I. BACKGROUND

(1) We refer to TLQC in trail, blue, italic and double Line 3466 of 8.4.26 about  Super Tax, etc: Department must decide Refund claims before Recovery - ATIR unreported order and KC views (2) For List of other relevant QCs, please refer to Para E

II. EXECUTIVE SUMMARY 

A. General: The ATIR, Special Bench Lahore, dismissed the appeal of -------------------, a commercial importer of polypropylene granules, against the CIR(A)'s order dated --------------. The assessing officer levied super tax of Rs. ----------------------- u/s 4C of the ITO, 2001, on the appellant's taxable income for TY -----, upheld by CIR(A) except for recomputing default surcharge after crediting prior tax payments. 

B. Appellant's Key Argument: The appellant contended that income tax already paid should be deducted from taxable income before applying super tax rates, arguing that levying super tax directly on taxable income amounts to impermissible "tax on tax," inconsistent with the Ordinance's scheme. 

C. Department's Position: The DR defended the levy as per section 4C, which charges super tax directly on "taxable income" (as defined u/s 9), without any deduction for prior income tax paid. 

D. Tribunal's Ruling

1. Taxable Income Base: Section 9 defines taxable income as total income minus allowable deductions; income tax paid is not a deductible expense. 

2. No Deduction Allowed: Section 4C mandates super tax on taxable income without reducing it by income tax paid; section 21(1)(a) expressly disallows taxes on business profits as deductions. 

3."Tax on Tax" Rejected: Multiple taxes on the same income base are valid; no evidence of tax being added to the base. 

4. Outcome: Appeal dismissed; super Department tax computation upheld as per law.

E. Key Takeaway: Super tax u/s 4C applies directly to statutory taxable income without deducting prior income tax, aligning with plain statutory language and prohibitions under section 9 and 21.

F. KC Views

1. The decision seems to be reasonable and hence, the Department has not filed any appeal with regard allowing credit of tax already paid against Default Surcharge; otherwise both their appeal would have been heard concurrently.

2. -----------------------------

3. The Case does not deal with regard to the issue as to whether against Gross Super Tax liability, taxes paid be adjust and or not, however, considering as per refund adjustment matter TLQC3466, it is evident that withholding tax will also be allowable.

4. However, please refer to our TLQC (to be sent about --HC order ------------------------) about disregarting credit of taxes already paid, though here, there is not appeal by the Tax Department as covered in para 1 above.

III. DETAILS

A. Hearing Details and CIR(A) Order

1 to 2

B. Brief Facts / Case History

1 to 4

C.  Taxpayer / Appellant's Representative Arguments

1 to 3

D. Department's Representative Defense

1 to 3

E. ATIR Deliberation

1 to 6 with several sub-points  

7. Conclusion on Base

In view of the foregoing discussion, we are of the considered opinion that the taxable income determined u/s 9 of the Ordinance constitutes the statutory base for the levy of Super Tax u/s 4C. The law does not permit the deduction of income tax paid or payable from such taxable income for the purpose of computing the Super Tax liability.

8. Department's Methodology Upheld

Accordingly, the methodology adopted by the department in levying Super Tax on the taxable income declared by the appellant is in consonance with the provisions of the Ordinance and does not suffer from any legal infirmity. The objection raised by the appellant, therefore, cannot be sustained.

9. Section 21(1)(a) Disallowed Deductions

9.1 to 9.4

F. Decision

Accordingly, the plea of the appellant that the amount of income tax paid should first be reduced from the taxable income before calculating Super Tax is not supported by the statutory framework of the Ordinance. The department has, therefore, rightly computed the Super Tax on the taxable income declared by the appellant, and the objection raised in this regard is devoid of legal merit. Consequently, the appeal filed by the appellant is hereby dismissed.

IV. LIST OF FURTHER TLQCs ABOUT SECTION 4B/4C 

(a) 3456 of 26.3.26 about Super Tax: FBR targets Rs 100bn Delay Surcharge and KC Views & Recommendations

(b) 3452 of 17.3.26 about Section 4C: FTO directs FBR to adjust Refunds before Recovery u/s 

(c) 3444 of 25.2.26 about Super Tax u/s 4C: Misapplication & Premature Recovery leading to Severe Hardship - LTBA letter

(d) 3443 of 24.2.26 about Super Tax u/s 4C: Irregularities in Enforcement - PTBA letter 

(e) 3439 of 19.2.26 about Super Tax u/s 4B/4C: FCCP Super Shock and Urgent Practical Solutions required

(f) 3435 of 10.2.26 about Super tax u/s 4C: Adjust Demand from Refundable - Tribunal 

(g) 3434 of 4.2.26 about Super tax u/s 4B/4C: Demand challenged on non-rectified ground; Recovery stayed by SHC 

(h) 3431 of 1.2.26 about FCCP Short Order: Sections 4B/4C Super Tax almost intra vires Constitution details

(i) 3433 of 2.2.26 about 4B & 4C Recovery measures, its Economic impact and PTBA recommendations

(j) 3432 of 2.2.26 about Section 4C: FCCP Order's Mr Shabbar Zaidi Comments

(k) 3429 of 29.1.26 about PSX Fallen as KC predicted & may fall more, as 4B & 4C FCCP order 

(l) Over 55 other commentaries on various aspects of Super Tax

V. FURTHER DETAILS & SERVICES

Should you require any clarification or explanations in respect of the above or otherwise, or require Income Tax, Federal & Provincial Sales Tax or Withholding Tax Statement, Advisory, Return Filing or Review services, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com, asif.s.kasbati@professional-excellence.com.