Section
48. Exemption from tax of newly established industrial undertakings.-
(1) Subject to the provisions of this section, there shall be exempt from the tax payable under this Ordinance so much of the profits and gains derived by an assessee from an industrial undertaking, to which this section applies, as does not exceed an amount computed with reference to the capital employed in the undertaking as hereinafter provided.
(2) This section applies to an industrial undertaking (hereinafter referred to as the "said undertaking") which fulfills the following conditions, namely:-
(a) that it is an undertaking engaged in the manufacture of goods or materials, or the subjection of goods or materials to any such process, ship-building and navigation, or the generation, transformation, conversion, transmission, distribution or supply of electrical energy or hydraulic power; or
(b) that it is an industrial undertaking which is approved by the Central Board of Revenue for the purposes of this section;
(c) that it is set up by a Pakistani company in the areas specified in clauses (119), (120), (121) and (122) of the Second Schedule or in an industrial estate approved by the Central Board of Revenue and located in the territories of Pakistan (excluding Talukas of Karachi and Hyderabad, and Tehsils of Faisalabad and Lahore, and such adjoining areas of Lahore Tehsil as may be notified in this behalf by the Federal Government);
(d) that it employs ten or more workers and involves the use of electrical energy or any other form of energy which is mechanically transmitted and is not generated by human or animal agency; or twenty or more workers and does not involve the use of electrical energy or any other form of energy which is mechanically transmitted;
(e) that it is not formed by the splitting up or the reconstruction or reconstitution of business already in existence or by transfer to a new business of any machinery or plant used in a business which was being carried on in Pakistan at any time before the commencement of the new business; and
(f) that it has commenced commercial production at any time between the first day of July, 1975 and the thirtieth day of June, 1988 (both dates inclusive).
(3) The amount referred to in sub-section (1) is a sum (hereafter in this sub-section and sub-section (4) referred to as the "said sum") equal to ten per cent of the capital employed in the said undertaking;
(4) The said sum shall be subject to an adjustment where the profits and gains of the said undertaking, computed for any year of assessment, cover a period which is less than, or exceeds, twelve months, the adjustment decreasing or increasing, as the case may be, the said sum to an amount bearing the same proportion to the said sum as the said period bears to a period of twelve months.
(5) The profits and gains of the said undertaking shall be computed in the same manner as is applicable to income chargeable under the head "Income from business or profession".
(6) Nothing contained in this section shall be so construed as to exempt from tax any dividend paid, credited or distributed or deemed to have been paid, credited or distributed, by a company to its, shareholders out of profits or gains exempt from tax under this section.
(7) The provisions of this section shall apply in respect of the assessment years commencing with the assessment year relevant to the income year in which the said undertaking has commenced commercial production and ending with-
(a) the assessment year ending on the thirtieth day of June, 1985, or
(b) the assessment year which is the last of the four assessment years next following the assessment year relevant to the income year in which commercial production has commenced, whichever is the later:
Provided that where assessment year referred to in clause (a) is the later, no exemption under this section shall be allowed in respect of any income accruing or arising after the thirtieth day of June, 1983.
(8) Where any exemption is allowed under this section and subsequently it is discovered by the Deputy Commissioner that any one or more of the conditions specified in this section was, or were, not fulfilled, as the case may be, the exemption originally allowed shall be deemed to have been wrongly allowed and the Deputy Commissioner may, notwithstanding anything contained in this Ordinance, recompute the tax payable by the assessee for the relevant year and the provisions of section 65 shall, so far as may be, apply accordingly, the period of ten years specified in sub-section (3) of that section being reckoned from the end of the assessment year relevant to the income year in which the condition or conditions was or were discovered not to have been fulfilled.
(9) The Central Board of Revenue may make rules regulating the procedure for the grant of approval under sub-section (2) and providing for the computation of capital employed in an undertaking for the purposes of sub-section (3) and any other matter connected with, or incidental to, the operation of this section.