Federal Court allows tax credit adjustment against super tax

Corporate taxpayers may now offset their credits against super tax, after the Federal Constitutional Court reversed an Islamabad High Court judgment that had declined that relief to Zong. A six-page detailed ruling by Justice Aamir Farooq accepted the appeals brought by the telecom operator. Mettis Link News reported that the court held credits generated through filing and deductions could be set off against super tax.

According to APP, the court described the credit under Section 168 of the Income Tax Ordinance as a distinct, long-established right of taxpayers. The bench also pointed out that refusing offsets and limiting firms to refund claims would contradict the purpose of the statute. Fiscal laws, it added, must be read in a way that favours taxpayers and eases compliance.

The court ordered the Federal Board of Revenue to take up Zong's adjustment request and decide it in line with the law. The request was filed in reply to a court notice. Earlier, the FBR had served Zong with a demand for super tax, and the company asked the Islamabad High Court to let it offset its available credit. When that petition was dismissed, Zong moved the Federal Constitutional Court, which set aside the High Court verdict and allowed its appeals.