Supreme Court upholds tax exemption for Bushra Aitzaz housePakistan

The exemption was claimed under Section 48(1)(a) of the 1963 law, which grants tax exemption for one house owned by either husband or wife. The property in question is House F-6/3, Islamabad.

The majority verdict was authored by Justice Aminuddin Khan and agreed with by Justice Ishtiaq Ibrahim. The majority held that the exemption applies to each spouse individually if both meet the conditions, and that the phrase either husband or wife does not mean only one spouse in a family can claim it.

According to the majority view, the law does not restrict either spouse from claiming an exemption for separately owned properties, and does not forbid a wife from having her own house.

Justice Muhammad Shafi Siddiqui dissented, saying the law means only one spouse could claim the exemption, and that if the wife claimed it, the husband could not.

Bushra Aitzaz Ahsan had claimed the exemption in 1996 for the Islamabad house, which was purchased in May 1996. Aitzaz Ahsan had already taken a tax exemption for his Lahore residence.

The assessing officer rejected her claim on May 29, 2006, and raised a tax demand. The Commissioner Income Tax upheld that decision, and the Income Tax Appellate Tribunal also upheld it.

The Lahore High Court ruled in her favour on October 28, 2019, setting aside all three earlier decisions. The Commissioner Inland Revenue then filed appeals in the Supreme Court.

With the Supreme Court now dismissing those appeals, the Lahore High Court’s ruling stands and the tax exemption for the Islamabad house remains in place.

The ruling settles a long-running question about how the exemption provision should be read when a husband and wife each own a house in their own name.

The majority’s reading means that a spouse who owns a separate house and meets the conditions of the law can claim the exemption independently, rather than the family being limited to a single claim.

The dissenting view would have read the provision more narrowly, limiting the exemption to one spouse in a family.

The case had travelled through the tax authorities and the courts for many years, from the original assessment in 2006 to the Lahore High Court’s decision in 2019 and now the Supreme Court’s verdict.