Law: Income Tax Ordinance, 1979

Section: 24(c)&50(7B)

Income Tax Ordinance (XXXI of 1979)----Ss.24(c) & 50(7-B)---Deductions not admissible---Deduction of tax at source---Deduction of tax from rent paid was not made under S.50(7-B) of the Income Tax Ordinance, 1979 by the assessee---Claim for payment of rent was disallowed under S.24(c) of the Income Tax Ordinance, 1979 by the Assessing Officer, while the rental income was taxed in the hands of recipient---Validity---Held, if it was proved that rent paid had already suffered incidence of tax in the hands of recipient, no disallowance was to be made by recourse to provisions contained in S.24(c), Income Tax Ordinance, 1979 for the reason that the condition of payment of tax on the allowance or deduction would be taken to have been fulfilled. 1996 PTD (Trib.) 411 ref. ORDER MUHAMMAD MUJIBULLAH SIDDIQUI (CHAIRMAN). ---The above appeal is directed against the order, dated 31-7-1998 by the learned C.I.T.(A), Zone V, Karachi in I.T.A. No.517/98 relating to the assessment year 1995-96. The relevant facts are that the appellant claimed to have paid rent to Civil Aviation Authority at Rs.8,50,050. The tax was not deducted under section 50(713) of the Income Tax Ordinance and, therefore, the claim was disallowed under section 24(c) of the Ordinance. The appellant being aggrieved preferred first appeal contending that although the appellant could not make deduction of tax from rent paid to the C.A.A. in accordance with the provisions contained in section 50(713) but the C.A.A. is a regular income-tax assessee borne on NTN 12-04-3356898 who have already paid tax on their rental income and as such the disallowance is not justified. Reliance in. this behalf was placed on the Tribunal, judgment reported as 1996 PTD (Trib.) 411 in which it is held that the recipient banks having paid taxes in Pakistan, the Assessing Officer was not justified in disallowing the claim of deduction on account of interest paid by the assessee companies under section 24(b). The learned C.I.T.(A) did not accept the contention and held that the facts of cited case were distinguishable. The contention that since rental income has already been taxed in the hands of recipient, therefore, the…

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