. ORDER MUHAMMAD ATHAR SAEED, J.---By this Income Tax Reference Application the Income Tax Appellate Tribunal has referred the following question said to be arising out of the order of the Tribunal, dated 19-8-1989 passed in ITA No.1013/KB of 1986-87, for the opinion of this Court:-- "Whether the Income Tax Appellate Tribunal was justified in holding that the word `tax' used in section 69(4)(a) of the Income Tax Ordinance, 1979 has been used in the same sense as defined in section 2(43) of the Income Tax Ordinance, 1979 and has not been used in restrictive sense referring to the charges created under sections 9 and 10 of the Income Tax Ordinance only." Briefly, the controversy involved in this reference application is the basis of arriving at the income to be allocated between the partners of registered partnership firm under section 69(4) of the…

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