| Case ID |
3830bb58-02a9-4c43-9483-d12db9d67c77 |
| Body |
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| Case Number |
ITA No. 1561/IB/2015 |
| Decision Date |
Feb 11, 2016 |
| Hearing Date |
Feb 11, 2016 |
| Decision |
The tribunal found merit in the appeal of the taxpayer regarding the addition made under the head of cost of sales, agreeing that without purchases, sales cannot be justified. The tribunal deleted the addition related to cost of sales. Concerning the addition of Rs. 57,729/- under P&L expenses, the tribunal found the prior authorities' addition unjustified and restricted it to Rs. 26,023/-. The decision emphasized the importance of adhering to accounting principles in taxation matters. |
| Summary |
In the case of M/s. City Sanitary Store vs. The CIR, RTO, Rawalpindi, the Appellate Tribunal Inland Revenue addressed significant issues regarding tax assessments under the Income Tax Ordinance, 2001. The taxpayer, having filed a return declaring an income of Rs. 308,680/-, faced an audit that led to an assessment raising the income to Rs. 1,768,839/-. The tribunal scrutinized the treatment of cost of sales and P&L expenses, determining that the tax officer's disallowance of purchases while accepting sales was contrary to fundamental accounting principles. The tribunal's decision to delete the cost of sales addition and restrict the P&L expenses addition to a justified amount underscores the importance of equitable treatment in tax assessments. This case highlights the necessity for tax authorities to base their assessments on sound accounting practices, offering valuable insights for taxpayers and tax professionals alike, particularly in navigating complex tax laws and ensuring compliance. The ruling serves as a precedent for future cases concerning the principles of taxation and the rights of taxpayers in representing their financial claims effectively. |
| Court |
Appellate Tribunal Inland Revenue
|
| Entities Involved |
|
| Judges |
Nazir Ahmad
|
| Lawyers |
Mr. Zahid Shafique,
Mr. Masood Akhtar
|
| Petitioners |
M/s. City Sanitary Store
|
| Respondents |
The CIR, RTO, Rawalpindi
|
| Citations |
2016 SLD 140
|
| Other Citations |
Not available
|
| Laws Involved |
Income Tax Ordinance, 2001
|
| Sections |
120,
121(1)(d),
122(9)
|