Law: Income Tax Ordinance, 2001

Section: 120(1)(b), 122(5A), 39(1), 37, 37(5)

SUMMARY; The Tribunal considered whether the gain from the appellant’s sale of two personally used motor vehicles could be taxed under Section 39 ("Income from Other Sources") of the Income Tax Ordinance, 2001. The appellant argued that the vehicles were movable personal-use assets and therefore excluded from the definition of "capital asset" under Section 37(5), making any gain on their disposal non-taxable. The Revenue, however, treated the gain as taxable under Section 39 after concluding that it had not been offered to tax in the return. The Tribunal observed that the nature and source of the receipt were fully disclosed, and the dispute related solely to its taxability rather than any unexplained investment or asset. The Tribunal held that Section 37 is the specific charging provision governing capital gains, while Section 39 is only a residual provision applicable to income otherwise chargeable but not falling under a specific head. Since motor vehicles held for personal use are expressly excluded from the definition of "capital asset" under Section 37(5), no taxable capital gain arises on their disposal. The Revenue could not invoke Section 39 to tax a receipt that the legislature had specifically excluded from taxation. Accordingly, the Tribunal declared the addition made under Section 122(5A) read with Section 39(1) to be legally unsustainable, annulled the orders of the lower authorities, allowed the appeal, and disposed of the stay application.       ORDER   M. M. AKRAM (Judicial Member):  In pursuance of the order dated 02.12.2025 passed by the Hon’ble Islamabad High Court, the appellant has filed the present appeal against the impugned Order No. 90/2024 dated November 22, 2024, passed by the learned Commissioner Inland Revenue (Appeals-1), Islamabad, relevant to the tax year 2023. The appellant has assailed the impugned order on various grounds set forth in the memorandum of appeal. Briefly stated, the facts emerging from the record are that the appellant is an individual taxpayer who filed his return of income for the tax year 2023 on 31.10.2023, declaring a total income of Rs.…