ISLAMABAD: The Isla­m­­abad High Court has dismissed a petition filed by Meezan Bank Ltd challenging the constitutional validity of Section 4C of the Income Tax Ordinance 2001, upholding the levy of super tax in a dispute involving about Rs11 billion.

The division bench also vacated interim stay orders and dismissed all pen­ding applications, holding that Parliament was constitutionally competent to impose the tax and reaffirming the statutory taxation regime applicable to banking companies.

Meezan Bank, through senior counsel Dr Farogh Naseem, had argued that Section 4C was unconstitutional, discriminatory and amounted to impermissible double taxation as income already taxed under Section 4 of the ordinance was again subjected to super tax. The bank also challenged the retrospective enhancement of the levy and argued that income arising from Islamic financing agreements executed before the introduction or enhancement of Section 4C could not be taxed.

Representing the Fed­eration and the Federal Board of Revenue (FBR), Hafiz Ehsaan Ahmad Khokhar Advocate opposed the petition, raising objections to its maintainability. He argued that the bank had already availed the statutory remedy by filing an appeal before the Appellate Tribunal Inland Revenue (ATIR), Karachi, and therefore could not invoke the IHC’s constitutional jurisdiction. He also contended that the court lacked territorial jurisdiction as the assessment proceedings had been conducted in Karachi.

The bench agreed with the federation’s arguments, holding that liability under Section 4C was determined by income accrued during the relevant tax year rather than the date on which financing contracts were executed. It ruled that the Seventh Schedule made no distinction between conventional and Islamic banks and found no constitutional violation.

Published in Dawn, July 28th, 2026