I. BACKGROUND: (A) TLQC 3682 of 19.8.26 about Super Tax u/s 4C: Adjustment of Valid Tax Credit u/s 168 allowed by FCCP as KC predicted (B) For List of earlier relevant QCs, please refer to Para IV.

II. EXECUTIVE SUMMARY

A. Introduction: The case concerns ------------------------, ITA No. ---------------------- TY -----. The taxpayer challenged a demand of Rs ------------- imposed as 10% super tax under section 4C of ITO, 2001. The taxpayer had declared taxable income of Rs ------------------ and, at the same time, reported an outstanding refundable tax of Rs ---------------. The department imposed the section 4C liability without adjusting the refundable amount against it.

B. Core issue: By the time the appeal was heard, the taxpayer no longer disputed the applicability or computation of super tax. The only substantive issue was whether the taxpayer's outstanding refund could legally be adjusted/set off against the section 4C super-tax liability.

C. Tribunal's reasoning

1. Super tax is under the Ordinance. Section 2(63) defines tax broadly, and section 4C does not exclude super tax from the general statutory framework.

2. The general provisions concerning payment, recovery, refund and adjustment apply to super tax. Section 4C incorporates the relevant provisions of Chapter X, while section 170 provides the mechanism for dealing with excess tax.

3. The department did not dispute the taxpayer's refundable amount of Rs. ----------- million, which was almost six times the super-tax demand. The Tribunal considered it inequitable for the State to retain money admittedly refundable while simultaneously pursuing recovery of a comparatively smaller tax liability.

4. The Tribunal relied, among other authorities, on CIR VS ----------------------- for the proposition that excess tax may be used to reduce another tax liability, subject to the statutory requirements.

5. The Tribunal also treated prolonged withholding of a lawful tax refund while enforcing a tax demand as raising fairness, equity and constitutional property-right concerns, particularly under Article 24 of the Constitution.

C. Final decision: The Tribunal allowed the appeal and annulled the impugned order creating the Rs. ------------ super-tax demand insofar as it refused the adjustment. However, the Tribunal did not grant an unconditional refund/adjustment: the ACIR was permitted to verify the taxpayer's tax payments through ITMS, IRIS, Veri-Tax and FBR Maloomat. If discrepancies are found, the taxpayer must be notified and given an opportunity of hearing.

E. Bottom line: The Tribunal's key holding is that an admissible outstanding tax refund may be adjusted against a section 4C super-tax liability, because super tax falls within the broader concept of “tax” and the adjustment/refund machinery of the Income Tax Ordinance applies to it. The department must, however, first verify the underlying refund claim.

III. DETAILS

A. Reference of issue

1. Further to KQU ----------- of -------------, being an important matter, we would inform you about ------------------------------- (Attachment CS3680.1) in the ensuing paragraph, with emphasis in bold & Underline for quick reading. 

2. Authentication: The document mentioned above is not available on relevant websites, although our team checks all relevant websites twice a day. However, we found the document from reliable resources; hence, the QC is being sent now. 

3. The titled appeal has been filed by the appellant/taxpayer against order dated -----------, passed by the ADCIR, ------------------ a net tax payable amounting to Rs ------------------- was created Against the taxpayer in respect of TY 2024 vide and order passed u/s 4C of ITO.

B. Brief Facts

1 to  5

C. Learned Counsels for the Appearance Parties

On the due date, Mr ----------------, the learned authorized representative [AR] attended the proceedings on behalf of the appellant/taxpayer while Mr ---------------, the learned departmental representative [DR] appeared on behalf of the revenue/respondent.

D. Learned Counsel of the Authorized Representative Submissions

1 to 3 

E. Learned Counsel of the Departmental Representative Submissions

1 & 2  

F. ATIR DELIBERATIONS

1. Issue for Adjudication

1.1 & 1.2 

2. Super Tax as a Component of the Overall Tax Liability

2.1 & 2.2 

3. Outstanding Refund and Departmental Inaction

3.1 & 3.2 

4. Applicability of the Ordinance to Super Tax

4.1 & 4.2 

5. Adjustment of Excess Tax u/s 170

5.1 to 5.3

6. Constitutional Implications of Withholding Refund and Simultaneous Recovery of Super Tax

6.1 to 6.3

7. Islamic Principles, Equity and Protection Against Unlawful Retention

7.1 to 7.3

8. Islamic Welfare State, Economic Justice and Natural Justice

8.1 to 8.2

9. Fiduciary Duty of the State and Protection of Taxpayer Property

9.1 to 9.4

10. Comparative Jurisprudence and the Doctrine of Protected Property Rights

11. Constitutional Protection against Unauthorized Retention of Property

11.1 to 11.3

G. ATIR Decision

1 & 2

IV. LIST OF FURTHER TLQCs MOST RELEVENT ARE MARKED IN BOLD

(a) 3590 of 29.6.26 about Super Tax u/s 4C: WHT adjustment denied but FCCP allowed Interim relief, as KC predicted 

(b) 3609 of 10.7.26 about Super Tax u/s 4C (4): Super Tax on income Difference / rate issue, etc - IHC DB Interim Relief

(c) 3609 of 10.7.26 about Super Tax u/s 4C (4): Super Tax on income Difference / rate issue, etc - IHC DB Interim Relief 

(d) 3665 of 11.8.26 about 4C Super Tax: IHC simultaneous jurisdiciton incorrect with SHC & FCCP Other matters – IHC

(e) 3466 of 8.4.26 about Super Tax, etc: Department must decide Refund claims before Recovery - ATIR unreported order and KC views

(f) 3594 of 30.6.26 about Super Tax u/s 4C: Surcharge stayed where ultra vires declared earlier by IHC - IHC Interim relief as KC predicted and KC views

(g) 3475 of 17.4.26 about Super Tax Default Surcharge recovery stayed - SHC unreported Main Interim order found 

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

(i) 3552 of 11.6.26 about NCCPL Revised CGT & Super Tax Computation for TY 2026 

(j) 3477 of 20.4.26 about Super Tax: No Default Surcharge recovery, without adhering to Section 137(2) - SHC

(k) 3493 of 29.4.26 about Super Tax u/s 4B & 4C: Detailed Order released today in case of DG Khan Cement, etc

(l)3482 of 21.4.26 about Super Tax Section 4C: WHT Adjustment denied against Gross tax by IHC and KC Views & Recommendations

(m) 3488 of 25.4.26 about Super Tax: Deepening controversy - WHT adjustment, etc

(n) 3466 of 8.4.26 about Super Tax, etc: Department must decide Refund claims before Recovery - ATIR unreported order and KC views

(o) 3497 of 30.4.26 about Super Tax 4C: Post U/S 120 Deemed Assessment, Direct Section 4C Order, without U/S 122 is void per ATIR & KC Views

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

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

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

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

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

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

(v) Over 60 other commentaries on various aspects of Super Tax

IV. FURTHER DETAILS & SERVICES

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