Income Tax Ordinance, 2001

Fifth Schedule

Fifth Schedule

THE FIFTH SCHEDULE(See Section 100)PART IRULES FOR THE COMPUTATION OF THE PROFITS AND GAINS FROM THEEXPLORATION AND PRODUCTION OF PETROLEUMRULES FOR THE COMPUTATION OF THE PROFITS AND GAINS FROM THE EXPLORATION AND PRODUCTION OF PETROLEUMExploration and Production of Petroleum a Separate Business1. Where any person carries on, or is treated as carrying on, under an agreement with the Federal Government, any business which consists of, or includes, the exploration or production of petroleum in Pakistan or setting up refineries at Dhodak and Bobi fields, income of exploration and production companies from pipeline operations, and manufacture and sale of liquified petroleum gas or compressed natural gas, such business or part thereof, as the case may be, shall be, for the purposes of this Ordinance, treated as a separate business undertaking (hereinafter referred to as “such undertaking”) and the profits and gains of such undertaking shall be computed separately from the income, profits, or gains from any other business, if any, carried on by the person.Computation of Profits2 (1) Subject to the provisions of this Part, the profits and gains of such undertaking 1[shall be] computed in the manner applicable to income, profits and gains chargeable under the head “Income from Business”.(2) Where such person incurs any expenditure on searching for or discovering and testing a petroleum deposit or winning access thereto but the search, exploration, enquiry upon which the expenditure is incurred is given up before the commencement of commercial production, the expenditure allocable to a surrendered area or to the drilling of a dry-hole shall be treated as lost at the time of the surrender of the area or the completion of the dry-hole, as the case may be.(3) Where the agreement provides that any portion of the expenditure is treated as lost under sub-rule (2) (hereinafter referred to as the “said loss”) and is allowed against any income of such undertaking, it shall be allowed in either of the following ways as may be provided for in the agreement, namely:-(a) The said loss in any year shall be set off against the income of that year chargeable under the head…