Law: Income Tax Act, 1922

Section: 4(1)(a),42

Law: Income Tax Rules, 1922

Section: 40

Income -Place of accrual -Non-resident company having branches all over the world -One such branch in Pakistan -Pakistan profits determinate, notwithstanding system of accounting maintained for determination of world profits -Profits arising or accruing in Pakistan -Whether assessable under Sec. 4(1)(a) -Held yes -Provisions of Sec. 42 of the Act or rule 40 of the Income-tax Rules -Whether applicable -Held no -Assessee a non-resident company having branches all over the world -Pakistan branch profits determinable, notwithstanding system of accounts adopted by assessee whereby only world profits determined -Income-tax Officer, held, justified in refusing to apply provisions of rule 40 of Income-tax Rules -Income-tax being assessable under provisions of section 4(1)(a) of Income-tax Act as accruing or arising in Pakistan -Fictional provisions of section 42 not attracted -- ORDER The order was passed by M.T. SIDDIQUI, President.---These three appeals by a non-resident company incorporated in USA will be disposed of by the same order in view of almost identical nature of objections raised from similar facts. 2. The appellant is a branch of the USA Company and was assessed as a non-resident AOP in Pakistan. Its main business is acting as Management Consultants for the Pakistan Railways and the various other authorities for modernization and improvement of their accounting systems, etc. The appellant was originally assessed by the Income-tax Officer and came in appeal before the Tribunal disputing the Income Tax Officer's action in not assessing it under rule 40 of the Income Tax Rules by apportioning the world profit in the ratio of the world receipts to the Pakistan receipts. A number of other objections relating to the apportionment of the profits, the non-consideration of the proportionate head office expenses were also agitated before the Tribunal. The Tribunal, however, held that the Income Tax Officer had not advanced cogent reasons for rejecting the appellant's claim for assessment under the Rule 40 and remitted the case to the Income Tax Officer. Directions were, however, also issued for consideration of other grievances of the appellant as well. In…

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