Islamabad, June 12, 2025 – In a significant legal triumph for the Federal Board of Revenue (FBR), the Islamabad High Court has granted the tax authority the right to recover approximately Rs22 billion (USD 78 million) from Pakistan Mobile Communications Limited (PMCL), widely known as Jazz.
This ruling marks a pivotal moment in FBR’s efforts to enforce tax compliance in high-value corporate transactions.
A Division Bench of the Islamabad High Court, headed by Justice Babar Sattar, ruled in favor of the FBR in a tax reference filed by PMCL against the Large Taxpayers Office (LTO) Islamabad. The case centered around a 2018 intra-group asset restructuring involving the transfer of telecom tower assets from PMCL to its wholly owned subsidiary.
The FBR had assessed that PMCL’s transaction—amounting to Rs98.5 billion (USD 940 million)—resulted in an accounting gain of Rs75.9 billion. PMCL, however, claimed the transaction was tax-exempt under Section 97(1) of the Income Tax Ordinance, 2001 (ITO), which permits tax-neutral transfers within a group. The court disagreed, determining that PMCL had failed to meet the critical conditions of Section 97, notably that the written-down value must remain consistent between transferor and transferee.
The court found that PMCL conducted the transaction at fair market value, thereby generating economic gain and violating the terms of Section 97. Consequently, the transfer constituted a taxable event. The judgment also affirmed the FBR’s authority to consider accounting income as part of the taxable base.
This landmark decision reinforces the FBR’s legal standing in pursuing tax liabilities from corporate entities like PMCL. The case was successfully pursued under the leadership of FBR Chairman Mr. Rashid Mehmood. The FBR’s Legal Wing, under Member (Legal IR) Mir Badshah Khan Wazir and Director General (Law) Dr. Ishtiaq Ahmed Khan, has taken active steps to expedite the resolution of revenue cases. The legal team, including Ms. Asma Hamid, ASC, represented the FBR with diligence and expertise.
Furthermore, the court dismissed another PMCL petition against a show cause notice issued under the Federal Excise Act, 2005, and imposed a penalty of Rs100,000, to be paid to the Deputy Commissioner-IR, LTO, Islamabad within four weeks.
This victory reflects FBR’s growing momentum in securing high-stakes tax cases and aligns with the Prime Minister’s directive for swift recovery of state revenue.