Law: Income Tax Ordinance, 1979

Section: 17,66A,66A(1)

Income Tax Ordinance (XXXI of 1979) Ss. 66A & 17 C.B.R. Letter No.17(1)/94, dated 28 5 1994 -C.B.R. Letter C. No.1 (1)/DTP I 94, dated 28-5 1994 C. B. R. Circular No. 15 of 1954 Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order Interest on securities -Mercantile Accounting System Interest income from Government Securities was assessed on receipt basis Inspecting Additional Commissioner by invoking provisions of S.66 A of the Income Tax Ordinance, 1979 directed the Assessing Officer to assess the same on accrual basis as the assessee was maintaining accounts on Mercantile basis in spite of the fact that same interest income was taxed on receipt basis in the subsequent assessment year Validity Inspecting Additional Commissioner failed to establish any loss of revenue to the Department No change whatsoever had taken place in the method of accounting accepted by the Department over the year Method of accounting adopted by the assessee might be erroneous but for the attraction of S.66 A of the Income Tax Ordinance, 1979, it would not only be an erroneous order but would be prejudicial to the interest of revenue as well Interest income which was ordered to be charged to tax on accrual basis was taxed on receipt basis in the subsequent assessment year and by not ordering for deletion of such amount in the subsequent year, Inspecting Additional Commissioner taxed the same amount twice -Practice of double taxation was deprecated Inspecting Additional Commissioner failed to view the matter in its total perspective and invoked S. 66 A of the Income Tax Ordinance, 1979 and that too only for one year without realizing its impact in the subsequent year whereas the Department would suffer loss if method of accounting adopted by the assessee was discarded Order passed by the Inspecting Additional Commissioner was annulled, the assessment order was restored by the Appellate Tribunal as one of the basic ingredients that not only that order should be erroneous but it should be prejudicial to the interest of revenue, was altogether missing which was a. prerequisite for invoking S.66 A of the Income Tax Ordinance, 1979. 1994 SCMR 229 = 1994 PTD…

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