Income Tax Ordinance, 2001

CHAPTER-III

TAX ON TAXABLE INCOME PART IV HEAD OF INCOME: INCOME FROM BUSINESS Division III Deductions: Special Provisions

From: 2023-07-01 - To: 0000-00-00 24. Intangibles.- (1) A person shall be allowed an amortization deduction in accordance with this section in a tax year for the cost of the person’s intangibles- (a) that are wholly or partly used by the person in the tax year in deriving income from business chargeable to tax; and (b) that have a normal useful life exceeding one year. (2) No deduction shall be allowed under this section where a deduction has been allowed under another section of this Ordinance for the entire cost of the intangible in the tax year in which the intangible is acquired. (3) Subject to sub-section (7), the amortization deduction of a person for a tax year shall be computed according to the following formula, namely:- A/B where - A is the cost of the intangible; and B is the normal useful life of the intangible in whole years. 1[(4) An intangible that does not have an ascertainable useful life shall be treated as if it had a normal useful life of twenty-five years.] (5) Where an intangible is used in a tax year partly in deriving income from business chargeable to tax and partly for another use, the deduction allowed under this section for that year shall be restricted to the fair proportional part of the amount that would be allowed if the intangible were wholly used to derive income from business chargeable to tax. (6) Where an intangible is not used for the whole of the tax year in deriving income from business chargeable to tax, the deduction allowed under this section shall be computed according to the following formula, namely:- A x B/C where - A is the amount of 2[amortization] computed under sub-section (3) or (5), as the case may be; B is the number of days in the tax year the intangible is used in deriving income from business chargeable to tax; and C is the number of days in the tax year. (7) The total deductions allowed to a person under this section in the current tax year and all previous tax years in respect of an intangible shall not exceed the cost of the intangible. (8) Where, in any tax year, a person disposes of an intangible, no amortization deduction shall be allowed under this section for that year and - (a) if the…