Law: Income Tax Ordinance, 1979

Section: Third Schedule

Income Tax Ordinance (XXXI of 1979)- -Third Sched.-Rules for the Computation of Depreciation Allowance, R.2-Hospital building-Depreciation allowance-Income Tax Appellate Tribunal treated hospital owned by assessee as "plant" thereby entitling it to depreciation when assessee had not pleaded to treat it as such-Validity-Three categories specified under R.2 of Rules for the Computation of Depreciation Allowance given in Third Schedule to Income Tax Ordinance, 1979, had been specified under the title 'Building'-Rate of depreciation in case of a building not otherwise specified was 5% while rate of 10% was attracted in case of a factory, workshop or residential quarters for labour-Building of hospital did not fall within the category of a factory, workshop or residential quarters of labour in order to attract rate of 10%- Assessing officer had correctly applied rate of 5% while Commissioner Inland Revenue (Appeals) and Income Tax Appellate Tribunal misinterpreted R.2 of Rules for the Computation of Depreciation Allowance given in Third Schedule to Income Tax Ordinance, 1979- Reference was answered in negative. THIS ORDER PASSED BY: ATHAR MINALLAH, JUSTICE.------ Through this Income Tax Reference Application filed under Section 133 of the Income Tax Ordinance, 2001 (hereinafter referred to as the "Ordinance of 2001") the Department has proposed for our consideration the following two questions of law: i) Whether on the facts and in the circumstances of the case the ITAT had the jurisdiction to characterize the hospital building as plant when the assessee had not pleaded to treat it as such. ii) Whether on the facts and in the circumstances of the case the ITAT was justified to treat the hospital building owned by the assessee as plant thereby entitling it to depreciation at the rate of 10% notwithstanding the fact that the said rate has been specified only for factory/workshop buildings and labour quarters as per Third Schedule to the Repealed Ordinance. It is claimed that the questions of law arise out of order dated 28-4-2007 passed by the learned Income Tax Appellate Tribunal Islamabad Bench, Islamabad (hereinafter referred to as the "Tribunal"). 2. The facts, in…

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