| Case ID |
0ffa20c5-205e-464a-9f75-11058ad5de9b |
| Body |
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| Case Number |
I.T.As. Nos.371/LB and 300/LB of 2008 |
| Decision Date |
Nov 06, 2009 |
| Hearing Date |
|
| Decision |
The Appellate Tribunal ruled on multiple points of contention regarding the treatment of obsolete stores and the classification of income from bank deposits. It upheld the First Appellate Authority's decision on the taxpayer's claim for the write-off of obsolete stores, asserting that the taxpayer had substantiated their claims adequately and that the Taxation Officer's objections were unfounded. The Tribunal concluded that the taxpayer's accounting practices conformed to the Income Tax Ordinance, particularly regarding the recognition of stock-in-trade and allowed deductions for losses due to obsolescence. Additionally, it ruled that the interest earned from bank deposits was rightly classified as income from other sources under section 39, dismissing the taxpayer's argument for it to be considered business income under section 18. Both appeals from the department were dismissed, affirming the taxpayer's positions on these matters. |
| Summary |
This case revolves around the appeals regarding the treatment of obsolete stores and the classification of interest income from bank deposits under the Income Tax Ordinance, 2001. The Appellate Tribunal Inland Revenue examined the taxpayer's claims for deductions related to obsolete stock, which had been written off based on the accrual method of accounting. The Tribunal upheld the First Appellate Authority's decision that the taxpayer had substantiated its claims, and the Taxation Officer's requirement for actual disposal before allowing deductions was not valid. The decision emphasized that the method of accounting regularly employed by the taxpayer was legitimate under the law. Furthermore, the Tribunal ruled that profits from bank deposits were correctly classified as income from other sources, rejecting the taxpayer's assertion that these should be treated as business income. The outcome reaffirmed the legal principles surrounding income classification and deduction allowances, making it a significant ruling for tax practitioners and corporations involved in similar disputes. |
| Court |
Appellate Tribunal Inland Revenue
|
| Entities Involved |
KOHAT CEMENT COMPANY LTD.,
COMMISSIONER OF Income Tax (LEGAL) LTU
|
| Judges |
CH. ANWAAR UL HAQ, JAWAID MASOOD TAHIR BHATTI
|
| Lawyers |
Viqar A. Khan, FCA,
Zulqarnain Trimzi, D.R.
|
| Petitioners |
KOHAT CEMENT COMPANY LTD.
|
| Respondents |
COMMISSIONER OF Income Tax (LEGAL) LTU
|
| Citations |
2015 SLD 12,
2015 PTD 9
|
| Other Citations |
Genertech Pakistan Ltd. and others v. ITAT and others (2004) 90 Tax 33,
2007 PTD (Trib.) 2365,
1993 PTD (Trib.) 465
|
| Laws Involved |
Income Tax Ordinance, 2001
|
| Sections |
21,
32,
39,
18,
35(4),
70,
177,
122(1)/(5)
|