Law: Income Tax Act, 1922

Section: 10,12

Law: Income Tax Ordinance, 1979

Section: 23,31

Income Tax Ordinance (XXXI of 1979)----Ss. 23 & 31, Second Sched., CI. 83---Income-tax Act (XI of 1922), Ss.10 & 12---Wealth tax paid by assessee whether was deductable as expense in computing the assessee's income, profit or gain or as an expenditure for carrying on the business. In the Income Tax Act, 1922 under sections 10 and 12, wealth tax paid on any income yielding asset or property owned by the assessee or held for the purpose of his income, was deductable as expense in computing the assessee's income, profit or gain. When Income Tax Ordinance, 1979 was promulgated the position completely changed under it. The Wealth Tax payable by an assessee allowable under Wealth Tax Act was to be deducted from the income as exemption had been granted under clause 83 of Second Schedule of the Income Tax Ordinance. 1n this scheme of the Ordinance question of allowing the wealth tax as expenditure does not arise. Exemption from income-tax and allowance as expenditure are two different concepts. There is no provision under the Income Tax Ordinance to permit the wealth tax payable by an assessee to be treated as an expenditure for carrying on the business. Commissioner of Income-tax v. Zakia Siddiqui 1989 PTD 135 ref. JUDGMENT SALEEM AKHTAR, J.--For the assessment year 1979-80 the respondent filed its return of income in the old form. By this time the Income Tax Ordinance, 1979 had been implemented but as new forms were not available the old form was used and Wealth Tax was not deducted as permitted by the Ordinance for computation of income. The assessing officer framed the assessment under subsection (1) of section' 59 and did not exclude the Wealth Tax liability. The respondent therefore filed an appeal before the Appellate Assistant Commissioner who in terms of clause 83 of the Second Schedule to the Income: Tax Ordinance permitted the exclusion of the wealth tax liability as admissible deduction against income generating assets. The department fled an appeal which was dismissed by the Tribunal. An application filed under section 136(1) for referring the…

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