Law:

Section:

ORDER Through this appeal for the tax year 2009 the impugned order No.825/2015 dated. 31.8.2015 of the CIR (Appeals-II) Islamabad has been assailed whereby the first Appellate Authority confirmed the amended order passed under section 122(1) of the Income Tax Ordinance 2001 passed by the Assessing Officer on 22.04.2015. 2. Facts relevant to the disposal of the instant appeal, briefly stated are that the appellant is a Private Ltd. company and filed its return declaring total income at Rs.6,170,931/-. The income declared was arrived at as under: - Revenue Rs.16,061,767/- Cost recognized Rs. 15,296,921/- Gross profit Rs. 764,846/- Other income Rs.5,406,085/- Total income Rs.6,170,931/- The return so filed was treated as deemed order under section 120 (1) ibid. Later the Assessing Officer initiated proceedings under section 122(5) ibid for the reason that the appellant taxpayer was required to apportion its expenditure as provided in section 67 ibid. Accordingly the order was amended as under:- Gross receipts Rs.77,173,257/- Other sales/gross receipts. Rs.21,467,852/- Contracts. Rs.55,705,405/- Percentage of other sale 29% P&L expenses Rs.15,296,921/- P&L expenses 29% (local) Rs. 4,453,472/- Net profit (Local)Taxable income Rs. 17,074,379/- Income offered to tax by company. Rs. 12,261,861/- Under assessment of income Rs.4,752,518/- Tax charged @ 35% Rs. 1,663,381/- 3. The above treatment of the Assessing Officer was contested before the learned CIR (Appeals-II) Islamabad on a number of grounds. However, the learned CIR (Appeals) after considering the facts of the case dismissed the appeal, hence this 2nd appeal filed by the appellant on the following grounds:- 1- The honorable CIR (A) has erred in upholding the impugned order without appreciating that it violates the provisions of section 122(2) of the Ordinance, hence liable to be annulled. 2- Notwithstanding the above, the honorable CIR (A) has erred in upholding the impugned order, being issued in terms of section 122(5) of Ordinance without lawful jurisdiction, hence liable to be annulled. 3- Notwithstanding the above, the honorable CIR (Appeals) has erred in upholding the chargeability of contractual…

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