Law: Income Tax Ordinance, 1979

Section: 13(1)(aa),52A,86

Law: Sale of Goods Act, (III of 1930)

Section: 2(7),4

(a) Income Tax Ordinance (XXXI of 1979)------S. 13(1)(aa)--Addition--Identification of source--Identification of source is an important condition for coming to the conclusion with regard to its addition in respect of provisions of S.13(1)(aa) of the Income Tax Ordinance, 1979. 2003 PTD 1040 rel. (b) Income Tax Ordinance (XXXI of 1979) S. 13(1)(aa) Addition Where Directors of company come forward and say that they had made the investment it should not be added in the hands of the company. (c) Income Tax Ordinance (XXXI of 1979) S. 13(1)(aa) Addition Principle Addition could only be made after determining the source from which such funds emanated. 2003 PTD 1040 rel. (d) Income Tax Ordinance (XXXI of 1979) S. 13(1)(aa) Addition Company Share deposit money Foreign remittances Certificate of foreign remittance was found to be fake No business of company Addition in the hands of company without identification of source of company Validity Identification of source factually and logically routes through the Directors who had floated such company through proper documentation and had introduced investment Fact that their documents were found not satisfactory, did create a reasonable doubt about their source, but not against the company, a legal person, which had started business after incorporation and had not done any trading or manufacturing and such source could not be identified as from some transaction done by the company. (e) Income Tax Ordinance (XXXI of 1979) S. 13(1)(aa) Sale of Goods Act (III of 1930), S. 2(7) Addition ¬Share deposit money Stocks Responsibility for explaining the source of such money was on the Directors Share deposit money was payment against purchase of shares, which was a sale transaction ¬Such transaction was covered under the definition of goods Shares undoubtedly were stocks of the Company and payment made by the Directors for their purchase was a sale transaction Directors of the Company had deposited the requisite amount for purchase of shares of the Company Same was a proper share capital and not mere deposit or advance Money having come to the coffers of the Company the formalities of the contract from the side of Directors under S.5…

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