ISLAMABAD – Islamabad High Court (IHC) decided in favor of Federal Board of Revenue (FBR) in case brought by leading telecom operator Jazz. The ruling stems from Income Tax Reference No. 32 of 2020, challenging a 2020 judgment of the Appellate Tribunal Inland Revenue.
Justice Babar Sattar of Islamabad High Court penned detailed judgment after March hearing as the issue revolved around whether Commissioner Inland Revenue had the jurisdiction to amend PMCL’s tax assessment under Section 122(5A) of the Income Tax Ordinance (ITO), 2001, even after such powers had been delegated to the Additional Commissioner.
IHC judge ruled that Commissioner lawfully exercised concurrent powers and that the order under challenge was not coram non judice. The judgment further upheld the Tribunal’s view that PMCL did not qualify as an “industrial undertaking” under section 2(29C) of the ITO for the tax year 2018. This interpretation was reinforced by a legislative amendment in 2021 that explicitly added telecom companies to the definition—implying they had previously not been covered.
Another major component of ruling addressed tax implications of Jazz transaction involving disposal of its tower business to Deodar. The court held that the deal did not meet the criteria for tax deferral under section 97 of the ITO.
IHC made key concession in remanding issue of advance income tax collected under section 148(1) for further factual determination. Commissioner is now required to conduct a detailed inquiry in line with legal principles set out in previous decision before raising any demand under section 148(7).
The court declined to issue a directive, stating that no substantive question of law had arisen in the current proceedings. It left the matter open to resolution based on future determinations for prior tax years.
This judgment is expected to influence how telecom companies are treated under Pakistan’s tax laws and reaffirms the discretionary powers of country’s top collection agency.
