IN THE HIGH COURT OF SINDH AT KARACHI

I.T.R.A. No.196 of 2026

I.T.R.A. No.117 of 2026

I.T.R.A. No.23 of 2026

I.T.R.A. No.24 of 2026

(M/s. Orient Energy Systems (Pvt) Ltd.,

versus

Assistant / Deputy Commissioner Inland Revenue)

PRESENT:

Mr. Justice Arshad Hussain Khan

Mr. Justice Amjad Ali Sahito

*****

17.09.2026

Mr. Anwar Kashif Mumtaz, Advocate for the Applicants alongwith Mr. Muhammad Usman Alam, Advocate.

M/s. Sajid Ali Solangi and Muhammad Fahad, advocates for respondent.

O R D E R

ARSHAD HUSSAIN KHAN J; Through these Reference Applications, filed under Section 133 of the Income Tax Ordinance, 2001 (the “Ordinance”), the Applicant has called in question the orders dated 03.04.2026, 27.02.2026 and 10.11.2025 (the latter being common to two ITRAs), passed by the Appellate Tribunal Inland Revenue (“ATIR”), Karachi Bench, in ITA No.120/KB/2026 (Tax Year 2024), ITA No.522/KB/2025 (Tax Year 2018), ITA No.521/KB/2025 (Tax Year 2017) and ITA No.607/KB/2025 (Tax Year 2019), respectively, whereby four (4) questions of law have been proposed for determination by this Court.

2. The primary question of law arising for determination in these Reference Applications is whether tax deducted or withheld at source under Section 153(1)(b) of the Ordinance is adjustable, in terms of Section 168 read with Chapter X thereof, against the liability to Super Tax imposed under Section 4C of the Ordinance.

3. Learned counsel for the Applicant submits that the principal question of law arising in these Reference Applications already stands settled by the Federal Constitutional Court of Pakistan vide judgment dated 30.06.2026, passed in F.C.P.L.A. Nos.1276 and 1277 of 2026 (CM Pak Limited v. Federation of Pakistan & others). Per learned counsel, the Federal Constitutional Court has categorically held that Section 4C(3) of the Ordinance expressly incorporates the provisions of Chapter X thereof, including Section 168, with the consequence that tax deducted or withheld at source is legally adjustable against the liability to Super Tax under Section 4C of the Ordinance.

4. Learned counsel appearing for the Respondent does not dispute the binding effect of the aforesaid judgment rendered by the Federal Constitutional Court of Pakistan, nor does he controvert the position that the legal issue involved herein stands determined in favour of the taxpayers.

5. We have heard learned counsel for the parties and, with their assistance, perused the record as well as the judgment rendered by the Honourable Federal Constitutional Court of Pakistan in CM Pak Limited v. Federation of Pakistan & others (supra).

6. The controversy involved in these Reference Applications no longer remains res integra. The Federal Constitutional Court of Pakistan, while interpreting Sections 4C(3) and 168 of the Ordinance, has held that Section 4C(3) expressly makes all the provisions of Chapter X applicable to the payment, collection and deposit of Super Tax. Since Section 168 forms part of Chapter X, a tax credit available thereunder cannot be excluded from consideration for adjustment against the liability to Super Tax under Section 4C. The Federal Constitutional Court further held that there is no justification for holding that Super Tax payable under Section 4C is incapable of being adjusted against a tax credit available under Section 168, thereby compelling the taxpayer to pursue only the refund mechanism under Section 170 of the Ordinance. In view of the law so laid down, the findings of the Appellate Tribunal Inland Revenue, insofar as they proceed on the premise that Super Tax under Section 4C constitutes a distinct charge against which adjustment of tax credit under Section 168 is impermissible, cannot be sustained. Consequently, the questions of law proposed in these Reference Applications are answered in the affirmative, in favour of the Applicants/Taxpayers and against the Respondent.

7. Accordingly, the impugned orders passed by the Appellate Tribunal Inland Revenue in the respective appeals, to the extent they deny adjustment of tax credit under Section 168 against the liability to Super Tax under Section 4C of the Ordinance, are hereby set aside.

8. The matters are remanded to the competent Taxing Authority to examine and determine, in accordance with law, the respective claims of the Applicants for adjustment of tax credit under Section 168 of the Ordinance. For this purpose, the Taxing Authority shall verify the tax deducted or withheld under Section 153(1)(b) of the Ordinance for the relevant Tax Year(s), including the corresponding evidence of its deduction and deposit into the Government Treasury, and shall further ascertain that the tax credit so claimed has neither already been adjusted or utilized against any other tax liability nor refunded under Section 170 of the Ordinance.

9. Upon such verification, the competent Taxing Authority shall determine and allow adjustment of the admissible tax credit against the liability to Super Tax under Section 4C of the Ordinance, to the extent found legally admissible and strictly in accordance with provisions of the Ordinance as well as the principles laid down by the Federal Constitutional Court of Pakistan in CM Pak Limited (supra).

The Reference Applications, along with all pending applications, stand disposed of in the above terms.

JUDGE

Naveed PA.