2001 PLP (Trib (PTD)
N/A
| Citation | 2001 PLP (Trib (PTD) |
| Forum / Court | Income-tax Appellate Tribunal Pakistan |
| Bench Members | M. Munir Qureshi, Accountant Member and |
| Parties | N/A |
| Primary Law | (b) Finance Act (XII of 1991), (a) Finance Act (XII of 1991), (c) Finance Act (XII of 1991) |
Q1: What are the key laws and sections cited in 2001 PLP (Trib (PTD)?
This judgment primarily cites: (b) Finance Act (XII of 1991), (a) Finance Act (XII of 1991), (c) Finance Act (XII of 1991) as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2001 PLP (Trib (PTD)?
The case was heard and decided by the Income-tax Appellate Tribunal Pakistan bench comprising: M. Munir Qureshi, Accountant Member and.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2001 PLP (Trib (PTD) (N/A). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- Mian Munawar Ghafoor, D.R. for Appellant.
- Ahmed Mushir Qadri, F.C.A. for Respondent.
- Date of hearing: 25th March, 2000.
Headnotes / Summary
S.12
Exclusion of unallocated capital expenses- Determination of depreciation allowance
Principles. Notwithstanding the departments' treatment of such expenses at the time of determinat.3n of depreciation allowance, the fact of the matter is that since these expenses are directly connected with the Company's fixed assets, they constitute "Capitalized Expenditure". The Company would be able to derive "Recurring Benefit" from its fixed assets only if such "Capitalized Expenditure" has been actually incurred. These expenses eventually merge into the cost incurred on the acquisition of fixed assets. However, it may not be possible to precisely relate the capital expenditure to "a" particular fixed asset. In -other words such expenditure may be spread over a number of different fixed assets viz. different plant/machinery/building items. In such a situation it may not be possible to tell immediately, the exact quantum of capital expenditure "embodied" in "a" particular fixed assets. That is one reason -why such unallocated capital expenses are often excluded at the time of determination of depreciation allowance. Nevertheless where the capital expenditure has been admittedly incurred in the context of the Company's aggregate fixed assets, the nature of such capital expenditure remains unchanged and it must form part of the over all value of the Company's fixed assets. Hence, so far as levy of corporate assets tax is concerned, the capitalized expenditure, though "unallocated" must form part of the Company's fixed assets.
S. 12
Unallocated capital expenditure-- Taxability
Where capital expenditure had been admittedly incurred in, the context of Company's aggregate fixed assets, the nature of such capital expenditure remained unchanged and it must form part of the overall value of the company's fixed assets and so far as levy of Corporate Assets Tax was concerned, the capitalized expenditure, though "unallocated" must form part of the company's fixed assets.
S.12
Levy of additional tax/penalty
Penalty and additional tax should not be levied
Central Board of Revenue had issued multiple circulars relating to Corporate Assets Tax which had created confusion in the mind of taxpayers. I. T. A. No. 1872/LB of 1997 rel.
Judgment & Decree
Rs. 250,985 Printing & Stationery Rs. 59,774 Communication . Rs. 3,779 Rent, rates and taxes Rs. 9,338 Fee and subscription Rs. 856,487 Legal and professional charges Rs. 13,582 Advertisement Rs. 21,646 Insurance Rs. 21,866 Mark-up and Bank charges Rs. 5,038,063 Lease rent of humidification Rs. 576,495 Others Rs. 18,546 Rs. 7,112,537 It is evident that these expenses are broadly consistent with the illustrative examples cited in para.7 above.
10. Penalty amounting to Rs.4,000 has been levied for late filing of C.A.T. Return by A, days at the rate of Rs.1,000 per day. Also additional tax amounting to Rs.17,17,150 has been charged at the rate of 24 % per annum calculated from the date it was due (i.e. 30-9-1991) up to 12-2-1997 which is the date of finalization of assessment by the DCTI.
11. The A.R. of Respondent Company has pointed out in I.T.A. No.1872/LB of 1997 (Assessment year 1992-93), dated 26-5-1998; the Income Tax Appellate Tribunal, Lahore (Special Bench), had directed that penalty/additional tax not be levied in the context of C.A.T. as C.B.R. had issued multiple circulars relating to C.A.T. that had created confusion in the minds of taxpayers. It is argued that the cited decision is applicable to the to the facts and circumstances of Respondent's case and, therefore, penalty and, additional tax may not be charged.
12. After the consideration of the matter, we are of- the opinion that in the facts and circumstances of the case, penalty and additional tax should not be levied. The cancellation, of additional tax by the CIT(A), is therefore, maintained but not for the reason assigned by the learned CIT(A). As regards levy of penalty that has been upheld by the CIT(A) we agree with the .Respondent's citation of decision recorded in I.T.A. No.1872/LB of 1997 (Assessment Year 1992-93), dated 26-5-1999 and direct that penalty is not to be levied.
13. In the result the departmental appeal succeeds to the extent that unallocated capital expenses are to be included in the fixed assets of the Company. However, there is to be no charge of penalty for late filing of Return and no charge of additional tax.
14. I.T.A. No. 897/LB of 1998 (Assessment Year 1992-93, dated 30-11-1999, is maintained intact and adjudication made above vide I.T.A. No.897/LB of 1998 (Assessment Year 1992-93), dated 29-3-2000 is to be read alongwith I.T.A. No.897/LB of 1998 (Assessment Year 1992-93), dated 30-11-1999.
15. To summarize the Respondent Company's fixed assets liable to charge of C.A.T. are as under:-- Operating fixed assets 9,19,82,355 Less value of vehicles as clarified by C.B.R. vide C. No: 3 (1)/ CAT/91, dated 26-4-1992. 28,21,607 Rs. 8,91,60,748 Non-operating fixed assets Rs. .36,34,438 Rs. 30,58,24,545 Capital work in progress Rs. 20,59,16,822 Unallocated capital expenses Rs. 71,12,537 C.M.A./M.A.K./114/Tax(Trib.) Order accordingly.