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

‑‑‑‑S. 16(2) & Second Sched., Part I, Cl. (39)‑‑‑Salary‑‑‑Exemptions‑‑Muzaffargarh Allowance‑‑‑ Generation Allowance‑‑‑ Generation Allowance was exempt while the Muzaffargarh Allowance was not exempt and was part of taxable salary.

I.T.A. No. 4009/LB of 1999 rel.

Talat Altaf Khan, D.R. for Appellant.

Mumtaz‑ul‑Hassan for Respondent.

Date of hearing: 27th May, 2003

ORDER

JAVED TAHIR BUTT (ACCOUNTANT MEMBER).‑‑‑This appeal has been filed by the Revenue assailing the order of the CIT (Appeals) on the following grounds:‑‑

(i)"That the learned AAC was not justified to delete the addition of Muzaffar Garh Allowance under the provision of clause 39 of Part‑I of Second Schedule read with section 16(2) of Income Tax Ordinance, 1979. "

(ii)"That the learned AAC was not justified to delete the addition of Generation allowance under the provision of clause‑39 of Part‑I of Second Schedule read with section 16(2) of Income Tax Ordinance, 1979."

2. Brief facts of the case are that the assessee is an employee of Thermal Power Station, Muzaffar Garh. The assessment was completed under section 59A at an income of Rs.179597 against declared income of Rs.112,473. Generation allowance of Rs.25500 and Muzaffar Garh allowance of Rs.24753 were added to the declared salary income in order passed under section 59A.

3. In appeal it was argued by the assessee that special area allowance paid to the officer who are working in specific locations are exempt from levy of income‑tax under clause (39) of the Second Schedule to Income Tax Ordinance, 1979 and the generation allowance for persons working at Thermal Power Station was given for specific period of five years and is not apart of the salary or pension and not allowed during the leave period. The addition made by the assessee under these two heads were deleted by CIT(A).

4. We have heard both sides and also perused the relevant record available on file. The AR of the assessee informed that ITAT has already decided the issue in the case of assessee for the assessment year 1996‑97 vide ITA No.4009/LB/1999, dated 29‑8‑2000 wherein the generation allowance has been held to be exempt while Muzaffar Garh allowance was held to be taxable. Following the decision of ITAT the generation allowance is held to be exempt and the deletion of addition of Rs.25,500 by CIT(A) is upheld. The other disallowance i.e. Muzaffargarh allowance was held to be not exempt and part of taxable salary. The order of the CIT(A) deleting the addition made in this account is vacated and this allowance is held to be taxable.

5. The appeal is disposed of in the manner and to the extent indicated above.

C.M.A./811/Tax (Trib.)Order accordingly.