2005 PLP (Trib (PTD)

Syed Shabbir Ahmed Hashmi, ITP and Irshad Rizwan Siddiqui, ITP for Respondent. Date of hearing: 29th January, 2002. This appeal has been filed by the department against the order of Order of the learned CIT(A), dated 30‑4‑2001 for the assessment year, 1998‑99, on the ground that the learned CIT(A) was not justified in his direction to allow the remuneration paid to investment advisor without any justification.

2. Mr. Mushtaq Ahmed learned Representative of the appellant department has contended that the learned CIT(A) was not justified in directing to allow the remuneration paid to investment advisor despite the fact that the said expenditure was also utilized on investment of capital nature and fair proportion may be disallowed under section 23(1)(xviii) of the Income Tax Ordinance, 1979.

3. On the other hand Syed Shabbir Ahmed Hashmi, ITP, learned Representative of the respondent/assessee has supported the impugned order of the learned CIT(A) and contended that the Assessing Officer had disallowed the expenses out of remuneration paid to investment advisor, without any reason. According to him the Assessing Officer allocated proportionate expenses towards income from capital gains exempt under Clause 116 of the Second Schedule of the Income Tax Ordinance, 1979. According to him the Assessing Officer had failed to appreciate the provision contained in section 28 of the Income Tax Ordinance, 1979 while computing income from capital gain. According to him section 28 of the Income Tax Ordinance, 1979 states that "Income computing the income under the head capital gains, the cost of acquisition of the capital asset and any expenditure incurred wholly and exclusively in connection with the transfer thereof shall be deducted". According 'to him in order to compute capital gain/losses only expenses incurred wholly and exclusively in connection with the transfer of assets should be deduced; whereas, remuneration paid to the investment advisor is recurring expenditure in nature and could not be linked with acquisition transfer of capital assets. Therefore, the learned CIT(A) has rightly directed to the Assessing Officer to allow full amount of revenue expenditure against revenue income. He has also placed before us the orders of this Tribunal on the identical issue, dated 27‑3‑1996 in I.T.A. No. 62/HQ of 1988/89 (Assessment year 1987‑88), order, dated 1 ‑8‑1997 in I.T.A. No. 852/HQ of 1989‑90 (Assessment year 1988‑89), order, dated 30‑6‑1991 in I.T.A. No.788/HQ of 1990‑91 (Assessment year 1989‑90) and order dated 18‑4‑1998 in I.T.A. No. 1769/KB of 1991‑92 (Assessment year 1990‑91), wherein this Tribunal has allowed the relief to the assessee on the above issue.

4. We have heard the learned Representatives of the two parties and have also perused the impugned order of the learned CIT(A) the assessment order and the orders of this Tribunal. On perusal of the impugned order of the learned CIT(A) we have found that the learned CIT(A) has given direction after proper verification because the Assessing Officer had failed to establish nexus between the impugned expenditure to the income from capital gain and this Tribunal has already decided the issue in favour of the assessee. Therefore, the order passed by the learned CIT(A) is proper, does not require any interference. Hence, the appeal filed by the department is dismissed. C.M.A./274/Tax (Trib.) Appeal dismissed.