Law:

Section:

(a) Income Tax Ordinance (XLIX of 2001)--- ----Ss.56 & 22(8)(b)---Setting off of losses---Sale of assets---Interest income---Setting off of loss on sale of assets in local market against interest income---First Appellate Authority allowed the setting off of business loss arising from sale of assets in local market against interest income---Department contended that taxpayer declared export receipts and tax deducted on exports was final discharge of tax liability; that in addition to exports, taxpayer suffered loss on disposal of assets in local market and the taxpayer had interest income and loss on sale of fixed assets was claimed as an expense against interest income; that in the past also, the entire income was from exports and interest income was assessed under S.39 of the Income Tax Ordinance, 2001 being income from other sources and only expenses allowable under S.40 of the Income Tax Ordinance, 2001 could be allowed as expense and if there was no normal business revenue, business loss could not be determined---Validity---Taxpayer had sold fixed assets in local market and suffered loss and there was no controversy about the factum or the amount of loss---Taxpayer also had interest income---Assessing Authority was of the opinion that loss on sale of fixed assets in local market could not be computed as there was no business revenue stream and loss ° should form part of export---Such stance of Assessing Authority was incorrect and contrary to law---Where there was no business revenue during the year, yet Taxation Officer was obliged to determine and compute loss under the head of "business income" due to expenses incurred---Fixed assets were sold in local market and loss was computed as per provisions of S. 22(8)(6) of the Income Tax Ordinance, 2001 by the taxpayer and was business loss and did not constitute exports as observed by the Assessing Authority---Once the loss was determined as per S.22(8)(b) of the Income Tax Ordinance, 2001 it was a "business loss" and business loss could be set off against income assessed under any head of income---Taxpayer correctly set off interest income against business loss on sale of fixed assets in local…

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