Law: Income Tax Act, 1922

Section: 10(2A),10(2)(xvi),18A(6),23B

Law: Income Tax Act, 1922

Section: 10(2A),10(2)(xvi),18A(6),23B

Income-tax Act, 1922 -- Sections 10(2A), 10(2)(xvi), 18A(6), 23B --Trading liability -- Assessee's account books showing certain outstanding liabilities including cash loan against sister concern -- Amount representing cash loan -- Whether can be treated as trading liability -- Held no -- Trading liability -- Assessee's account books for accounting year relevant to assessment year 1972-73 showing certain outstanding trading liabilities since 1961 -- Whether liable to tax under sub-section (2A) of Sec. 10, as amended by Finance Ordinance, 1972 -- Held yes - Penal interest -- Advance Tax -- Provisional assessment under Sec. 23B for the year 1964-65 made on income below Rs. 25,000 -- Levy of penal interest for non-payment of advance-tax on the basis of earlier year's assessment made on income exceeding Rs. 25,000 -- Whether sustainable -- Held no -- Trading loss -- Consignment of goods to East Pakistan -- Consignment losses due to trouble in that Wing -- Whether trading loss -- Held yes -- Cash loans to sister concern -- Not trading liabilities -- Retrospective operation of provisions of section 10(2A) as amended by Finance Ordinance of 1972 -- Corresponding Sections: Income-tax Ordinance, 1979 -- Sections 25, 60, 87(2), 23(1)(xvii) ORDER The order was passed by M. T. SIDDIQUI, President.---These two appeals by a private limited company will be disposed of as below. 2. For the assessment year 1969-70, the first objection concern an addition of Rs. 1,22,407 under Section 10(2A). The Appellant had disclosed certain outstanding trading liabilities against M/s. S ............ Limited, a sister concern and since these were outstanding for quite a long time, the Income Tax Officer treated the same as taxable under the provisions of Section 10(2A). The appellant's case is that the Income Tax Officer was informed that out of the outstandings against the sister concern to the extent noted by him, an amount of Rs.1,17,038 represents cash loans and not trading liabilities. The Income Tax Officer however, refused to accept this position on the simple excuse that only one current account was maintained to record both types of transactions. The appellant again places reliance…

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