Law: Income Tax Ordinance, 2001

Section: 67,122(1),122(5),122(9),133,154(4),169(1 )

Law: Income Tax Rules, 2002

Section: 13,231

Income Tax Ordinance (XLIX of 2001)-Ss. 67, 122(1)(5)(9), 133, 154(4) 169(1)-Income Tax Rules, 2002, Rr.13 . 231-Apportionment of expenditure-Amendment in tax return-Dispute was with regard to apportionment of expenditure incurred and adjustments claimed by taxpayer under R.231 of Income Tax Rules, 2002- Plea raised by authorities was that apportionment of expenditures was to be done by applying mechanism provided under S.67 of Income Tax Ordinance, 2001, read in consonance with R.13 of Income Tax Rules, 2002-Validity-Income derived from export sales and tax deducted thereupon was treated as final tax in terms of Ss.154(4) 169(1) of Income Tax Ordinance, 2001-Apportionment of expenditures, was required to be carried out under S.67 of Income Tax Ordinance, 2001 and R.13 of Income Tax Rules, 2002-In the context of expenditures / deductions claimed by taxpayer, provision of R.231 of Income Tax Rules, 2002 had no application-High Court set aside order in question as Income Tax Appellate Tribunal erred in law while applying R.231 of Income Tax Rules, 2002-High Court remanded the matter to Income Tax Appellate Tribunal for decision afresh-Reference was allowed accordingly. Commissioner Inland Revenue v. Messrs Quality Textile Mills Ltd. 2013 PTD 2095 ref. JUDGMENT: ASIM HAFEEZ, JUSTICE:---.--- Instant reference application is against order of 06.10.2014, by learned Appellate Tribunal Inland Revenue, Lahore (for brevity the Appellate Tribunal’). Matter in issue pertains to tax year 2012. 2. The primary dispute is regarding apportionment of expenditures incurred and adjustments claimed by the respondent taxpayer, claimed to have drawn income from the manufacture and sale of yarn. Respondent taxpayer had filed return of income, by computing income under Normal Tax Regime (NTR) and income attributable to exports falling under Final Tax Regime (FTR). Pursuant to the audit proceedings, amendment was sought under section 122(1)/(5) and section 122(9) of the Income Tax Ordinance, 2001 (for brevity the Ordinance) - notice was replete with multiple issues, but controversy at hand is restricted to the issue of apportionment of expenditures. Taxpayer claimed apportionment under…

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