Law: Income Tax Act, 1922

Section: 2(15),10

Income-tax Act (XI of 1922)---Ss. 2 (15), 10 read with Workers' Welfare Fund Ordinance (XXXVI of 1971), S. 4 (1), 4 (7)-Total income-Rebate-Assessee, an indus­trial undertaking, obliged to pay to the Workers' Welfare Fund a sum equal to 2 per cent of the total income as assessable under the Income­tax Act, i.e. before the amount of Welfare Fund is taken into account--­Such payment should be treated as an expenditure or rebate or allow­ance for the purpose of income-tax assessment by virtue of S. 4 (7) of Ordinance-Workers' Welfare Fund cannot be calculated on net profit derived at after deducting amount paid to fund. ORDER MUHAMMAD MAZHAR ALI (PRESIDENT).-Being aggrieved by the consoli­dated order dated 13-3-1980 passed by the learned Appellate Assistant Commissioner, B-Range, Karachi, on appeals filed by the assessee-respondent, pertaining to charge years 1973-74, 1974-75, 1976-77, 1977-78 and 1976-79, the Income-tax Officer, Companies Circle B-4, Karachi, has brought these five appeals on the following common ground :- "That the learned Appellate Assistant Commissioner was not justified in directing to calculate the Workers' Welfare Fund on net profit derived at after deducting this amount as the Workers' Welfare Fund was calculated @ 2 % on total income determined as per Board's Circular." The Income-tax Officer through an order under section 35 of the re­pealed Income-tax Act, 1922, pertaining to charge years 1973-74 and 1978-79 rectified the original assessments to work out and charge to tax, inter alia the Workers' Welfare Fund at Rs.85,040 and Rs.75,450 respectively. While giving effect to the first appellate order under section 31 of the re­pealed Income-tax Act. 1n respect of the remaining charge years under appeal i.e. 1976-77 and 1977-78 he charged to tax the Workers' Welfare Fund at Rs.45,45,816 and Rs. 1,97,996 respectively. The assessee felt aggrieved with this action of the Income-tax Officer in respect of all the five years in question, He, therefore, carried appeals to the learned Appellate Assistant Commissioner assailing only the method of calculation of Workers' Welfare Fund. It was contended on his behalf before the first appellate…

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