Law:

Section: 131,156,161,205

(a) Income Tax Ordinance (XLIX of 2001)--- ----Ss. 131, 156, 161 & 205---Advertisement and sales promotion expenses---Failure to deduct tax---Charging of tax and additional tax---Taxation Officer during monitoring proceedings, observed that taxpayer under the head "advertisement and sales promotion expenses" had claimed amount on account of expenses recorded to settle the distributors' claim for free goods being issued to distributors on account of various sales promotion schemes---According to Taxation Officer said expenditure was basically and specifically incurred on account of sales promotion; and taxpayer who was legally bound to deduct tax under S.156 of Income Tax Ordinance, 2001, had failed to do so---Taxation Officer being not satisfied with explanation given by the taxpayer, proceeded to charge tax at the rate of 20% and also charged additional tax under S.205 of the Ordinance---Appeal filed by the taxpayer against order of Taxation Officer, was allowed by the Commissioner (Appeals) and order passed by the Taxation Officer was annulled and the department had filed appeal before Appellate Tribunal---Factually the taxpayer had given free units to its distributors at the time of achieving the requisite target by the distributors which the department had rightly taken as prize on sales promotion---Giving a different colour to any event which squarely came within the ambit of S.156 of the Income Tax Ordinance, 2001 would not help the case of taxpayer---Under S.156 of Income Tax Ordinance, 2001 words `prize' and `sales promotion' had never been restricted to either general public at large or distributors---Commissioner (Appeals) had overstepped beyond the boundaries of the phrase used by the Legislature in S.156 of the Income Tax Ordinance, 2001 in establishing that the taxpayer's case did not fall under ambit of S.156 of the Income Tax Ordinance, 2001---Word `Prize' covered the free units given by the taxpayer to the distributors---Similarly, the words `sales promotion' had to be construed in the scheme of things carried out by the taxpayer bringing the same within the four walls of the provisions of S.156 of the…