Law: Income Tax Act, 1922

Section: 2(4A)

Law: Finance (Supplementary) Ordinance (XVII of 1972)

Section: 10,12B

Income-tax Act (XI of 1922)----Ss. 2(4-A) [as amended by Finance Ordinance (XXI of 1972), Ss.10 & 12-B]-- -Capital asset---Definition---Stock in trade not a capital asset----If a gain arose on the sale of assets, same was to be taken as income under S.12-B of the Act---Any income yielded by the capital assets, however, would continue to be income and not a `gain from the sale, exchange or transfer of capital asset'---Dividend income of the assessee who was an investment company, had to be assessed under S.10 of the Act. ORDER A.A. ZUBERI (ACCOUNTANT MEMBER).--- These five appeals have been filed at the instance of Department to impugn the learned Appellate Assistant Commissioner--- Range---Consolidated order dated 16-10-1978 relating to assessment years 1973-74 to 1977-78. The discussion before us revealed that the assessee acts as an Investment Company. There was dispute whether the income was to be assessed under section 10 or under section 12 of the Act, and the matter went as high as the High Court of West Pakistan (Karachi Bench) whose decision was accepted by both the parties holding: `the income of the assessee as an Investment Company was to be assessed under section 10 of the Income Tax Act'. As a result of this decision, assessments were finalised up to assessment year 1971-72. In 1972-73 the assessee themselves placed their income under section 12 which position the assessing officer accepted. From this year up to 1976-77 always assessment were made under section 12. When Return for 1977-78 was filed the assessee reverted to the old position to declare income under section 10. The appeals were filed before the learned Appellate Assistant Commissioner who accepted the argument that even if an assessee wrongly declares income under a different head, it is duty of the assessing officer to make an assessment placing the income under the correct head. The learned Appellate Assistant Commissioner further held that as the High Court had already decided, in the cases of this very assessee, that their dividend income should be assessed under section 10 (not under section 12) the correct course would be to place the Assessee's income under section 10 for…

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