COMMISSIONER INLAND REVENUE, FAISALABAD vs BE BE JAN FIBRES (PVT — 2025 PTD 51 LAHORE-HIGH-COURT-LAHORE

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COMMISSIONER INLAND REVENUE, FAISALABAD VS BE BE JAN FIBRES (PVT.) LTD., FAISALABAD S. 107aa---Income Tax Ordinance (XLIX of 2001), S. 239(15)---Section 107aa of Income Tax Ordinance, 1979, interpretation of---Promulgation of subsection (15) of S. 239 of the Income Tax Ordinance, 2001, effect of---Requirements of investment and installation to be fulfilled up to 30.06.2002---Tax credit under S. 107 aa of the Income Tax Ordinance, 1979, claim of---Department filed Reference applications against the dismissal orders of appellate Tribunal Inland Revenue ('the Tribunal') maintaining determination of Commissioner Income Tax (appeals) that investment had to be made before cut-off date (30th June 2002 ) and not the installation---Case of the applicant / department was that in terms of S.107aa of Income tax Ordinance, 1979 ('the repealed Ordinance'), tax credit was only claimable provided the plant and machinery, acquired upon investing funds, was installed before the 30th day of June 2002 as legislative intent was reaffirmed through subsection (15) of S. 239 of Income Tax Ordinance, 2001 ('the Ordinance, 2001'),and since the taxpayer had not installed the machinery till cut-off date, therefore, no credit could be claimed for the Tax years 2004 and 2005---argument of the taxpayer was that admissibility of tax credit was subject to the requirement of investing funds for acquisition of plant and machinery, before 30th June 2002, and not to ensure the installation of the machinery, and question of installation of machinery had relevance for the purposes of income year, in which adjustment of tax credit against the tax payable was claimed---Validity---as per S. 239(15) of the Ordinance 2001, S.107aa of the repealed Ordinance shall continue to apply until the 30th day of June 2002 while S. 107aa of the repealed Ordinance unequivocally suggests the "requirement of investing any amount(s), in the purchase of plant and machinery for installation, at any time, between the first day of July 2000 and 30th June 2002, in an industrial undertaking, set-up in Pakistan and owned by the assessee"---Condition precedent for being eligible for the tax credit was investment made within the timelines prescribed, and entitlement for the adjustment, for a particular income year, was dependent upon installation of plant and machinery---The expression "for installation" limits the purpose of investment ensuring that plant and machinery was installed and not offered for sale or lease---There is difference between being eligible and claim entitlement in respect thereof---Subsection (15) of S. 239 had not altered the situation to the disadvantage of the taxpayer nor could said provision of law be construed to take away eligibility to tax credit accrued, upon investment before 30th June 2002---Subsection (15) of S. 239 actually supported S. 107 aa of the repealed Ordinance by affirming cut-off date of 30.06.2002---Subsections (2) and (3) of S. 107 aa of the repealed Ordinance provides timing and mechanism for claiming tax credit which have nothing to contribute for the purposes of determining eligibility for tax credit---Thus, the appellate Tribunal had rightly interpreted S. 107 aa of the repealed Ordinance in the context of subsection (15) of S. 239 of the Ordinance, 2001, while CIT (appeals) had aptly determined timing of adjustment, appreciating factum of installation of machinery that investment had to be made before 30th June 2002 and not the installation---Question was answered in the negative and decided against the department---Reference applications, filed by the department, were dismissed, in circumstances.

COMMISSIONER INLAND REVENUE, FAISALABAD vs BE BE JAN FIBRES (PVT — 2025 PTD 51 LAHORE-HIGH-COURT-LAHORE

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