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Official Citation: 2025 IHC 243036
Court / Jurisdiction: Islamabad High Court
Parties: FOP, CIR, etc vs M/s Dowell Schlumberger, Western, etc
Ruling Summary: This decision was rendered by the Islamabad High Court, officially reported as 2025 IHC 243036. In this matter between FOP, CIR, etc and M/s Dowell Schlumberger, Western, etc, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
COURT: Islamabad High Court (Honourable Mr. Justice Arbab Muhammad Tahir, Honourable Mr. Justice Inaam Ameen Minhas) AUTHOR JUDGE: Honourable Mr. Justice Inaam Ameen Minhas DECISION DATE: 10-DEC-2025 CASE NO: Intra Court Appeal-6-2019 CITATION: 2025 IHC 243036 PARTIES: FOP, CIR, etc VS M/s Dowell Schlumberger, Western, etc LAW / SECTION: under sections 122(9) read with 122(5A) of the Income Tax Ordinance, 2001| Under section 74(5) of the ordinance| SUBJECT: Writ, REMARKS: ICA in Wp 1183/2018, Tax Matter: Against Show cause U/s 122(5A) U/s 122(9) of Income Tax Ordinance. ============================================================ JUDGMENT SHEET ISLAMABAD HIGH COURT, ISLAMABAD JUDICIAL DEPARTMENT 1. INTRA COURT APPEAL NO. 06 OF 2019 FEDERATION OF PAKISTAN THROUGH CIR VERSUS M/S DOWELL SCHLUMBERGER (WESTERN) 2. INTRA COURT APPEAL NO. 370 OF 2022 COMMISSIONER INLAND REVENUE, ISLAMABAD VERSUS M/S SEA AND LAND DRILLING CONTRACTOR INC. 3. INTRA COURT APPEAL NO. 371 OF 2022 COMMISSIONER INLAND REVENUE, ISLAMABAD VERSUS M/S ORIENT PETROLEUM INC. 4. INTRA COURT APPEAL NO. 372 OF 2022 COMMISSIONER INLAND REVENUE, ISLAMABAD VERSUS M/S DEWAN PETROLEUM (PVT.) LTD. 5. INTRA COURT APPEAL NO. 373 OF 2022 COMMISSIONER INLAND REVENUE, ISLAMABAD VERSUS M/S DOWELL SCHLUMBERGER (WESTERN)
Uncertified 2 I.C.A No.6/2019 and I.C.A No. 370/2022 to 373/2022 Petitioner by: M/s Riaz Hussain Azam Bopera and Hassan Ali Khan, Advocates for the appellants in all appeals. Respondent No. 1 by: Mr. Asif Khan Jadoon, AAG. Respondent No. 2 by: M/s Hafiz Muhammad Idris, and Syed Farid Ahmed Bukhari, Advocates for the respondent in ICA No. 372 of 2022. Mr. Hyder Ali Khan, Advocate for the respondents in ICA No’s. 06 of 2019, 373 of 2022 and 370 of 2022. Mr. Adeel Waheed, Advocate for the respondent in ICA No. 371 of 2022. Assisted by: Muhammad Yahya Khan Niazi, Judicial Law Clerk. Date of Hearing: 10.11.2025 INAAM AMEEN MINHAS, J :- This common judgment shall decide the afore-titled Intra Court Appeals, as they involve similar questions of law and facts. 2. Through I.C.A. No. 6 of 2019, the appellant has assailed the judgment dated 15.11.2018 rendered in W.P. No. 1183/2018, titled Dowell Schlumberger (Western) S.A. vs. Pakistan through Secretary Revenue, FBR (“Impugned Judgment-I”). The remaining appeals, I.C.A Nos. 370/2022 to 373/2022 , call into question the judgment dated 06.09.2022 delivered in W.P. No. 1421/2021 and connected matters, titled Sea and Land Drilling Contractor Inc. v. Pakistan through Secretary Revenue, FBR and others (“Impugned Judgment-II”) . In Uncertified 3 I.C.A No.6/2019 and I.C.A No. 370/2022 to 373/2022 both sets of appeals , the learned Single Judges allowed the respective writ petitions and set aside the show cause notices issued under sections 122(9) read with 122(5A) of the Income Tax Ordinance, 2001 (“Ordinance”). 3. The facts of I.C.A. No. 6 of 2019, in brief, are that the respondent is a company having special tax year which filed its income tax return for the period 01.01.2011 to 31.12.2011 (Tax Year 2012) on 15.10.2012. The respondent received a show cause notice dated 14.03.2018 under sections 122(9) read with 122(5A) of the Ordinance which was challenged by the respondent through W.P. No. 1183/2018, which was allowed vide Impugned Judgment-I, wherein the learned Single Judge, treating the respondent’s financial year as extending from 1 st January to 31 st December by virtue of interpretation of section 74(10), concluded that the period of limitation commenced on 01.01.2012 and expired on 31.12.2016, thereby rendering the impugned show cause notice barred by limitation. 4. The facts of I.C.A. No. 370 of 2022, in brief, are that the respondent is a company having special tax year under Section 74(5) of the Ordinance, filed its income tax return for the period 01.01.2014 to 31.12.2014 (Tax Year 2015) on 16.12.2015. Subsequently, a show cause notice under Section 122(9) read with Section 122(5) of the Ordinance was issued on 07.04.2021 in respect of the said tax year. The respondent assailed the show cause notice before this Court in Writ Petition No. 1421/2021, which was decided vide Impugned Judgment- II wherein the learned Single Judge also held, inter alia, that the petitioners’ approved special tax years ran from 1st January to 31st December, that the show cause notices had been issued beyond five years from the expiry of the relevant special tax years, and that the department’s attempt to extend limitation by an additional six months on the basis of the expression “financial year” in Section 122(2) was misconceived. It was further held that reliance on the phrase “unless the context otherwise requires” in Section 70(4) was misplaced in the absence of any demonstrated contextual necessity; and that the concluding phrase “commencing during the financial year” in Section 70(4) pertained only to transitional tax years, not special tax years. Accordingly, adopting the reasoning of paragraph 7 of the judgment rendered in the case of Dowell Schlumberger (Western) S.A. vs. Pakistan through Secretary Revenue Uncertified 4 I.C.A No.6/2019 and I.C.A No. 370/2022 to 373/2022 FBR in W.P. No. 1183/2018, the connected writ petitions were allowed and the impugned show cause notices were set aside. 5. The facts of I.C.A. No. 371 of 2022, in brief, are that the respondent had been accorded approval to adopt a Special Tax Year, pursuant to which it filed its income tax return for the period 01.01.2012 to 31.12.2012 (Tax Year 2013) on 29.11.2013. Thereafter, show cause notices under Section 122(9) read with Section 122(5A) of the Ordinance were issued to the private respondent on 09.04.2019 and again on 12.06.2019. The respondent challenged the aforementioned show cause notices before this Court in Writ Petition No. 2295/2019, which was allowed vide Impugned Judgment-II. 6. Tersely, in I.C.A No. 372 of 2022, the brief facts are that the respondent having Special Tax Year filed its income tax return for the period 01.01.2012 to 31.12.2012 (Tax Year 2013) on 30.11.2013. Thereafter, show cause notice dated 05.04.2019 under Section 122(9) read with Section 122(5A) of the Ordinance was issued to the respondent in respect of the said tax year. The respondent challenged the show cause notice before this Court through Writ Petition No. 1899/2019, which was allowed vide Impugned Judgment-II. 7. The facts of I.C.A No. 373 of 2022, are that the respondent having Special Tax Year filed its income tax return for the period 01.01.2009 to 31.12.2009 (Tax Year 2010) on 18.10.2010. Thereafter, show cause notice dated 07.04.2016 under Section 122(9) read with Section 122(5A) of the Ordinance was issued to the respondent in respect of the said tax year. The respondent challenged the show cause notice before this Court through Writ Petition No. 1486/2016, which was allowed vide Impugned Judgment-II. 8. The learned counsels for the appellants contended that that the learned Single Judges respectively failed to consider the submissions advanced by the appellants; that the specific objections and factual assertions placed before the Court were neither addressed nor discussed, resulting in a decision adverse to the appellant and causing substantial loss to the public exchequer; that it is a well-settled principle that where a statute prescribes that a thing be done in a particular manner, it must be done in that manner alone and in no other manner. Learned counsel further argued that the computation under section Uncertified 5 I.C.A No.6/2019 and I.C.A No. 370/2022 to 373/2022 122(2) must be read in conjunction with section 74(10) of the Ordinance, which extends the financial year up to 30 th June of the following calendar year. Learned counsel submitted that, in accordance with this interpretation, the limitation period should accordingly be computed from the end of the normal financial year and that in fiscal matters, courts cannot import intendment or supply meanings beyond the plain text. Learned counsel further contended that while interpreting section 74(10) of the Ordinance in paragraph 7 of the Impugned Judgment-I, the learned Judge inadvertently overlooked the qualifying phrase “unless the context otherwise requires”; and that, further, the writ petition was not maintainable as it raised disputed questions of facts rather than a pure question of law which was a specific objection taken by the appellant but was not considered by the learned Single Judge. 9. Conversely, learned counsels for the private respondents supported the impugned judgments, contending that the limitation period prescribed under section 122(2) of the Ordinance, in the case of taxpayers operating under special tax years, begins to run from the end of the special tax year. Learned counsels argued that this interpretation follows from section 74(10) of the Ordinance, which requires that a special tax year be treated as the financial year for all purposes of the Ordinance. They further submitted that this interpretation is also consistent with section 174(3) of the Ordinance, which mandates that accounts and documents be maintained for six years after the end of the tax year to which they relate. Learned counsel further submitted that the period of limitation cannot be extended unless expressly authorized by statute, and that this construction introduces no ambiguity; however, even if any ambiguity was assumed to exist, it must, under settled principles of law, be resolved in favour of the taxpayer. 10. We have given anxious consideration to the arguments of the learned counsel for the parties and perused the record with their able assistance. 11. Since these intra court appeals arise from impugned judgments that are identical in reasoning and outcome, we deem it appropriate to reproduce the relevant reasoning in order to provide the necessary background for the present adjudication. The learned Single Judges respectively held, inter alia, that the respondents approved special tax years ran from 1 st January to 31 st December, Uncertified 6 I.C.A No.6/2019 and I.C.A No. 370/2022 to 373/2022 that the show cause notices had been issued beyond five years from the expiry of the relevant special tax years, and the department’s attempt to extend limitation by an additional six months on the basis of the expression “financial year” in Section 122(2) was disapproved. It was held that any alleged ambiguity between Sections 122(2) and 74(10) must, on settled principles, be resolved in favour of the taxpayer and the reliance on the phrase “unless the context otherwise requires” in Section 74(10) was misplaced in the absence of any demonstrated contextual necessity; and that the concluding phrase “commencing during the financial year” in Section 74(10) pertained only to transitional tax years, not special tax years. Accordingly, the writ petitions were allowed and the impugned show cause notices were set aside. 12. In the present matters, it is an admitted fact that all the respondents had been duly granted approval under section 74(5) of the Ordinance, to adopt a special tax year commencing on 1 st January and concluding on 31 st December. The common question of law that arises from these intra court appeals pertains to the limitation bar, specifically the determination of the point in time from which limitation begins to run for the purposes of initiating amended assessment proceedings in respect of a company operating under a special tax year. 13. Given that the question of law in all the captioned appeals is substantially the same, this Court shall treat I.C.A No. 06 of 2019 as the lead case for the purpose of applying the law to the facts and resolving the common question of law. In this case the respondent filed its income tax return on 15.10.2012 for the period 01.01.2011 to 31.12.2011 (Tax Year 2012). The learned Single Judge vide the Impugned Judgment-I rendered in W.P. No. 1183/2018 titled Dowell Schlumberger (Western) S.A. vs. Pakistan through Secretary Revenue, FBR , from which I.C.A No. 6 of 2019 arises held that the show cause notice dated 14.03.2018, issued under sections 122(9) and 122(5A) of the Ordinance, was barred by limitation and, therefore, without lawful authority. The Court reasoned that the respondent had been granted a Special Tax Year running from 1 st January to 31 st December, and, consequently, Tax Year 2012 ended on 31.12.2011 and held that the deemed assessment under section 120 arose upon filing of the return in 2012, and consequently the five- Uncertified 7 I.C.A No.6/2019 and I.C.A No. 370/2022 to 373/2022 year period prescribed under section 122(2) would commence from 01.01.2012 and expire on 31.12.2016. However, in reaching this conclusion, the learned Single Judge overlooked a material and crucial aspect i.e. the date on which the income tax return was filed. 14. This factor is crucial as it goes to the root of the matter. In order to address the issue appropriately, it is necessary to reproduce the relevant provisions of section 122(2) of the Ordinance which governs the applicable period of limitation, both as they stood prior to and after the Finance Act, 2009: Pre-amendment Section 122(2) “An assessment order shall only be amended under sub-section (1) within five years after the Commissioner has issued or is treated as having issued the assessment order on the taxpayer” Post amendment Section 122(2) “No order under subsection (1) shall be amended by the Commissioner after the expiry of five years from the end of the financial year in which the Commissioner has issued or treated to have issued the assessment order to the taxpayer” 15. It is manifest from the perusal of section 122(2), both before and after its amendment that the prescribed limitation period of five years remains unchanged, however, the Finance Act, 2009 essentially shifted the point from which the limitation is to run from, moving the commencement from the date of issuance of the assessment order to the end of the financial year in which such order was issued or deemed to have been issued. When Impugned Judgment-I is examined in this context, it becomes apparent that the learned Single Judge did not fully appreciate the statutory scheme governing the commencement of limitation under section 122(2) of the Ordinance which explicitly mandates that no order under subsection (1) shall be amended by the Commissioner after the expiry of five years from the end of the financial year in which the Commissioner has issued or treated to have issued the assessment order to the taxpayer. 16. The matter also touches upon the very logic underlying the computation of limitation periods since limitation is inherently tied to the existence of the Uncertified 8 I.C.A No.6/2019 and I.C.A No. 370/2022 to 373/2022 order sought to be amended. It is axiomatic that the department cannot commence the computation of the amendment assessment period from a date when the order itself does not exist. To do so would defeat the conceptual and statutory foundation upon which limitation is structured since logically and legally, the limitation period cannot precede the date when the order was issued, otherwise, the statutory regime of limitation would be rendered illusory. 17. The date of the deemed assessment order which was issued on 15.10.2012 is a crucial factor which was not taken into consideration. The learned Single Judge erred in commencing the limitation from 01.01.2012, which effectively treated the statutory time as running prior to the existence of the order, thereby divorcing the limitation period from the rationale underpinning the limitation itself and the statutory scheme. Section 122(2) clearly ties the Commissioner’s power to amend an assessment to the end of the financial year in which the deemed assessment arises upon filing of the return and this textual interpretation is consistent with the statutory language and the purpose of limitation provisions, which is to ensure finality and certainty for taxpayers. The statutory language of section 122(2) cannot be disregarded and any finding to the contrary is inconsistent with the statutory framework. Thus, we are inclined to hold this as the correct interpretation. Accordingly, in this case the limitation would commence from 01.01.2013 and expire on 31.12.2017. 18. We shall now address the primary contention of the learned counsels for the Department. The primary argument advanced is that the computation under section 122(2) must be read in conjunction with section 74(10) of the Ordinance, which, according to the learned counsels, extends the financial year up to 30th June of the following calendar year. They contend that, in accordance with this interpretation, the limitation period should accordingly be computed from the end of the normal financial year for which reliance was placed on the principle i.e. where a statute prescribes that a thing be done in a particular manner, it must be done in that manner alone, and that, particularly in fiscal matters, Courts cannot import intendments or supply meanings beyond the plain language of the statutory text. Uncertified 9 I.C.A No.6/2019 and I.C.A No. 370/2022 to 373/2022 19. The question that now arises is whether, where a taxpayer has been granted a Special Tax Year under section 74(5), the same should, for all legal and procedural purposes, be treated as concluding on 31st December in accordance with the Special Tax Year, or according to the normal financial year ending on 30th June, if read in conjunction with section 74(10). The determination of the captioned appeals accordingly hinges upon the resolution of this issue which arises from the divergent interpretations advanced by the learned counsels for the Department on the one hand, and learned counsels for the private respondents on the other. In order to address this question it is appropriate to reproduce the relevant provision:- “74. Tax year.- (1) …. …. (10) In this Ordinance, a reference to a particular financial year shall, unless the context otherwise requires, include a special tax year or a transitional tax year commencing during the financial year.” 20. At this juncture it is appropriate to peruse the law relating to interpretation. The Honorable Supreme Court in the case of Syed Mukhtar Hussain Shah vs. Mst. Saba Imtiaz and others, (PLD 2011 SC 260) held as follows:- “It is settled law that definition clause or a section in a statute is meant generally to declare what certain words or expressions used in that statute shall mean, the obvious object of such a clause is to avoid the necessity of frequent repetition in describing all the subject matter to which the word or expression so defined is intended to apply.” In the case of Muhammad Khan vs. Obaidullah Jan Babat and others, (PLD 2016 SC 492) the Honourable Supreme Court held:- “A perusal of the aforesaid reveals that the words and expressions used in a Statute are ordinarily to be interpreted in accordance with their normal dictionary meaning and the same words used in different Sections of the same Statute usually carry the same meaning. Words and expressions may be defined in the Interpretation Clause of Statutes. Such definitions are declaratory in nature and are incorporated to avoid repetitiveness. Normally, such words and expressions occurring in the main provisions of the Statute carry the same meaning, as are available in the definition. However, both the aforesaid general principles are subject to the overriding condition that the said words" and expressions must always be construed with reference to the Uncertified 10 I.C.A No.6/2019 and I.C.A No. 370/2022 to 373/2022 context they are used in the Statutes the subject of provisions wherein they are used and examined with reference to the scheme of the Statute and the intent and purpose to be achieved thereof. The possibility that such words and expressions may have a different meaning in individual Sections of the Statute cannot be entirely ruled out as the meaning of such words and expressions must be construed subject to the context in which they are employed in the specific provision. Usually, definition clauses in the Statutory Instruments are scribed subject to the rider that the words and expressions so defined will carry the meaning ascribed to them where the context and the subject so permit. Where the defined meaning being employed results in an obvious anomaly or absurdity, it is not permissible to mechanically and mindlessly inflict such meaning regardless of repugnancy to the context or the subject, to the words or expressions in the provision sought to be interpreted.” Similarly the Supreme Court of India in the judgment, reported as Commissioner of Sales Tax, Gujarat vs. M/s. Union Medical Agency (AIR 1981 SC 1) expressed a similar view, which reads as under: “14. It is a well settled principle that when a word or phrase has been defined in the interpretation clause, prima facie that definition governs whenever that word or phrase is used in the body of the statute. But where the context makes the definition clause inapplicable, a defined word when used in the body of the statute may have to be given a meaning different from that contained in the interpretation clause; all definitions given in an interpretation clause are, therefore, normally enacted subject to the usual qualification-'unless there is anything repugnant in the subject or context', or 'unless the context otherwise requires'. Even in the absence of an express qualification to that effect such a qualification is always implied." "18. There is no dispute with the proposition that the meaning of a word or expression defined may have to be departed from on account of the subject or context in which the word had been used and that will be giving effect to the opening sentence in definition section, namely 'unless the context otherwise requires'. In view of this qualification, the Court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words in a particular section. But where there is no obscurity in the language of the section, there is no scope for the application of the rule ex visceribus actus. ...” 21. The upshot of the principles enunciated by the Superior Courts is that words and expressions defined in a statute are generally declaratory, intended to provide clarity and avoid repetition, and ordinarily carry the meaning Uncertified 11 I.C.A No.6/2019 and I.C.A No. 370/2022 to 373/2022 ascribed to them in the body of the statute. However, such definitions are always subject to the context, the scheme of the statute, and the purpose sought to be achieved, and where a literal application would result in anomaly, absurdity, or conflict with the subject matter, the court must construe the words in a manner consistent with the statutory context. 22. In the present matter the context itself is evident from the fact that once a taxpayer is accorded a Special Tax Year, he is to be governed by the Special Tax Year since the assessment cycle is naturally delinked from the normal financial year. To construe otherwise would produce an absurd outcome resulting in an irregular situation in which limitation…
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