Law: Income Tax Ordinance, 2001

Section: 61,62,135,136

Law: Banking Companies Ordinance, 1962

Section: 41,83(5),91A

Income Tax Ordinance (XXXI of 1979)-- Ss.61, 62, 135 , 136—Banking Companies Ordinance (LVII of 1962), Ss.41, 83(5)    , 91-A—Loan to employees—Factual controversy—Appellant/taxpayer was a Banking Company and dispute was with regard to amounts advanced to its employees as loan Validity—Income Tax Appellate Tribunal ignored examination of factual aspect that whether any expenditure was incurred by appellant/taxpayer or not in providing loan to its employees at concessional rate—Appellant/taxpayer claimed that amounts so given to employees were from non-interest bearing account or current account or reserve account, which required a factual examination of the matter—No such exercise was made in such behalf as until and unless it was shown or proved that amounts of concessional loans given to employees had any nexus with diversion of expenditure, it could not be claimed that a benefit was provided either at concessional rate or free of cost to the employees, when it was claimed by appellant/taxpayer that amount so advanced to employees was from separate identifiable funds either from current account or reserve accounts- High Court remanded the matter to Income Tax Appellate Tribunal, as the matter pertained to ascertainment of factual controversy- Appeal was allowed accordingly. JUDGMENT: IRFAN SAADAT KHAN, JUSTICE:---.--- The instant Income Tax Appeal (ITA) has been filed by raising the following questions of law, which were admitted for regular hearing vide order dated 06.04.2001:- “(a) Whether crediting of interest on “classified debts” to “suspense account” could be equated with credit of “real income (b) Whether the learned Income Tax Appellate Tribunal misdirected itself in law by ignoring from consideration provisions of Section 41; Section 83(5) and Section 91-A of the Banking Companies Ordinance, 1962 which were of a mandatory and overriding nature, (c) Whether the learned Income Tax Appellate Tribunal acted legally in refusing to accept the method of accounting regularly employed by the appellant whereby interest accrued on “debts” not likely to be received was placed in “suspense account” in accordance with the provisions of Prudential…

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