OCCIDENTAL PETROLEUM (PAKISTAN) INC. vs COMMISSIONER INLAND REVENUE, ZONE III, LARGE TAXPAYERS UNIT S

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OCCIDENTAL PETROLEUM (PAKISTAN) INC. VS COMMISSIONER INLAND REVENUE, ZONE III, LARGE TAXPAYERS UNIT S. 133 (1) & Fifth Schedule, Part-1, R.3---Income Tax Ordinance (XXXI of 1979), [since repealed] Fifth Schedule, Part-1, R. 4(2)---Regulation of Mines and Oil-fields and Mineral Development (Government Control) Act (XXIV of 1948), S. 3B & Schedule, Part-2---Reference---Amount of royalty---Deduction---Rate of tax---Applicability---Petroleum Concession Agreement---Dispute was with regard to rate of tax and deduction of amount of royalty---Held: Rate of royalty and tax on income were clearly provided in Part-2 to the Schedule to Regulation of Mines and Oil-fields and Mineral Development (Government Control) Act, 1948 according to which it was not to be more than 55% nor less than 50% of the profits and gains before deduction of payments to Government---As and when calculation was being made for the purposes of calculating any tax on any income [either @ 50% or 55% or any other agreed rate]it had to be arrived at before deduction of payments to Government---Only protection on the basis of Petroleum Concession Agreement available to applicants / taxpayers was in respect of aggregate of the tax on income and other payments to Government---In terms of R. 4 (2) of Part-I of Fifth Schedule to Income Tax Ordinance, 1979, it was also provided that if aggregates of taxes on income and payments to government was greater or less than the amount provided for in the Agreement, an automatic adjustment in the form of further payment or an abatement of tax could be availed of---Protection in Petroleum Concession Agreement was dependent on the applicable laws---If something had not been provided in it then it could not have been incorporated in Petroleum Concession Agreement, whereas even otherwise wording of Regulation of Mines and Oil-fields and Mineral Development (Government Control) Act, 1948 would be the law and should prevail which catered for this clearly---All rates provided in Petroleum Concession Agreements (i.e. 50% to 55%) were applicable on profits and gains before deduction of royalty---Reference was disposed of accordingly.

OCCIDENTAL PETROLEUM (PAKISTAN) INC. vs COMMISSIONER INLAND REVENUE, ZONE III, LARGE TAXPAYERS UNIT S — 2025 PTD 1777 KARACHI-HIGH-COURT-SINDH

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