Law: Income Tax Ordinance, 2001

Section: 39,15(2),122(9),177(4)(d),21,174,122(1), 21(m),177,122,111(1)(a)

(a) Income Tax Ordinance (XLIX of 2001)---Ss. 39, 15(2), 122(9) & 177(4)(d)---Income from other sources--Income from property---First Appellate Authority directed that addition made be accepted as rental income as a separate block of income instead of income from other sources despite the fact that the properties were not owned by the taxpayer---Revenue contended that rental income claimed by the taxpayer from immoveable property was treated as income from other sources assessable under S.39 of the Income Tax Ordinance, 2001 because these properties were admittedly not owned by the company but the ownership was in the name of a Director of the company---Taxpayer contended that rental income had been earned from the properties which were duly reflected in the balance sheet of the taxpayer; and it will be wrong to conclude that it was not rental income of the company but income from other sources---Validity---Taxpayer did not deny that all the properties were in the name of one of the Director of the company but argued that company/taxpayer had declared all the properties as its assets duly reflected in the balance sheet, the income from such properties should be treated as rental income of the Company and not income from other sources--- Provisions of S.15(2) of the Income Tax Ordinance, 2001 provided for exclusive definition of rent which meant any amount received or receivable by owner of land or building---Income to be classified as rental income, the person receiving rent must be the owner of the land or building according to the provisions of law---Admittedly the taxpayer company was not the owner of the properties let out, the receipts from these properties would fall under `income front other source' of the taxpayer assessable under provision of S.39 of the Income Tax Ordinance, 2001. (b) Income Tax Ordinance (XLIX of 2001)--- ----Ss. 21, 174 & 122(1)---Deductions not allowed---Operating and administration expenses---Revenue contended that First Appellate Authority was not justified in deleting 50% disallowance out of operating and admin expense by observing that sub-cls. of Ss.21 and 174 of the Income Tax Ordinance, 2001 had not been mentioned…

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