| Case ID |
2fd8766e-013d-49bf-9d3c-e98aa57ada6e |
| Body |
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| Case Number |
P. T. R No. 874 (T R. No 7) of 1974 |
| Decision Date |
Oct 23, 1978 |
| Hearing Date |
Jun 28, 1978 |
| Decision |
The Lahore High Court ruled that the forfeiture of Rs. 10,000 imposed by the Martial Law Committee was not a legitimate business expenditure. The court concluded that the amount forfeited was a penalty for violating the law regarding the acceptance of demonetized currency, and thus, it could not be claimed as a deductible expense under Section 10(2)(xvi) of the Income Tax Act, 1922. The court emphasized that any liability arising from the infraction of law could not be considered as an expenditure incurred wholly and exclusively for the purposes of business. The decision highlighted the importance of adhering to legal regulations in business practices and clarified the criteria for what constitutes admissible business expenses. |
| Summary |
In the case of P. T. R No. 874 (T R. No 7) of 1974, the Lahore High Court addressed the issue of whether a forfeiture imposed by the Martial Law Committee could be classified as a legitimate business expenditure under the Income Tax Act, 1922. The court found that the forfeiture of Rs. 10,000 was a penalty resulting from the acceptance of demonetized currency, which violated law. As such, the forfeiture could not be deducted as a business expense, as it did not meet the criteria of being incurred wholly and exclusively for business purposes. This ruling reinforces the necessity for businesses to comply with legal standards, as any violations would not only result in penalties but also affect tax deductions. The court's decision serves as a precedent for future cases involving similar issues of legal compliance and business expenditures. |
| Court |
Lahore High Court
|
| Entities Involved |
COMMISSIONER OF INCOME TAX, LAHORE ZONE, LAHORE,
PUNJAB OIL EXPELLER CO., LAHORE
|
| Judges |
MUHAMMAD AFZAL LONE,
MUHAMMAD AMIN BUTT
|
| Lawyers |
Sh. Abdul Haq
|
| Petitioners |
COMMISSIONER OF INCOME TAX, LAHORE ZONE, LAHORE
|
| Respondents |
PUNJAB OIL EXPELLER CO., LAHORE
|
| Citations |
1979 SLD 28,
(1979) 40 TAX 55
|
| Other Citations |
Inland Revenue Commissioner v. Anglo Browing Co., Ltd. (1925) 12 Tax Case 803, 813,
I.R. v. Warnes & Co. (1919) 2 K.B 444,
I.R. v. Alexander Van Glehn & Co. Ltd (2 T.C. 232),
Ata Hussain Khan Ltd, v. Commissioner of Income Tax (1970) 21 Tax 1
|
| Laws Involved |
Income Tax Act, 1922
|
| Sections |
10,
10(2)(xvi)
|