Law: Income Tax Ordinance, 1979

Section: 14,16(2)(c)(1),27,28,30

(a) Income Tax--- Agreement between private parties-Transaction ---Taxability---Validity---Taxability of a transaction or otherwise is determinable under the law and not through the recitation made in the agreement between the private parties. (b) Income Tax Ordinance (XXXI of 1979)-----S. 27---Capital gains---Principle that "when asset itself is lost and the entire source of business is taken away which is separable from the other business of an assessee, the compensation received would be a capital gain and not revenue receipt" is a principle independent of the fact whether the amount received is on account of a voluntary agreement regarding relinquishing the source of income or otherwise---Said principle remains unaltered on transition from Income Tax Ordinance, 1922 to Income Tax Ordinance, 1979 as the fundamentals on the subject remain the same. (1908) 77 Tax 35 (Trib.) rel. (c) Income Tax Ordinance (XXXI of 1979)--- ----S. 27---Capital gain---Capital receipt---Any voluntary payment to take away the source of income described by whatever name is a capital receipt not liable to tax. 39 Tax 21 rel. (d) Income-tax--- ----Principle of consistency and certainty---Administration of justice-Principle of consistency and certainty occupy a very prominent position in the law of precedence which has to be adhered to in order to maintain discipline in the administration of justice. (1998) 77 Tax (Trib.) 35; 39 Tax 21 and 75 Tax 108 rel. (e) Income-tax--- ----Splitting of business in three entities---Camouflaged arrangement---Validity---Department itself had not made any objection in two earlier assessment years and secondly the issue raised was not subject -matter of appeal---Objection raised was rejected by the Appellate Tribunal. (f) Precedent--- ---- Foreign Courts---Precedence---Reference to---Superior Courts do refer to precedence of foreign origin and follow the precedents laid down by the foreign Courts on corresponding provisions. (g) Income Tax Ordinance (XXXI of 1979)--- ----S. 27---Capital gain---Capital receipt ---Exemption---Principles---Capital receipts not in the nature of capital gain are exempt from taxation on the principle of law enunciated by the…

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