Law: Income Tax Ordinance, 1979

Section: 78,79

Law: Income Tax Act, 1922

Section: 25

(a) Income-tax Ordinance (XXXI of 1979)---Ss. 78 & 79--Non-resident Company in Pakistan can be taxed only for the incomes accruing within the territorial limits of Pakistan--Bangladesh, having separated from Pakistan, its recognition by Government of Pakistan would relate back to the date when the new State was born--Any, income which may have accrued upto 15-12-1971 was an income accrued within the territory of Pakistan and was liable to tax--Merely because the whole year up to 31-12-1971 could not be completed for the purpose of accrual of profit, it cannot be said that for rest of the period of 11-1/2 months the profit cannot be ascertained or cannot be subjected to tax--Tax can be levied on such income which has accrued up to the date when the territory of East Pakistan was a part of Pakistan. (b) Income-tax Ordinance (XXXI of 1979)- ---S. 13--Computation of assessee's taxable income is determined by its regular mode of accounting but it does not affect the ambit of taxation--Method of accounting cannot be an instrument to avoid chargeability of tax--Chargeability of income received cannot be escaped on ground that the assessee's regular method of accounting is mercantile. Kanga and Palkivalla on Law and Practice of Income-tax, 4th Edn., p.448 and Keshar Mills Ltd. v. C.I.T. (1963) 231 T R 230 (SC) fol. (c) Income-tax Act (XI of 1922)-- ---S.25--Where the business is discontinued in any year the Income-tax Officer can. make assessment during that year for the period from the end of the previous year to the date of continuance of business--Provision. of S. 25 is an exception to the rule that the income taxed is that of the previous year--When a business has been discontinued before the expiry of a year, the income earned up to the date of discontinuance cannot escape assessment, it has to be charged to tax. C.I.T. v. Srinvasan and Gopalan (1958) 23 I T R 87 (SC) ref. (d) International law-- --- When a country recognizes a new State it relates back retrospectively to the date when the new State was created. United Liner Ltd. Agency v. Commissioner of Income-tax 1988 P T D 277 ref. JUDGMENT SALEEM AKHTAR, J.--The assessee/applicant is a non-resident…

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