1998 PLP (Trib (PTD)
N/A
| Citation | 1998 PLP (Trib (PTD) |
| Forum / Court | Income-tax Appellate Tribunal Pakistan |
| Bench Members | Muhammad Mujibullah Siddiqui, Chairman and Muhammad Mahboob Alam, Accountant Member |
| Parties | N/A |
| Primary Law | Agreement for Avoidance of Double Taxation between Pakistan and Switzerland |
Q1: What are the key laws and sections cited in 1998 PLP (Trib (PTD)?
This judgment primarily cites: Agreement for Avoidance of Double Taxation between Pakistan and Switzerland as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 1998 PLP (Trib (PTD)?
The case was heard and decided by the Income-tax Appellate Tribunal Pakistan bench comprising: Muhammad Mujibullah Siddiqui, Chairman and Muhammad Mahboob Alam, Accountant Member.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 1998 PLP (Trib (PTD) (N/A). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- Muhammad Majid, D.R. for Appellant.
- Shabbar Zaidi, F. C. A. for Respondent.
- Date of hearing: 11th February, 1998.
Headnotes / Summary
Art.vi(a), cl.(6)
Dividend derived from income of industrial undertaking
Activities of the assessee in its entirety and not the various components of its income are relevant for the purposes of Art.(vi), cl. (6) of the Agreement
Taxation of entire dividend income has to be concessionally assessed accordingly.
Judgment & Decree
"(a) Where a Swiss Company owns shares carrying not less than one-third of the voting power of a Pakistan Company the rate of Pakistan tax payable in respect of the dividends declared of or after the 1st January, 1961, and paid by such Pakistan Company to such Swiss Company shall not exceed:-- (i) 10 per cent. when such dividends are derived from the income of an industrial undertaking ir. Pakistan; and (ii) 20 per cent. in the case dividends derived from other income. "
4. The term "Industrial Undertaking" as used in Article (vi)(a) has also been defined as per clause (6) of the said Article (vi) as under:-- ".(6) The terms 'Industrial Undertaking', as used in this Article, means an undertaking falling under any of the classes mentioned below:-- (a) the manufacture of goods or materials or the subjection of goods or material to any process which results in substantially changing the original condition; (b) ship-building; (c) electricity, hydraulic power, gas and water supply; (d) mining, including the working of an oil well os any other source of miner deposits; and (e) any other undertaking, which may be declared to be an 'industrial undertaking' by the competent Authority in Pakistan for the purposes of this Article."
5. As it has rightly been pointed out by the learned CIT (A) that there is no dispute about the fact that M/s. Tetra Pakistan Ltd is an "Industrial Undertaking in terms of definition given in clause (6) of the Convention the only dispute by the Department is that income in the form of return on deposits and sources other than manufacturing activities should be categorised apart from income occurring to the company from manufacturing activity for the purpose of determining the nature of dividend income attributable thereto. This interpretation by the Department is in our views not correct. The Income of "Industrial Undertaking" has to be taken as composite whole as there is no provision in clause (a)(i) of Article (vi) of the Convention denoting any bifurcation of income from manufacturing/industrial and non-industrial activity. The expression used is "divided derived from the income of an Industrial Undertaking in Pakistan". In our view the only interpretation to be given to this expression is that the entire amount of dividend declared has to be treated as arising out of income from such "Industrial Undertaking" and for these reasons we confirm the', finding of the learned CIT(A) that "while considering the applicability of Clause (6) of Article (vi) of the Treaty it will be activities of the assessee in' its entirety (with regard to it being an Industrial Undertaking) and not the various components of its income which shall be relevant. " The taxation of the entire dividend income from Tetra Pakistan Ltd. @ 10% is accordingly confirmed.
6. The Departmental appeal fails. M.B.A./518/Trib. Order accordingly.