IN THE SUPREME COURT OF PAKISTAN 
(Appellate Jurisdiction) 
 
 
PRESENT: 
 
 
 
 
MR. JUSTICE MAQBOOL BAQAR 
 
 
 
 
MR. JUSTICE MAZHAR ALAM KHAN MIANKHEL 
 
 
CIVIL APPEAL NO. 723 OF 2013 
(Against 
the 
judgment 
dated 
29.05.2009 of the Lahore High Court, 
Lahore passed in WP No. 1363/2003) 
 
 
The Taxation Officer/Deputy Commissioner of 
Income Tax, Lahore 
Appellant(s) 
 
VERSUS 
 
M/s Rupafil Ltd & others 
Respondent(s) 
 
 
 
 
For the Appellant(s) 
: Mr. Ibrar Ahmed, ASC  
 
 
 
For Respondents No. 1-3 
: Mian Ashiq Hussain, ASC 
 
 
 
Date of Hearing 
: 31.10.2017 
 
JUDGMENT 
 
 
 MAQBOOL 
BAQAR, 
J. 
Through 
the 
impugned 
judgment, a writ petition preferred by the respondents challenging 
the legality and propriety of notices under sub-section (2) of Section 
221 of the Income Tax Ordinance, 2001 (“ITO 2001”) issued, by the 
appellant, requiring the respondents to show cause as to why their 
assessment orders for the assessment years 2000-2001 and 2001-2002 
be not amended/rectified by levying surcharge on the tax levied 
under section 80-D of the Income Tax Ordinance, 1979 (“ITO 1979”), 
has been allowed by a learned Single Judge of the Lahore High 
Court.  
 
2. 
 
The learned Single Judge through the impugned 
judgment, whilst overruling the objections to the maintainability of 
the petition, held that Section 221 of ITO 2001 does not apply to the 
CA 723/2013 
 
 
 
 
2
orders passed under the provisions of repealed Ordinance i.e. “ITO 
1979”. Through Order dated 18.06.2013, this Court was pleased to 
grant leave to appeal in this case, inter alia, to consider the 
following points: 
 
1. 
Whether the provisions of Section 221 of the Income 
Tax Ordinance 2001 can be applied to the assessment 
orders passed under the provisions of the repealed 
ordinance; 
 
2. 
Whether surcharge can be levied on the “minimum 
tax” payable under Section 80-D and other paramateria 
sections of the repealed ordinance; and 
 
3. 
Whether writ petition is maintainable against the 
notice issued under section 221 of the Ordinance 2001 
without availing departmental remedies. 
 
 
3. 
 
In order to appreciate the issue with regard to the 
legality and propriety of invoking Section 221 of the ITO 2001, 
seeking to rectify a mistake in the assessment order made under 
section 62 of ITO 1979, we first need to examine the nature, scope, 
extent, purview and implication of the said provisions which, as 
stood at the relevant time, read as follows:  
221. 
Rectification 
of 
mistakes.---(1) 
The 
Commissioner, the Commissioner (Appeals) or 
the Appellate Tribunal may, by an order in 
writing, amend any order passed by them to 
rectify any mistake apparent from the record on 
their own motion or any mistake brought to their 
notice by a taxpayer or, in the case of the 
Commissioner 
(Appeals) 
or 
the 
Appellate 
Tribunal, the Commissioner. 
 
(2)  
……………………………………... 
 
(3) 
……………………………………… 
  
(4) No order under sub-section (1) may be made 
after five years from the date of the order 
sought to be rectified.  
 
4. 
 
It is indeed true that the above section does not 
expressly provide for its retrospective application but it can well be 
seen from the plain reading thereof that it prescribes procedure for 
CA 723/2013 
 
 
 
 
3
rectification of a mistake in a assessment order and the 
circumstances under which such can be done. The provisions of 
Section 221 of  ITO 2001 thus neither create, nor  take away any 
right or privilege in/or from anyone,  it rather provides for 
rectification of mistake(s) apparent from the record.  It hardly needs 
to be stated that a benefit or advantage, which accrues to one    
at the cost of other due to a blatant mistake, does not create     
any right in the beneficiary to retain the same, unless the act giving 
rise to such benefit, or advantage, by efflux of time prescribed for   
its 
rectification, 
becomes 
a 
past 
and 
closed 
transaction. 
Furthermore 
the 
rectification/amendment 
under 
the             
aforesaid provision may not necessarily be to the disadvantage     
of the assessee/tax payer, but could also be beneficial for him, thus 
the remedy under Section 221 can also be invoked at the instance 
of the assessee/tax payer.  It    is also relevant to note that 
subsection (4) of Section 221 of ITO 1979, prescribes a period of 
limitation, and it is now well settled that the law prescribing period 
of limitation is to be considered as procedural. The said provision is 
thus clearly procedural rather than substantive, though where right 
to commence a proceedings has already become time barred 
then a subsequent enlargement of time through an amendment 
can be of no avail, as with the lapse of time prescribed, the 
transaction becomes a past and closed transaction, vesting a party 
with a right thus accrued which cannot be taken away by a 
subsequent amendment. 
 
5. 
 
Indeed the assessment order sought to be rectified 
through the impugned notices were finalized under Section 62 of 
ITO 1979, between May 2001 and June 2002, whereas ITO 1979 
CA 723/2013 
 
 
 
 
4
prescribed a period of Four (4) years for rectification of the 
assessment made under Section 62 of the said Ordinance. ITO 1979 
was repealed on 30.06.2002, where after, in July 2002, ITO 2002 
came into force. It can therefore be seen, that the period of 
limitation prescribed through Section 156 of ITO 1979 has not 
expired at the time of promulgation of ITO 2001, such period during 
its currency thus stood extended through subsection (4) of Section 
221 of ITO 2001, which provided a period of 5 (Five) years for 
rectification of mistakes, from the date of the assessment order, 
sought to be rectified. It is now well settled that procedural 
amendments apply to all cases which have not become past and 
closed transactions therefore the provisions of section 221 of ITO 
1979 have been rightly invoked in the present case.  
 
6. 
 
Coming to the next question, as to “whether surcharge 
can be levied on minimum tax payable under Section 80-D, and 
other paramateria sections of the repealed Ordinance”, it may be 
noted that under ITO 1979 surcharge was levied and charged in 
terms of the provision of Section 10 which reads as under: 
10. Charge of super tax and surcharge.--- (1) In 
addition to the income tax charges for any year, 
there shall be charged, levied and paid for that 
year in respect of the total income, or any part 
thereof, of the income year or years, as the case 
may be, of every person, an additional duty of 
income tax (in this Ordinance referred to as ‘super 
tax’) and surcharge at the rate or rates specified 
in the First Schedule; (emphasis supplied) 
 
Provided……………………………………………………
……………………………….………………………………
………………………………………………………………. 
 
(2) Subject to the provisions of this Ordinance, the 
total income of any person shall, for the purposes 
of super tax and surcharge, be the total income 
as assessed for the purposes of income tax, and 
where an assessment has become final and 
conclusive for the purposes of income tax for any 
CA 723/2013 
 
 
 
 
5
year, the assessment shall also be final and 
conclusive for the purposes of super tax or 
surcharge, as the case may be, for the same 
year. 
 
(3)……………………………………………………………
………………………………………………………………. 
 
 
A perusal of the above provisions makes it clear that, firstly 
the levy of surcharge was in addition to the income tax charged for 
the relevant year, secondly, such levy was in respect of the “total 
income” of the relevant income year as assessed for the purpose of 
income tax and was to be levied at the rate(s) specified in the First 
Schedule. Whereas in terms of Section 9 of the aforesaid Ordinance 
(ITO 1979), income tax was to be levied and charged in respect of 
the total income of the relevant year and at the rate(s) specified in 
the First Schedule. For the sake of convenience, section 9 of ITO is 
reproduced hereunder: 
 9. 
Charge of Income Tax.--- (1) Subject to 
provisions of this Ordinance, there shall be 
charged, levied and paid for each assessment 
year commencing on or after the first day of July, 
1979, income tax in respect of the total income 
of the income year or years, as the case may be, 
of every person at the rate or rates of specified in 
the First Schedule. (emphasis supplied) 
 
 
7. 
 
It may also be noted here that “total income”, as 
defined by subsection (44) of Section 2 of ITO 1979, “means the 
total amount of income referred to in section 11, computed in the 
manner laid down in this Ordinance, (ITO 1979), and includes any 
income which, under any provision of this Ordinance (ITO 1979), is to 
be included in the total income of an assessee.” It may further be 
noted that Section 11 of ITO 1979 specifies “total income” as the 
one which includes all income from whatever source derived.  
8. 
 
Whereas section 80-D of the said Ordinance, which 
begins with a non-obstante clause, introduced a distinct concept 
CA 723/2013 
 
 
 
 
6
of “minimum tax” which in its nature and scope is clearly 
distinguishable from the nature and scope of “income tax” 
chargeable under Section 9 of ITO 1979. Section 80-D provided for 
charging tax, where the assessee was otherwise, i.e. in terms of 
Section 9 of ITO 1979, either not liable to pay any tax, or the tax 
payable by him was less than one-half percent of its turnover and 
at the rate(s) specified therein and with reference to the turnover of 
the assessee/tax payers. Section 80-D thus reads as under:-  
80D. Minimum tax on income of certain 
persons.--- 
(1) 
Notwithstanding 
anything 
contained in this Ordinance or any other law for 
the time being in force, where no tax is payable 
or 
paid 
by 
a 
company 
or 
……………………………………………………………
……………………………………………………………
…………………… or the tax payable or paid is 
less than one-half percent of the amount 
representing its turnover from all sources, the 
aggregate of the declared turnover shall be 
deemed to be the income of the said company 
or 
a 
registered 
firm, 
……………………………………………………………
……………………………………………………………
………………….. 
and 
tax 
thereon 
shall 
be 
charged in the manner specified in subsection 
(2). 
 
Explanation……………………………………………
………………………………………………………….. 
 
 
 
(2)………………………………………….................. 
 
 
……………………………………………................... 
shall pay as income tax- 
(a) an amount, where no tax is payable or paid, 
equal to one-half percent of the said turnover; 
and 
(b) an amount, where the tax payable or paid is 
less than one-half percent of the said turnover, 
equal to the difference between the tax 
payable or paid and the amount calculated in 
accordance with clause (a). 
 
Explanation……………………………………………
………………………………....................................... 
 
9. 
 
What emerges from the foregoing is that “income tax” 
in terms of Section 9 of ITO 1979 is charged and levied in respect of 
CA 723/2013 
 
 
 
 
7
the total income of the assessee and at the rate specified in the First 
Schedule, whereas Section 80-D of the said Ordinance deals with a 
situation where either no tax is payable by the assessee, or the tax 
payable is less than One-half percent of the amount representing its 
turnover. It thus provides a legal device to levy and charge 
“tax”/”minimum tax” where either no tax is payable, or the tax 
payable is at a specified low percentage, by deeming the 
aggregate of the assessee’s turnover as its income, and at the rates 
specified in the said section itself, and thus section 80-D, unlike the 
provision of Section 9 of ITO 1979, provides for levying “minimum 
tax” where no tax is payable in terms of the later provision, and in a 
certain specified situation, also provides for levying and charging 
tax in excess of what may otherwise be payable under Section 9 of 
ITO 1979. Section 80-D also shifts the very basis of levying tax from 
“total income” to “turnover”, by deeming the same to be the 
income of the assessee, whereas in terms of section 10 of ITO 1979 
surcharge is leviable on the income tax and super tax payable on 
the income tax. There is no provision for charging surcharge in 
respect of any tax levied on the basis of turnover of the assessee 
rather than his total income. As noted earlier, section 80-D provided 
for levying of “minimum tax”/”tax” where either no tax is payable or 
where the tax payable is less than one-half percent of the amount 
representing its turnover. In the former situation, the “minimum 
tax”/”tax” equal to one-half percent of the said turnover, and in the 
latter case, equals to the difference between the tax payable or 
paid and the amount calculated in accordance with the former. 
Both the above situations do not allow for levying any surcharge, as 
surcharge is charged on the income tax only, whereas in the first of 
the above, no income tax is payable, and in the second what is 
CA 723/2013 
 
 
 
 
8
charged by way of “minimum tax”/”tax”, rather than income tax, is 
already in excess of the income tax payable in terms of Section 9 of 
ITO 1979, and therefore there is no justification for levying of any 
surcharge thereon, more so when all and every ingredients 
essentially required for such levy, as discussed earlier, are clearly 
missing.  
 
10. 
 
Although in view of our answering the question 
regarding the levy of surcharge in the negative, the question of 
maintainability of the respondents’ petition before the High Court 
has become redundant, however since leave to appeal was 
granted in the instant case to consider the latter question also we 
would therefore, express ourselves on the same by holding that 
since we have held that Section 221 of ITO 2001 was rightly invoked 
in the present case and the Department was competent to do so 
there was no jurisdictional error in issuing the impugned notices, the 
respondents’ petition was therefore not maintainable.  
 
11. 
 
The appeal is thus, disposed of in the foregoing terms.  
 
  
 
 
 
JUDGE 
 
 
JUDGE 
 
 
 
Announced in open Court on _______________ 
at Islamabad 
 
 
 
 
 
JUDGE 
 
‘APPROVED FOR REPORTING’ 
Rizwan 
 
 
