Law: Income Tax Ordinance, 1979

Section: 27

[Income Tax Ordinance (XXXI of 1979)]....Section 27...Profit on investment on government securities declared by assessee/Banking Company taxable as business or revenue income. I.T.A. No. 882/1999, (1940) 8 ITR 635 (PC) and 1985 PTD 329 distinguished. 2000 PTD (Trib.) 1299, (1966) 62 ITR 269 (Madhya Pradesh), 16 TC 381, 1985 PTD 329, 2003 PTD (Trib.) 494 and 2006 PTD (Trib.) 882 ref. ORDER MUHAMMAD ATHAR SAEED, J.--The Income Tax Appellate Tribunal had vide its order dated 11-1-1995 in R.A. No. 21/KB of 1994-95 to R.A. No.30/KB of 1994-95 pertaining to assessments years 1976-77 to assessment years 1984-85 and 1989-90 referred the following questions for the opinion of this Court. 1. "Whether on the facts and in the circumstances of this case the Tribunal was justified in holding that income derived from Sale and maturity of the Government Securities was regular banking income of the Bank and not capital gains? 2. "Whether on the facts and in the circumstances of this case the Tribunal had any relevant material to hold that the Government Securities were stock in trade of the Bank and not investments and capital assets"? 3. "Whether on the facts and in the circumstances of this case the Tribunal was justified in holding the Head Office Administration and supervision expenses were correctly allowed under the Rule 20(1)(a) instead of Rule 20(1)(b) of the Income Tax Rules, 1982"? 4. Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the penal interest charged by the State Bank for bursting the credit ceilings under section 25 of the Banking Companies Ordinance, 1962 was not admissible"? 2. We had vide our short order dated 22-1.2009 reframed questions No.3 to read as under: "Whether the Tribunal correctly held that the question of Head office expenses will be dealt with under the provisions of the Income Tax Ordinance and not under the provisions of the treaty"? And for the reasons quoted in that short order answered this question in negative in favour of the applicant and against the respondent. Whereas, we had answered the question No.4 for the reasons stated in the short order in affirmative in favour of the…

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