LAHORE: The Appellate Tribunal Inland Revenue Lahore ruled out the tax department’s interpretation of Section 111 of the Income Tax Ordinance 2001 and termed that making addition to the income of a taxpayer by wrongly applying accounting principles and interpretation of fiscal laws was unjust.
As per details, in a landmark verdict, the tribunal also overthrew the department’s applicability of Section 111 of the Income Tax Ordinance, 2001. The tribunal ruled that it was not the only compulsory condition that against each and every liability there must be some investment or asset. Expenditures viz-a-viz assets both can be financed through a liability. When all the parties/creditors are registered taxpayers and all payments have been routed through cross-cheques in accordance with the provisions of section 73 of Sales Tax Act, 1990, there is no justification for the addition u/s 111.
The verdict declared that taxpayer should not to be put under fear that he had to remember scenario of each and every entry at the end of year. Rather he has to work freely and concentrate upon his business to earn money. If he will earn something, he will pay to the government exchequer because in corporate sector taxpayers each and every unit is in-fact a partner of the exchequer for 35 percent of their profits. Such like attitude of the tax department to show the muscle serves neither public exchequer nor the economy.
Strange enough that without considering the clearly worded order issued by the High Court a huge amount of Rs81,684,612 has been taxed as deemed income solely by misapplying the provisions of the Ordinance which is patently illegal.