Law: Income Tax Ordinance, 1979

Section: 23,25(a),25(b)

(a) Income Tax Ordinance (XXXI of 1979)----Ss. 25(a), (b) & 23-----Deduction---Amount subsequently recovered in respect of deduction etc.---Addition---Assessee a public sector. Corporation had declared loss---Amount credited in the profit and loss account in the heads, GOP loans, interest, dividend amount reimbursable to Government for guarantee and redemption were added in the total income of the assessee by the Assessing Officer being adjusted against losses of the earlier years which arose from the expenditure allowed under S.23 of the Income Tax Ordinance, 1979---Addition was upheld by the First Appellate Authority on the ground that assessee had already availed benefits in the past in respect of interest on foreign loans and guarantee commission paid by the Government---Contention of the assessee was that credits had been made in pursuance of the financial re-structuring of the Corporation in accordance with the recommendations of the Ministry of Communication and amounts of ,interest on loan as well as exchange losses had already been disallowed in the past while making the assessment---Validity---Amounts had been waived in pursuance of a re-structuring formula as approved by the ECC---Neither the Government was obliged to make good losses of the Corporation nor the Corporation was providing subsidised passage on the instructions of the Government--Amounts/credits received could not be held to be income or the assessee in circumstances as, amounts in question did not fall within the definition of "income" as generally understood---Some of the expenses, though had been allowed in the past-and the assessee had derived some benefit by way of waiver of the liabilities and possibility of application of S.25 of the Income Tax Ordinance could not be ruled out completely---­Appellate Tribunal remanded the case for reconsideration with the instruction that no bald estimate may be made and provisions of S.25 of the Income Tax Ordinance, 1979 may be followed strictly. CIT v. Stewart and Lloyds 165 ITR 416; Mehboob Productions (Private) Limited v. CIT, Bombay 106 ITR 758 and CIT v. S.K.&.F. and 2 others (1991) 64 Tax 37 [SC (Pak)] ref. Addl. CIT, Delhi-II v.…

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