PRESENT:
Mr. Justice Yahya Afridi, CJ Mr. Justice Muhammad Shafi Siddiqui Mr. Justice Miangul Hassan Aurangzeb
VS
Commissioner Inland Revenue, Zone I, Regional Tax Office, Peshawar. .....Respondent
Petitioner(s) by: Mr. Jahanzeb Masud, ASC. [in all cases] .
Respondent(s) by: Mr. Shahid Raza Malik, ASC. [in all cases] [through video-link from Peshawar] Dr. Ishtiaq Ahmed Khan, Director-General, Law, FBR. Mr. Arfat Rasool, Secretary Legal, FBR. [Both at Islamabad].
Law: Income Tax Ordinance, 2001
Sections: Second Schedule Part 1 Clause 58(2)(i), Clause 58
Three connected Tax References were decided by the impugned consolidated judgment dated 16.10.2024 passed by the Peshawar High Court, Peshawar, whereby the petitioner was denied the exemption to pay tax on the income so derived.
2. We have heard the learned counsel for the parties and perused the material available on record. The petitioner, being Frontier Constabulary Security Services is a Private Limited Company and derived income by providing security services as its only prime business. The matter pertained to the tax years 2007, 2008 and 2009, wherein the petitioner sought exemption from income tax under sub-clause (2)(i) of clause (58) of Part-I of the Second Schedule to the Income Tax Ordinance, 2001 (hereinafter referred to as ‘the Ordinance'). It is urged that petitioner is wholly owned by Frontier Constabulary Foundation, which itself enjoying exemption from income vide Special Education and Social Welfare Division SRO 205 (I)/86 dated 24.02.1986. Thus, in consequence thereof and being subsidiary of Frontier Constabulary Foundation, petitioner's income is also exempt from payment of tax and same yardstick should be followed.
3. The stance of the learned counsel representing the petitioner is contrary to the facts of the case. Petitioner do not fall in the category identified in sub-clause (2)(i) of clause (58) of Part-I of the Second Schedule of the Ordinance. The petitioner is an independent legal entity registered under company's laws and hence cannot derive such benefits as extended to the Frontier Constabulary Foundation.
4. Reliance was also placed on the certificate of exemption dated 04.09.2012, which for the purposes of convenience and understanding is reproduced as under:
‘CERTIFICATE
Subject: EXEMPTION CERTIFICATE UNDER CLAUSE 58(2)(1) OF PART-I OF THE SECOND SCHEDULE TO THE INCOME TAX ORDINANCE, 2001.
It is certified that income received by M/S Frontier Constabulary Foundation, 5th Floor Trust Building, Peshawar Cantt, NTN- 3550254-1 from the following projects is exempt from tax as per Clause 58(2)(1) of Part-I of 2nd Schedule to the Income Tax Ordinance, 2001.
1. F.C. Welfare Filling Station Sunehri Masjid Road, Peshawar.
2. F.C. Trust Plaza (Diljan Plaza) Peshawar Cantt.
3. F.C. Trust Building, Peshawar Cantt.
4. F.C. Shopping Plaza, Thall District Kohat.
5. F.C. Welfare Supper Market, Shabqadar, District Charsadda.
6. F.C. Securities Services (PVT) Ltd.
7. F.C. Foundation School, Shabqadar.
This certificate too is of no benefit to the petitioner. It only certified that the "income received by the Frontier Constabulary Foundation" from the Projects notified in the certificate (petitioner) are exempted from tax as per sub-clause (2)(i) of Clause (58) of Part-I of the Second Schedule of the Ordinance. Meaning thereby, that whatever income is derived by the Frontier Constabulary Security Services (Pvt) Limited is not exempted, whereas, if any of its income forwarded/extended to M/s Frontier Constabulary Foundation, that income of the "Foundation" is exempted. So, the entire income as derived by Frontier Constabulary Security Services (Pvt) Limited, being petitioner here, is liable to tax. With this understanding of law, these petitions are dismissed and leave to appeal is declined.
Disclaimer / Note: We have reproduced the judgment for facilitation of readers; however, the readers must study the original or certified copy of the above said judgment before referring it in any Court of Law. The judgment as reproduced above is a reported judgment available in law magazines and journals namely: 2026 PTD 336