CIRCULAR NO. 5 OF 1991, Islamabad, the 10th March, 1991

CIRCULAR NO. 5 OF 1991, Islamabad, the 10th March, 1991GOVERNMENT OF PAKISTANCENTRAL BOARD OF REVENUE(INCOME-TAX)SUBJECT:- SRO 1283(I)/90 DATED 13-12-1990-- CLARIFICATION REGARDINGA number of queries have been made in respect of the new tax holiday package notified vide S.R.O. 1283(I)/90, dated 13th December, 1990. Clarifications are, therefore, issued as under:-1. Setting up of industrial undertaking.--Clauses (118C), (118D) and (118E) of Part I of the Second Schedule to the Income- tax Ordinance, 1979, would apply to the new industrial undertakings set up between 1st December, 1990, and 30th June, 1995. The date of setting up of an industrial undertaking refers to the date on which the industrial undertaking is ready to go into production, whether trial production or regular commercial production. A new industrial undertaking set up between the said dates would also be covered under one of these clauses even though the company may have been formed before 1st December, 1990, exclusively for operating the said industrial undertaking.2. Formation of company for exclusive purpose.--Tax holiday under the above mentioned clauses would be available only to a company which is formed exclusively for operating the new industrial undertaking. An existing company installing another unit in the same premises or at some other place would not be eligible for this concession. Similarly, if the Memorandum and Articles of Association of a company include the business of the new industrial undertaking simply as one of its objects, it can be inferred that the company has not been formed exclusively for operating the said undertaking. Likewise a company owning tax exempt unit shall become ineligible if it is engaged in any other business.3. Manufacture of goods or materials etc.--An industrial undertaking not engaged in the manufacture of goods or materials or the subjection of goods or materials to a manufacturing Process would not qualify for tax-holiday concession. For example, cotton-ginning factories will be eligible for this concession but rice polishing units will not be entitled to such concession.4. Installation of plant and machinery.--It is necessary that the machinery…