FCC allows corporates to adjust tax credits against super tax, overturns IHC ruling in Zong case

Profit reported that the Federal Constitutional Court has set aside an Islamabad High Court judgment and allowed companies to offset eligible tax credits against super tax. The six-page detailed verdict, written by Justice Aamir Farooq, came as the court accepted Zong's appeals against the lower court's ruling. The bench held that tax credits generated through withholding can be set off, viewing the Section 168 credit as a distinct entitlement held by the taxpayer.

The court reasoned that blocking such adjustments and forcing taxpayers to seek refunds would defy legislative intent, so fiscal statutes must be read in a manner favouring taxpayers and honouring the advantages the statute grants. It directed the Federal Board of Revenue to review and decide Zong's adjustment claim in line with the law, after the FBR had issued Zong a notice seeking super tax payment. Earlier, Zong had asked the Islamabad High Court to let it offset its credit against that liability, but the petition was dismissed.