Law: Income Tax Ordinance, 1979

Section: 7962

(a) Income Tax Ordinance (XXXI of 1979)--- ----S. 79---Addition ---Transaction with non-resident principal---Conditions laid down in S.79, Income Tax Ordinance, 1979 enumerated. To tax the income from transactions with non-resident the following conditions, as laid down in section 79, have to be fulfilled:-- (i) That there should be business relationship between a resident and non-resident. (ii) There must be close connection between them (of Principal and Agent). (iii) The course of business is so arranged that it--- (a) produced to the resident no profit, or (b) less than ordinary profits, which might be expected to arise in that business. 1988 PTD 447 fol. (b) Income Tax Ordinance (XXXI of 1979)---S. 79 & 62---Addition---Transaction with non-resident principal---Income Tax Officer had discussed at length in the assessment order that by purchasing raw material at a higher cost from its parent company, assessee had shown less profit than ordinary profit which would have been earned as raw material was available at a much lower price in the open market and assessee was not compelled to buy said material from a particular source---Business relationship and close connection had been established between the non-resident and the assessee beyond any doubt---Income Tax Officer, while determining the amount of profit which may reasonably be deemed to accrue to the assessee, had given opportunity to the assessee to explain various points---Notices under S.62, Income Tax Ordinance, 1979 were issued to the assessee by Income Tax Officer and sufficient opportunity was allowed to explain the position--¬Contents of notice issued under S.62, Income Tax Ordinance, 1979 and the explanation submitted by the assessee had been incorporated in the assessment order---Points relating to business relationship between the assessee and non¬resident had been discussed by .the Income Tax Officer in the assessment order---Close connection between the non-resident and assessee had been tried to be established by the Income Tax Officer and ordinary profit which could have been earned by the company in view of rates of raw material had also been discussed---Amount of addition made under…

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