Additions

2018 PTD 1344 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss. 6 & 152Payments to non-residentsDeduction of taxAdditionsCompany (tax-payer) was not provided with the adequate opportunity to provide the required details

Tax-payer company had provided all required data, showing that the company had released all the payments of Technical Assistance Fee after the proper deduction of taxes under S.152 of the Income Tax Ordinance, 2001

Additions by the Assessing Officer under said head, was not justified

Matter was remanded by Tribunal to the Assessing Officer, with the direction that issue should be examined afresh.

2016 PTD 2069 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss. 21(c), 122(1)(5), 151 & 158Amendment of assessmentAdditions

Assessing Authority made additions under S.21(1) of Income Tax Ordinance, 2001, for tax years 2009 and 2010, for the reason that taxpayer had failed to deduct tax while making payments towards re-rolling charges on purchases made, though they had exemption certificate

Appellate Authority upheld impugned additions

Validity

As issue of deduction of tax on re-rolling charges, was involved, case fell under cl.(b) of S.158 of Income Tax Ordinance, 2001, which dealt with the deduction of tax other than profit on debts and stipulated that tax was to be deducted at the time the amount was "actually paid"; whereas under cl.(a) of said section, tax could be deducted on actual basis

Matter was remanded by Appellate Tribunal to the Assessing Authority to verify the time of payment against said charges by the taxpayer to the recipient company in terms of S.158(b) of Income Tax Ordinance, 2001; and then proceed with the matter in accordance with law.

2016 PTD 7 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss.21(c) & 122(1)Deductions not allowedStationery Office Supplies, repair and maintenance, selling expenses and other expensesAdditions

Taxpayer contended that S.21(c) of the Income Tax Ordinance, 2001 had wrongly been applied on such expenses which did not come under said section and the addition was liable to be deleted

Revenue contended that addition had rightly been made as all such heads come under the ambit of services on which the taxpayer was required to deduct the tax and First Appellate Authority had rightly maintained the addition

Validity

Addition under S.21(c) of the Income Tax Ordinance, 2001 had wrongly been made which was ordered to be deleted as the addition made did not come under the ambit of S.21(c) of the Income Tax Ordinance, 2001

Such addition was also not maintainable as the same was not specifically confronted to the taxpayer and had been made without referring any definite information.

2013 PTD 1335 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss.13(7), 21(k), 67 & 150Allowable expenses/deductionsScopeAssessee, a BankAdditionsValidity

Expenses incurred on new branches of Bank where buildings were not owned by the Bank, were revenue in nature and were allowable deduction

Advertisement and publicity expenses, were disallowed on the ground that those were capital in nature

Commissioner (Appeals) had rightly deleted the addition with the observation that those expenses were not of enduring nature

Fee paid to Security and Exchange Commission of Pakistan, had no nexus with enhancement of share capital of the Bank and department had misconstrued the facts and misapplied the law

Order of Commissioner (Appeals) deleting the additions was confirmed

Department allowed 10% amortization and disallowed amount

Commissioner (Appeals) disapproved the addition

Order of Commissioner (Appeals) was based on correct interpretation of law

In absence of any infirmity in order of Commissioner (Appeals), same was confirmed by Appellate Tribunal

Substance and not the nomenclature given to any transaction mattered

Liability could not become unascertainable, if it was named as provision

No disallowance could be made on whims

Department could not dictate a taxpayer to conduct a business.

2013 PTD 10 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss. 65 & 13Additional assessmentDefinite informationBank depositsEstimation of salesNo adverse inference was drawnAdditions

Taxpayer contended that although assessments were reopened on the basis of maintenance of bank accounts, yet, at the end of the day the Assessing Officer could not draw an adverse inference regarding bank deposits; and having failed to draw an adverse inference, the Assessing Officer resorted to estimation of sales as Assessing Officer observed in his order that "no adverse inference is drawn as far as the source of deposit is concerned and no action being taken under S.13 of the Income Tax Ordinance, 1979"; that in the absence of any adverse inference to the grounds of reopening, the Assessing Officer should have dropped the proceedings instead of continuing; and that notices under S.65 of the Income Tax Ordinance, 1979 had not been lawfully issued, since the relevant clauses of the notices were not ticked which was the statutory requirement

Validity

After being satisfied with the genuineness of deposits in accounts, the Assessing Officer had no jurisdiction to proceed further under S.65 of the Income Tax Ordinance, 1979

No action under S.13 of the Income Tax Ordinance, 1979 appeared to have been taken with reference to deposits except in one year which was again on altogether different grounds

Issuance of notices and culmination of proceedings initiated was held to be void ab initio and illegal and all subsequent proceedings were without jurisdiction and liable to be quashed

Assessing Officer was bound to let the assessee know as to precise basis warranting reopening of his already completed assessment by ticking appropriate clause and striking off the remaining clauses

In the absence of any such exercise inference would be that Assessing Officer was himself not sure as to the basis of reopening

Irrefutable inference in such like situations was that the information being utilized by the Assessing Officer did not fulfil the conditions of being a "definite information"

Such defect alone was sufficient to declare the whole proceedings as void ab initio

Notice under S.65 of the Income Tax Ordinance, 1979 was held as having been issued without lawful jurisdiction for lack of "definite information"

All the subsequent proceedings and whole series of orders passed on the basis of such notice were not allowed to hold the field

Orders passed by the lower authorities were vacated as having been passed without lawful authority

Proceedings initiated and orders passed thereunder having been declared to be without lawful authority, imposition of penalty was to crumble down.