Law:

Section: 6,32(2),100,120(1),122(5A),129,152,Fifth Schedule,Part1,Rr.1,2,3,clause(c) ofsub-section(1) ofsection105,

(a) Income Tax Ordinance (XLIX of 2001)--- ----Ss. 100, 122(5-A) & 129, Fifth Schedule, Part 1, Rr.1 & 2---Business of production and exploration of petroleum---Claim of expenses of one Petroleum Concession Agreement (P.C.A.) against the income from the other---Concept of 'ring fencing' and 'one basket'---Amendment of assessment---Taxpayers, who were engaged in business of production and exploration of Petroleum, had challenged orders, whereby their assessment was amended---Authorities below put wrong construction on the interpretation of Rr.1, 2 of the Fifth Schedule to Income Tax Ordinance, 2001; and in that manner taxpayers had been deprived of their legal rights---Business of exploration and production of petroleum, was to be treated as a separate business encompassing all Petroleum Agreement (PCA) for exploration of petroleum deposits---No bar existed on the taxpayers to claim expenses of one 'PCA' against the income from the other---Concept of 'ring-fencing' had no place in the law---Law provided that all 'PCAs' had to be aggregated; and the expenses therefrom had to be deducted in case the company had been notified with commercially---All the receipts as well as expenses, would be put in one basket---Consolidated amount of receipts and expenses had to be treated as a "single business"---Concept of 'one basket' assessment was applicable in the assessment of petroleum companies---Income from exploration and production of petroleum from oil 'PCAs' was assessable as "one business"---Profits and gains of such business, would be assessable separately from the income and profits of any other business---All the receipts and expenses of all the 'PCAs' had to be lumped; and tax liability had to be worked out accordingly, on the basis of resultant income---Assessment of such income, was regulated by special provisions contained in Regulation of Mines and Oil-fields; and Mineral Development (Government Control) Act, 1998. (b) Income Tax Ordinance (XLIX of 2001)--- ----S. 32(2)---Method of accounting--- Two principal methods of keeping track of a business's income and expenses were "cash method" and "accrual method"---Said methods differ only in the…

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