Supreme Court Favors Coca-Cola Pakistan in Long-Running Tax Dispute
Nov 12, 2025
The Supreme Court of Pakistan has ruled in favor of Coca-Cola Pakistan Limited, dismissing the Federal Board of Revenue (FBR) in a protracted tax dispute dating back to 2003.
Key Highlights of the Verdict
The apex court clarified that there is no single mandatory formula for allocating expenses across different income sources. Taxpayers can apportion costs on “any reasonable basis” allowed under the law.
The bench, headed by Justice Muneeb Akhtar along with Justice Muhammad Shafi Siddiqui and Justice Mian Gul Hassan Aurangzeb, emphasized that a method chosen by a taxpayer cannot be deemed incorrect simply because it differs from the FBR’s prescribed formula.
Background of the Case
The dispute revolved around Income Tax Rule 13, where the FBR argued that Coca-Cola Pakistan had not allocated expenses according to the government’s formula. The Supreme Court, however, ruled that as long as the allocation is reasonable and justifiable, it complies with Section 67(1) of the Income Tax Ordinance, 2001.
Justice Akhtar noted that FBR rules are guidelines rather than binding standards, and multiple valid methods for expense apportionment may exist under the law.
This ruling is a significant win for Coca-Cola Pakistan, setting a precedent for flexibility in tax expense allocation for other businesses as well.
