Law: Income Tax Ordinance, 2001

Section: 122,122(5A),131,153(1)(C),233

Income Tax Ordinance (XLIX of 2001)---Ss. 233 & 131---Taxing service charges---Amendment of assessment---Commissioner income was treated as income and was charged accordingly---Taxpayer was a private limited company engaged in the business of air transport service---Counsel for the taxpayer had contended that taxpayer was engaged in the business of providing of air transport services and amount in question represented payment of service charges from Army Welfare Trust for charter of flights which did not attract the provision of S.233 of Income Tax Ordinance, 2001 and placed on record agreement arrived at between the taxpayer and the Army Welfare Trust---Said agreement provided that appellant/ taxpayer in consideration of service would be paid by Askari Chartered Services/Army Welfare Trust, service charges at 5% profit subject to a maximum, limit of Rs.500,000 for each contract in addition to actual expenses---Section 233 of Income Tax Ordinance, 2001 related to brokerage and commission, but as per agreement in question, appellant had not received the brokerage or commission, but had received amount as per agreement executed between the parties prescribing same as service charges; and the mode of payment of which also had been mentioned in the agreement---No justification existed for taxing the said amount at the separate block of income in view of legal as well as factual position---Impugned order of Commissioner was vacated and order passed by the Taxation Officer was annulled. THIS ORDER PASSED BY: JAWAID MASOOD TAHIR BHATTI, JUDICIAL MEMBER.---The appellate through this appeal has objected against the impugned order of the learned CIR(A) dated 22-7-2010 on the following grounds:-- "(2) That Taxation Officer was not justified to tax service charges under section 233 of the Income Tax Ordinance, 2001 and Commissioner Inland Revenue (Appeals-I) is not justified to confirm the same." 2. The appellant in this case is a private limited company in the business of air transport services. The case of the appellant was selected for the audit subsequently after scrutinizing and examining record of the case and the spot visits conducted by the department officials…

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