| Case ID |
e8d71d2d-3db0-411c-90fa-180cb59a9f7e |
| Body |
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| Case Number |
I.T.A. No. 3223 of 1966-67 |
| Decision Date |
May 02, 1968 |
| Hearing Date |
|
| Decision |
The Income Tax Appellate Tribunal ruled that the difference between the actual price paid for compensation books and their face value was not taxable income. The Tribunal determined that the purchase of compensation books was incidental to the business of running hotels and not a trading activity. It concluded that the surplus arising from this transaction could not be assessed as income under the Income Tax Act, as the primary motive was to acquire a capital asset, not to engage in the buying and selling of compensation books. The principles of res judicata and estoppel were also deemed inapplicable to income tax proceedings. |
| Summary |
In the case I.T.A. No. 3223 of 1966-67, the Income Tax Appellate Tribunal addressed the taxation of a surplus arising from the purchase of compensation books utilized to acquire property for a hotel business. The Tribunal held that the transaction did not constitute taxable income, as it was an incidental activity linked to the primary business of running hotels. Key points emphasized included the nature of compensation books as capital assets rather than stock-in-trade and the inapplicability of res judicata and estoppel in income tax matters. This decision underscores the distinction between capital gains and ordinary income, particularly in the context of business expansions involving unique assets such as compensation books. The ruling is significant for tax law practitioners and businesses involved in similar acquisitions, reinforcing the importance of understanding the nuances of capital versus revenue transactions. |
| Court |
Income Tax Appellate Tribunal, Karachi
|
| Entities Involved |
Not available
|
| Judges |
NUR ILAHI, PRESIDENT,
M. T. SIDDIQUI, ACCOUNTANT MEMBER
|
| Lawyers |
Ali Athar, Advocate,
M. G. Hasan, PTS., D.R.
|
| Petitioners |
Not available
|
| Respondents |
Not available
|
| Citations |
1969 SLD 715,
(1969) 19 TAX 1,
1969 PTD 1
|
| Other Citations |
Not available
|
| Laws Involved |
Income Tax Act, 1922,
Income-tax Ordinance, 1979
|
| Sections |
34,
10,
4(3)(vii),
2(4A),
9(1),
65(1)
|