2026 PLP (Trib (PTD)

This appeal has been filed by the revenue against the impugned order dated 24.08.2018 recorded by the learned CIR (Appeals), Lahore.

2. Succinctly facts of the case are that the taxpayer, a private limited company, engaged in providing space in exhibition halls known as Expo Centre owned by the Government of Pakistan and Government of Punjab filed income tax return to declare loss of Rs. 161,974,321/- which was deemed to be an assessment order under section

120. The learned Additional Commissioner considered it to be erroneous in so far as prejudicial to the interest of revenue on the ground that the taxpayer had not declared his income under section 15 as income from property on which tax withheld/paid was minimum tax liability of taxpayer. The learned Additional Commissioner treated income of the taxpayer under section 15 as income from property and apportioned expenses of the taxpayer between the two streams of income from property and event management services u/s 18 as income from business. In appeal, the learned CIR(Appeals) accepted the appeal of the taxpayer. This has brought the department in appeal before this forum.

3. Case was fixed for hearing by issuing notices in response to which learned AR represented the taxpayer, and the learned DR represented the department. The learned AR contended that the taxpayer does not own land or building rather they are owned by Government of Pakistan and Government of Punjab, therefore, income from providing space for exhibition to various businesses cannot be treated as income from property. He further stated that in tax year 2010 show-cause notice was issued to treat income of the taxpayer under section 15 as income from property but after considering the contention of the taxpayer the learned assessing officer assessed income of the taxpayer as business income. The learned DR on his turn contended that letting out space to any person rented properties owned by him falls in income from property, therefore, the learned Additional Commissioner was justified in treating the income is of the taxpayer under section 15 as income from property and apportioning expenses between the two streams coming from renting out space and providing services. Therefore, the order of learned CIR (Appeals) may be set aside and order of learned assessing officer may be upheld.

5. We have considered the arguments and perused the record. For the sake of convenience section 15 is reproduced as under:-- The rent received or receivable by a person for a tax year, other than rent exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head "Income from Property . Subject to subsection (3) rent means any amount received or receivable by the owner of land or a building as consideration for the use or occupation of, or the right to use or occupy, the land or building and includes any forfeited deposit paid under a contract for the sale of land or a building. This section shall not apply to any rent received or receivable by any person in respect of the lease of a building together with plant and machinery and such rent shall be chargeable to tax under the head "Income from Other Sources." (3A) Where any amount is included in rent received or receivable by any person for the provision of amenities, utilities or any other service connected with the renting of the building, such amount shall be chargeable to tax under the head "Income from Other Sources." Subject to subsection (5), where the rent received or receivable by a person is less than the fair market rent for the property, the person shall be treated as having derived the fair market rent for the period the property is let on rent in the tax year.

5. Subsection (4) shall not apply where the fair market rent is included in the income of the lessee chargeable to tax under the head Salary .

6. Perusal of subsection (2) of section 15 makes it clear that to be owner of land or building is a prerequisite for treating rental receipts as income from property. Therefore, we have no hesitation in holding that the learned Additional Commissioner was not justified in treating income of the taxpayer as income of property. Consequently, he was also not justified in apportioning expenses between the two streams of revenue namely letting out of space and providing of services, therefore, order of learned Additional Commissioner being illegal and against the facts of the case was rightly vacated by the learned CIR (Appeals), therefore, we uphold the order of the order of the learned CIR (Appeals).

7. The departmental appeals fail. MQ/4/Tax (Trib.) Appeals dismissed.