Law: Income Tax Ordinance, 1979

Section: 107,Explan.107AA,156,24,24(ft),25,25(c)

Law: Finance Act, 2001

Section: Preamble

(a) Income Tax Ordinance (XXXI of 1979)----Ss. 107AA, 107 & 156---Finance Ordinance (XXI of 2001), Preamble---Tax credit for investment---Assessing Officer disallowed the tax credit claimed under S.107AA of the Income Tax Ordinance, 1979 on the ground that unlike S.107 of the Income Tax Ordinance, 1979 there was no explanation available under S.107AA of the Income Tax Ordinance, 1979 whereby tax credit could not be extended to lease assets---First Appellate Authority allowed such tax credit---Department moved application under S.156 of the Income Tax Ordinance, 1979 before First Appellate Authority that unlike 5.107 of the Income Tax Ordinance, 1979 no explanation was available for S.107AA of the Income Tax Ordinance, 1979 whereby the benefit could be given for lease assets---First Appellate Authority revised his order under S.156 of the Income Tax Ordinance, 1979, vacated its earlier order, and consequently restored the order of the Assessing Officer---Validity---In substance the entire arrangement was an investment, which the lease finance was only a methodology to acquire the assets---No distinction could be drawn between an asset, which was acquired through direct purchase or acquired through lease finance---For the purposes of S.107AA of the Income Tax Ordinance, 1979 no such distinction could be drawn---Order of First Appellate Authority allowing the credit under S.107AA of the Income Tax Ordinance, 1979 in respect of leased assets was absolute, as such same did not warrant interference---Departmental appeal and subsequent order of First Appellate Authority invoking S.156 of the Income Tax Ordinance, 1979 observing that benefit of tax credit under S.107AA was available only to those industrial undertaking which "invested and owned that plant and machinery" was annulled by the Appellate Tribunal---Appeal of assessee was allowed on the issue and departmental appeal lost its effect whereby same was dismissed being infructuous. (b) Income Tax Ordinance (XXXI of 1979)---Ss. 107, Explan. & 107AA---Tax credit for replacement, balancing and modernization of machinery or plant---Tax credit for investment---Provisions of S.107 of the Income Tax Ordinance,…

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