Law: Income Tax Ordinance, 1979

Section: 12,12(18)

(a) Income Tax Ordinance (XXXI of 1979)----S. 12(18)---C.B.R. Circular No.3 of 1992, dated 27-1-1992---Income deemed to accrue---Payment, made by a sister concern of assessee to third parties on behalf of the assessee under advice to the assessee for their entries in its books of accounts---Transaction shown in the ledger account of the assessee clearly indicated that the payments made by the sister concern were on behalf of the assessee---Most part of the payments were made to third parties by the sister concern through banking channel---Reliance of assessee on C.B.R. Circular No.3 of 1992 dated 27-1-1992 was therefore, relevant as said circular had provided that S.12(18) of the Income Tax Ordinance, 1979 was only to check fictitious loans and entries in the books of accounts by the assessee---Amount in question during the assessment year 1992-93 could be added and deemed as income with reference to the provisions of S.12(18) of the Ordinance only if it had been claimed or shown to have been received as a loan and not as advance by the assessee---Assessee, in the present case, had been successful in demonstrating on the basis of the copies of ledger which were earlier examined by the Assessing Officer, that credit entries made in favour of sister concern were neither claimed nor were factually a loan---Treating such the payments made by the sister concern on behalf of the assessee by the Assessing Officer as `loan' and not advance was clearly unjustified as such payments could not be treated as unrecorded or offensive to the purposive approach of the provisions of S.12(18) of the Income Tax Ordinance, 1979---Appellate Tribunal, in circumstances, was also not justified in maintaining the payments made by the sister concern to be liable as additions under S.12(18) of the Ordinance---"Loan" connotation. Utman Ghee Industries v. Commissioner of Income Tax 2002 PTD 63 and Messrs Micropak (Pvt.) Ltd., Lahore v. Income Tax Appellate Tribunal, Lahore and 2 others 2001 PTD 1 180 fol. (b) Words and phrases--- ----Loan---Connotation. Messrs Micropak (Pvt.) Ltd., Lahore v. Income Tax Appellate Tribunal, Lahore and 2 others 2001 PTD 1180 ref. JUDGMENT NASIM SIKANDAR,…

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