| Case ID |
10c8a698-18ea-4fd1-86bf-64f58110e046 |
| Body |
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| Case Number |
I.T.A. No.74/KB of 2010 |
| Decision Date |
Dec 02, 2013 |
| Hearing Date |
Oct 25, 2013 |
| Decision |
The Appellate Tribunal ruled in favor of the department regarding the apportionment of deductions under Section 67 of the Income Tax Ordinance, 2001. The Tribunal emphasized that a reasonable basis for apportionment must consider the relative nature and size of activities. The decision highlighted that income from exports and local sales should be appropriately segregated for tax purposes. The Tribunal found that the taxpayer's method of apportionment based on the quantity sold was valid and reasonable, while the department's contention to base apportionment on turnover was rejected. The Tribunal allowed the appeal from the department and dismissed the taxpayer's appeals on this issue. |
| Summary |
In the case I.T.A. No.74/KB of 2010, heard by the Appellate Tribunal Inland Revenue, the key issue was the apportionment of deductions under Section 67 of the Income Tax Ordinance, 2001. The taxpayer, Pakistan Refinery Limited, argued for a reasonable basis for apportioning direct and indirect expenses related to crude oil processing. The Tribunal underscored the importance of a reasonable basis that reflects the nature and size of business activities. The case examined various income tax laws, including the Income Tax Rules of 2002 and 1982, and the Income Tax Ordinance of 2001 and 1979. The Tribunal ruled that the taxpayer's method of apportionment based on the quantity of products sold was justified, while the department's reliance on turnover for apportionment was deemed inappropriate. The decision provided clarity on the application of tax regulations concerning export and local sales, emphasizing that the method of apportionment should be consistent and reasonable, particularly in the volatile oil market. This ruling is significant for businesses in similar sectors, providing guidance on the apportionment of expenses for tax purposes. |
| Court |
Appellate Tribunal Inland Revenue
|
| Entities Involved |
Pakistan Refinery Limited
|
| Judges |
Faheemul Haq Khan, Accountant Member,
Muhammad Jawed Zakaria, Judicial Member
|
| Lawyers |
Shabbar Zaidi, FCA
|
| Petitioners |
Not available
|
| Respondents |
Messrs Pakistan Refinery Limited
|
| Citations |
2014 SLD 1499,
2014 PTD 935,
(2014) 110 TAX 1
|
| Other Citations |
2013 PTD 2095,
PTD 1961 SC 375,
(1999) 80 Tax 217,
PLD 1997 SC 582,
1997 PTD 1555,
PLD 2002 Pesh. 118,
PLD 2002 Lah. 369,
2000 CLC 1583
|
| Laws Involved |
Income Tax Ordinance, 2001,
Income Tax Rules, 2002,
Income Tax Rules, 1982,
Income Tax Ordinance, 1979
|
| Sections |
67,
122(5A),
13,
231,
216,
FirstSched:Part-IV
|