Law: Income Tax Ordinance, 1979

Section: 24

Law: Income Tax Rules, 1982

Section: 20

(a) Income-tax Ordinance (XXXI of 1979)--S.24--Income-tax Rules, 1982, R.20--Intserpretation of S.24 and R.20--Head Office, expenses--Assessee, a non-resident company--Whether Head Office expenses should be taken in foreign currency and then converted into Pakistan currency at the prevailing rate in the relevant year. Per Muhammad Mujibullah Siddique, Judicial Member. Per Alvi Abdul Rahim, Accountant Member. Per Farhat Ali Khan, Chairman. (b) Interpretation of statutes-- --- Legislature cannot be imputed oblivion to the consideration of hardship in execution of law enacted by it. (c) Income-tax Ordinance (XXXI of 1979)--- ---S.24 (e)--Income-tax Rules, 1982, R. 20--Head Office expenditure--Meaning and implication. Head Office expenditure means and implies the following expenses: (i) which pertain to executive and general expenditure including expenditure regarding items which are enumerated in its clauses (a), (b), (c) and (d), and (ii) which is incurred by the assessee outside Pakistan, and (iii) which is incurred for the purposes of business or profession of the assessee. Before Head Office expenditure -is allowed it should not only fulfill conditions mentioned above, but, in any case, it should not be in excess of such limits as may be prescribed, and, these limits have been prescribed by Rule 20 of the Income-tax Rules, 1982. ORDER MUHAMMAD MUJIBULLAH SIDDIQUI (JUDICIAL MEMBER).-This appeal is directed against the older dated 24-10-1984 by the learned C.I.T. (A), Zone-2, Karachi in I.TA. No.CIT/Z-2/805/84. The only grievance agitated by the department is in respect of the direction of learned C.I.T. (A) that the head office expenses of the three years should be taken in U.S. Dollars and after computing the head office expenses in U.S. Dollars the same may be converted into rupees at the rate prevailing in the assessment year 1983-84. 2. Briefly stated the relevant facts are that the assessee (hereinafter referred to as the respondent) is Anon-resident Company who claimed head office expenses at Rs.43, 27,840. The I.T.O worked out admissible head office expenses under Rule 20 of the Income-tax Rules, 1982, as under: Head Office expenses allowed for asstt.…

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