Law: Income Tax Ordinance, 1979

Section: 12(18),13(1)(aa),62,108,139,141,142,144, 148

Law: Income Tax Rules, 1982

Section: 53,61A,61

THIS ORDER PASSED BY: ISTATAAT ALI (ACCOUNTANT MEMBER):---.--- These cross appeals have been filed by the assessee as well as department against order, dated 14-9-2000 passed by CIT (A-I), Islamabad. The assessee has also filed separate appeals against order, dated 3-2-2008 passed by CIT(A-I), Islamabad in respect of imposition of penalty under section 108. 2. As per facts the assessee a non-listed public limited company deriving income from running a textile mill filed returns declaring loss of Rs.3,31,10,621 and Rs.1,43,67,559 for assessment years 1997-98 and 1998-99 respectively. For the reasons recorded in combined assessment order under section 62 the declared version was rejected and net income was assessed as under:-- Assessment year 1997-98 Quantity of yarn estimated at 2500000 pounds. Rs.2500000 Sale rate per pound Rs.52 Total sale of yarn Rs.130,000,000 G.P. rate 12% Rs.15,600,000 Less: P L expenses. 1. Administrative. Rs.78,508 2. Selling. Rs.162,834 3. Financial Rs.19,132,269 Rs.20,076,611 Net loss (Rs.4,476,611) Rs.59,465 Addition out of Administrative expenses. Net loss (Rs.4,417,146) Add: other income as declared. (Rs.313,262) Net loss (Rs.4,103,884) Assessment year 1998-99 Quantity of yarn estimated at 5200000 pounds. Rs .5200000 Sale rate per pound. Rs.52 Total sale of yarn. Rs.270,400,000 G.P. rate. 12% Rs.32,448,000 Less: P L expenses. 1. Administrative. Rs.1,119,574 2. Selling. Rs.180,834 3. Financial Rs.21,390,66 Rs.22,690,236 Net loss Rs.9,886,659 Add: Addition under section 13(1)(aa) Rs.17,090,350 Total income Rs.26,977,009 Less: W. W. F. Rs.539,540 Balance income Rs.26,437,469 3. Tax under section 80D was charged by passing a proper order through which tax liability of the assessee was separately worked out. The assessee filed appeals for both the years contesting the enhancement of selling price of yarn., G.P., rate, add backs out of P L account expenses, addition under section 13(1)(aa), charging of W.W.F. and charging minimum tax under section 80D. Learned CIT(A) vide his impugned order, dated 14-9-2000 reduced the estimate of sales and additions in the P L account and directed to accept the G.P. rate, addition under section 13(1)(aa)…

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