Law: Income Tax Ordinance, 1979

Section: 50,53,54,23

(a) Income-tax Ordinance (XXXI of 1979)--Ss. 50, 53 & 54--Retained income"--Tax deducted at source or the tax aid in advance or amount remitted by non-resident companies to the Head Office are not to be treated as "retained income"--Only that portion of tax liability is to be treated as retained income for which provision has been made by the assessee. Only that portion of the tax liability is to be treated as retained income for which provision has been made by the assessee. Thus the tax deducted at source or the tax paid in advance is not to be treated as retained income, because such amount already goes out of the coffers of the assessee and remains lying in Government treasury for appropriation towards the tax liability. Likewise in the case of non-resident companies the amount remitted to the Head Office is not to be treated as retained income. In the present case this aspect of the case was not examined at all by the Income-tax Officer. The finding of the Income-tax Officer relating to the surcharge was therefore, set aside with the direction to examine the issue afresh. While working out the surcharge it should be kept in mind that remittances to the Head Office, tax paid under section 53 and tax paid under section 50 are not to be treated as retained income. The tax paid under section 54 alongwith the return and the tax paid after the completion of assessment are to be treated as "retained income". (b) Income-tax Ordinance (XXXI of 1979)-- ---S.23--Administrative expenses--Expenses incurred on legal fee are included in general administrative expenses--Principles--Head Officer's expenses-¬Admissibility--Conditions. The expenses incurred on legal .fee are included in general administrative expenses, however, it is to be ascertained whether the professional charges claimed were incurred on account of legal fee or pot. Likewise the other expenses claimed are also to be examined from the point of view if they relate to the business of assessee in Pakistan or not. It the present case, the findings of the officers below regarding the Head Office expenses were set aside with the direction that this issue may be re-examined and while working out the expenses…

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