Essential elements/components of Clause 86, Part 1 of Second Schedule to the Income TAX Ordinance, 1979 ("Clause 86")

Citation Name : 2019 PTD 523 SUPREME-COURT
Side Appellant : OXFORD UNIVERSITY PRESS
Side Opponent : COMMISSIONER OF INCOME TAX, COMPANIES ZONE-I, KARACHI
Second Sched., Pt. 1, Cl. 86---Exemption from TAX ---Essential elements/components of Clause 86, Part 1 of Second Schedule to the Income TAX Ordinance, 1979 ("Clause 86")---Clause 86 comprised of three components (i) any income; (ii) of any university or other educational institution; (iii) established solely for educational purposes and not for purposes of profit---First component meant precisely what it said i.e. "any income" from whatsoever source derived---Any distinction between income derived from "educational" activities on the one hand and other sources, including what in other contexts could be regarded as commercial, on the other would be artificial, contrived and contrary to the express and natural language of the exemption---For instance, it was quite common for a university to derive rental income from properties owned by it, or to have an endowment fund which was suitably invested to earn profits---Second component was self-explanatory and included a branch/department of a university, such as its publication press---Third component had to be read and applied as a whole---Use of the word "solely", and the negation of profit as a purpose in the third component, meant simply that there could be no distribution or disbursement of any profits made---If the purpose of the university or educational institution was to "earn" a profit for its owners or stakeholders (howsoever described) in the sense of there being an intention or expectation that there would be such a disbursement, then exemption from TAX under Cl. 86 would not apply---Such an institution could not be said to be established "solely" for educational purposes---On the other hand, the institution could make profits, but as long as those profits remained with the institution itself and there was no intention to disburse or distribute the same to its owners or stakeholders, profits would not be its purpose, which would remain "solely" educational.

Citation Name : 2019 PTD 523 SUPREME-COURT
Side Appellant : OXFORD UNIVERSITY PRESS
Side Opponent : COMMISSIONER OF INCOME TAX, COMPANIES ZONE-I, KARACHI
Fiscal statute---Exemption clause---Application and interpretation---Firstly, onus laid on the TAX payer to show that his case came within the exemption; secondly, if two reasonable interpretations were possible the one against the TAX payer would be adopted; thirdly, if the TAX payer's case came fairly within the scope of the exemption then he could not be denied the benefit of the same on the basis of any supposed intention to the contrary of the legislature or authority granting it.

Citation Name : 2019 PTD 523 SUPREME-COURT
Side Appellant : OXFORD UNIVERSITY PRESS
Side Opponent : COMMISSIONER OF INCOME TAX, COMPANIES ZONE-I, KARACHI
Second Sched., Pt. 1, Cl. 92 [since omitted]---Income TAX Ordinance (XXXI of 1979) [since repealed], Second Sched, Pt. 1, Cl. 86---Exemption from TAX ---Scope---University or other educational institution established solely for educational purposes and not for purposes of profit---Publishing press of a foreign university (Oxford University Press) operating in Pakistan---High Court found that the publishing press/assessee was not entitled to exemption from TAX under Cl. 86, Part 1 of Second Schedule to the Income TAX Ordinance, 1979 ("Clause 86") for the reasons that "in Pakistan", it was not engaged solely in imparting education, which was one of the primary requirement for availing the benefit of Cl. 86, and further it had failed to prove that the income earned by it through its business of printing, publication and sale of books or otherwise, was solely used for educational purposes "in Pakistan"---Held, that the High Court had laid a great deal of emphasis on the fact that for claiming exemption the university must be carrying out educational activities "in Pakistan"---Perusal of the Cl. 86 showed that the words "in Pakistan" were not to be found therein---High Court erred materially in introducing an element or requirement for claiming exemption that found no mention in Cl. 86---Publishing press/assessee in question was a branch/department of a foreign university, and hence came within the meaning of "university"---Furthermore there was no distribution or disbursement of profits made by the assessee---Even if during some of the income years the profits (or part thereof) were remitted abroad to the foreign university, there was no distribution or disbursement thereof---Purpose therefore throughout remained solely educational and not profit, thus the publishing press/assessee was entitled to the benefit of Cl. 86 for all of the assessment years concerned---Impugned judgment of High Court was set aside in circumstances.

Citation Name : 2019 PTD 484 SUPREME-COURT
Side Appellant : PAKISTAN TELEVISION CORPORATION LIMITED
Side Opponent : COMMISSIONER INLAND REVENUE (LEGAL) LTU, ISLAMABAD
Ss. 2(23), 3 & First Sched., Table II---Customs Act (IV of 1969), First Sched. [Pakistan Customs Tariff (PCT), Heading 98.12]---Wireless Telegraphy Act (XVII of 1933), S. 3---Television Receiving Apparatus (Possession and Licensing) Rules, 1970, Rr. 2(e) & 3(3)---TV license fee recovered by Pakistan Television Corporation Ltd. (PTV)---Federal excise duty, payment of---Exemption---Telecasts, TV sets and TV license fee were not covered by the definition of "services" in S. 2(23) of the Federal Excise Act, 2005 and Item 6 of Table II of the First Schedule to the said Act read with Chapter 98 of the Pakistan Customs Tariff (PCT)---TV license fee, telecasts and TV sets not being covered by any of the subheadings of PCT Heading 98.12 were not subject to Federal Excise Duty on a reasonable interpretation of the law---Pakistan Television Corporation Ltd. (PTV) was exempt from payment of Federal Excise Duty on TV license fee---Moreover the Wireless Telegraphy Act, 1933 and the Television Receiving Apparatus (Possession and Licensing) Rules, 1970, made the Parliamentary intention clear, i.e. the license fee was paid not for any service provided by PTV but by the holder of the TV set for its possession---TAX able event was not the provision of any service by PTV; it was the possession of a television set by the holder---TV license fee not being the product of any service provided by PTV, Federal Excise Duty could not be levied on it---Appeal was allowed accordingly.

Citation Name : 2019 PTD 484 SUPREME-COURT
Side Appellant : PAKISTAN TELEVISION CORPORATION LIMITED
Side Opponent : COMMISSIONER INLAND REVENUE (LEGAL) LTU, ISLAMABAD
Fiscal/TAX ation statute---Charging provision---Scope---Provision providing for a mode of collection was not a charging provision; it could neither abridge nor expand the scope of a charging provision in an Act.