| Case ID |
15435f2f-5713-4033-a844-d4b501bfc66b |
| Body |
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| Case Number |
I.T.A. No. 5036/LB of 1995 |
| Decision Date |
May 08, 2002 |
| Hearing Date |
Apr 10, 2002 |
| Decision |
The Income Tax Appellate Tribunal ruled that the action taken under Section 12(18A) of the Income Tax Ordinance, 1979 against the assessee was not justified for the assessment year 1993-94. The Tribunal clarified that a loan could only be deemed income if not paid within five years or by June 30, 1994. Since the assessed loan was first included in the wealth statement in 1987, and given the timeline, the Tribunal concluded that the Assessing Officer could not take action for the year in question. Moreover, the Tribunal upheld the legality of converting a loan into a gift, emphasizing that such actions are permissible under Islamic law and do not contravene any existing laws in Pakistan. The appeal of the Revenue was rejected, affirming the decision of the learned Commissioner who deleted the addition made under Section 12(18A). |
| Summary |
This case revolves around the interpretation of Section 12(18A) of the Income Tax Ordinance, 1979, which discusses the tax implications of loans that are not repaid within a specified time frame. The Tribunal found that the Assessing Officer's decision to classify a long-standing loan as taxable income was premature, as the loan was first recorded in the wealth statement in 1987 and the five-year repayment period extended to June 30, 1994. The Tribunal also affirmed the legality of converting loans into gifts, highlighting that creditors may waive their rights to recover loans without incurring tax liabilities. This case sets a precedent for future tax assessments related to loans and gifts, emphasizing the legality of minimizing tax obligations through legitimate means. The ruling reinforces taxpayer rights and clarifies the application of income tax laws regarding loans and gifts. |
| Court |
Income Tax Appellate Tribunal
|
| Entities Involved |
Not available
|
| Judges |
ZAFAR ALI THAHEEM, JUDICIAL MEMBER,
MUHAMMAD SHARIF CHAUDHRY, ACCOUNTANT MEMBER
|
| Lawyers |
Manzoor Hussain Shad, D.R. for Appellant,
Sarfraz, F.C.A. for Respondent
|
| Petitioners |
Not available
|
| Respondents |
Not available
|
| Citations |
2002 SLD 444,
2002 PTD 3072,
(2003) 87 TAX 80
|
| Other Citations |
Not available
|
| Laws Involved |
Income Tax Ordinance, 1979
|
| Sections |
12,
12(18A)
|