NATIONAL DEVELOPMENT FINANCE CORPORATION vs COMMISSIONER OF INCOME TAX Ss

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NATIONAL DEVELOPMENT FINANCE CORPORATION VS COMMISSIONER OF INCOME TAX Ss. 22 & 23---Income from business and profession---Deductions---Bad debts---Scope---While claiming any income from any business and profession, under S. 22 of the Income Tax Ordinance, 1979, certain expenditures under S. 23 are allowable---Section 23(1)(x) deals with the claim made in respect of the bad debts claimed by an assessee---Bad debts are generally those accounts/amounts which due to any reason have become irrecoverable and all possible efforts with regard to their recovery including the hope of recovery has vanished which amounts are claimed as bad debts by an assessee---However, legislature has put a bar upon an assessee that only such amounts would be allowed as bad debts which are determined by the Deputy Commissioner to be irrecoverable---It is not a matter of discretion of an assessee to decide what is a bad debt, rather the assessee has to establish with cogent material and on reasonable grounds that such and such accounts/amounts since have become irrecoverable, therefore, the same are declared as bad debts---However the discretion to allow or not to allow the same has not been given to the assessee rather the said power is given to the concerned Deputy Commissioner Inland Revenue to determine the amounts which actually have become irrecoverable as bad debts and the onus in this regard for claiming any accounts/amounts as irrecoverable as bad debts lies squarely on an assessee. Citation Name: 2023 PTD 1671 KARACHI-HIGH-COURT-SINDHBookmark this Case NATIONAL DEVELOPMENT FINANCE CORPORATION VS COMMISSIONER OF INCOME TAX Ss. 22 & 23---Income from business and profession---Deductions---Bad debts---Scope---Simply on the basis of mere provision an expenditure cannot be allowed and for allowing the claim of the assessee the Assessing Officer is duty bound to call the record, necessary explanations/clarifications from the assessee and thereafter allow or disallow any claim. Citation Name: 2023 PTD 1671 KARACHI-HIGH-COURT-SINDHBookmark this Case NATIONAL DEVELOPMENT FINANCE CORPORATION VS COMMISSIONER OF INCOME TAX S.8---all officers to follow the orders of the Central Board of Revenue---Scope---Instructions of the CBR, now FBR, issued from time to time are binding upon the departmental authorities under S. 8 of the Income Tax Ordinance, 1979. Citation Name: 2023 PTD 1671 KARACHI-HIGH-COURT-SINDHBookmark this Case NATIONAL DEVELOPMENT FINANCE CORPORATION VS COMMISSIONER OF INCOME TAX Ss. 22 & 23---Income from business and profession---Deductions---Bad debts---Scope---Assessee is required to give the names of the account holders and amounts considered as bad debt in each case, as may be indicated in a certificate issued by the State Bank of Pakistan---Assessing Officer has the authority under the law to enquire into genuineness of the claim and the assessee has no arbitrary or irrational authority to write off any amount as bad debt until and unless the parameters, as provided under the law, have been fulfilled or met out, as simply making a provision for doubtful debt is not sufficient to claim deduction under S. 23(1)(x) of the Income Tax Ordinance, 1979.

NATIONAL DEVELOPMENT FINANCE CORPORATION vs COMMISSIONER OF INCOME TAX Ss — 2023 PTD 1671 KARACHI-HIGH-COURT-SINDH

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