Law:

Section:

Income Tax Ordinance (XLIX of 2001)--- ----Ss.22 (5) (b), 23, 32, 34 & 169(2)(a)---Depreciation and initial allowance---Presumptive tax regime---Observation of Taxation Officer that "company was assessed to tax under presumptive tax regime during tax years 2003, 2004 and 2005 and it was required to deduct the amount of depreciation and initial allowance allowed during the said tax years from opening written down value for tax year 2006, resulting in reduced allowance of depreciation in subsequent tax years" was confirmed by the First Appellate Authority---Taxpayer contended that reducing depreciation and initial allowance from written down value, pertaining to period of presumptive tax regime, was not lawful and written down value at the beginning of a tax year was determined by reducing the cost by the amount of depreciation and initial allowance allowed during previous tax years in the normal tax resume; that in the present case, no depreciation was allowed during tax years 2003, 2004 and 2005 and there was no room for intendment, in the absence of any express provision of law to the contrary; and depreciation and initial allowance was allowed under the provisions of Income Tax Ordinance, 2001 on `actually allowed basis' and not under 'deemed allowed' basis---Validity---Under presumptive tax regime, a fixed amount of tax was paid in Government Exchequer---To furnish the account of income or expense was not necessary---Whatever was spent that stood allowed and it was not to be questioned by the Department---Tax paid under presumptive tax regime had to remain the same---Depreciation remained frozen while other expense did not freeze---Section 169 of the Income Tax Ordinance, 2001 dealing with presumptive tax regime cases provided that no deduction would be allowable which did not mean that depreciation shall remain frozen---No express provision in law existed for freezing of depreciation in the Income Tax Ordinance, 2001---Similarly written down value at the beginning of a tax year was determined by reducing the cost by the amount of depreciation and initial allowance allowed during the previous tax year of course, it was true but the depreciation and other…

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