Law: Income Tax Ordinance, 2001

Section: 120,122(5),122(5A),122(9)

Law: Income Tax Ordinance, 1979

Section: 113,80D

ORDER MASOOD AKHTAR SHAHEEDI (Accountant Member): Through this appeal, the taxpayer/appellant has assailed the appellate order No. 150 dated 27.04.2015 passed by the CIR (Appeals-II), Lahore. Brief facts of the case are that the taxpayer is a limited company which derives income from supply of electricity. Return for the tax year 2014 was e-filed u/s 120 of the Income Tax Ordinance, 2001 (hereinafter referred to as 'the Ordinance'). On examination of record the OIR observed certain discrepancies in the return/record and considered the deemed (assessment erroneous in so far as prejudicial to the interest of revenue within the meaning of Section 122(5A) of the Ordinance. Show cause notice u/s 122(9) read with Section 122(5A) of the Ordinance, confronting the taxpayer with alleged discrepancies, was issued. In response to the show cause notice the reply submitted by the taxpayer was considered and rejected being devoid of merits. Resultantly, vide order dated 31.03.2015 assessment was amended u/s 122(5A) of the Ordinance. Being aggrieved the taxpayer filed appeal before the CIR(A-II), Lahore who upheld the treatment accorded by the Additional Commissioner Inland Revenue. Hence the present appeal. Mr. Kamran Iqbal Butt, FCA (the AR) has represented the appellant/taxpayer whereas Mr. Muhammad Anwar Ch. and Mr. Bilal Asghar Malik, DRs have tendered their appearance on behalf of the Department. At the very outset the learned AR pointed out that the issue of non-taxability of government subsidy under Section 113 of the Ordinance has been decided by this Tribunal against Revenue and on Tax Reference to the High Court the decision of the Tribunal was upheld by the Hon'ble Islamabad High Court in the judgment cited as (2010) 101 Tax 174 (H. C. Isl) in the following manner:- What is meant by the phrase "Turnover" is explained through this explanation. Gross receipts derived from the sale of goods or from rendering, giving or supplying services or benefits or from execution of contracts fall within the definition of "turnover". The licence fee or the subsidy from the Government does not fall within the definition of "turnover". We, therefore, agree with the interpretation…

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