Law: Income Tax Ordinance, 1979

Section: 62,30,31(1)(b),80D

(a) Income tax Ordinance (XXXI of 1979)---S. 62--Assessment on production of accounts, evidence etc.----Trial production---Commercial production---Taxation on profit earned during "trial production"---Validity---No concept of "trial production" or "commercial production" in the income tax law---Such is for internal management/working of a business concern that it treats the production of initial stages as on "trial basis"---Income or loss had to be assessed on the basis of account books and tax liability for the relevant period had to be worked out accordingly---Nevertheless question of "trial production" viz-a-viz "commercial production" had its relevance in cases where question of exemption from tax was materially involved because in that case it had to be determined as from which date the commencement of period of exemption had to be reckoned--Since the question of exemption from tax was not involved in the present case, the income/loss of the company during the so-called "trial production" period shall be assessable under normal law---Treatment given by the Assessing Officer was correct and order of First Appellate Authority being extra-legal was vacated by the Appellate Tribunal and appeal on this point was accepted. 2004 PTD 1653; (1971) 23 Tax 4 (Trib.) and 2006 PTD 2474 ref. (b) Income Tax Ordinance (XXXI of 1979)--- ----S.30---Income from other sources---Interest income---Income on account of interest on bank deposits was assessable under S.30 of the Income Tax Ordinance, 1979 as "income from other sources". 2004 PTD 2255 (SC Pak.) rel. (c) Income Tax Ordinance (XXXI of 1979)--- ----S.31(1)(b)---Deduction---For claiming any expenditure its relationship with its purpose was essential---If the loan was obtained for the purposes of business, then interest on loan will be allowed as expenditure against business income---If the money was borrowed for the purpose of earning interest income, then the interest paid on borrowed money will be allowable as deduction against income from interest---Assessee obtained loan for the purposes of business, and claimed the interest paid on this loan as deduction from business income in the shape of "financial…

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