1982 PLP (Trib (PTD)

MUHAMMAD MAZHAR ALI (MEMBER).‑This appeal at the instance of the assessee arises from the order of the learned A. A. C. to F‑Range, Karachi. It concerns the assessment year 1974‑75.

2. The first objection agitated before us by the learned counsel for the appellant was against the addition of Rs. 29,822 made by the I. T. O. with these observations:‑ "The assessee has claimed Bank Interest on O. D. and loan to the tune of Rs. 3,06,472 but at the same time has made an advance to Directors amounting to Rs.2;98,226 and no interest has been charged thereon. I would, therefore, charge interest on these advances @ 10 %." The assessee carried an appeal to the A. A. C. Its contention before him was that no doubt the sum of Rs. 2,98,220 was outstanding against the directors but the directors had also, in turn, advanced loans to the extent of Rs. 10,30,000 to the assessee‑Company as is apparent from the entries in the balance‑sheet. The learned A. A. C. therefore, remitted the cage to the I. T. O. on this issue directing him, "to look into the claim of the appellant on merit and dispose it of in accordance with law". Mr. I. . . . N. . . . P. . . the learned counsel for the appellant vociferously argued that the learned A. A. C. acted improperly in setting aside the order of the Assessing Officer. It was, in his submission, a fit case for the deletion of the addition in question. He argued that the learned A. A. C. has clearly mentioned in his order that the I. T. O. bad made an addition of national interest income under Explanation 8 to section 4(l) of the Act. The learned counsel, therefore, submitted that explanation 8 incorporated by Finance Act., 1976, was a charging provision inasmuch as it makes a provision for national income. The learned D. R. on the other hand, submitted that the I. T. O. has in fact made the disallowance out of interest claimed on account bank loans and he has not invoked the provision of Explanation 8.to section 4 of the Act. In support of his contention he invited our attention to the fact that the bank loan had, in fact, increased from Rs. 4,53,986 of the previous year to Rs. 11,40,090, in this year. Paragraphs 3 to 8 omitted.

9. The next disallowance objected to was Rs. 9,000 out of packing expenses claimed at Rs.59,

326. The reason for disallowance being "for want of proof". The counsel vehemently contended that no proof or evidence was at all called for by the Departmental Representative. The counsel also submitted that the assessee's sales were over Rs. 1 lakh in this year and hence the claim could not be said to be excessive. He also drew our attention to the fact that no disallowance was made in the charge year 1972‑73 and that an add back of Rs. 5,000 out of Rs. 37,919 (claimed) was made in.1969‑70 but it is in line with the past history of the case, which statement is definitely perverse and contrary to the record. However since the I. T. O. has made the disallowance on the pure surmises and guestures and in the absence of any material on record, we do not find any course open but to knock off the addback in question. Paragraphs 10 to 13 omitted. Appeal allowed.