IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
PRESENT: 
MR. JUSTICE MIAN SAQIB NISAR  
MR. JUSTICE SH. AZMAT SAEED 
MR. JUSTICE MUSHIR ALAM 
 
 
CIVIL APPEALS NO. 150, 151 AND 152 OF 2006 
(Against the judgment dated 22.11.2005 of the Peshawar High 
Court, Peshawar passed in Income Tax References No.117, 118 & 
119 of 2003) 
 
 
Lucky Cement Ltd., having its offices at Lakki Marwat, Dera Ismail 
Khan 
 
…Appellant(s) 
(in all appeals) 
VERSUS 
Commissioner Income Tax, Zone Companies, Circle-5, Peshawar  
 
…Respondent(s) 
(in all appeals) 
… 
For the appellant(s): 
(in all appeals) 
Mr. Khalid Anwar, Sr. ASC 
Mr. M. S. Khattak, AOR 
 
 
For the respondent(s): 
(in all appeals) 
Ghulam Shoaib Jally, ASC 
Raja Abdul Ghafoor, AOR 
 
 
Date of hearing: 
31.03.2015 
… 
JUDGMENT 
 
 
MIAN SAQIB NISAR, J.- The main question involved in 
these matters is:- whether the income received by the appellant 
from the investment(s) made by it of its surplus money into various 
profitable ventures/schemes and the amounts thus realized as 
profits thereupon amount to income from business or income 
from other sources. The facts relevant for the purposes of 
resolution of the noted question are:- the appellant is a public 
limited company (listed at the stock exchange). The main and primary object 
of the appellant was/is to setup/establish and run a cement 
Civil Appeals No.150, 151 & 152 of 2006 
-: 2 :-
factory, however, in its business prudence, the appellant decided to 
not seek and avail any financial support from outside (i.e. financial 
institutions etc.), rather it relied upon its own resources (i.e. the 
deposits/contributions made by the shareholder etc). It may be pertinent to mention 
here that for the accomplishment of the above venture (cement factory), 
the appellant had collected and possessed in its reserves an 
amount of rupees 3.44 billion, which was not required to be used 
immediately (in one go) in lump sum and thus as the amount was 
lying unutilized with the appellant-company in banks or otherwise, 
it (appellant) decided to invest the said amount in certain profitable 
schemes through fund management process/arrangements. In this 
manner, the investments were made and certain profits were 
earned by the appellant during the financial years 1994-95, 1995-
96 and 1996-97. The assessing officer (Deputy Commissioner Income Tax) 
vide order dated 24.3.1997 assessed the income so received by the 
appellant as from other sources under Section 30(2)(b) of the 
repealed Income Tax Ordinance, 1979 (note: the rate of tax on such income was 
different than the rate of tax on income generated from the business of the assessee). 
However, the Commissioner on appeal through its order dated 
30.10.1997 reversed the aforesaid decision and considered the said 
amount as the business income of the appellant. The department 
challenged this decision before the Tribunal which appeal was 
accepted on 29.9.2001, and by setting aside the order of the 
Commissioner Appeals, the order of the Assessing Officer was 
restored. The appellant unsuccessfully assailed the above (two) 
decisions vide tax references before the Peshawar High Court which 
were dismissed through the impugned judgment dated 22.11.2005. 
Civil Appeals No.150, 151 & 152 of 2006 
-: 3 :-
 
Leave in these cases was granted on 24.1.2006 to consider 
the following points:- 
“i) 
Whether earning from investment of surplus money in the 
portfolio and fund management ventures and such other 
activities of the petitioner would be income from the business 
as profit or interest? 
ii) 
Whether learned Division Bench of the High Court has erred 
in law in failing to consider that the Tribunal has erred in 
law treating the net amount received by the petitioner from 
portfolio and fund management ventures and other activities 
as an interest? 
iii) 
What would be the nature of relationship between the 
investor and the Bank when the latter is not responsible in 
case of any loss in case of investment? 
iv) 
Whether learned Division Bench of the High Court failed to 
appreciate that the business undertaken by the petitioner of 
portfolio and fund management ventures/activities was 
inextricably linked to the construction of cement plant and 
such surplus funds earned from the said ventures were 
specifically earmarked for construction of cement plant.” 
 
2. 
 
Mr. Khalid Anwar, learned Sr. ASC, by relying upon 
Article III of the appellant-company’s Memorandum of Association 
has argued that though the primary object and purpose of the 
company was to establish a cement factory and this would be the 
ultimate business of the appellant, however since the constitution 
i.e. the Memorandum of Association of the company permits 
investments to be made for the purposes of its (appellant) business to 
generate income, therefore any profits earned or income generated 
and received through such investments should be taxed as income 
from business, as opposed to income from other sources. For the 
Civil Appeals No.150, 151 & 152 of 2006 
-: 4 :-
ease of reference, he has referred to relevant clauses of Article III of 
the Memorandum of Association of the appellant-company, which 
are reproduced below. 
Clause 1 of Article III ibid reads as follows:- 
“To carry out the design, engineering, procurement, manufacturing, 
delivery, erection, installation, testing and commissioning at site of a 
new, state of the art, plant including all auxiliary and ancillary 
equipment, complete in all respects for the purpose of manufacturing 
PORTLAND 
CEMENT 
as 
per 
Pakistan/British 
standard 
specifications, including all mechanical and electrical equipment 
and controls to ensure a smooth and continuous production clinkers 
and corresponding quantity of ordinary PORTLAND CEMENT.” 
 
Clause 6 of Article III ibid reads as follow:- 
“To invest or otherwise deal with the money of the Company in such 
manner as may from time to time be determined.” 
 
Clause 36 of Article III ibid reads as under:- 
“It is expressly declared that the several sub-clauses of this clause 
and all the powers expressed therein are to be cumulative but in no 
case unless the context expressly so requires is the generality of any 
one sub-clause to be narrowed or restricted by the name of the 
Company or by the particularity of expression in the same sub-
clause or by the application or any rule of construction such as the 
ejusdem generis rule, and accordingly none of such sub-clauses or 
the objects therein specified or the power thereby conferred shall be 
deemed subsidiary or auxiliary, merely to the objects mentioned in 
any other sub-clause of this clause and the Company shall have full 
power to exercise all or any of the powers conferred by any 
provisions of this clause in any part of the world.” 
 
 
It is thus submitted that Clause 6 ibid specifically and 
independently provides and enables the company to make such 
Civil Appeals No.150, 151 & 152 of 2006 
-: 5 :-
investment in addition, the said clause when read in light of 
residuary Clause 36 ibid, makes the investments a permissible 
business activity of the appellant, notwithstanding its primary 
business of establishing the cement factory, therefore all such 
income received by the appellant shall be taxable as the income 
from business and not from any other source. It is also argued that 
the learned High Court has unnecessarily relied upon the judgment 
of this Court reported as The Commissioner of Income-Tax, East 
Pakistan, Dacca Vs. The Liquidator, Khulna-Bagerhat Railway 
Company Ltd., Ahmadabad (PLD 1962 SC 128). Such decision is 
distinguishable on its own facts, and has no relevance and 
application to the proposition in hand. It is further urged that it is 
always the intention of the assessee which is germane and 
expedient for the purposes of deciding and determining whether the 
income generated by it (the assessee) is from the business of the 
assessee or from any other source. It is contended that even the 
earning of interest on investment(s) and the deposits as such, could 
also be a business of a company. And the apt example of this is, 
where investments are made by the banks etc. in certain treasury 
bonds etc. and the income is generated on that account, which for 
all intents and purposes shall be the income from business. In 
support of his plea(s), the learned counsel has made reference to 
the judgment of this Court reported as The Commissioner of 
Income-Tax, West Zone, Karachi and another Vs. Messrs 
Khairpur Textile Mills Ltd. and others (1989 SCMR 61). It is 
also argued that since Clause 36 ibid is a residuary clause and on 
account of the interpretation assigned to such a clause (residuary 
Civil Appeals No.150, 151 & 152 of 2006 
-: 6 :-
stipulation/provision), 
the 
investment(s) 
made 
by 
the 
appellant 
undoubtedly were a business investment and therefore, the same 
cannot be termed to be investment(s) beyond the scope of 
appellant’s business and thus the income from any other source. In 
this regard, the judgments cited are Commissioner of Income-
Tax, U.P. Vs. Basant Rai Takhat Singh ((1933) ITR 197), 
Commissioner of Income-Tax Vs. Govinda Choudhury and Sons 
((1993) 200 ITR 881) and Asiatic Agencies Limited, Karachi Vs. 
Commissioner of Income-Tax (1967 PTD 286). Learned counsel 
has further argued that even a single transaction can be taken as a 
business of the assessee and it is not necessary that there should 
be a series of transactions. Support is drawn from Kanwarlal 
Manoharwal Vs. Commissioner of Income-Tax, Madras ((1975) 
101 ITR 439) and K. Nallathambi Pillai Vs. Commissioner of 
Income-Tax ((1975) 98 ITR 13) for the above submission. 
3. 
 
Contrary to the above, learned counsel for the 
respondent has made reference to Clause 37 of Article III of the 
Memorandum of Association which reads as under:- 
“Notwithstanding anything contained in the foregoing object clauses 
of this Memorandum of Association, nothing herein shall be 
construed as empowering the Company to undertake or indulge in 
the business of banking, finance, investment, leasing or insurance, 
directly or indirectly or any unlawful operations.” 
 
 
On the basis of above, it is argued that this being a 
prohibitory clause, no investments can be made by the appellant 
and the appellant cannot be said to have made the investment(s) 
under question in pursuit of its business venture and resultantly 
Civil Appeals No.150, 151 & 152 of 2006 
-: 7 :-
the amount of the profit accruing to the appellant is assessable as 
income from other sources. It is also argued that according to 
Clause 1 of Article III of the Memorandum of Association, the 
primary/main and key object of the appellant is to establish a 
cement factory and even if it is considered that the investment 
business is permissible, since the same is not ancillary to the main 
business object of the appellant-company, any income generated 
through such investment business is to be taxed as income from 
other sources. 
4. 
 
Heard. Before resolving the proposition in hand, we find 
it expedient to briefly state the nature and legal status/position of 
Memorandum of Association (MOA) and Articles of Association (AOA) 
of a company, the purpose and object of the same, the rules of its 
application 
and 
the 
construction/interpretation 
of 
such 
a 
document. In this regard, several judgments of superior courts 
have shed light and from the gist thereof, it can be held that the 
MOA and Articles of Association when read as a whole are the 
constitution of the company. MOA provides and prescribes the 
object(s) and the purpose(s) for which the company has been 
established and constituted, with specific reference to the business 
and the avocations which it can conduct, carryon and undertake. 
While the AOA are the organizational and governance rules of the 
company which primarily deal with the management affairs. There 
are judgments of the superior Courts to the effect that anything 
done by a company (as the company is a juristic person and has to act through natural 
person i.e. its management) which is beyond the scope of its MOA is ultra 
vires and thus cannot be given any legal sanctity. In order words, a 
Civil Appeals No.150, 151 & 152 of 2006 
-: 8 :-
company cannot engage in a business which is not fairly covered by 
any of its independent objects, or such objects which are ancillary 
and incidental to those for which a company has been created and 
such MOA is duly recognized and accepted, by the regulatory 
body(ies) meant for the incorporation of a company and oversight 
thereof. 
 
It has been noticed and experienced by us for various MOAs 
of different companies that in order to avoid any of its venture 
being declared as ultra vires of the object, besides the main object 
of the company and its ancillary purposes, the latest trend is that 
the company shall incorporate in the MOA certain other objects as 
well which are aloof and independent of its main object/business; 
this is also so because the company might at some point of time 
like to undertake some another or more business, but would be 
precluded from doing so, because of the lack of object and it is 
difficult to have the MOAs changed and altered frequently. 
A company thus may have a primary object and purpose, but 
still there may also be several other objects mentioned in the 
objects clause, and after proper construction of such objects, by 
resorting to the relevant rules of interpretation, it should be 
considered whether those are ancillary to the main object of the 
company or can be held to be independent of each other. It may be 
pertinent to mention here that MOA of a company in law should be 
read and construed liberally and be given a wide meaning through 
literal interpretation of the clause. Since objects are considered to 
be the permissive activities which a company can undertake in 
order to do its business, the same should not be given a restrictive 
Civil Appeals No.150, 151 & 152 of 2006 
-: 9 :-
meaning. In any case, rigid construction of the said document, 
unless and until inevitable and insurmountable, must be avoided. 
5. 
 
In the context of the above, the question whether in the 
instant case, the investments made by the appellant-company are 
pursuant to its business or such investments and the profits 
derived therefrom are from other sources, now needs to be 
determined. But before doing that, we would like to reproduce the 
provisions of Section 30(2)(b) of the Income Tax Ordinance, 1979, 
which are as follows:- 
30.   Income from other sources:- 
……. 
 
(2)  In particular, and without prejudice to the generality 
of the provisions of sub-section (1), the following 
incomes shall, save as otherwise provided in this 
Ordinance, be chargeable under the head “Income from 
other sources”, namely: 
…… 
(b)  “interest, royalties and fees for technical services” 
 
6. 
 
From Clause 1 of Article III of the appellant-company’s 
MOA, as reproduced above, it is clear that the primary and main 
object of the appellant-company is to install, establish and run a 
cement manufacturing plant. This, however, is not the only object 
of the appellant-company, rather there are numerous other 
ventures which are permissible under the objects clause of the 
company. 
Some 
are 
ancillary, 
but 
some 
are 
vividly 
and 
undoubtedly independent; and Clause 6 ibid amongst others falls 
within the latter category.  According to Clause 6, it is 
unequivocally clear that the company is empowered to, and one of 
Civil Appeals No.150, 151 & 152 of 2006 
-: 10 :-
its purposes and objects is “To invest or otherwise deal with the money of the 
Company in such manner as may from time to time be determined”. From a plain 
reading of this clause, it is manifest that investment of the money 
of the company, surplus or otherwise, for the purpose of earning 
income, would be within the pail of permissible business activities 
detailed in the MOA; the decision as to where, how and to what 
extent this money is to be invested, in which scheme and for what 
profit etc. is left for the management to decide in its commercial 
prudence and in the best interest of the company. 
Notwithstanding the above clause, in clause 36 (supra), which 
is a residuary clause, it has been specifically stated that all the 
aforesaid clauses shall be held to be independent objects of the 
company and no objects stated in any sub-clause shall be deemed 
or construed to be subsidiary or auxiliary to any objects mentioned 
in any other sub-clause and that the Company shall have full 
power to exercise all or any of the powers conferred by any 
provisions of this clause in any part of the world. The only 
exception to this general rule of interpretation of the MOA of the 
appellant-company as envisaged by Clause 36 is where the scope of 
sub-clause or object is expressly narrowed down or made 
dependent on any other object/sub-clause. Therefore, while reading 
Clause 6 in light of Clause 36, it may deduced that Clause 6 has 
been considered and held to be an independent object of the 
company as well.  
7. 
 
In light of the above, suffice it to say that Section 
30(2)(b) is only applicable where the investment of money by a 
person has not been made as part of his business activities. Where 
Civil Appeals No.150, 151 & 152 of 2006 
-: 11 :-
money has been invested by a person in his business and profit is 
generated on such an investment, that profit shall, for all intents 
and purposes, be considered to be the profit earned from business 
and not from other sources. 
To elucidate the above, it may be mentioned that if a person 
is engaged in a business of sale and purchase of paintings and 
pursuant to his business activity, he buys a painting worth 
Rs.100/-, sells that out for Rs.150/-, and thus earns Rs.50/- as 
profit, such profit of Rs.50/- shall be considered to be part of the 
income generated from his business. On the contrary, if a person, 
merely interested in collecting paintings for his personal collection, 
purchases one but later sells it at a profit margin, the 
profit/income earned by such person shall be deemed to be income 
from other source as opposed to income from business. The reason 
for this being that his purchase of the property i.e. paintings is only 
for the purposes of his private collection and not as part of any 
commercial/business activity he is engaged in. Therefore, it is the 
object/purpose for which investments are made which is relevant 
and the object, in the case of a company, has to be ascertained 
from its Memorandum of Association and in the case of any other 
individual, from the nature of his business activity. 
8. 
 
As 
regards 
the 
judgment 
reported 
as 
The 
Commissioner of Income-Tax, East Pakistan, Dacca Vs. The 
Liquidator, 
Khulna-Bagerhat 
Railway 
Company 
Ltd., 
Ahmadabad (PLD 1962 SC 128), the learned High Court has 
heavily relied upon this verdict, but to our consideration, the 
judgment is not germane to the facts and circumstances of the case 
Civil Appeals No.150, 151 & 152 of 2006 
-: 12 :-
in hand. The facts in which the aforesaid judgment was rendered 
were that the respondent was a railway company which had 
entered into an agreement with Secretary of State for India in-
council in 1916 for construction and management of railway in 
what was previously East Pakistan. Later on in the year 1948, the 
railway was acquired by the Government of Pakistan. When the 
income tax return for the relevant period was filed by the 
respondent, exemption was claimed under subsections 3 and 4 of 
section 25 of the Income Tax Act. The question before the income 
tax officer was whether income from interest from monies kept in 
banks earned by the company during the relevant assessment year 
would be classified as income from business or from other sources. 
The income tax officer deemed such interest to be part of the 
legitimate business activities of the company. This decision 
however was reversed on appeal and the decision of the appellate 
authority was upheld throughout. The Supreme Court while 
hearing the matter held that per Article 2 and 3 of Memorandum of 
Association of the respondent-company, main business was 
construction and upkeep of the Railway system and though Article 
26 did authorize the company to lend or invest monies belonging to 
it, because such an activity was not company’s (railways) normal 
business. The Supreme Court in that case concluded that each 
case must be decided on its own facts, and in that case the 
circumstances brought out in the evidence did not indicate that the 
receiving of interest on Invested moneys was really included in the 
business-income of the company. The supra case is distinguishable 
from the one in hand because in the instant case, when the various 
Civil Appeals No.150, 151 & 152 of 2006 
-: 13 :-
clauses of the MOA of the appellant-company are construed and 
applied specifically in the presence of Clause 36, it is clear that 
Clause 6 is an independent object of the company and not a mere 
authorization available with the appellant-company to make 
investments which may be narrowed down or confined or deemed 
auxiliary to Clause 1 ibid, which factor it seems was absent in the 
afore cited case (emphasis supplied). 
9. 
 
Now attending to the question raised by the counsel for 
the respondent that the provisions of Clause 37 ibid of the MOA 
specifically prohibits the appellant-company from making any 
investment of its money and carrying on any activity having no 
nexus to its main object for generating income. It may be held that 
unambiguously and undoubtedly the aforesaid is a prohibitory 
clause, it is couched in the negative language and therefore under 
the law of interpretation of statutes, such a provision of law and/or 
a clause appearing in a document (such clause in the MOA) should be 
construed and applied strictly. It should be assessed and 
ascertained as to what is the real intent and object behind such a 
clause, what mischief it has to suppress, circumvent and curb. 
Besides, such prohibitory clause unless no other interpretation is 
possible cannot be used as a tool for obliterating any other specific 
and express provision of the statute or document, (in this case MOA) 
which provision/clause unequivocally, categorically and clearly 
provides a particular act and object of the company as its 
permissible business, which otherwise is also lawful. It should not 
be construed and interpreted that a prohibitory clause in a 
statute/document is prescribed and is designed to render any other 
Civil Appeals No.150, 151 & 152 of 2006 
-: 14 :-
specific provision/clause as nugatory, rather for all intents and 
purposes the rules of harmonious interpretation should be adhered 
and resorted to and all possible efforts should be made to save each 
and every provision of the statute/clauses of MOA (as the case may 
be). In this context we find that Clause 6 supra in very clear and in 
unambiguous terms prescribes that the appellant-company can 
make an investment of its money. The precise words are “To invest 
or otherwise deal with the money of the Company in such manner as 
may from time to time be determined”. The word “deal” appearing in 
the clause is disjunctive and notwithstanding the word invest (note: 
which shall be construed in the preceding part of this opinion not hit by Clause 
37) by itself permits the company to administer and apportion its 
money by ways of putting it in any profit bearing scheme and 
venture and earn income thereupon. Anyhow while interpreting the 
two clauses, we ask a question to ourselves that if Clause 37 was 
not there in the MOA, whether the company could invest its monies 
as its business venture as per the force of Clause 6 ibid. The 
answer we find is in the affirmative i.e. YES. Thus the question for 
consideration and resolution now is if Clause 37 has made the 
otherwise permissible business of the company as impermissible, 
the reply is in the negative, NO. For the above reply, the intent and 
the object of Clause 37 needs some elaboration, and the relevant 
comments in this context are:- that regardless of the empowerment 
of the company to carry out its objects clearly mentioned in the 
preceding part of the MOA; Clause 37 when read independently 
and in isolation of other clause it does debar the company from 
Civil Appeals No.150, 151 & 152 of 2006 
-: 15 :-
undertaking and indulging in the business of banking, finance, 
investment, leasing or insurance or any other unlawful business. 
 
Now for a moment excluding two words appearing in this 
clause from consideration i.e. finance and investment, if the clause 
is read, it is very much clear that a company has been precluded 
and denuded of the authority to undertake (i.e. “to take on an 
obligation or task; to give a formal promise; to make oneself responsible for 
(a person, fact, or the like); a promise, pledge, or engagement” and indulge 
i.e. “to become involved in any activity”), and indulge with the business 
(this is an important word in the clause) of banking, leasing or insurance. 
The word business unmistakably is also directly relevant to the two 
other components of this clause i.e. finance and investment, which 
connotes that the company shall not enter into any business of 
financing, meaning thereby to undertake and indulge into the 
business of financing i.e. providing money to others which concept 
in the commercial parlance and sense is understood to act and 
function as a financing company, or a company indulged in the 
business of lending money. Likewise, there is a prohibition and a 
bar per this clause that the appellant shall not act as an 
investment entrepreneur, or an investment company, by attracting 
and calling upon the public or class of people to invest money with 
it and pay investors, the interest, profit etc. on such investment, so 
as to act as an investment institution. 
 
Clause 37 seemingly has been purposely added in the MOA 
with the clear intent, and as an extra precaution to eliminate any 
doubt that a company while misinterpreting any of its object clause 
might not undertake and indulge into such business which is 
Civil Appeals No.150, 151 & 152 of 2006 
-: 16 :-
expressly covered and falls within the prohibitory domain thereof. 
But where a business of the company is covered expressly by 
anyone or more than one of its lawful objects, and do not clearly 
and unambiguously fall within the prohibitory clause, it is held to 
be beyond the pale of the said clause i.e. 37. Therefore, we are clear 
in our mind that this clause in no way affect, control or annul the 
specific object Clause 6 of the MOA, otherwise it is not conceivable 
that on the one hand the company has assigned to itself a lawful 
purpose and business in the shape of Clause 6, but on the other 
hand itself has nullified the said empowerment by Clause 37. Thus 
for the purposes of interpreting the two clauses the rule of 
harmonious interpretation as mentioned above should apply and 
both be saved for the purposes of serving their own object and 
purpose. Before parting with this point it may be relevant to 
mention here that for the purposes of banking; leasing and for 
insurance the licences are required and the above clause had such 
intent behind and for financing and investment as those are an 
unlawful business which imperially experienced and it is a publicly 
known fact has resulted in bid and critical scams, therefore the 
prohibition was placed in the MOA for such business with a 
purpose of preventing that. In fact the purpose of Clause 37 is to 
discourage, unregulated collection of funds from the public and 
safeguard against financial scams. 
10. 
 
In light of what has been discussed above, we are clear 
in our mind that the amount of profit earned by the appellant-
company from the investment made in the various schemes/banks 
is pursuant to its business activities and, therefore, this profit 
Civil Appeals No.150, 151 & 152 of 2006 
-: 17 :-
cannot be termed to have been accrued from any other source so as 
to attract the application of Section 30(2)(b) i.e. income from other 
source. These appeals, thus, are allowed, the impugned judgment 
of the learned High Court and that of the Income Tax Tribunal is 
set aside. The question of law thus involved in the matter 
accordingly stands answered. 
 
 
 
 
JUDGE 
 
 
JUDGE 
 
 
JUDGE 
Announced in open Court 
on ___________ at ____________ 
Approved For Reporting 
Waqas Naseer/* 
Civil Appeals No.150, 151 & 152 of 2006 
-: 18 :-
 
SH. AZMAT SAEED, J.- The brief facts necessary 
for adjudication of the lis at hand are that the Appellant is a 
limited 
Company, 
incorporated 
under 
the 
Companies 
Ordinance, 1984. The primary object of the Company was to 
setup a Cement Manufacturing Plant. It was incorporated on or 
about 18.09.1993 and commenced its business on 22.11.1993. It 
appears that from its surplus funds, investments were made in 
various Banks and Financial Institutions. Such investment was 
yielded income in the Assessment Years 1994-95, 1995-96 and 
1996-97. In the audited Statement of Accounts, the Appellant set-
off the income so realized against its unallocated capital 
expenditure. The Deputy Commissioner Income Tax (DCIT) 
issued a notice to the Appellant under Sections 61/62 of the 
Income Tax Ordinance, 1979 to show cause as to why the income 
realized from the aforesaid investments of surplus money 
should not be treated as “income from other sources” in terms of 
Section 30 of the Income Tax Ordinance, 1979. Explanations were 
offered by the Appellant, which was not accepted. However, the 
CIT Appeals accepted the contentions of the Appellant 
whereafter the Department invoked the jurisdiction of the 
Tribunal, which vide its decision dated 29.9.2001 held that the 
income realized by the Appellant from the surplus fund placed 
Civil Appeals No.150, 151 & 152 of 2006 
-: 19 :-
in the Financial Institutions was to be treated as “income from 
other sources”. The Appellant filed three separate Tax 
References i.e. T.R. Nos.117 to 119 of 2003 before the learned 
Peshawar High Court, against the consolidated order of the 
Tribunal. The said Petitions were dismissed vide judgment 
impugned dated 16.11.2005. Whereafter, the Appellant invoked 
the jurisdiction of this Court by filing Civil Petitions Nos.38 to 40 
of 2006 wherein leave to appeal was granted vide Order dated 
24.01.2006.  
2. 
 
Upon hearing the learned counsels and after perusal 
of the available record, it is evident that it is common ground 
between the parties that the amounts realized by the Appellant 
Company from the funds placed with the various Banks and 
Financial Institutions is income. The only matter in controversy 
is whether such amounts are to be treated as “Business Income” 
or “income from other sources”. It is the case of the Appellant 
that by virtue of its Memorandum of Association (MOA), more 
particularly, sub-clause 6 thereof the Appellant Company is 
authorized and entitled to invest its money and such venture is 
one of the declared objects of the Company. Furthermore, each 
and every object of Company as set out in the various sub-
clauses of the MOA, by virtue of sub-clause 36 must be 
Civil Appeals No.150, 151 & 152 of 2006 
-: 20 :-
construed independently unrestricted by any other sub-clause, 
including sub-clause I, identifying the main Business of the 
Company, sub-clauses 6 and 36 are reproduced herein below for 
ease of reference: 
“6. 
To invest or otherwise deal with the 
money of the Company in such manner as 
may from time to time be determined.” 
 
“36. It is expressly declared that the several 
sub-clauses of this clause and all the powers 
expressed therein are to be cumulative but in 
no case unless the context expressly so 
requires is the generality of any one sub-
clause to be narrowed or restricted by the 
name of the Company or by the particularity 
of expression in the same sub-clause or by the 
application or any rule of construction such as 
the ejusdem generis rule, and accordingly 
none of such sub-clauses or the objects therein 
specified or the power thereby conferred shall 
be deemed subsidiary or auxiliary, merely to 
the objects mentioned in any other sub-clause 
of this clause and the Company shall have full 
power to exercise all or any of the powers 
conferred by any provisions of this clause in 
any part of the world.” 
 
3. 
 
While, on the other hand, it is the case of the 
Department that all the sub-clauses of the MOA are qualified by 
sub-clause 37, which in no uncertain terms states the object 
clauses of the MOA cannot constrained to empower the 
Company to indulge in inter alia the Business of Investment. 
Thus, the income derived by the Company from the investment 
in Banks and Financial Institutions cannot be deemed to be 
Civil Appeals No.150, 151 & 152 of 2006 
-: 21 :-
income derived from the “Business” of the Company but in fact 
is “income from other sources”. For ease of reference, sub-clause 
37 is reproduced hereunder: 
“37. Notwithstanding any thing contained in 
the 
foregoing 
object 
clauses 
of 
this 
Memorandum of Association, nothing herein 
shall be construed as empowers the Company 
to undertake or indulge in the business of 
banking, finance, investment, leasing or 
insurance, directly or indirectly or any 
unlawful operations.” 
 
4. 
 
The MOA of a Company is undoubtedly its Charter, 
which identifies the objects of the Company the business to be 
undertaken and the powers conferred upon the Company. 
Subject to the tenor of the MOU, one mode of interpretation the 
same would be to identify the primary or normal business of the 
Company and treat all other powers enumerated therein as 
pertaining or subservient to the such normal business and any 
income derived through exercise of such incidental powers was 
not treated as Business Income for tax purposes. Reference in 
this behalf may be made to the judgment of this Court, reported 
as Commissioner of Income Tax, East Pakistan Dacca Vs. The 
Liquidator, Khulna Bagerhat Railway Company Limited, 
Ahmadabad (PLD 1962 SC 128), wherein it has been held as 
follows: 
Civil Appeals No.150, 151 & 152 of 2006 
-: 22 :-
 
“We have considered the various Articles by 
which this Company was governed. We have 
no hesitation in agreeing with the view of the 
High Court that the normal business of the 
Company was the construction and the 
running of the Railway and not investment of 
its moneys on interest. Other powers were 
also given to the Company by the Articles of 
Association, but it is not contended that all 
those powers pertained to the earning of 
normal business income. If the Company, 
instead of retaining its surplus moneys in idle 
condition, invested them under the powers 
given to them by their Articles of Association, 
it would not follow that the income so derived 
would be part of the Company’s normal 
business income. Each case must be decided 
on its own facts and, in the instant case, the 
circumstances brought out in the evidence do 
not indicate that receiving of interest on 
invested moneys was really included in the 
business income of the Company.” 
 
5. 
 
A Company can be incorporated to carry on multiple 
business. Furthermore, the object clauses of the MOA can be 
scribed so as to be read independently, unfettered by the other 
clauses, including the clause identifying the primary or normal 
business as has been attempted to be done in the instant case 
through sub-clause 36 reproduced hereinabove. But, be that as it 
may, we cannot ignore or avoid giving effect to sub-clause 37 
(reproduced herein above). The said sub-clause is prefixed with 
the word “Notwithstanding” which defines in Black’s Law 
Dictionary Ninth Edition to mean “Despite” or “in spite of”. 
Civil Appeals No.150, 151 & 152 of 2006 
-: 23 :-
6. 
 
On a plan reading, sub-clause 37 states in unequivocal 
terms states that in spite of anything contained any of the object 
clauses (including clause 6 and clause 36) nothing therein shall 
continued to empower the Company to undertake or indulge in 
the Business of inter alia Investment. Such is the clear and 
unambiguous import and meaning of sub-clause 37. To attribute 
to the said sub-clause any other meaning would require 
inflicting extreme violence on the plain language. In the 
circumstances, the accumulative effect of the MOA, more 
particularly, sub-clause 6, 36 and 37, which read together would 
be that the Appellant Company is empowered to invest its 
money but such a transaction cannot be deemed to be Business 
of Company; consequently, the income derived from such 
investment cannot qualify as Business Income and therefore 
must fall in the category of “income from other sources” as has 
been correctly held by the Tribunal and the High Court by way 
of the impugned judgment. Hence, these Appeals are liable to be 
dismissed.    
 
Judge 
Civil Appeals No.150, 151 & 152 of 2006 
-: 24 :-
 
 
Mushir Alam, J-. I had the privilege and benefit of reading 
the opinion of two very learned brothers (Mian Saqib Nisar, J and Sh. 
Azmat Saeed, J). I concur with the conclusion drawn by my learned 
brother Justice Sh. Azmat Saeed. However, I would like to supplement my 
own reasons for the same.  
 
2. 
 
Facts of the case are straightforward and simple. Appellant-
Lucky Cement Ltd, which is a public limited company, with authorized 
capital of Rupees Three Billion was incorporated on or about 18.9.1993 for 
the purpose of inter-alia to setup a cement plant to manufacture “Portland 
Cement”. To set up cement plant, Appellant had raised capital/funds, 
during the period of construction of cement plant, surplus funds not 
immediately required by it, were invested in various financial institutions. 
Period of investment comprised of three assessment years i.e. 1994-95, 
1995-96 and 1996-97. Investments of funds were specifically permitted by 
Clause 6 of its Article and Memorandum of Association. For the subject 
three assessment years, no business was carried out as the cement plant 
was under construction. Appellant, however, declared income, in all three 
assessment years, earned from interest (earned through Pak Rupee 
Currency investment and Foreign Currency Investments). In the audited 
statement of account, the Appellant set off the aggregate of the sum so 
realized from the financial institutions against unutilized capital 
expenditure, which also included the financial charges and capitalized the 
balance claiming to have reduced the project cost. 
 
3. 
 
The Deputy Commissioner of Income Tax, Circle-18, Zone-A, 
Peshawar (DCIT) rejected the claim of Appellant that the interest income 
was not liable to be taxed vide order dated 24.07.1997 and assessed the 
interest income under Section 30 (2)(b) of the Ordinance, 1979 so received 
by it under the head “from other sources.” It was held that “the Company 
does not enjoy exemption under any clause of the 2nd Schedule to the 
Income Tax Ordinance, 1979”. It was further held “that income earned on 
account of income on interest and other investments are liable to tax and 
is treated as “income from other sources”. It may be observed that interest 
income earned from Foreign Currency investment was not taxed being 
exempted vide Section 5 of the “Protection of Economic Reforms Act, 1992. 
However, the Commissioner of Income/Wealth Tax, Appeals [CIT (A)], on 
Civil Appeals No.150, 151 & 152 of 2006 
-: 25 :-
Appeal by the Appellant company, reversed the finding of the DCIT, vide 
order dated 30.10.1997 and, held that “Income earned was directly related 
to the main business of setting up of cement project”, hence “the appellant 
had correctly offset the said income against the cost of the project”. 
Income Tax Appellate Tribunal (ITAT) accepted the Appeal filed by the 
CIT(A), placing reliance on the case of Commissioner of Income Tax, East 
Pakistan, Dacca v. The Liquidator, Khulna Bagerhat Railway Company 
Ltd. Ahmadabad (PLD 1962 SC 128) and, held that the main business of 
the Assessee is to earn income from manufacture and sale of cement and 
though clause 6 of the Article of Association, allows the Company to invest 
surplus money but in view of the observation in the cited case, it cannot be 
included in the normal business of the respondent (Lucky Cement), which 
were unsuccessfully subjected to Tax References No.117, 118 and 119 of 
2003 by the Appellant company under Section 133 of the Income Tax 
Ordinance, 2001. All the three References were dismissed by the Peshawar 
High Court vide impugned judgment dated 22.11.2005 (reported as Lucky 
Cement v. CIT Zone Companies Circle Peshawar 2006 PTD 578).  Leave in 
all the three cases was granted vide order dated 24.1.2006, which has been 
reproduced in the opinion of my learned brother (Mian Saqib Nisar, J) 
and thus need not be reiterated herein. 
 
4. 
 
Pivotal question that clichés the controversy in hand is 
whether the income (interest) earned by investing surplus fund not 
immediately required by the Appellant, during the period of construction 
of cement plant, in various financial institutions, either falls under the 
head “Income from business and profession per Section 15(d) and 
chargeable to tax under Section 22 or “Income from other sources” and 
chargeable to tax under Section 30 of the Ordinance, 1979. 
 
5. 
 
Total income of the Appellant-company under the Ordinance, 
1979 is chargeable to tax under Section 9 thereof. Head of income for the 
purpose of charging tax and computation of total income are classified in 
six sub-heads under Section 15 of the Ordinance, 1979, manner of 
computing income on each head is further detailed in separate provision as 
mentioned in the tabulation below. 
Head of income  
 
 
Charging Provision 
U/s 15 of Ordinance, 1979 
 
 
 
 
a). Salary 
…………………………………………….Section 16. 
 
Civil Appeals No.150, 151 & 152 of 2006 
-: 26 :-
b). Interest on Securities 
 ……………………Section 17. 
c).Income from house property……………………..Section 19. 
d).Income from business and profession…..……Section 22. 
e).Capital Gain …………..………………………………Section 27. 
 
 
f). Income from other sources….……………………Section 30. 
 
 
 
6. 
 
As noted above, computation of income falling under any of 
the heads as enumerated above is chargeable to tax under provision 
specified against each head. Admissible and inadmissible allowances and 
deductions are catered for each of the six sub-heads of income separately 
under the Ordinance, 1979. Any exemption, concession, deduction and or 
adjustment or set off on account of expenditure is permissible as per 
provisions of the Ordinance, 1979 and not otherwise. Generating income 
that may fall under any of the six sub-heads as noted above, does not affect 
its taxability in any manner whatsoever irrespective of application of such 
income for the payment of interest, adjustment and or setting off on 
account of expenditure etc. 
 
7. 
 
It may be observed that a corporate entity like Appellant, have 
vast portfolio to operate upon under its Article and Memorandum of 
Association. A corporate entity or for that matter any person/assessee may 
have more than one source of income, each falling in any of the six sub-
heads enumerated under section 15 ibid. Income falling under any of the 
six sub-heads is charged separately under different provisions of the 
Ordinance, 1979 as mentioned against each sub-head of income as noted 
above. 
 
8. 
 
It may so happen, as in the instant case, that a company 
incorporated to undertake any commercial or business venture has not yet 
commenced its main business or commercial activity that may yield any 
income, may generate income from other sources, like renting out part of 
its premises, which is not yet put to use during period of completion of its 
factory/cement plant and or by purchasing and selling any real estate using 
its surplus fund and or by renting it out, and or by utilizing its surplus fund 
in any other commercial proposition including and not limited to placing 
such funds in fixed deposit or profit bearing scheme in any financial 
institution and or by investing in stock or securities etc. as may be 
permissible under its Article and Memorandum of Association. As has 
happened in the case in hand, to generate more revenue or earn interest or 
profit, Appellant Company, in its commercial prudence and rightly so, 
Civil Appeals No.150, 151 & 152 of 2006 
-: 27 :-
instead of keeping its surplus money idle, “chose to employ such fund in 
proactive manner in order to generate additional fund”, invested its 
surplus funds “by way of portfolio, fund and cash management venture”.  
It is Appellant’s case that “by an active trading (buying and selling) of 
these financial assets, the Appellant was able to earn substantial amount 
by way of return”.   
 
9. 
 
As noted in the narrative above, DCIT disallowed the claim of 
the Appellant Company to set off the aggregate of the sum so realized from 
the financial institutions against unutilized capital expenditure, which also 
included the financial charges and capitalized the balance claiming to have 
reduced the project cost, which triggered controversy in hand. The decision 
of the DCIT was reversed by the CIT(A), however ITAT, restored the 
finding of the DCIT.  
 
10. 
 
The controversy that has drawn attention of this Court in 
instant case is ‘whether the “interest income” generated “by way of 
portfolio, fund and cash management venture” falls under clause (d) and 
or (f) of Section 15 of the Ordinance, 1979’. As noted above, income within 
taxable slab may fall under any of the six sub-heads enumerated under 
Section 15 ibid; are liable to be taxed in accordance with respective 
charging provisions, unless specifically exempted by law under Section 14 
read with schedule 1 of the Ordinance.  
 
11. 
 
For the purpose of controversy in hand, phrases “Income from 
business” (clause-d) and “Income from other sources” (clause-f) are 
relevant. “Business” is defined under Section 2(11) of the Ordinance, 1979 
“to include any trade, commerce or manufacture, or any adventure or 
concern in the nature of trade, commerce or manufacture.  As noted above 
each head of income enumerated in Section 15 ibid is charged separately 
under respective charging section. Charging provision for the purposes of 
income from business falling under clause (d) of Section 15 ibid;   is Section 
22 of the Ordinance, 1979, which provides “income” that shall be 
chargeable under the head of income from “business or profession” as 
follows:- 
 
(a) 
Profits and gain of any business or profession carried 
on, or deemed to be carried on, by the assessee at any 
time during income year 
Civil Appeals No.150, 151 & 152 of 2006 
-: 28 :-
 
(b) 
Income derived by any trade, profession and similar 
association from specific service performed for its 
members; and 
 
(c) 
Value of any benefit or perquisite, whether convertible 
into money or not, arising from business or exercise of 
profession. 
 
Explanation : Where speculative transaction carried on by an 
assessee are of such a nature as to constitute a business, the 
business, the business (hereinafter referred to as “speculation 
business”) shall be deemed to be distinct and separate from 
any other business carried on by the assessee.” 
 
12. 
 
Income from “other sources” chargeable to tax per clause (f) of 
Section 15 is further elaborated in Section 30 of the Ordinance, 1979, which 
reads as follows:- 
“30. 
Income from other sources: (1) Income of every 
kind which may be included in the total income of an 
assessee under this Ordinance shall be chargeable under 
the head “Income from other sources”, if it is not included 
in his total income under any other head. 
 
(2) 
In particular, and without prejudice to the 
generality of the provisions of sub-section (1), the 
following income shall, save as otherwise provided in this 
Ordinance, be chargeable under the head “Income from 
other sources” namely, 
 
(a) 
dividend; 
(b) 
interest, royalties and fees for technical 
services; 
(c) 
ground rent; 
(d) 
income from the hire of machinery, plant or 
furniture, belonging to the assessee and also 
of buildings belonging to him if the letting of 
the building is inseparable from the letting of 
the said machinery, plant or furniture; and 
(e) 
any income to which sub-section (12) of the 
Section 12 or Section 13 applies.” 
 
13. 
 
Contentions of Mr. Khalid Anwar, learned senior ASC for the 
Appellant, that though primary object of the Appellant Company per object 
No.1 set out in the Memorandum of Association of Appellant Company was 
to install “state of the art plant” for the purpose of manufacturing 
“PORTLAND CEMENT”. It was urged that surplus money lying idle, during 
the three assessment year, when the cement plant was under construction, 
as business prudence would have demanded, were invested to earn interest 
to mitigate cost of installation of plant, cannot be termed anything but 
income from business. It was urged that investment of the surplus fund of 
Civil Appeals No.150, 151 & 152 of 2006 
-: 29 :-
the Appellant company from part of the business activity is permissible 
under clause 6 of its Article and Memorandum of Association.  
 
14. 
 
The controversy raised is not new, in our jurisdiction. Similar 
controversy prevailed in Indian jurisdiction, was resolved by the Supreme 
Court of India in the case titled as Tuticorin Alkali Chemicals and 
Fertilizers Ltd. v. Commissioner of Income Tax, 1997 Supp. (1) SCR 528 
(also reported in 1998 PTD 900). In the cited case also the company raised 
funds for setting up plant for manufacturing heavy chemicals, utilized its 
funds, which were not immediately required by the company in short term 
deposit with the bank, such investment was specifically permitted under its 
Article and Memorandum of Association. In said case, also the company 
initially set off the interest income against the business loss, claimed 
benefit of carry forward of net loss, however, later filed revised return and 
claimed that interest and other finance charges along with other pre-
production expenses will have to be capitalized, and that the interest 
income should go to reduce the pre-production expenses, which would 
ultimately be capitalized. The Supreme Court of India, considered large 
number of conflicting decisions of various High Courts and approved the 
judgment rendered by the Madras High Court in the case reported as 
Commissioner of Income Tax v. Seshasayee Paper & Board Ltd. (156 ITR 
543), wherein it was held that “the interest earned by the assessee from the 
bank deposit had to be assessed under the head “Other sources”. 
 
15. 
 
Position in Pakistan is no different. Similar controversy has 
arisen in the case of Commissioner of Income Tax v. Liquidator Khulna-
Bagerhat Railway Company Ltd (PLD 1962 SC 128) wherein this Court 
confronted with proposition similar to one in hand and resolved the same 
at page 132 as follows:- 
 
“We have considered the various Articles by which 
this Company was governed. We have no hesitation in 
agreeing with the view of the High Court that the normal 
business of the Company was the construction and the 
running of the Railway and not investment of its moneys 
on interest. Other powers were also given to the Company 
by the Articles of Association, but it is not contended that 
all those powers pertained to the earning of normal 
business-income. If the Company, instead of retaining its 
surplus moneys in idle condition, invested them under the 
powers given to them by their Articles of Association, it 
would not follow that the income so derived would be part 
of the Company’s normal business-income. Each case 
Civil Appeals No.150, 151 & 152 of 2006 
-: 30 :-
must be decided on its own facts and, in the instant case, 
the circumstances brought out in the evidence do not 
indicate that the receiving of interest on invested moneys 
was really included in the business-income of the 
Company. We are, therefore, of the opinion that the view 
taken by the High Court is not open to any legal exception. 
The appeal fails and is hereby dismissed with costs.” 
16. 
 
In another judgment reported as Genertech Pakistan Ltd v. 
Income Tax Appellate Tribunal of Pakistan (2004 SCMR 1319), wherein 
facts are somewhat similar to the facts in instant case, the assessee 
company, received share capital from various sharers for the purpose of 
setting up “Electric Generation Project”, and instead of keeping the money 
idle, deposited said amount in the Bank. The amount so deposited earned 
interest. The company showed “nil” profit from power generation, 
however, at the same time claimed exemption from payment of tax on the 
interest earned from the Bank under item 176 of the 2nd Schedule of the 
Ordinance, (which inter-alia exempted from tax any “Profit and gain 
derived by an assessee from an electric power generation project set up in 
Pakistan on or after 1st day of July 1988).  Stance of the company was not 
accepted by the DCIT and the interest earned was treated as "income from 
other sources”, and was taxed accordingly, which assessment order was 
concurrently maintained up to the High Court. Controversy landed in this 
Court, which examined all the relevant provisions and came to a conclusion 
as recorded in paragraphs 9  and 11 thereof at page 1323 as follows:- 
“9. 
Now question for consideration is as to whether 
interest earned by the appellants from the share capital 
deposited in the Banks does fall within the scope of 
“income from other sources” under section 30 of the 
Ordinance. To answer the proposition it is to be borne in 
mind that Item 176 of Second Schedule of the Ordinance 
provides in clear terms that “profits and gains derived by 
an assessee from Electric Power Generation Project, set up 
in Pakistan on or after 1st of July, 1998 shall be exempted 
from total income tax.” Essentially, profits and gains from 
the Electric Power Generation Project is distinct and 
different from the interest being obtained by the Company 
on the deposit of share capital in the Banks, during the 
financial years for which the return of income under the 
relevant provision of Ordinance is filed and the exemption 
is claimed from the payment of income tax under Item 176 
of Second Schedule of the Ordinance. It is informed that 
Electric Generating Plants of appellants-companies had 
started functioning in 1994-95 but they instead of 
claiming exemption on the profits/gains from Power 
Generation, claimed it from the deposit of the share 
capital lying in the Banks. It is to be seen that no sooner as 
a Company goes in production it cannot claim exemption 
of income tax on the interest of share capital deposited in 
Banks because on commencement of the production, 
Civil Appeals No.150, 151 & 152 of 2006 
-: 31 :-
profits and gains are to be earned out of the income of 
Electric Generation independently. 
11. 
But in instant case, position is altogether different 
because the share capital deposits in the Banks by the 
appellants are providing a separate income to them after 
post production stage of the Power Generating activity, 
therefore, on the income of interest no exemption can be 
claimed by the appellants under Item 176 Second Schedule 
of the Ordinance as it is a different income from the 
profits/gains being earned from post production activity 
of power generation.” 
17. 
 
In another case reported as CIT, Karachi v. Gelcaps (Pvt) Ltd 
(2009 PTD 331), a learned Division Bench confronted with similar 
proposition, examined large number of cases from Pakistani and Foreign 
jurisdiction in detail and came to following conclusion in Paragraph 38 at 
page 350; as follows:- 
 
“38. 
We fully agree with the reasoning contained in the 
above two judgments of the Patna High Court and hold 
that the interest income earned by the assessee in the two 
cases before us on short-term deposit out of the capital 
borrowed for the establishment of industry is not income 
from business but is income from other sources and 
cannot be allowed to be adjusted against the interest paid 
on the borrowed capital for the simple reason that the 
interest paid on the borrowed capital is to be capitalized 
and there is no provision in law whereby income earned 
under the head “other sources” can be permitted to be 
adjusted against the expenses which are to be capitalized.” 
18. 
 
In a more recent judgment reported as UCH Power (Pvt) Ltd 
v. Income Tax Appellate Tribunal (2010 SCMR 1236), this Court once 
again reaffirmed the principle enunciated in the case of Tuticorin Alkali 
Chemicals (1998 PTD 900); Gelcaps (Pvt.) Ltd (2009 PTD 331) and 
Genertech Pakistan Ltd (2004 SCMR 1319), already noted in the preceding 
paragraphs above.  
  
19. 
 
On examining the scheme of the Income Tax Ordinance, 1979, 
case law on the subject, consensus that emerges is that during the period or 
course of setting up of a factory or plant by the company, activity of 
investing surplus funds of the company and generating any sum, return or 
interest on such investment, could not be considered as “Income from 
business” under clause (d) of Section 15 of the Ordinance, 1979. Fact 
remains in the words of the Appellant, surplus funds in the hands of 
appellant company were employed “in proactive manner in order to 
generate additional fund”, invested its surplus funds “by way of portfolio, 
fund and cash management venture”.  It is Appellant’s case that “by an 
Civil Appeals No.150, 151 & 152 of 2006 
-: 32 :-
active trading (buying and selling) of these financial assets, the Appellant 
was able to earn substantial amount by way of return”. Such activity was 
carried out during the period cement plant/factory was under construction, 
therefore, the Appellant, under facts and circumstances cannot be said to 
be carrying on any business within the contemplation of Section 22 of the 
Ordinance, 1979. When income does not fit in any of the five sub-heads 
enumerated in clauses (a) to (e) of Section 15 of the Ordinance, 1979 and 
falls under the residuary sub-head of “Income from other sources”  i.e. 
clause (f) of Section 15 ibid, the  DICT, under the given facts and 
circumstances, was justified to treat the “interest” income yielding from the 
investment of the surplus funds of the company  as “Income from other 
sources”  and rightly assessed the same under Section 30 (2)(b) of the 
Ordinance, 1979, which was rightly sustained by the ITAT and so also by 
the learned Division Bench of the High Court.  
 
20. 
 
Consequently, the appeals do not merit consideration and are 
dismissed.  
 
Judge 
 
Civil Appeals No.150, 151 & 152 of 2006 
-: 33 :-
ORDER OF THE BENCH 
 
 
By majority of two to one, these appeals are, accordingly, 
dismissed. 
 
 
Judge 
 
 
Judge 
 
 
Judge 
 
Announced in open Court 
on 10th July 2015 at Islamabad 
 
 
(Judge)