LAHORE: Lahore High Court (LHC) Tuesday held that super tax under Section 4C (Super tax on high-earning persons) of the Income Tax Ordinance, 2001, cannot be imposed retrospectively on companies/individuals for the tax year 2022.
The petitioners had challenged the imposition of super tax for the tax year 2022 operated retrospectively and impaired the vested rights of those persons.
According to a judgment (ICA No48745 of 2023) of a two-member bench of LHC issued on Tuesday, the appeals by appellants/taxpayers are allowed. The part of the impugned judgment that upholds the retrospective application of Section 4C by the use of the words “for the tax year 2022” is set aside.
It is declared that, notwithstanding these words, the rights conferred on the appellants at the end of tax year 2022 on 30th June 2022 are past and closed transactions and cannot be impaired or whittled away by the use of these words. In sum, super tax under Section 4C cannot be imposed on these appellants for the tax year 2022. This obviously includes appellants with special tax year, the LHC’s judgement added.
The issue at the heart of this litigation in respect of discrimination is that different rates of taxation have been provided, the LHC maintained.
“Certain sectors without any intelligible criteria cannot be isolated from rest of the persons similarly placed and sought to be taxed at a higher rate than those persons who earn an income in the same bracket. This is precisely the holding of the Sindh High Court, Islamabad High Court and the single judge. We do not find any illegality or error in the holding of the learned single judge in this respect.
In the above analysis, we concur in the result reached by the Islamabad High Court and Sindh High Court (where similar challenges were brought). We have; however, arrived at the same result by another route,“ the LHC added.
