Law: Income Tax Ordinance, 1979

Section: 11,11(1),12(18),17,19,19(1),19(2)(b),22, 27,30,30(2)(d),32,32(1),32(3),32(1)(3)

(a) Income Tax Ordinance (XXXI of 1979)---Ss. 30(2)(d) & 62---Income from other sources---Lease income---Increase in assets---Taxation Officer discarded lease money which was supported by a lease agreement, only .for the reason that during the years, there had been increase in the operating fixed asset but the lease money as compared to the previous assessment year had not been proportionately increased---Validity---Held, there was no dispute regarding increase in fixed assets but that was not sufficient to discard a legally executed agreement which had been accepted by the Department in two preceding assessment years---Taxation Officer had failed to bring on record any evidence to establish that the actual lease money received by the assessee was in any way more than the declared one---In case of lessee, assessments had been made by accepting the lease expenses at the amount, which had been declared by the assessee as lease money---Taxation Officer had estimated the lease money without any basis which was not only beyond comprehension but devoid of any legal support---Action of the Taxation Officer was self-contradictory as the addition in lease money in the case of a lessor was possible only by making simultaneous addition under S.13(1)(d) of the Income Tax Ordinance, 1979 in the case of lessee---Assessee company was deriving income from lease money and the same was adjusted through one general entry---Entries in ledger existed under the head "building", "associated", "repair" and "depreciation"---Said entries in the ledger had properly depicted all the transactions during the income year---Taxation Officer had failed to point out any specific defects in the books and supportive documents so the rejection of declaration version and estimation of lease money was without any legal basis--Unless and until specific defects in the books of accounts were confronted through a notice under S.62 of the Income Tax Ordinance; 1979, the book version could not be rejected--Declared lease money was directed to be accepted for both the years and appeals filed by the assessee on the issue of lease money was allowed by the Appellate Tribunal. 1998 PTD 769; PLD 1991 SC 368…

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