Law:

Section:

(a) Income Tax Appellate Tribunal--- ----Powers of---Scope---Income-tax Appellate Tribunal had no authority to interpret the power of Legislature or the provisions of the Constitution. (b) Income Tax Ordinance (XXXI of 1979)--- ----S.12 (9A)---Income deemed to accrue or arise in Pakistan---Methods of distribution of dividends---Provisions of S.12 (9A) of the Income Tax Ordinance, 1979 contain two methods of distribution i.e. to distribute cash dividend within seven months but no minimum requirement has been given, and to distribute dividend (not cash) but no time frame has been given. (c) Income Tax Ordinance (XXXI of 1979)--- ----S.12(9A), proviso---Income deemed to accrue or arise in Pakistan---Proviso to S. 12(9A) of the Income Tax Ordinance, 1979 is restricted to the assessment year commencing on the first day of July, 1999 issued by the Central Board of Revenue whereas in the assessee's case the income year commences from 1-10-1998 which extends to 30-9-1999---Clause (i) of the proviso talks about the income year ending on a date prior to 30th June, 1999 and clause (ii) converses about the income year ended on 30-6-1999 and both clauses did not cover the income year ending on 30-6-1999---Both clauses did not cover the assessee's income year. (d) Income Tax Ordinance (XXXI of 1979)--- ----S. 12(9A) & Second Sched., Part-IV, Cl. (59)---C.B.R. Circular No.26 of 1999 dated 30-9-1999---Income deemed to accrue or arise in Pakistan---Company listed in stock exchange was not hit by mischief of S.12(9A) of the Income Tax Ordinance, 1979 if it distributes 40% of after tax profits. (e) Income Tax Ordinance (XXXI 1979)--- ----S.12(9A)---Income deemed to accrue or arise in\ Pakistan---Reduction of profit by the Assessing Officer---Addition by taking reserve for the previous years---Validity---Allegation of Assessing Officer that company had reduced its profits by showing a provision of Twenty Million of tax liability and it could only be current tax liability and not the deferred tax liability and in case the deferred tax liability had to be included, it should be reasonable---For said reason, assessing officer reduced the said provision from Twenty Million to…

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