Taxation

‘Double taxation’: SHC admits petitions for hearing

Sindh High Court (SHC) on Saturday accepted petitions for hearing. These petitions challenge a newly inserted provision under Section 5-A of Income Tax Ordinance through the Finance Act 2017. The petitioners moved the SHC through their counsel Dr Farogh Naseem, seeking the annulment of a newly-inserted provision under Section 5-A of Income Tax Ordinance.

On this, SHC issued notices to Attorney General for Pakistan and other respondents under order 27A CPC. Besides challenging the vires of above newly-inserted section, the petitioners have also asserted on facts that their respective income/profits have already been subjected to income tax at initial stage when the companies finalize their accounts however this newly-inserted section imposes a second taxation in case the profit is not distributed to the shareholders within a period mentioned therein.

The counsel submitted that the companies at their desire may or may not reserve this surplus amount for expansion or for other issues as the companies may deem fit and proper and such business decisions cannot be challenged legally or subjected to double taxation.

He further submitted that the issues involved in these petitions are beyond applicability of earlier judgment passed on the issue of bonus shares. The counsel further relied upon an order passed in the Suit No 1717 of 2015 where a newly inserted provision was challenged more or less having similar language which has now been challenged in these petitions. In the meantime, the SHC said, no coercive actions be taken against the petitioners under the garb of the newly-inserted section.

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