SC rejects DHA plea for income tax exemption

The Supreme Court has rejected a plea by the Defence Housing Authority (DHA) for income tax exemption under Section 49 of the Income Tax Ordinance, 2001. A three-judge bench, led by Chief Justice Yahya Afridi, ruled that DHA is not a "local authority" for the purposes of the exemption. The decision upheld the January 14, 2019, ruling of the Islamabad High Court.

The Supreme Court dismissed four civil appeals filed by DHA against the denial of the tax exemption. The appeals related to tax references filed in 2012, with DHA having filed returns for tax years 2005 to 2008. Initially, DHA had claimed exemption under Section 49(2), arguing that it was a local authority. However, the Commissioner (Audit-II) and Additional Commissioner (Audit-II) amended the assessments, treating them as erroneous and prejudicial to revenue.

The Supreme Court disagreed with the high court's interpretation of DHA's status as a local authority. Justice Muhammad Shafi Siddiqui, authoring the judgement, stated that DHA's case did not demonstrate that it possessed the legal attributes of a local authority as defined in Section 49(2).