Law: Income Tax Ordinance, 2001

Section: 24(11),120(1)(b),122(2),122(5A)

Law: Income Tax Act, 1922

Section: 33(4)

THIS ORDER PASSED BY: M.M. AKRAM, JUDICIAL MEMBER:---.--- The titled appeal has been filed by the appellant Department against an Order No.04 dated 02.12.2013 passed by the learned Commissioner Inland Revenue Appeals("CIR(A)"), Zone-I, Lahore for the Tax Year 2007 on the grounds as set forth in the memo of appeal. 2. The facts in brief leading to the present appeal are that the respondent taxpayer, a private limited company, is engaged in the business of manufacturing and making of soft drink concentrates of Pepsi Cola Products and manufacturing and sale of Frito-Lays Inc, products. The respondent taxpayer filed its income tax return for the tax year 2007 on 30.09.2007, declaring an income of Rs.418,550,351/-(before charging WWF and brought forward losses). The return so filed by the respondent was deemed to be an assessment order by fiction of law under section 120(1)(b) of the Income Tax Ordinance ("the Ordinance"). However, the said assessment order was subsequently considered erroneous as well as prejudicial to the interest of revenue in terms of section 122(5A) of the Ordinance on the grounds enumerated in the amended assessment order dated 30.06.2013 passed by the Additional Commissioner Inland Revenue (ACIR) Audit, Zone-II, LTU, Lahore. 3. The Respondent-company thereafter preferred an appeal before the Commissioner Inland Revenue Appeals, Zone-I, Lahore against the said order of the ACIR. The learned CIR(A) however by its order dated 02.12.2013, accepted the appeal on merits and deleted the addition made by the ACIR on account of "Amortization of marketing expenses" by observing as follows: "I have considered the rival arguments, facts available on record and case laws cited supra. The arguments of the AR carry force. The findings of the Appellate Tribunal in the above referred judgments are clear and relevant to the present matter. The additional CIR's treatment of amortizing the production cost of ads as intangibles was without fully appreciating the facts of the case as well as the applicable law. No instance was brought on record by the learned Additional CIR that any of the subject ads was aired for more than a period of one year. Further, in own…

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