FAYSAL BANK LTD. vs The DEPUTY COMMISSIONER OF INCOME TAX S — 2025 PTD 562 LAHORE-HIGH-COURT-LAHORE

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FAYSAL BANK LTD. VS The DEPUTY COMMISSIONER OF INCOME TAX S. 23(1)(x)---Deductions---Bad debts---Scope---On the basis of the standard accounting principles, a debt becomes irrecoverable when it is written off and so the entitlement regarding deduction for bad debts is, to the extent of irrecoverable loans, determined as such under the regulatory framework governing financial institutions---Thus, it would be a matter to be determined on a case to case basis whether the deduction for bad debts was allowable to a particular taxpayer/financial institution or not---Such issue is required to be determined under the (repealed) Income Tax Ordinance, 1979, by the concerned Deputy Commissioner being the competent Officer---Deputy Commissioner is to determine whether deduction for bad debts is to be allowed to a particular taxpayer individually on the basis of the treatment that has been given by the taxpayer/financial institution in its books of account---High Court , therefore, remitted the present case for the necessary determination regarding irrecoverability of a loan to the concerned Deputy Commissioner---Appeal was disposed of accordingly. Citation Name: 2025 PTD 562 LAHORE-HIGH-COURT-LAHOREBookmark this Case FAYSAL BANK LTD. VS The DEPUTY COMMISSIONER OF INCOME TAX S. 23(1). Cl.V---Deductions---Bad debts---Scope---Income from lease rentals---Depreciation, calculation of---Deduction of other allowances---Scope---Argument of the Department was that depreciation must be calculated after reducing the income from lease rentals by deducting other allowances---Validity---In Cl. V of S. 23(1) of Income Tax Ordinance, 1979, the word "income" is not to be to read as "net income" as this would be adding words to a provision which is not permissible as there is no intendment in taxation laws---In fact, the expression "income from lease rentals only" has to be taken in its ordinary connotation and it signifies simply that depreciation on assets given on lease shall be allowed against any income from lease rentals---Term "income" in this clause has not been used in the isolated sense that it has been defined in the Income Tax Ordinance, 1979---Thus, argument of the Department was misconceived---Question of law to said extent was decided in favour of the appellant and against the respondents / Department---High Court set-aside impugned order passed by Appellate Tribunal---Appeal filed by financial institution was allowed.

FAYSAL BANK LTD. vs The DEPUTY COMMISSIONER OF INCOME TAX S — 2025 PTD 562 LAHORE-HIGH-COURT-LAHORE

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