Law: Income Tax Ordinance, 1979

Section: ThirdSched.,R.7(b)(i)

(a) Income Tax Ordinance (XXXI of 1979)--- ----Third Sched.---Scope and application of Third Schedule. The Third Schedule does not aim to create any income by fiction of law and simply prescribes rules for the computation of depreciation allowance in respect of "any building, machinery, plant or furniture owned by an assessee and used for the purpose of any business or profession carried on by hi in". Therefore, whatever computation is made should strictly pertain to the "business or profession carried on by an assessee' in which that particular building machinery, plant or furniture is use. (b) Income Tax Ordinance (XXXI of 1979)---Third Sched., R.7(b)(i)---Gain resulting from disposal of assets even though such disposal was due to compelling-T reasons, would be 'gain' creditable to the Profit and Loss Account of the tax exempt business of manufacture and sale of goods. (c) Income Tax Ordinance (XXXI of 1979)--- ---Third Sched., R. 7(b)(i)--Where any asset was sold after the closure of business, the business (though closed) was to be deemed to have continued even after the closure of the account and the expiry of the income year---Gain or loss arising on sale of assets used in a particular business was to be treated as gain or loss relating to such business. (d) Income Tax Ordinance (XXXI of 1979)--- ----Third Sched., R.7(b)(i)---Once manufacture and sale of goods by assessee had been accepted by the Department as exempt under C1.125 of the Second Sched., the gain arising out of the sale of asset(s) used for the business of manufacture of goods was also to be treated as part of profit/loss of such business, hence entitled to exemption. ORDER This appeal has been filed at the instance of a private limited company who are manufacturers and vendors of children's garments. The appeal is directed against order dated 28-6-1990 passed by the learned C.I.T. (Appeals), Zone I, Lahore in respect of the assessment year 1989-90. The learned counsel for the Appellant explained that they were manufacturing garments for the last few years and in the assessments (such as 1988-89), it was accepted that they were entitled to exemption granted vide clause 125 of the Second…

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