Law: Income Tax Ordinance, 1979

Section: 10,23,24(a)

Law: Constitution of Pakistan, 1973

Section: 163

Income Tax Ordinance (XXXI of 1979)-----Ss. 23 & 24(a)---Constitution of Pakistan (1973), Art. 163 & Federal List Entry No. 47---West Pakistan Finance Act (XXXIV of 1964), S. 11(a) (as amended)---Professional tax paid by the assessee being not a tax on income was not hit by bar contained in S. 24(a) of the Income Tax Ordinance, 1979 and was an allowable expenditure under S. 23 of the Ordinance ---[ITA No.894/HQ of 1991 overruled]. Professional tax was levied by section 11 of West Pakistan Finance Ac;, 1964. This Act was substantially amended in 1975 and later on changes in Schedule were made. Professional tax is not a tax on income as the Provincial Government has no powers under the Constitution to levy tax on income. The Professional tax is not a tax on income and is not hit by the bar contained in section 24(a) of the Income Tax Ordinance, in so far as the amount of Professional tax is not relatable to profits or gains of any business and neither it is assessable as a percentage or otherwise on the basis of any such profits and gains. Professional tax is relatable to business premises of the assessee because an assessee is liable to pay this tax if he has a registered office, any factory or business premises in the Province. In short this tax is relatable to business premises and would not be payable if a person has no business premises in the Province where this tax is levied. Professional tax paid by the assessee is not a tax on income and is, therefore, not hit by bar contained in section 14(a) of the Income Tax Ordinance. This tax could be termed as expenditure incidental to business and is necessary for carrying on of the business and would be deemed to be laid out wholly and exclusively for the purpose of carrying on of the trade. But since there is a specific provision for this type of expenditure, therefore, this expenditure should have been claimed under that clause. However, this would not affect the allow ability of expenditure in so far as an assessing officer can always allow such reliefs which are legally due to the assessee irrespective of the fact whether such reliefs are claimed by the assessee or not. Nevertheless professional tax…

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