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ISLAMABAD: The Federal Board of Revenue (FBR), Tuesday, assured the Lahore High Court (LHC) that it will give an extension of time to the taxpayers to file income tax returns, who feel aggrieved by the impugned Section 7E of the Income Tax Ordinance, 2001.

The petitioner has questioned the constitutionality of Section 7E – the tax on deemed income of the Income Tax Ordinance, 2001, inserted through the Finance Act, 2022, on the premise of legislative incompetence of the Parliament to enact law outside the scope of Entry 50 of the Federal Legislative List, Fourth Schedule of the 1973 Constitution.

According to an order of the LHC in writ petition 52559 of 2022 (Muhammad Osman Gull versus the Federation of Pakistan), the reply has been filed by the federal government, as well as, the office of the Attorney General for Pakistan. The reply on behalf of the FBR has also been filed.

LHC adjourns case about tax on deemed income till 27th

Regarding interim relief, Badshah Khan Wazir, chief commissioner Large Taxpayer Office (LTO), Lahore, on the instructions from the FBR chairman, states that the petitioners in this and connected petitions or any other taxpayer, feeling aggrieved from the impugned Section 7E of the Income Tax Ordinance, 2001 (“Ordinance of 2001”), if approaches with an application in writing, under the law, for extension of time to file return, the same shall be entertained and time shall be granted.

However, it is clarified that the taxpayer shall establish before the concerned Commissioner that he falls within the mischief of impugned Section 7E of the Ordinance of 2001. The LHC has re-listed the case for October 18, 2022.

Copyright Business Recorder, 2022


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Morhammad Shams Izhar Sep 29, 2022 01:34pm
There editor/news paper should raise the issue as is no justification for FBR invoking Deemed Income on Individuals who besides owning their dwelling house ( exceeding Rs 25 million , own Open plots for their future genuine personal use ( treatment of serious ailments/surgery , shifting to better locality or home town after retirement from existing place of residence due to their job location or bear bigger house or bear expense of higher education of their children etc). Levying tax on on individuals on the basis of deemed income is based on assumption is not only wrong but unjustified as well. Unlike a commercial concern, individuals most of the time do not hold property for recurring income (specially open plot ) and on sale of individual property( where they may earn money) they are already taxed as per capital gain law in the field . For rented constructed property there already exists a mechanism and further all rent agreements are required to registered with respective police stations, this mechanism needs to be further strengthened to avoid leakage in revenue collection on rented house/ constructed property as this is justified revenue source for FBR instead of resorting to unjustified superfluous Deemed Income taxation levy by FBR which do not stand the test of justice and more the same on one or two open plot held by individuals from their hard earned money . Consider the plight of those limited source individuals, how they will finance payment of deemed income on their non earning property/ open plot . Regards, M.Shams Izhar
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