ISLAMABAD: The Federal Board of Revenue (FBR) is planning to hire expert legal counsel to defend its cases of tax on windfall income of banks at the level of high courts.
Presently, the cases of banks are pending with the Sindh High Court (SHC), Lahore High Courts (LHC) and Islamabad High Court (IHC). The FBR’s Inland Revenue (Policy) Wing may not be able to comment on the Constitutional provisions and delegated legislation, but it can only give its input on the facts of the case, a tax expert said.
According to sources, the cases involve tax statutes as well as Constitution. Banks have challenged the vires of Income Tax SRO 1588(I)2023 issued under section 99D of the Income Tax Ordinance,2001.
LHC, too, suspends SRO about tax on banks’ windfall income
Therefore, a Legal Counsel would be required to defend this important case in High Courts. The operation of the SRO 1588(I)/2023 will remain suspended till the next date of hearings at the High Courts. The controversy has been raised regarding vires of section 99D of the Income Tax Ordinance 2001 as well as SRO 1588(I)/2023 which is already pending before this court in a number of petitions.
The LHC had stayed tax imposed under section 99D read with SRO1588(I)/2023 dated November 21, 2023 at the rate of 40 percent on foreign exchange income of the banks as windfall gains.
Earlier, the Islamabad High Court (IHC) had suspended the SRO 1588(1)/2023.
The petitioner banks are aggrieved of the impugned SRO 1588(1)/2023, dated 21.11.2023, issued under section 99D of the Income Tax Ordinance 2001 by which the banking companies have been subjected to “additional tax” at 40 per cent on their windfall income that is to be computed in accordance with the formula given in the impugned SRO.
Under section 99D (3), the notification levying the additional tax on windfall income is to be laid before the National Assembly, which not only assumes that a National Assembly is in existence (for it is to be laid “within” 90 a but, more to the point, it is quite possible that the National Assembly would not agree and may refuse to bless the notification issued under section 99D.
In this case, the additional tax would no longer be valid and, in case of its earlier recovery, it would be the petitioners who would be out of pocket for the interim period for which the federal government is unlikely to pay any interest and, therefore, the loss of use of the taxpayer’s funds for that period without any compensation does appear to meet the test of irreparable loss.
Copyright Business Recorder, 2024
Comments
Comments are closed for this article.