Law: Income Tax Ordinance, 1979

Section: 163

Law: Income Tax Rules, 1982

Section: R.20

(a) Income Tax Ordinance (XXXI of 1979)----S. 163--- Income Tax Rules, 1982, R. 20---Convention for Avoidance of Double Taxation between the Islamic Republic of Pakistan and Federal Republic of Germany, Art. III(4)---Assessee a non-resident---Head office expenses--¬Allowability---Convention provided that the expenses reasonably allocable to the permanent establishment including executive and general administration are to be allowed---Duty of Assessing Officer---Held, in presence of Convention for Avoidance of Double Taxation resort to R. 20, Income Tax Rules. 1982 is not justified for provisions contained to the Convention for Avoidance of Double Taxation shall prevail over the provisions contained in the Income Tax Ordinance, 1979---Assessing Officer, however, has to examine the details of expenses and allow those expenses, which are reasonably allocable to the permanent establishment including executive and general administration expenses---If the Assessee has claimed any such expenses which are not reasonably allocable to the permanent establishment such expenses have to be disallowed---Where the Assessing Officer had made the addition in Assessees account by resorting to R.20, Income Tax Rules, 1982, Commissioner of Income Tax (Appeal) was not justified in deleting the said additions for the appropriate direction by Commissioner would have been to set aside the issue. In the presence of treaty for avoidance of double taxation the resort to Rule 20 of the Income Tax Rules is not justified. Under section 163 of the Income Tax Ordinance, 1979 the provisions contained in the agreement for avoidance of double taxation shall prevail over the provisions contained in the Income Tax Ordinance. It is, therefore, held that the C.I.T.(A) has rightly concluded that resort to Rule 20 of the Income Tax Rules was not justified. However, the C.I.T.(A) was not justified in deleting the addition because the appropriate direction would have been to set aside the issue. It is provided to the treaty for avoidance of double taxation that the expenses reasonably allocable to the permanent establishment including executive and general administration expenses are to be allowed.…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492