Karachi, March 4, 2025 – Gatron (Industries) Limited has filed a review petition against the recent Supreme Court of Pakistan ruling in the tax credit case, aiming to secure its claim over investment-related tax benefits.
According to Gatron’s half-year financial statement, the dispute stems from amendments introduced through the Finance Act, 2019. This legislation altered Section 65B of the Income Tax Ordinance, 2001, effectively revoking tax credit eligibility for investments in plant and machinery from tax year 2020 onward. As a result, the Federal Board of Revenue (FBR) also disallowed tax credit claims on Letters of Credit (LCs) that had been opened before June 30, 2019.
Gatron legally contested this amendment before the Sindh High Court, which ruled in favor of the company. The court upheld Gatron’s right to claim a 10% tax credit on investment in plant and machinery based on the pre-amended version of Section 65B for machinery arriving in tax years 2020 and 2021. However, the FBR challenged this verdict by filing petitions CPLA 649-K/2023 and CPLA 665-K/2023 in the Supreme Court of Pakistan.
The Supreme Court delivered a mixed ruling. While it upheld the company’s tax credit claims for machinery that had been purchased and installed by June 30, 2019, it ruled in favor of the FBR for machinery that was not fully installed by that date. In response, Gatron has now filed a review petition with the Supreme Court, seeking reconsideration of the verdict concerning tax years 2020 and 2021.
Additionally, the Additional Commissioner Inland Revenue (ADCIR) issued assessment orders for tax years 2020 and 2021, creating tax demands of Rs. 105.230 million and Rs. 94.804 million, respectively. Gatron has adjusted these amounts against available income tax refunds under protest while continuing its legal battle.
Further, the tax department disallowed expenses amounting to Rs. 74 million under Section 122(5A) of the Income Tax Ordinance, 2001, for tax year 2022. However, due to Gatron’s tax refundable status, no additional income tax demand was raised.
The company’s appeal is currently reserved for order before the Commissioner Inland Revenue Appeals (CIRA). Gatron’s management remains confident that the case will be resolved in its favor, reinforcing its position in the ongoing tax credit dispute.