Law:

Section:

Income Tax Ordinance (XXXI of 1979)--- ---Ss. 2(16), 22 & 27(2)(a)(ii)---Sarhad Development Authority Act (XI of 1973), S.4---Lease money and interest received by Sarhad Development Authority from leaseholders of industrial plots---Assessing Officer treated receipt of lease money and interest as business activity of assessee taxable under S.22 of Income Tax Ordinance, 1979---Plea of assessee was that industrial plots owned by Provincial Government were not sold, but were only leased out by assessee; that land of such plots being capital asset and receipt on account of lease money thereof being of nature of capital gains was exempt under S.27(2)(a)(ii) of Income Tax Ordinance, 1979---Validity---Disposal of industrial plots by assessee on lease would not tantamount to outright sale---Income from simple lease would be considered as having been derived from business of leasing of plots instead of sale thereof---Entire premium received 'in lump sum by assessee as lease money might not be subjected to tax in the year of its receipt, but to be spread over to number of years of leasing period and charged to tax with money relatable to each assessment year---Principles. K.S. Krishna Rao v. Commissioner of Income Tax, Andra Pardesh 1991 PTD 286 (SC) ref. JUDGMENT RAJ MUHAMMAD KHAN, J.---This income tax appeal No.175 of 2000, subsequently converted into SAO No.33 (Income Tax) of 2000, is preferred by Mrs. Abida Ali, Commissioner of Income Tax/Wealth Tax, Companies Zone, Peshawar who had also decided appeals of the respondent in the case on 3-12-1997 in her capacity as CIT(Appeals-I) against the respondent Messrs Sarhad Development Authority (SDA) Peshawar under section 136 of the Income Tax Ordinance, 1979 (hereinafter referred to as the Ordinance) against the order of Income Tax Appellate Tribunal, Peshawar, dated 9-2-1999 followed by its order, dated 19-5-2000 whereby the Tribunal had deleted the addition of lease money received by the respondent assessee from Industrial Plots as well as interest received from the lease holders thereof. It was prayed that the orders of the Tribunal may be set aside and the order of the Assessing Officer for the assessment year…

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