(a) Income Tax Ordinance (XXXI of 1979)---

----Ss.22 & 32---Income from business---Estimate of sales---History of case- Additions in trading account ---Assessee returned sales applying his own G.P. rate---Assessing Officer, rejecting Sales and G.P. rate declared by assessee estimated both sales and G.P. rate at higher figures despite the fact that assessee had the history of acceptance of his accounts---Validity---Held, addition in trading account being contrary to the history of the case, was unwarranted in circumstances.

(b) Income Tax Ordinance (XXXI of 1979)---

----S. 24 (cc), proviso [as added by Finance Act (VII of 1992)]---Director's remuneration as claimed by assessee was reduced by I.T.O. to 40% in pursuance of S.24(cc) of the Income Tax Ordinance, 1979---Held, provisions of S.24(ec), Income Tax Ordinance, 1979 [as added by Finance Act, 1992] being not applicable to assessment year 1991-92 in view of proviso to cl. (cc) of S.24 of the Income Tax Ordinance, 1979 to the addition so made by the Department had no sanction in law.

M.R. Farooqi, I.T.P. for Appellant.

Abdul Rashid, D.R. for Respondent.

Date of hearing: 11thMarch, 1995.

ORDER

Appellant, a Private Limited Company, deriving income from manufacturing and sale of Electric Stabilisers, Regulators, Rectifiers, etc. is contesting certain additions in trading as well as P&L Account for assessment year 1991-92.

2. For the year under appeal, declared GP rate of 33.625/on sales of Rs.7,84,560 was not accepted and G.P. Q 35% was applied on sales estimated at Rs.8,00,000. This resulted in addition of Rs.13,411 in the trading account. Though the appellant has a history of acceptance of accounts and position of accounts and other circumstances during the year under appeal were the same as in the past, the CIT(A) upheld the addition for being on nominal nature. Some relief in respect of P&L expenses was also allowed but on the point of treatment of director's remuneration, he directed to I.T.O. to rectify the order in accordance with the amended law. Appellant's Authorised Representative does not contest additions under other heads of P&L Account but addition in the trading account as well as under the head director's remuneration are vehemently disputed.

3. Addition in the trading account indeed was contrary to the history of the case and unwarranted by the circumstances of the case. The CIT(A)was, therefore, not justified to maintain the addition even if it was of a nominal nature. The addition being unwarranted and unjustified is hereby deleted.

4. An amount of Rs.1,08,000 had been claimed as director's remuneration. The I.T.O. had allowed Rs.33,742 representing 40% of the total income in accordance with clause (CC) of section 24 of the Income Tax Ordinance. The amendment in question was not applicable to assessment year 1991-92 as per proviso to the said clause inserted vide Finance Act. 1992. The addition under this head was without any sanction in law and is accordingly deleted.

5. The appeal succeeds as above.

M.B.A. /401/Trib.Appeal allowed.