Law: Income Tax Ordinance, 2001

Section: 2(2),2(29),7,11,11(2),11(3),18,20,21,35, 56,67,80D,101,120,122(5A),148,150,152(1) ,153,156,156A,169,169(2)(a),169(2)(b),23 3,233A,234(5)

Law: Income Tax Rules, 2002

Section: 13

Income Tax Ordinance (XLIX of 2001)---Ss.67, 169, 18, 20 11--Deductions--Deductions in computing income chargeable under head “Income from Business”--Composite business activities--Expenses common to income under Normal Business Income and Presumptive Tax Regime--Apportionment of deductions--Scope--Question before High Court was whether allowable expenses towards earning Normal Business Income (“NTR”) could be prorated against expenses incurred for earning income under Presumptive Tax Regime (“PTR”); when income from such business was derived from composite business activity--Held, that under head of “income from business” there seemed to be no distinction between income derived under NTR and PTR as both were derived from “income from business” as per S.18 of Income Tax Ordinance, 2001-- Different types of income of a person for a tax year, to be charged from business, had been defined in said S.18 whereas deductions in computing income chargeable under “income from business” had been provided in S.20 of said Ordinance--While computing “income from business “ all types of income from a business, falling under the NTR and PTR, had to be treated as part of composite business income whereas all expenses (deductions) incurred wholly and exclusively for purposes of said business were to be allowed while computing income charged under head of “income from business”--Total income, if the same consisted of more than one head, then expenses incurred where not separable and such apportionment of expenses towards income under NTR and PTR could be made in terms of S. 67 read with S.169 of Income Tax Ordinance, 2001--Total income, if it was received from same head of income as a composite business activity, then there was no occasion of proration of expenses between NTR and PTR particularly when such expenses were common and not separable-- Once expenses were verifiable and admissible in terms of S.20 of Income Tax Ordinance, 2001 against business income, then there existed no reason to disallow such expenses by making by simply making proration against NTR and PTR income. PLD 1992 SC 723; Elahi Cotton Mills Ltd. v. Federation of Pakistan and others PLD 1997 SC 582; A.P.…

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