Law: Income Tax Ordinance, 1979

Section: 12(9A),SecondSched.,PartIV,Cls.59&66A

Income Tax Ordinance (XXXI of 1979)------S. 12 (9A), Second Sched., Part IV, Cls. 59 & 66-A---Income deemed to accrue or arise in Pakistan--Exemption from specific provisions ---C.B.R: Letter No. F. 12(9A)ITP, 99, dated 8-6-2001--¬C.B.R. Letter No.F. 12(9A)IT/99, dated 16-6-2001---Reserves--¬Imposition of tax under S.12(9A) of the Income Tax Ordinance, 1979 a 10 % on amount of reserves exceeding 50 % of paid-up capital worked out on the basis of assessed profit rather than assessees declared profit--¬Validity---For purpose of S.12(9A) of the Income Tax Ordinance, 1979, 40% of "after-tax profits" were to be computed on the basis of assessees after tax profit as declared in its final accounts and not on the basis of its assessed profits as the term "after tax profits" refers to profits computed in accordance with the generally accepted and understood accounting audit principles and standards of Income Tax Ordinance, 1979---Inspecting Additional Commissioner had jurisdiction to examine and verify the genuineness of assessment order to arrive at "after tax profits" of assessee---Order under S.66-A of the Income Tax Ordinance, 1979 imposing tax under S.12(9A) of the Income Tax Ordinance, 1979 on the basis of assessment order was unjustified--¬Inspecting Additional Commissioner was directed to compute the after tax profits in accordance with the generally accepted and understood accounting, and audit principles and standards of Income Tax Ordinance, 1979, after verifying the genuineness of the various deductions claimed by the assessee to arrive at its "after tax profits". I.T.As. Nos. 2256 & 223/KB rel. ORDER The assessee in this appeal has taken objection to the order, dated 28-6-2002 passed by the learned IAC invoking section 66A of the Income. Tax Ordinance, 1979 imposing tax under section 12(9A) at Rs.12,958,300. 2. Further objection is taken to the order working out of tax at 10% of Rs.12,958,300 on the amount of reserves exceeding 50 % of paid up capital under provision of section 12(9A) of the Income Tax Ordinance, 1979 worked out as per the assessment order of the relevant period. The charging of surcharge at Rs.810,753 on increased tax demand…

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