Law: Income Tax Ordinance, 1979

Section: 62,66

(a) Income Tax Ordinance (XXXI of 1979)----Ss. 66-A & 62---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Proration of expenses---Sales were taken as inclusive of sales tax---When assessment was framed by proration of expenditure towards income under normal law assessable, the figures of sales were taken by the assessee as inclusive of sales tax and same was adopted by the assessing panel---Department noticed that by including the sales tax in sales for proration of the expenditure to it, was incorrect because it had resulted in higher allocation of expenditure towards normal sales as sales were to be net i.e. exclusive of sales tax---Validity---Including the sales tax in sales and then claiming it as expenditure in Profit & Loss Account was erroneous and prejudicial to the interest of Revenue as sales tax was not an expenditure but it was always by adjustment of payment and receipts of sales tax with its net effect was accounted for---Sales tax when charged in sales invoices and recovered was subject to adjustment against the sales tax on purchases made where the assessee had paid the amount---Such was erroneous as well as prejudicial to the interest of Revenue for the reason that on the one hand, the allocation of expenditure was by higher ratio than actual on the basis of net sales and higher amount had been charged to the normal tax regime---Straightaway deduction of sales tax had been as a part of Profit & Loss Account expenditure had double fold adverse effect on net income assessable under normal law---It was an admitted fact as well as a legally permissible practice that sales tax paid and received were liable to adjustments and/or excluding it from the sales---Treatment given in order under S.62 of the Income Tax Ordinance, 1979 was both erroneous as well as prejudicial to the interest of Revenue---Invocation of S.66-A of the Income Tax Ordinance, 1979 was maintained by the Appellate Tribunal. 1986 SCMR 968; 2002 PTD (Trib.) 1997; 1992 PTD 1671; 2002 PTD 1014; 2004 PTD 330; 2002 PTD 1699; 2002 PTD 2542; 1992 PTD 1681; 2006 PTD 2678; 2008 PTD (Trib.) 47; 1993 PTD 1113; 1993 PTD (Trib.) 1116; 2006 PTD…

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