PHC stops FBR from acting against textile mills.

PESHAWAR -- A single-member Peshawar High Court bench has stopped the Federal Board of Revenue from acting against three textile mills, which have challenged the retrospective application of reduction in tax credit from 10 percent to five percent for industrial units, which had made investment for modernisation and expansion.

Justice Ahmad Ali also directed the three textile mills be allowed to submit their returns manually or by making adjustment in e-portal/computer system as interim arrangement as per un-amended provisions of Section 65-B of the Income Tax Ordinance, 2001.

A petition jointly filed by the Gadoon Textile Mills Limited and two other textile mills had challenged the application of an amendment made to Section 65-B of the Income Tax Ordinance, 2001, through the Finance Act, 2019, whereby tax credit had been reduced to five percent for the tax year 2019 and the amendment had also been applied retrospectively upon the petitioners.

Qazi Ghulam Dastagir, lawyer for the petitioners, said a scheme of tax incentives was introduced through insertion of Section 65 -B in the Income Tax Ordinance (ITO), 2001, in 2010 and the said provision had been amended from time to time.

He said Section 65-B contained two incentives.

The lawyer added that according to the first incentive a tax credit off 10 percent of the investment in an existing industrial undertaking had to be given.

He said the incentive was meant to incentivise investment and expansion of the existing plants through tax credits enabling industrial undertakings to modernise their machinery and compete internationally.

The lawyer said the benefit was initially available in cases where plant and machinery was purchased and installed at any time between June 30, 2010 and June 30...