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COMMISSIONER INLAND REVENUE ZONE-I vs EXCELL PAKISTAN (PVT — 2022 PTD 1535 KARACHI-HIGH-COURT-SINDH

Case information

Citation
2022 PTD 1535 KARACHI-HIGH-COURT-SINDH
Court
Sindh High Court
Year
2022
Reporter
PTD
Parties
COMMISSIONER INLAND REVENUE ZONE-I vs EXCELL PAKISTAN (PVT
Subject matter
Tax & Customs
Provisions referred to
S. 32; S. 34; Income Tax Ordinance

Fields are extracted from the reported citation and judgment text. Where a detail is not stated in the record, it is not shown.

Judgment text as reported

COMMISSIONER INLAND REVENUE ZONE-I VS EXCELL PAKISTAN (PVT.) LTD Ss.20, 32, 34, 122 & 133---Method of accounting and accrual-basis accounting---Principles---Entry made in accounts---Assessing Authority did not accept claim of loss suffered by taxpayer due to currency exchange rate and added the loss into total income of taxpayer---Appellate Authority deleted the addition of exchange loss which order was maintained by Appellate Tribunal Inland Revenue---Validity---Certain amount was payable by taxpayer to its foreign company and the same was to be considered as an ascertained liability and allowance of the same was to be made on accrual basis, as per mercantile system of accounting---Extra amount payable at the time of actual payments due to devaluation of Pakistan Rupee was to be taken care of in accounts as an ascertained liability of taxpayer as per accounting system employed---Such was considered as a lawful deduction in the hands of taxpayer---If amount was accrued and ascertained but actual payment was made afterwards, the same was allowable expenditure as per the system of accounting maintained by taxpayer---Entries made in books of accounts as per accounting method followed by taxpayer was mercantile and was to be considered as valid entry for the purposes of allowing exchange loss in question---High Court declined to interfere in orders passed by Appellate Authority and Appellate Tribunal Inland Revenue, as the same were in conformity with the provisions of S.32 read with S.34 of Income Tax Ordinance, 200---High Court decided the question in favour of taxpayer and against the Authorities---Reference was disposed of accordingly.

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