Law: Income Tax Ordinance, 2001

Section: 21,.21(k)&FourthSched.Rr.2&3

Income Tax Ordinance (XLIX of 2001)---S.21(k) & Fourth Sched. Rr. 2 & 3----Income Tax Ordinance (XXXI of 1979), Fourth Sched. Rr. 2 & 3---Deductions not allowed--Life Insurance Company---Payment of excess perquisites---Addition made by the Taxation Officer was deleted by the First Appellate Authority---Validity---Amount of allowance exceeding fifty per cent of salary was to be disallowed, however, under Rr.2 & 3 of the Fourth Schedule of the Income Tax Ordinance, 1979 this was made allowable in respect of Life Insurance Corporation/employees---Such was not the situation in Rr.2 & 3 of the Fourth Schedule of the Income Tax Ordinance, 2001---Substantial change occurred in the scope of excessive perquisite as mentioned in Rr.2 & 3 of the Fourth Schedule of the Income Tax Ordinance, 2001 regarding Life Insurance business---First Appellate Authority had not appreciated the change in the Income Tax Ordinance, 2001 and had based his finding on the Income Tax Ordinance, 1979---Taxation Officer was correct as far as taxing the excess perquisite under S.21K of the Income Tax Ordinance, 2001 was concerned---Order of First Appellate Authority was modified by the Appellate Tribunal and findings of Taxation Officer were upheld. I.T.A. No.1171 to 1175/KB of 2000-2001; Order I.T.A. No.162/KB of 2002; I.T.A. No.558 to 560/KB of 2003 and ITA No.187/KB to 1190/KB of 1998-98 distinguished. THIS ORDER PASSED BY : The department has filed this appeal against the order of CIT(A) on a solitary ground which is reproduced as under:-- "That the learned CIT(A) has erred in deleting the addition of Rs.100,599,000 made under section 21(k) of the Income Tax Ordinance, 2001 2. Brief facts of the case are that the at time of framing the original assessment order the Taxation Officer, after following legal procedure and issuing notices made certain additions in the taxable income of the taxpayer including additions of excess perquisite under the then section 21(k) of the Income Tax Ordinance, 2001. The relevant portion of Taxation Officer's observation and arguments by the taxpayer are reproduced as under: "(4) That in this case the Taxation Officer has taxed so-called…

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