Law: Income Tax Ordinance, 1979

Section: 32,24,24(c),50,50(4),50(5),52,62,80,80C

(a) Income Tax Ordinance (XXXI of 1979)----S. 32---Method of accounting---Test reports---Test reports were merely indicator which could not be outright applied on each and every unit of Ghee Mill---If such practice was allowed, the very purpose of maintaining books of accounts by an assessee in accordance with S.32 and the Rules made thereunder would frustrate. 1987 PTD (Trib.) 402 ref. (b) Income Tax Ordinance (XXXI of 1979)--- ----S. 62---Assessment on production of accounts, evidence etc.---Rejection of accounts----In absence of pointing out specific material defects in the books of accounts and particularly when the declared Gross Profit rate was not ridiculously low, the declared trading account was bound to be accepted. 1986 SCMR 443 rel. (c) Income Tax Ordinance (XXXI of 1979)--- ----S.62---Assessment on production of accounts, evidence etc.--Rejection of accounts---High consumption of raw material---Merely declaring high consumption of raw material or excessive wastage did not give rise to the basis for rejection of account version. (1961) 42 ITR 237 (H. C.) rel. (d) Income-tax--- ----Cost of sales account---Showing sale of damaged seed in cost of sales account was not against the principle of accountancy coupled with it. (e) Income-tax--- ----Cost of sales account---Crediting sale of damaged seeds to the cost of sales account could not be termed to be a discrepancy; it could safely be held to be a difference of opinion on recording a transaction and nothing else. (f) Income Tax Ordinance (XXXI of 1979)--- ----Ss. 62 & 32---Assessment on production of accounts, evidence etc.---Method of accounting---Addition on account of process loss---When the declared gross profit rate and also the declared sale price had been directed to be accepted by the First Appellate Authority and especially when debit side of the trading account had not been objected to then judicial hierarchy demands acceptance of the declared trading version---Making addition on account of process loss in such circumstances would not be sustainable---Such would be burdening the assessee twice; it was so because gross profit rate had been arrived at after excluding debit side of the…

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