Law: Income Tax Ordinance, 1979

Section: 24,24(i),24(1)

Law: Income Tax Ordinance, 2001

Section: 122

(a) Income Tax Ordinance (XXXI of 1979)-----S.24---Deductions not admissible---Scope---Pre-requisites to employees---Assessing Authority declined to allow deduction of expenditure incurred by respondent on the provision of perquisites to its employees---Commissioner (Appeals) dismissed the appeal---Appellate Tribunal allowed the appeals by holding that the law did not permit making of ad hoc addition under S. 24(i) of the Income Tax Ordinance, 1979---Validity---Section 24(i) of the Income Tax Ordinance, 1979, had empowered the Assessing Authority to add to the income of a company any perquisite, allowance or other benefit given to an employee which was in excess of the 50% of his salary---No power was vested with the Assessing Authority to make any ad hoc additions to the income of the assessee in a slip shod manner or without properly working out the excess perquisites claimed by the assessee, in a shortcut manner---Assessing Authority being a quasi judicial authority was supposed to make the additions to the income of the assessee by giving cogent reasons and the justification for making such additions, if any---Assessing Authority though had opined that excess perquisites were given to the employees, but instead of adding those amounts, which were to be calculated after working out the excess perquisites, rather adopted a shortcut method of making ad hoc additions to the income of the assessee, in both the years under consideration, which was not in accordance with law---Reference applications were decided against the department. Messrs Rajput Metal Works Ltd., Gujranwala v. The Commissioner of Income-Tax, Rawalpindi Zone, Rawalpindi PLD 1976 Lah. 223 rel. (b) Income Tax Ordinance (XLIX of 2001)--- ----S.122---Amendment of assessments---Scope---Any addition made to the income of the assessee without giving reasons and justification for the same is not warranted under the law and is liable to deleted. JUDGMENT IRFAN SAADAT KHAN, J.----These two Income Tax Cases (ITC) were admitted to regular hearing on 26.1.2005 to consider the following questions of law. (i) "Whether on the facts and in the circumstances of the case, and assessee's failure to provide…

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