1987 PLP 1297 (SCMR)

M. Ilyas Khan, Advocate Supreme Court and Ch. Akhtar Ali, Advocate‑on‑Record for Appellant (in Civil Appeal No. 134 of 1973). Maqbool A. Qadri, Advocate‑on‑Record for Respondent (absent) (in Civil Appeal No. 134 of 1973). Ch. Akhtar Ali, Advocate‑on‑Record for Appellant. Ex parte: against Respondent (in Civil Appeal No. 135 of 1973). Date of hearing: 4th June, 1986. S.A. NUSRAT, J.‑‑ This judgment will dispose of the above mentioned appeals which arise out of a common judgment of the learned High Court and involve a common question of law.

2. The brief facts of the case are that the respondents were, at the relevant time, shareholders of the company, Sh. Fazal Rehman and Sons Limited, Multan. The company enjoyed tax‑holiday under section 15BB of the Income‑tax Act. The respondents in each of the appeals declared dividend income amounting to Rs.4,31,878 having been distributed out of the profits of the company. The Income‑tax Officer, however, brought this income to tax in the hands of the respondents. The respondents successfully appealed to the Appellate Assistant Commissioner and the appeal of the Commissioner of Income‑tax against this order was dismissed by the learned Income‑tax Appellate Tribunal. The Commissioner of Income‑tax, in the circumstances, referred the following question of law arising out of the order of the Tribunal for decision to the High Court under section 66 (1) of the Income‑tax Act. "Whether on the facts and in the circumstances of 'the case, the Tribunal was justified in holding that income from dividend declared out of the Company's profits exempt under section 15BB of the Income‑tax Act is also exempt from tax in the hands of the share‑holder of the Company." The above question was answered by the learned High Court in the affirmative thus deciding the reference against the appellant.

3. Leave to appeal was granted to examine the question with regard to the interpretation of section 15BB of the Income‑tax Act relating to the tax‑holiday granted to certain Industries.

4. Section 15BB of the Income‑tax Act reads as follows:‑ "Section 15BB: Subject to the provisions of this Act, the income, profits and gains of an industrial undertaking set up in Pakistan between the 1st day of April. 1959 and the 30th day of June, 1965 (both days inclusive) shall be exempt from Income‑tax and super‑tax payable under this Act for a period of four years beginning with the month in which the undertaking is set up or the commercial production is commenced, whichever is the later.

5. There is no dispute that the income of the company was exempt from payment of tax but it was contended on behalf of the Department that moment the income of the company was distributed as dividend and fell into the hands of the share‑holders, the same become taxable so far as the recipient share‑holders were concerned.

6. We heard the learned counsel and have gone through the impugned judgment of the learned High Court. In deciding the reference the learned High Court has relied on the decision of this Court in the case of the Commissioner of Income‑tax, Punjab, NWFP and Bahawalpur versus Mst. E.V. Miller P L D 1959 SC

219. The judgment in our view was rightly followed by the learned High Court and the learned counsel for the appellant was unable to show that there was anything wrong in the finding of the learned High Court that the whole matter was clinched by the ratio of the said judgment. In the circumstances the matter does not require any further consideration and these appeals are, therefore, dismissed with cost. M.B.A./C‑5/S Appeals dismissed.