Law: Income Tax Act, 1922

Section: 10,10(2A)

Law: Finance Act, 1956

Section: 11

(a) Income tax Act (XI of 1922) S. 10(2A) Finance Act (XI of 1966), S. 5 Finance Act (XXX of 1956), S. 11 History of amendment of S. 10(2 A) traced and misconception about addition of subsection (2 A) in S. 10 removed. (b) Income tax Act (XI of 1922)--S. 10(2 A) Sundry credits Mere expiry of period of limitation within which a creditor could sue the assessee to recover his debt, held, would not constitute cessation of liability of assessee Expiry of limitation did not extinguish debtor's liability to pay debt Income tax Officer, therefore, was not justified in adding back amount of debt from sundry creditors 'on ground that they had remained unpaid for period of more than 3 years Income tax Appellate Tribunal. held further, was justified in excluding said amount from profits added by Income tax Officer in circumstances. [Commissioner of Income tax, Lahore v. Messrs Mian Muhammad Allah Bux P L D 1983 Lah. 381 dissented from]. Commissioner of Income tax, Lahore v. Messrs Mian Muhammad Allah Bux P L D 1983 Lah. 381 dissented from. Commissioner of Income tax, Karachi (West), Karachi v. S. K. Rehman 1980 P T D 314 ; The Law of Income tax by Sampath 1yengar, VII Edn, p. 2052 and Commissioner of Income tax (Central) Karachi v. Messrs Morris Jacob & Co., Karachi 1984 P T D 200 rel. JUDGMENT NAIMUDDIN, J. This is a reference under section 66(l) of the Income-tax Act, 1922 (hereinafter called the Act) by the Commissioner of Income-tax (East Zone), Karachi, referring the following question of law said to arise out of the order dated 14 1 1974, passed by the Income tax Appellate Tribunal. Karachi, in I . T. A. No. 1560 (VB) 71 72: "Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the amount of Rs 76,308 could not be included in the total income of the assessee under the provisions of section, 10(2 A) of the I. T. Act, 1922 in respect of the charge year 1964 65?" 2. The facts, as stated in the statement of facts are: that the respondent is a registered firm carrying on business of dismantling ships and selting scrap. In the assessment year 1964 65, the Income tax Officer made add back of Rs. 76,308 on account of profit…

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