JUDGMENT NASIM SIKANDAR, J.- In these four further appeals under Section 136 of the late Income Tax Ordinance, 1979 the Revenue claims that following common question of law has arisen out of the consolidated impugned order of the Tribunal dated 14.01.1998:- "Whether under the circumstances and facts of the case, the learned ITA was justified in holding that the dividend Income of an Insurance Company was to be taxed separately on lower rate at 5% instead of General rate of tax in the presence of Rule 5 of Fourth Schedule to the Income Tax Ordinance, 1979 read with section 26(a) of the said Ordinance."
2. The respondent is a public limited company and during the period relevant to the assessment year 1993-94 to 1996-97 derived income from General Insurance dividend and capital gain on sale of shares, In all these years it was, inter alia, aggrieved of the charge of tax on dividend income at the rate and its treatment as income form General Insurance. The learned Members of the Tribunal on the basis of the ratio settled by the Hon'ble Sindh High Court, Karachi as well as Hon'ble Supreme Court of Pakistan in re: Adamjee insurance Co. 164, re Messrs E.F.U General Insurance Co.
Limited v. The Federation of Pakistan and others (1997) 76 Tax 213 = PLD 1997 SC 700 and re: General Insurance Company v. C.B.R. (1993 SCM R 1232) allowed the contention of the company that the computation of income profits and gains from insurance business and the tax payable thereupon were two different concepts altogether.
3. Learned counsel for the respondent, Dr. Ikram- ul-Haq, Advocate, states and we will agree that the issue in hand having already been finally decided by the Hon'ble Supreme Court of Pakistan, the Department should not have filed an appeal unless they could establish a distinction between the case of the respondent-company and the facts falling for consideration by the Hon'ble Supreme Court of Pakistan in the cases of E.F.U. General Insurance Co. Ltd. (Supra), and General insurance Company (Supra).
4. Also points out that in the very case of the respondent-company for early years a Division Bench of this Court, in which I was also a member, the principle laid down by the Hon'ble Supreme Court was reiterated, followed and the appeals filed by the company were accepted, In that judgment we also benefited from the observations of the Apex^Court in the aforesaid two judgments. The relevant part of that judgment now reported as re: Muslim Insurance Co. Ltd. Lahore v.
Commissioner of Income Tax (2002) PCTLR (Lah) 417 reads as under:- "6. The issue in hand has too facets. First the dividend income or for that matter other income derived by an insurance com is to be computed 26 of the Ordinance with the Fourth Schedule thereto. Second while computing the income of an insurance Company it is entitled to any concessional of taxation as provided for in the Se Schedule to the Income Tax Ordinance, ' In re: Central Insurance Company (supra), Lordships of the Supreme Court maintained view that income from interest on Deposit Certificate/Defence Sa\ Certificates earned by an Insurance Com being part of the profits and gains of Insur business were liable to tax. That view wa affirmed by their Lordships in the case of EFU [supra). However, the second que was never an issue before the Hon Supreme Court in the case of Ce Insurance Company (supra). Accordingly Lordships in the course of their judgment I M/s EFU (Supra) observed that there being provision in the Ordinance or the Schedule that any one part of the first Schedule shall not apply in the case of General Insurance Companies the Beneficial rate of tax available under the first Schedule could not be denied except by the suitably amending the law. Their Lordships while interpreting the provisions of section 26(a) of the Ordinance read with the provision of Fourth Schedule contain special provisions for computation of income from general insurance business but there was no provision at all in them for computation of tax on such income. Their Lordships while interpreting all the relevant provisions including those contained in the First Schedule providing for computation of tax on income from business came to the conclusion that if any benefit in the rate of tax was provided on any kind of income in the insurance companies could not .Be deprived of such benefits. According to the Hon'ble Judges, in absence of any provision that such benefit shall not be extended to income of general insurance companies, that benefit.
5. In view of the ratio settled by the Hon'ble Supreme Court of Pakistan in the aforesaid judgments particularly in the case of M/s EFU General Insurance Co. (Supra) our answer to the aforesaid question is in the affirmative that the learned Tribunal was correct in law by holding that the dividend income of the appellant company was to be taxed separately on lower rate.
6. All four department appeals shall, therefore, be dismissed. This order shall also govern ITA Nos.
141, 142 & 143 of 1998. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.