Law: Income Tax Act, 1922

Section: 10(2A),43,10,10(2)

Income-tax Act, 1922 -- Sections 10(2A), 23 -- Trading liability -- Liability not allowed or deducted in earlier year in computing income under Sec. 10 of the Act -- Whether a trading liability in subsequent year within the meaning of sub-section (2A) -- Held no -- Liability not allowed or deducted earlier for purpose of computation of income -- Held, not a trading liability within meaning of section 10(2A) -- Non-resident Bank account for money belonging to it opened in name of assessee -- Inclusion of interest, accruing to such money, in assessment of assessee -- Held, illegal -- Corresponding Sections: Income-tax Ordinance, 1979 -- Section 25 -- ORDER The order was passed by C. IMAMUDDIN, Accountant Member)--- This is a direct appeal to the Tribunal. It relates to the charge year 1966-67. 2. The appellant M/s. A,. Ltd., (hereinafter referred to as the 'licensee" has been assessed for the charge year 1966-67 in the status of non-resident Association of Persons. The relevant accounting year which relates to the instant assessment is the year ending on the 28th May, 1966. 3. M/s. B Ltd., (hereinafter to as "Columbia"), a corporation organised under the laws of the Estate of Delaware., Untied States of America entered into an agreement dated 11th of August, 1949 with the licensee for carrying out the business of distribution of films within the territory of Pakistan. Columbia held hundred per cent shares of the licnesee. The licensee is, therefore, a cent per cent subsidiary of Columbia. Under the agreement the licensee was entrusted with the non-exclusive right of distribution of films produced by Columbia in the territory of Pakistan. Other terms and conditions for the conduct of the business have been stipulated in the agreement referred to above. Article VI of the agreement relating to division of receipts, definition of gross receipts, time of payment, place and manner of payment etc. between Columbia and the license reads as below: Division of Receipts--All billings derived from the license to exhibit, distribute, exploit and/or otherwise dispose of each picture hereunder excepting from the sale of trailors, advertising matter and accessories, the proceeds…

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