2004 PLP (Trib (PTD)
N/A
| Citation | 2004 PLP (Trib (PTD) |
| Forum / Court | Income‑tax Appellate Tribunal Pakistan |
| Bench Members | Khalid Waheed Ahmed, Judicial Member and Mahmood Ahmad Malik, Accountant Member |
| Parties | N/A |
Q1: What are the key laws and sections cited in 2004 PLP (Trib (PTD)?
This judgment primarily cites: statutory provisions as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2004 PLP (Trib (PTD)?
The case was heard and decided by the Income‑tax Appellate Tribunal Pakistan bench comprising: Khalid Waheed Ahmed, Judicial Member and Mahmood Ahmad Malik, Accountant Member.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2004 PLP (Trib (PTD) (N/A). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Representation
- Saeed Anwar Kazmi, ITP for Appellant.
- Abdul Shakoor, DR for Respondent.
- Date of hearing: 20th December, 2003.
Headnotes / Summary
(a) Income Tax Ordinance (XXXI of 1979)‑‑‑ ‑‑‑‑S. 62‑‑‑Income Tax Rules, 1982, R.34‑‑‑Assessment‑‑‑Estimation of sales‑‑‑Sales were estimated on the ground that the same were not open to verification because invoices produced were devoid of complete particulars of the clients and the sales were mostly on cash basis and complete addresses of the customers had not been given on the cash memos‑‑‑Assessee contended that no defects were pointed out to the assessee and that the cash memos issued contained the details as required under R.34 of the Income Tax Rules, 1982 and that detailed addresses were not required as per the said rule‑‑‑Sales were reduced by the First Appellate Authority ‑‑‑Validity‑‑‑Assessee had not contested rejection of the declared version‑‑‑Assessee's concern was that adequate relief in estimate of sales had not been given‑‑‑On one hand it was pleaded that addresses of the customers were given on cash memos but on the other hand it was contended that R.34 of the Income Tax Ordinance, 1982 did not require that the assessee should give full particulars of the customers and the declared sales could not be rejected on that ground‑‑‑Assessing Officer had also not evolved any basis for estimate of sales‑‑‑Assessee was not confronted with instances of particular sales which were not verifiable‑‑‑Case was of a private limited company where account books were maintained‑‑‑Appellate Tribunal agreed that relief allowed by the Appellate Tribunal was not adequate and further reduced the estimation of sales. (b) Income Tax Ordinance (XXXI of 1979)‑‑‑ ‑‑‑‑Third Sched., R. 5A Category‑E & R.5‑‑‑Depreciation allowance‑‑ First year allowance‑‑‑Assessee was an Internet Service Provider ‑‑ Assessee's claim of First Year Allowance under R.5A of the Third Schedule of the Income Tax Ordinance, 1979 was rejected by the Assessing Officer on the ground that assessee was not an industrial undertaking as provided in Explanation to R.5 of the Third Schedule of the Income Tax Ordinance, 1979 which was confirmed by the First Appellate Authority‑‑‑Validity‑‑‑Under R.5A of the Third Schedule of the Income Tax Ordinance, 1979, First Year Allowance was available apart from manufacturers to other industries including service, infrastructure, social and agricultural sector etc.,‑‑Definition of "industrial undertaking" given in the First Schedule of the Income Tax Ordinance, 1979 was confined to the manufactures etc. Only the First Year Allowance was available both to manufacturers and other industries which includes services industries‑‑‑Definition given in Explanation to R.5 of the Third Schedule of the Income Tax Ordinance, 1979 or given in the First Schedule to the clause "industrial undertaking" will not apply in case of assessee which provided services‑‑‑Conditions laid down in R.5A of the Third Schedule of the Income Tax Ordinance, 1979 would apply in case of assessee‑‑‑Assessee was entitled to the allowance‑‑ Appellate Tribunal held that the assessee be allowed allowance @ 40 % as provided in R.5A of the Third Schedule of the Income Tax Ordinance, 1979. 2002 PTD 470; 1999 PTD (Trib.) 4 and Oxford Advanced Learner's Dictionary ref.
Judgment & Decree
"5A First Year Allowance. Where any machinery, plant and equipment is installed by any industrial undertaking set‑up in Pakistan on or after the twenty‑first day of November, 1997, and owned and managed by a company formed after the said date, exclusively for operating the said industrial undertaking, further depreciation by way of First Year Allowance in respect of the year of installation or the year in which such machinery, plant or equipment is used by the assessee for the first time for the purposes of his business or profession or the year in which commercial production is commenced, whichever is the later, shall be allowed at the rates specified in the table below:‑‑ E ..Other industries Forty per cent of the including service, infrastructure, written down value. social and agricultural sector, other than transport industry.
7. The Assessing Officer has interpreted the clause "industrial undertaking set‑up in Pakistan" used in the above provisions to mean as the industrial undertaking as defined in Explanation to Rule 5 of the said schedule read with the meanings assigned to the clause in the First Schedule. The learned AR pointed out that the term has been defined in Para. . B of part IV of the First Schedule but it has been specifically stated therein that the definition is relevant for the said Schedule i.e. the First Schedule only. Further he submitted that the Explanation to Rule 5 also provides as under:‑‑ "Explanation. As used in this clause "industrial undertaking" has the same meaning as in the First Schedule." To us the arguments of the learned AR carry substantial weight. In order to properly apprehend the provisions it would be worthwhile to reproduce the definition of "industrial undertaking" given in Para. B of Part‑IV to the First Schedule as under:‑‑ "
B. As used in this Schedule:‑‑ (1) "Industrial undertaking" means an undertaking which is set up or commenced in Pakistan on or after the 14th day of August, 1947, and which employees (i) ten or more persons in Pakistan and involves the use of electrical energy or any other form of energy which is mechanically transmitted and is not generated by human or animal agency; or (ii) twenty or more persons in Pakistan and does not involve the use of electrical energy or any other form of energy which is mechanically transmitted and is not generated by human or animal agency and which is (i) engaged in:‑‑ (a) the manufacture of goods or materials or the subjection of goods or materials to any process, which substantially changes their original condition; (b) ship‑building: (c) Generation, transformation, conversion, transmission or distribution of electrical energy or the supply of hydraulic power; or (d) the working of, any mine, oil‑well or other source of mineral deposits not being an undertaking to which the Fifth Schedule applies; or (ii) Any other industrial undertaking which may be approved by the Central Board of Revenue for the purposes of this clause
7. A bare perusal of the above provisions shows that this definition is relevant for manufacture of goods or material, ship building, generation etc. of electrical energy, working of mines etc. or any other industrial undertaking approved by the C.B.R. The provisions show that these do not apply in case of an industrial undertaking which provides services. On the other hand Rule 5A of Third Schedule which is under consideration indicates that the First Year allowance is available apart from manufacturers to other industries including service, infrastructure, social and agricultural sector etc. Thus the two provisions are different in that whereas the definition of "industrial undertaking" given in the First Schedule is confined to the manufacturers etc. only the First Year Allowance is available both to manufacturers and other industries which include service industries. In these circumstances the AR rightly argued that the definition given in Explanation to Rule 5 or given in the First Schedule to the clause "industrial undertaking" will not apply in case of the assessee which provides services. The other conditions as laid down in rule 5A apply in case of assessee and therefore, the assessee was entitled to the Allowance as given in Rule 5A of the Third Schedule. Accordingly it is held that the assessee be allowed @ 40% as provided in Rule 5A.
8. The two appeals are disposed of in the manner indicated above. C.M.A./50/Tax (Trib.) Order accordingly.