960402

LHC stays 6 months

IT recovery from

three banks

RIZWAN-UR-REHMAN RAZI

LAHORE: The Lahore High Court has stayed the recovery of income tax for the period January 95 to June 95, from three private scheduled banks, under the amendment introduced in the Income Tax Ordinance, 1979 through Finance Act, 1995.

The single bench comprising Justice Ijaz Nisar announcing this decision sent a notice to the Attorney General of Pakistan to assist the court in the matter.

The court has also called a report from the CBR, Commissioner and Deputy Commissioner, Income Tax, Lahore region.

Three private scheduled banks, namely Union Bank Limited, Bolan Bank Limited and Soneri Bank Limited, had moved writ petitions challenging the amendment introduced in the Income Tax Ordinance 1979 through Finance Bill, 1995. Under the amendment, the banks were asked to adopt the fiscal year as their financial closures by filing their returns of 18 months from January 94 to June 95.

Counsel for the Banks, Mian Saqib Nisar, argued that the amendment introduced through the Finance Bill 1995 was violative of Articles 2(A), 4, 18, 24 and 25 of the Constitution and that the change could not be implemented retrospectively and the instructions of the CBR in this regards were illegal and void.

He submitted that the CBR had allowed the insurance companies and rice exporters to follow the previous schedule of closing. In this way, the CBR had violated the Article 25 of the Constitution by discriminating among different classes of the society.

It was also argued that the petitioners had closed their accounts on December 31, 1994 for 12 months period according to the then existing law. The new amendment had made the petitioner banks to submit the returns up to June 30, 1995 from January 1, 1994, which amounted to re-opening the closed transactions - a time-barred matter - which implied that the vested rights of the petitioner had been taken away from it retrospectively.

It was prayed that the new section included in the Income Tax Ordinance, 1979, through Finance Bill 1995 be declared ultra vires of the Constitution, and the SRO No. 4 by the CBR in this regards as illegal, too.

It was prayed that CBR may be restrained from charging any tax for the six-month period exceeding the settled income year 12 months of the financial year or the calendar year, as during the transition period of change-over of income year the benefit should ensure in favour of the petitioner.

It was also prayed that the petitioners may be allowed to retain the calendar year as has been done in the insurance companies and rice exporters cases.