Law: Income Tax Ordinance, 2001

Section: 21(c),50(4)(a),52,86,120,122(5A),122(9)

THIS ORDER PASSED BY: CH. SHAHID IQBAL DHILLON, JUDICIAL MEMBER:---.--- This appeal has been filed by the department against order of the learned CIR(Appeals)-II, Lahore recorded on 30.12.2011 on the following ground:- i) "That the learned CIR(Appeals-II), Lahore was not justified to delete the additions made u/s 21(c) of the Income Tax Ordinance, 2001 under the heads rent rates, legal and professional charges and advertisement." 2 Brief facts of the case are that the appellant a public limited company derives income from manufacturing and sale of fruit juices, filed return for the tax year 2005 declaring loss at Rs.(7,76,79,839) which was deemed to be assessment order in term of section 120 of the Income Tax Ordinance, 2001. The Additional CIR issued show cause notice u/s 122(9) read with section 122(5A) requiring the taxpayer as to why the deemed assessment made u/s 120 of the Ordinance may not be amended. In response to the said notice, the reply submitted by the learned AR did not find favour with the Additional CIR who proceeded to amend the deemed assessment u/s 122(5A) of the Ordinance vide order dated 30.06.2011 at taxable income at Rs.71,34,966/- after finding the same was erroneous insofar as prejudicial to the interest of revenue. Being aggrieved with the treatment, the taxpayer filed appeal before the learned CIR(A) contesting the order on legal as well as factual grounds. The learned CIR(A) after considering the arguments of the learned AR deleted the additions made u/s 21(c) of the Ordinance under the heads Rent rate, legal and professional charges and advertisement at Rs. 6,23,570/-, Rs. 1,27,500/- and Rs. 1,31,78,333/- respectively with the following observations:- "I have given conscious consideration to the arguments of the learned AR in the perspective of the impugned order and am of the view that the contention of the appellant holds considerable force. Perusal of the impugned order reveals that the Additional Commissioner had no definite information that the tax had not been deducted against the payments under the heads Rent Rates, Legal & professional and the advertisement. In my view, the action of the Additional Commissioner in…

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