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" TAXATION OF BUSINESS INCOME----PRINCIPLES     TAXATION OF BUSINESS INCOME----PRINCIPLES AND TAX POLICY CONSIDERATIONS UNDERLYING INADMISSIBLE DEDUCTIONS REGIME.   By   Amjad Javaid Hashmi, Advocate, High Court Sindh   Contrary to the principle specific admissibility regime of section 20; the Income Tax Ordinance, 2001 contemplates under section 21 an expenditure specific inadmissibility regime for the purposes of computing taxable income of a taxpayer under the head of "income from business". There are 13 types of specific expenditures which are not admissible as an expense against business income.   (2) The evaluation of the nature, style, manner, prequalifications and the set of circumstances covering the 13 types of specified expenditures are underwritten by concrete tax policy. The tax policy options are rooted in seven under lying principles:   (i) Tax is not a cost component for doing business. (ii) personal expenditure cannot be claimed as a proxy expenditure against business income. (iii) taxes are tools to influence behavior of a taxpayer to make him more compliant to tax laws in particular and other laws of the land in general (iv) Business related entertainment expenditure must conform to the socio-cultural norms of propriety (v) Taxes are an instrument for ensuring documentation of economy (vi) a capital expenditure is not cost component for doing business unless specifically stated.(vii) an Association of Persons and its members are not two distinct legal entities.   (3) The principle that tax is not a cost component for doing business is woven into provisions of subsections (a) and (b) of section 21. Section 21 stipulates that any type of tax whether we call it a cess, or rate or whether we call it tax…