Presumptive Tax

Services rendered necessarily flowed from execution of a contract, but execution of a contract would not necessarily result in rendering of services

In other words, where services were being rendered, prior execution of a contract would not per se attract the Presumptive Tax under S.80C of the Income Tax Ordinance, 1979, rather it would be excluded by virtue of the exception in S.80C(2)(a)(i) of the said Ordinance

Income derived from 'services rendered', thus, was not subject to the Presumptive Tax Regime of S.80C of the Income Tax Ordinance, 1979, which stood specifically excluded from said section.

Services rendered necessarily flowed from execution of a contract, but execution of a contract would not necessarily result in rendering of services

In other words, where services were being rendered, prior execution of a contract would not per se attract the Presumptive Tax under S.80C of the Income Tax Ordinance, 1979, rather it would be excluded by virtue of the exception in S.80C(2)(a)(i) of the said Ordinance

Income derived from 'services rendered', thus, was not subject to the Presumptive Tax Regime of S.80C of the Income Tax Ordinance, 1979, which stood specifically excluded from said section.

Assessee company was engaged in shipping business and it contended that its income by disposal of assets fell within the `ambit of its income from business' and was covered under Presumptive Tax Regime

Validity

Depreciation was never been allowed to assessee, therefore, there was no Written Down Value (WDV) available for computation of the gain and such gain could not be computed under S. 22 (8) of Income Tax Ordinance, 2001, therefore, plea raised by assessee that such gain would be treated as income from business under S. 22(8) of Income Tax Ordinance, 2001, did not hold ground

Once assessee's income became liable to presumptive tax under Cl. (21) of Part-II of Second Schedule to Income Tax Ordinance, 2001, then entitlement to depreciation deduction under S. 22 of Income Tax Ordinance, 2001, in respect of any property of such person would cease to exist and therefore, such assets did not fall within the ambit of S. 37(5)(b) of Income Tax Ordinance, 2001

Such income would fall within the definition of `capital assets' and had to be assessed as `capital gains' and not `business income' and therefore, would not be considered to be `income from business' of shipping of assessee company and was not covered by presumptive tax collected in accordance with provisions of Cl. (21) of Part-II of Second Schedule of Income Tax Ordinance, 2001

Income Tax Appellate Tribunal was justified to hold that gain on disposal of vessel was chargeable tax under the head "capital gains" and was not covered by Cl. (21) of Part-II of Second Schedule to Income Tax Ordinance, 2001

Reference was decided accordingly.

Appellate Tribunal upheld the deduction of tax under S.50(5) read with S.80-C of the Income Tax Ordinance, 1979 and directed to delete the tax deducted under S.50(4) of the Income Tax Ordinance, 1979 for the reason that assessee could not be subjected to taxation twice.