Preliminary Order

Preliminary order in pending proceedings could not be challenged unless it would affect the case materially or otherwise would amount to finality or jolting the merit of the case to a great extent; or due to interlocutory order the suit/appeal could become infructuous

Court, in circumstances would be conscious enough and would always avoid to interfere in the like cases, so that the purpose of litigation could not be frustrated.

Contention was that Khushhali Bank was a "body corporate" which carne into existence through a special legislation and it had to be treated as a "public limited company" for the purpose of tax rates

Validity

Bank was neither a finance company nor a financial institution; it was a banking company, which was engaged in business of money lending on which interest was also charged on specified rates

Prudential Regulations of State Bank of Pakistan were fully applicable to Khushhali Bank

Bank had rightly been treated as a banking company because it was essentially engaged in banking business as it was giving loans and charging interest on loans

Orders of both the authorities below were upheld by the Appellate Tribunal and appeal of the assessee was rejected on the point of status of the company for the application of tax rates.

Grants received from the government for the purchase of durable assets were amortized over a period of their expected life

Amount equal to amortized cost was booked as income and at the same time the amortized amount was shown as expenditure in the account books of the Bank

Entries were made to comply with accounting requirements it was just a formality that a sum equal to amortized cost was shown as an income at the same time a sum equal to this amount was shown as an expenditure in the account books

Said accounting entries did not have any relevance to the tax matters

Taxation Officer was not correct to treat the "amortization of deferred grants" as inadmissible deduction

First Authority had rightly held that amortization @ 10% of the grants which had been reduced from total value of assets purchased by the Bank confirmed that no effect was made on taxable income

Since grants were not income and had only been recorded in the account books for fulfilment of required International Accounting Standards, the addition made was not legally justified and First Appellate Authority was legally right to delete it from income

Departmental appeal was rejected by the Appellate Tribunal on this point.