MANZURUL HAQ vs FEDERATION OF PAKISTAN S — 2025 PTD 1795 LAHORE-HIGH-COURT-LAHORE

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MANZURUL HAQ VS FEDERATION OF PAKISTAN S. 37a & First Schedule, Part-1, Division-VII, first proviso [as amended/inserted through the Finance act, 2022]---Disposal of securities---Capital gains accrued---Chargeability to tax--- Scope---Petitioner/taxpayer acquired the securities in the year 2011 and disposed them of in the year 2023---Petitioner/taxpayer challenged constitutionality of the first proviso to Division-VII of Part-1 of First Schedule to the Income Tax Ordinance, 2001 ('the Ordinance, 2001') inserted through the Finance act, 2022 ('impugned amendment')---Held: Table qua rate of tax with impugned amendment showed that in terms of the proviso, added through the Finance act, 2022, the criterion for availing benefit of zero percent of rate of tax was made permissible, where holding period exceeded six years but condition of acquisition of securities on or after first day of July 2002 was imposed---The period of holding of securities and date of acquisition for availing benefit percent tax was prescribed---No vested right could be claimed against the right of the legislature to tax, when neither any vested right had conclusively accrued, nor subject matter transaction graduated to achieve status of a past and closed transaction---No case for interference was made out---Constitutional petition, being merit-less, was dismissed. Citation Name: 2025 PTD 1795 LAHORE-HIGH-COURT-LAHOREBookmark this Case MANZURUL HAQ VS FEDERATION OF PAKISTAN S. 37a & First Schedule, Part-1, Division-VII, first proviso [as amended/inserted through the Finance act, 2022]---Disposal of securities---Capital gains accrued---Chargeability to tax---Scope---Vested rights of taxpayer---Petitioner/taxpayer acquired the securities in the year 2011 and disposed them of in the year 2023---Plea of the petitioner / taxpayer was that the securities were retained for over one year, hence, disposal thereof could not be subjected to capital gains under the provisions of S. 37a of the Ordinance, 2001, applicable at the time of acquiring said securities---Stance of the Department was that question of applicability of S. 37a of the Ordinance, 2001 would be the date of disposal of securities and by then impugned amendment was in place, effective and enforceable---Validity---In the present case, the securities were acquired in the year 2011 and sold during Tax Year 2023 and amendment was introduced through Finance act, 2022---apparently, petitioner failed to underpin significance of omission of proviso to subsection (1) of S. 37a of Ordinance, 2001, through Finance act, 2014---as per text of S. 37a of the Ordinance, 2001 (being applicable at the time of disposal of securities - during tax year 2023), it was evident that no protection was available to the petitioner at the time of disposal of the securities, a triggering point for the determination of tax under S. 37a of the Ordinance, 2001---In absence of the proviso to S. 37a omitted since 2014, no question of inapplicability of S. 37a arises---Petitioner failed to show any statutory representation/ promissory estoppel, allegedly extended before amendment was introduced in Division VII---No question of availability, let alone accrual of vested right, was made out---No inconsistency between S. 37a of the Ordinance, 2001 and impugned amendment was found, since proviso to subsection (1) of S. 37a was earlier omitted through Finance act, 2014, and even the expression "held for a period of less than a year" appearing in S. 37a of the Ordinance 2001 stood omitted through Finance act, 2015---at the time of leviability of tax, for the purposes of gain tax accrued, no protection was available to support claim of any exemption or concession, whatsoever---Right to claim zero percent of tax on the securities acquired in 2011 cannot be recognized or granted perpetually---There is no cavil that legislature is otherwise competent to tax capital gains by changing the benchmark requirements, in absence of any promise made [which promise based on proviso to subsection (1) of S. 37a was omitted since 2014, save past and closed transactions]---No case for interference was made out---Constitutional petition, being merit-less, was dismissed. Citation Name: 2025 PTD 1795 LAHORE-HIGH-COURT-LAHOREBookmark this Case MANZURUL HAQ VS FEDERATION OF PAKISTAN S. 37a & First Schedule, Part-1, Division-VII, first proviso [as amended/inserted through the Finance act, 2022]---Disposal of securities---Capital gains accrued---Chargeability to tax as per rate prevalent at time of disposal---Discrimination---Scope---Discrimination was asserted by the petitioner/taxpayer who acquired the securities in the year 2011 and disposed them of in the year 2023---Validity--- Different rates of tax were provided against variously prescribed periods of holdings of securities, where each of the category manifested diverse periods---This was the pattern of rates prescribed for different period of holdings since addition of S. 37a from 2010---Provisioning of different slabs for retention of securities was not a novel or discriminatory practice---Categorization of slabs for holdings and prescribing rate of tax for each slab met the criterion of providing intelligible differentia, distinguishing classes of securities held and varied retention period prescribed in the context of concession in rate of tax---Element of commonness amongst each category of securities held, root cause of discrimination, was conspicuous by its absence---Though there was no occasion to comment on the rational and efficacy of the policy, still ex-facie offering of discounted rates of tax regarding securities acquired on or after first day of July 2022 in fact encouraged and incentivized the investment, which satisfied the test of proximity between rationality and objective intended to be achieved encouraging roll-over of securities / investment---Thus plea of discrimination was misconceived---No case for interference was made out---Constitutional petition , being merit-less, was dismissed.

MANZURUL HAQ vs FEDERATION OF PAKISTAN S — 2025 PTD 1795 LAHORE-HIGH-COURT-LAHORE

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