Industrial establishment

2013 PTD 1140 APPELLATE TRIBUNAL INLAND REVENUE (PAKISTAN) KARACHI Judicial Precedent

Ss.2 (f)(vi) & 4Income Tax Ordinance (XLIX of 2001), S.221Industrial establishmentLevy of Workers' Welfare Fund was deleted by the First Appellate Authority

Revenue contended that taxpayer was an "Industrial Establishment" and as such charge of Workers' Welfare Fund within the meaning of S.4 of the Workers' Welfare Fund Ordinance, 1979 read with S.221 of the Income Tax Ordinance, 2001 was in accordance with law and such order passed by the Assessing Officer be restored

Taxpayer contended that it was a public limited company incorporated in Pakistan and listed on Stock Exchanges, 60.43% shares of the company were owned by the Government; and was governed by the exclusion provided in S.2(f) of the Workers' Welfare Fund Ordinance, 1971

Provision of exclusion showed that an industrial establishment would not include a concern or establishment which was owned (i) by Government; (ii) by a Corporation established by Government; (iii) by a Corporation the majority of shares of which was owned by the Government; and in view of fact that 60.43% shares were owned by the Government and as such the taxpayer not only fell in the first category number, "by the Government" but also fell in the third category namely "by a corporation the majority of shares of which were owned by the Government"

Validity

Since the taxpayer was a Corporation established by Government and the majority of shares i.e. 60.43% were owned by the Government, which fact had duly been substantiated from the audited accounts for the period under consideration, taxpayer enjoyed exemption in terms of S.2(f)(vi) of the Workers' Welfare Fund Ordinance, 1971, on the ground being corporation established by Government and as well as majority shares held by the Government

Departmental appeals being without any merit were dismissed by the Appellate Tribunal.

2012 PLD 412 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Ss. 5 & 5-AConstitution of Pakistan, Art.199Constitutional petitionAnnual value, ascertainment ofValuation tableIndustrial establishmentDetermination

Petitioner was a telecommunication service provider company and dispute was with regard to charging of property tax against its properties located in Karachi city

Petitioner company claimed that property tax was chargeable at industrial rates, whereas authorities intended to charge against commercial rates

Validity

Some additional elements must be present for technical support to amount to industrial activity

Those additional elements must be activity or action, directly in relation to petitioner's telephone exchanges (or the other devices used, by it to provide telecommunications services) and must be substantially more than a mere servicing or care thereof

Petitioner did not carry out industrial activities on its properties, in which case the annual value of properties would not have to be determined on the basis that those were industrial properties

Properties of petitioner company must be brought to tax on the basis that those were commercial properties and there was nothing on record in relation to such additional activities or actions, if any

High Court directed that in respect of each property, where petitioner claimed to carry out industrial activities, would make application to authorities, ,giving full details of its activities

Petition was disposed of accordingly

Pakistan Telecommunication Company Ltd. v. Government of Punjab and others 2009 PTD 1602 dissented from.