ISLAMABAD – The Federal Constitutional Court has ruled in favour of corporate taxpayers, declaring the adjustment of tax credits against super tax legally permissible.
In its detailed judgment, the court held that tax credits available to taxpayers on filing and deductions can be adjusted against super tax.
The court set aside the Islamabad High Court’s decision and allowed appeals filed by private mobile operator Zong. Justice Aamer Farooq authored the six-page detailed judgment.
According to the ruling, a tax credit granted under Section 168 of the Income Tax Ordinance constitutes a separate and established legal right. Preventing taxpayers from adjusting the credit and forcing them to seek a refund instead would run contrary to the intent of the law.
The court further observed that fiscal laws should be interpreted in a manner that facilitates and benefits taxpayers.
The Federal Board of Revenue (FBR) has been directed to examine the taxpayer’s claim for adjustment in response to the notice and decide the matter in accordance with the law.
The FBR had issued a notice to the private company seeking payment of super tax. Zong subsequently approached the Islamabad High Court seeking permission to adjust its tax credit against the super tax liability, but its petition was dismissed, prompting the company to challenge the decision before the Federal Constitutional Court.
