Law: Income Tax Ordinance, 2001

Section: 67,122,154,122(5A),122(9),154(4)

Law: Income Tax Rules, 2002

Section: 13,131,231,231(1)(b)

Income Tax Ordinance (XLIX of 2001)---Ss.67 & 122(5-A)(9)---Income Tax Rules, 2002, Rr.13, 231(1)(6) & 131---Apportionment of deductions---Amendment of assessment---Appeal to Appellate Tribunal---Expenditure had to be apportioned on a reasonable basis after taking into consideration and account the relative nature and the size of the activities to which the amount related---Taxation Officer, in the present case had failed to point out a single expense which related to either dividend income or the exempt capital gain declared by the assessee---Taxation Officer had apportioned the expenditure only on the premise and the assumption that "had the taxpayer not invested in the shares, then the fund so available would have been invested in business", which had shown that the Taxation Officer could not bring on record any evidence to justify his said action--Alleged apportionment was found to have been made on imagination only---Taxation Officer had failed to prove "relative nature" and size of the activities to which the amount related which was an essential requirement as per the provisions of S.67 of Income Tax Ordinance, 2001---Said apportionment made by the Taxation Officer, had rightly been deleted by Commissioner Income Tax (Appeals)---No interference in that regard was required---Taxation Officer had misinterpreted R.231(1)(b) of Income Tax Rules, 2002 by bringing export rebate within the ambit of total profit which was contrary to the provisions of S.154(4) of Income Tax Ordinance, 2001--Appeal filed by the department against decision of Commissioner Income Tax (Appeals) on issue of apportionment, was dismissed and order passed by Commissioner Income Tax (Appeals) was confirmed. THIS ORDER PASSED BY: MRS. ZAREEN SALEEM ANSARI, ACCOUNTANT MEMBER.---This appeal has been filed by the Department against the order of the learned C.I.T.(A) dated 1-12-2005 on the following grounds:-- (1) That the learned C.I.T.(A) has erred in deleting the Financial Expenses of Rs.569,435 allocated Dividend Income and Exempt Capital Gain as per provisions of section 67 of the Income Tax Ordinance, 2001 read with Rule-13 of the Income Tax Rules, 2002; (2) That the learned…

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