P L D 2026 Federal Constitutional Court 155 (PLP)
SHER MUHAMMAD MUGHARI and others — Petitioners Versus The FEDERATION OF PAKISTAN through Secretary Finance Islamabad and others — Respondents
| Citation | P L D 2026 Federal Constitutional Court 155 (PLP) |
| Forum / Court | Rashid Anwer, Advocate Supreme Court Assisted by: Yousuf Khalid Anwer, Advocate, Salman Akram Raja, Advocate Supreme Court Assisted by: M. Shakeel Mughal, Advocate, Faisal Siddiqi, |
| Bench Members | Amin-ud-Din Khan, CJ and Ali Baqar Najafi, J |
| Parties | SHER MUHAMMAD MUGHARI and others — Petitioners Versus The FEDERATION OF PAKISTAN through Secretary Finance Islamabad and others — Respondents |
| Primary Law | Income Tax Ordinance (XLIX of 2001) |
Q1: What are the key laws and sections cited in P L D 2026 Federal Constitutional Court 155 (PLP)?
This judgment primarily cites: Income Tax Ordinance (XLIX of 2001) as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case P L D 2026 Federal Constitutional Court 155 (PLP)?
The case was heard and decided by the Rashid Anwer, Advocate Supreme Court Assisted by: Yousuf Khalid Anwer, Advocate, Salman Akram Raja, Advocate Supreme Court Assisted by: M. Shakeel Mughal, Advocate, Faisal Siddiqi, bench comprising: Amin-ud-Din Khan, CJ and Ali Baqar Najafi, J.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: P L D 2026 Federal Constitutional Court 155 (PLP) (SHER MUHAMMAD MUGHARI and others — Petitioners Versus The FEDERATION OF PAKISTAN through Secretary Finance Islamabad and others — Respondents). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- Rashid Anwer, Advocate Supreme Court [Assisted by: Yousuf Khalid Anwer, Advocate], Salman Akram Raja, Advocate Supreme Court [Assisted by: M. Shakeel Mughal, Advocate], Faisal Siddiqi,
- Advocate Supreme Court, Abid H. Shaban, Advocate Supreme Court, Malik Qamar Afzal, Advocate Supreme Court, Barrister Jahanzeb Awan, Advocate Supreme Court, Shahzad Ata Illahi, Advocate Supreme Court [Assisted by: Salman Sohail Khan, Advocate], Hyder Ali Khan, Advocate Supreme Court, Hafiz Muhammad Idrees, Advocate Supreme Court, Syed Farid Bukhari, Advocate Supreme Court, Shehryar Kasuri, Advocate Supreme Court, Ms. Samia Faiz Durrani, Advocate Supreme Court, Muhammad Aleem, Advocate Supreme Court, Sheikh Muhammad Akram, Advocate Supreme Court, Faisal Jaffar, Advocate Supreme Court, Saleem Mangrio, Advocate Supreme Court, Arshad Hussain Shahzad, Advocate Supreme Court, Syed Tauqeer Bukhari, Advocate Supreme Court, Syed Tanseer Bukhari, Advocate Supreme Court, Dr. Usman Mirza, Advocate-on-Record, Abdul Ghaffar Khan, Advocate-on-Record, Tariq Aziz, Advocate-on-Record, Anis Muhammad Shahzad, Advocate-on-Record, Dr. Tariq Masood, Advocate High Court, Ch. Hashim Azeem, Advocate High Court and Ejaz Hussain Rathore, In-Person.
- Ms. Asma Hamid, Advocate Supreme Court [Assisted by: Messrs Mustafa Khalid and Faisal Khalid, Advocates], Dr. Shah Nawaz, Advocate Supreme Court, Hafiz Ahsan Ahmad Khokhar, Advocate Supreme Court [Assisted by Aimal Ejaz, Advocate], Malik Itaat Hussain Awan, Advocate Supreme Court, Ghulam Shoaib Jally, Advocate Supreme Court, Saeed Tahir Sulehri, Advocate Supreme Court, Mrs. Misbah Gulnar Sharif, Advocate Supreme Court, Barrister Iftikhar Raza Khan, Advocate Supreme Court, Osama Shahid, Advocate Supreme Court, Atif Rahim Burki, Advocate Supreme Court, Ms. Shazia Bilal, Advocate Supreme Court, Amjad Hussain Malik, Advocate Supreme Court, Irfan Mir Halipota, Advocate Supreme Court, Manzoor Hussain, Advocate Supreme Court, Ibrar Ahmed, Advocate Supreme Court, Dr. Raana Khan, Advocate-on-Record, Jawaid Masood Tahir Bhatti, Advocate-on-Record, Ms. Samina Mumtaz, Advocate High Court, Badshah Wazir, Member Legal FBR, Qaiser Mehmood Sra, Legal Advisor and Yousaf Khan, S.O. Legal.
Headnotes / Summary
S.7E
Tax on deemed income from capital assets
Section 7E of the Income Tax Ordinance, 2001, vires of
Held: Section 7E of the Income Tax Ordinance, 2001, was ultra vires the Constitution, and was accordingly struck down, being void ab initio
Consequently, all actions, proceedings, and notices initiated or taken by the FBR/C.I.R under Section 7E were declared to be without lawful authority and were set aside. For the Taxpayers Rashid Anwer, Advocate Supreme Court [Assisted by: Yousuf Khalid Anwer, Advocate], Salman Akram Raja, Advocate Supreme Court [Assisted by: M. Shakeel Mughal, Advocate], Faisal Siddiqi, Advocate Supreme Court, Abid H. Shaban, Advocate Supreme Court, Malik Qamar Afzal, Advocate Supreme Court, Barrister Jahanzeb Awan, Advocate Supreme Court, Shahzad Ata Illahi, Advocate Supreme Court [Assisted by: Salman Sohail Khan, Advocate], Hyder Ali Khan, Advocate Supreme Court, Hafiz Muhammad Idrees, Advocate Supreme Court, Syed Farid Bukhari, Advocate Supreme Court, Shehryar Kasuri, Advocate Supreme Court, Ms. Samia Faiz Durrani, Advocate Supreme Court, Muhammad Aleem, Advocate Supreme Court, Sheikh Muhammad Akram, Advocate Supreme Court, Faisal Jaffar, Advocate Supreme Court, Saleem Mangrio, Advocate Supreme Court, Arshad Hussain Shahzad, Advocate Supreme Court, Syed Tauqeer Bukhari, Advocate Supreme Court, Syed Tanseer Bukhari, Advocate Supreme Court, Dr. Usman Mirza, Advocate-on-Record, Abdul Ghaffar Khan, Advocate-on-Record, Tariq Aziz, Advocate-on-Record, Anis Muhammad Shahzad, Advocate-on-Record, Dr. Tariq Masood, Advocate High Court, Ch. Hashim Azeem, Advocate High Court and Ejaz Hussain Rathore, In-Person. For the Respondents/FBR Ms. Asma Hamid, Advocate Supreme Court [Assisted by: Messrs Mustafa Khalid and Faisal Khalid, Advocates], Dr. Shah Nawaz, Advocate Supreme Court, Hafiz Ahsan Ahmad Khokhar, Advocate Supreme Court [Assisted by Aimal Ejaz, Advocate], Malik Itaat Hussain Awan, Advocate Supreme Court, Ghulam Shoaib Jally, Advocate Supreme Court, Saeed Tahir Sulehri, Advocate Supreme Court, Mrs. Misbah Gulnar Sharif, Advocate Supreme Court, Barrister Iftikhar Raza Khan, Advocate Supreme Court, Osama Shahid, Advocate Supreme Court, Atif Rahim Burki, Advocate Supreme Court, Ms. Shazia Bilal, Advocate Supreme Court, Amjad Hussain Malik, Advocate Supreme Court, Irfan Mir Halipota, Advocate Supreme Court, Manzoor Hussain, Advocate Supreme Court, Ibrar Ahmed, Advocate Supreme Court, Dr. Raana Khan, Advocate-on-Record, Jawaid Masood Tahir Bhatti, Advocate-on-Record, Ms. Samina Mumtaz, Advocate High Court, Badshah Wazir, Member Legal FBR, Qaiser Mehmood Sra, Legal Advisor and Yousaf Khan, S.O. Legal. For the Federation Ch. Aamir Rehman, Addl. AGP.
Judgment & Decree
AMIN-UD-DIN KHAN, CJ.
The insertion of Section 7E in the Income Tax Ordinance, 2001, through the Finance Act, 2022, was assailed before all the provincial High Courts, including the Islamabad High Court, on constitutional grounds. The Peshawar High Court and the High Court of Balochistan declared the impugned provision to be ultra vires the Constitution and struck it down. The Islamabad High Court, while not invalidating the provision in its entirety, read it down and declared subsection (2) thereof to be ultra vires the Constitution. Against the judgment of the Single Judge of the Islamabad High Court, I.C.As were pending before the division bench of the Islamabad High Court and two writ petitions were also pending, which were requisitioned vide order dated-06.04.2026 in the light of Article 175E(5) of the Constitution and same were transferred to this Court. A learned Single Judge of the Lahore High Court allowed the writ petitions; however, the said judgment was reversed in intra-court appeals by a Division Bench, which allowed the appeals and dismissed the petitions. The High Court of Sindh similarly dismissed the constitutional petitions. Consequently, the taxpayers assailed the judgments of the Lahore High Court and the High Court of Sindh, whereas the Federal Government! Federal Board of Revenue/Commissioner Inland Revenue challenged the judgments rendered by the Peshawar, Balochistan, and Islamabad High Courts.
2. Having heard the learned counsel for the parties at considerable length and upon due deliberation, we are persuaded to hold that Section 7E of the Income Tax Ordinance, 2001, is ultra vires the Constitution, and is accordingly struck down, being void ab initio. For the reasons to be recorded separately, all the civil petitions filed by the taxpayers against the judgments of the High Court of Sindh and the Lahore High Court are converted into appeals and allowed while civil petitions filed by the FBR/C.I.R against the judgments of the Peshawar High Court and the High Court of Balochistan are dismissed. The transferred cases are disposed of accordingly. Consequently, all actions, proceedings, and notices initiated or taken by the FBR/C.I.R under Section 7E are declared to be without lawful authority and are hereby set aside. MWA/31/FCC Order accordingly.