LAHORE: A tax tribunal has upheld the tax authority’s right to correct erroneous assessment orders even if the taxpayer’s return shows losses. The decision is expected to have far-reaching implications for tax disputes in the country. The case centred on the tax authority’s invocation of Section 66-A of the Income Tax Ordinance, 1979, to amend/correct an original assessment order. The taxpayer had argued that the order, although potentially erroneous, was not prejudicial to the interest of the revenue. However, the tribunal disagreed, holding that both conditions for invoking Section 66-A – the order being erroneous and prejudicial to the interest of the revenue were fulfilled. The taxpayer approached the tribunal under Section 136(2) of the Ordinance, proposing a question of law regarding whether the subsidy granted by the federal government to reimburse losses suffered by it should be treated as a capital receipt or a revenue receipt. The taxpayer believed that the order passed under Section 66-A of the Ordinance was without lawful authority and jurisdiction as it was neither erroneous nor prejudicial to the interest of the revenue, as the subsidy granted by the federal government was a capital receipt, not taxable as trading revenue. He…