I.T.As. Nos. 1698/KB to 1702/KB of 2003, decided on 13th September, 2005. VS I.T.As. Nos. 1698/KB to 1702/KB of 2003, decided on 13th September, 2005., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1072 (2005)

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

----Second Sched., Part-1, cl. (94)---Companies Ordinance (XLVII of 1984), S. 26---Exemption---Assessee Company was a body corporate promoted by various insurance companies to help, support, and protect the status and general welfare of the Insurance Companies' working in Pakistan---Assessee company filed its return claiming exemption---Assessing Officer in re-assessment proceedings repeated his order by holding that assessee was not involved in any charitable or general welfare purpose and made various, add backs from Profit and Loss account---First Appellate. Authority confirmed the treatment in its entirety---Validity---Object of the assessee company was to promote support and protect status, common interest and welfare of the companies and bodies carrying on the business of insurance in Pakistan---Company could at best be considered as an association doing research to find ways and means for increasing business of its members for such and similar other common interests---Company was an association of business rivals who had united on common interest---Such could not be in the form of general public interest---If the welfare of the member companies was the only purpose, it was neither a `charitable purpose' nor a general public welfare motive---On one hand these companies were getting the benefits of deduction of the membership fee and other contributions to this association from their accounts and on the other hand were claiming exemption in the case of this association which was not meant for a public welfare at all---Had these companies united for a charitable hospital or for an educational institution with non-profit motive, the matter could be decided in their favour---If the main purpose was to maintain, run etc. educational institution, research or other institutions for development of technology in the. country for the welfare and uplift of the general Pakistani public or to assist in establishment of hospitals and clinics and dispensaries, or to construct houses and buildings for housing poor class, and to help poor by providing food and clothing to down-trodden public, etc.; such an exemption could be granted---Assessee company was not entitled to exemption under the Second Schedule of the Income Tax Ordinance, 1979 in circumstances.

(1965) 55 ITR 722 (SC) and (1967) 60 Tax 195 ref.

1985 PTD 287 distinguished.

Hyderabad Race Club v. C.I.T. (1985) 153 ITR 521; Fisher's Blend Station v. Tax Commissioner (Wash.) 45 Pac. (2) 942; Union Pass. R.Co. v. Philla. 101 U.S. 528, 25 L.Ed. 912; Harper v. England, 124 Fla. 296, 168 So. 1403; Common v. Hazel 155 Ky. 30, 159 S.W. 673; State v. Soards Directory Co., 148 La 1013, 88 So. 251; Springfield v. Smith 138 Mo. 645. 40, S.W. 757, 37 L.R.A. 446; People v. Morgan, 69 N.Y.S. 263. 59 Ap. Div. 302; Common v. Cover 215 Pa. 556. Atl. 686 St. Louis v. Boatmen's Ins. Co. 17 Mo. 150; Camas Stage Co v. Kozer, 104 Ore. 600, 209 Pac. 95 ALR 27; New Orleans v. Robira, 42 La. Ann. 1098, 8 So. 402. 11 L.R.A. 141 and Portland v. Kozer, 108 Ore. 375, 217 Pac. 833; The Interpretation of Statutes at p.166 of its Chapter 23; PLD 1966 SC (sic); PLD 1966 Dacca 523 and 1973 PTD 361 rel.

(b) Interpretation of Statutes---

----Importing meanings from other laws is not safe---Meaning should be adopted as explained in the concerned enactment---If the main law does not give a guideline then the ordinary dictionary meanings are to be adopted.

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

----Second Sched., Part-I, cl. (94)---Exemption---Charitable purpose---`Charitable purpose' had been defined to include relief of poor, education, medical relief and advancement of any other object of public utility in the Income Tax Ordinance, 1979---Claiming that provision of Income Tax Ordinance, 1979 having been applied while granting permission under the Company Law makes it a charitable society shall not be of help.

(d) Interpretation of statutes---

---Explanation clause is to be given restrictive meanings.

(e) Income-tax---

----Exemption---Facts of each case separately decide the question of exemption of its income.

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

---Second Sched., Part-I, cl. (94)---Exemption---Benefit to the public at large---Term "benefit to the public at large" cannot be stretched to include legal persons doing profitable business.

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

----Second Sched., Part-I, cl. (94)---Exemption---Public---Term `public' stands for `the public' and the general body of mankind.

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

----Second Sched., Part-I, cl. (94)---Exemption---Charitable purpose--Charitable purpose may not be restricted to charity only.

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

---Second Sched., Part-I, cl. (94)---Exemption---Public at large---Term `public at large' cannot .be stretched beyond the living persons.

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

----Second Sched., Part-I, cl. (94)---Exemption---Public at large---Public at large as used in the exemption clause, only includes human beings and not those persons who cannot breathe or enjoy the nature.

(k) Income-tax---

---Exemption---Doubt in case of exemption is to be resolved in favour of revenue and not the assessee.

(l) Income-tax---

----Exemption---Exemption is a special facility and additional benefit which could only be advanced to the people for whom the same had been provided---Nobody could, by way of extending the meaning of law or creating a doubt therein, claim that he was exempt from tax.

(m) Income-tax---

----Exemption---Doubts---Exemption enactments were clearly in derogation of the normal rights and were a kind of special privileges---Such statutes were always subject to strict construction against claimant be that a legal person or juridical person---Before an exemption could be allowed the right for the same should be clearly given rather establish from the statute itself---Doubt in such cases must always be resolved against the existence of such an exemption---If the right of a person of an exemption stands established, efforts should not be made to defeat the purpose, at the same time such 'a right could not be established by debates or arguments and the doubt shall remain a doubt against the tax payer.

Fisher's Blend Station v. Tax Commissioner (Wash.) 45 Pac. (2) 942; Union Pass. R.Co. v. Philla. 101 U.S. 528, 25 L.Ed. 912; Harper v. England, 124 Fla. 296, 168 So. 1403; Common v. Hazel 155 Ky. 30, 159 S.W. 673; State v. Soards Directory Co., 148 La. 1013, 88 So. 251; Springfield v. Smith 138 Mo. 645, 40, S.W. 757, 37 L.R.A. 446; People v. Morgan, 69 N.Y.S. 263. 5,9 Ap. Div. 302; Common v. Cover 215 Pa. 556. All. 686 St. Louis v. Boatmen's Ins. Co. 17 Mo. 150; Camas Stage Co v. Kozer, 104 Ore. 600, 209 Pac. 95 ALR 27; New Orleans v. Robira, 42 La. Ann. 1098, 8 So. 402. 11 L.R.A. 141 and Portland v. Kozer, 108 Ore. 375, 217 Pac., 833 rel.

(n) Income-tax---

----Add back out of Profit and Loss account---Stock phrases---Appellate Tribunal deleted the additions made under the head telephone, motor vehicle expenses and entertainment, being made on the basis of "stock phrases".

(2003) 87 Tax 122 rel.

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

----Ss. 23 & 24---Deductions---Bad debts---Full particulars had hot been provided-Appellate Tribunal set aside the case on said issue---Assessing Officer was directed to re-determine the status of the same in the light of Ss.23 and 24 of the Income Tax Ordinance, 1979 and then either allow or disallow the same.

E.U. Khawaja and S. Hassan Naeem for Appellant.

Mushtaq Husain Qazi, D.R. for Respondent.

Date of hearing: 11th March, 2005.

ORDER

These appeals have been preferred at the instance of the assessee against the order of the CIT(A) dated 26-8-2003, the same are against the finding that assessee is not exempt from tax under the Second Schedule of the Income Tax Ordinance, 1979.

Brief facts leading to these appeals are that the appellant is a body corporate promoted by various insurance companies of Pakistan to help, support, and protect the status and general welfare of the said insurance companies working in Pakistan. The insurance companies are more or less one hundred in number. The assessee company filed its return claiming exemption and in the first round of litigation the ITAT set aside the order with following instructions:

"(1) Whether the object or the association falls within the definition of general public utility and whether it is an association for charitable purpose involving public utility.

(2) It is to be seen whether the income of the association is from voluntary contribution in terms of clause 94 of the Part 1 of the 2nd Schedule.

(3) In case whether receipts fall within the scope of clause 94, it is necessary to determine whether the assessee is a religious or charitable institution."

The Assessing Officer in re-assessment proceedings repeated his order by holding that the assessee is not involved in any charitable or general welfare purpose and also made various add backs from P&L account. In appeal the first appellate authority confirmed the treatment in its entirety. Before us the learned AR says firstly that the jurisdiction of the Assessing Officer was to determine parameters as instructed by the ITAT mentioned by us above. He objected to the format and method of assessment and pointed out the areas, which in his opinion were beyond the directions of the ITAT. His main emphasis, however, remained that the Assessee Company is a charitable institution and that its objects are of general public welfare. He repeated all the arguments and continued saying that the charitable purposes have got nothing to do with term charity. In his opinion charitable purposes includes any beneficial deed in relation to promotion of education, health, environments or such jobs of general public welfare. Formation of association for arranging water, health, and sanitation prayer places etc. for a class or a group or for that matter people living in a particular area amounts to charitable purpose of general welfare. He gave the example of some institutions in Pakistan. Referring to Edhi Welfare Trust, he remarked that it works in all walks of life and makes available facilities to down trodden people. Nobody can doubt that the organization is not charitable being of complete welfare. Similarly, there are organizations; which are for a special class or some time for a specific type of disease. Like in the case of Shoukat Khanam Hospital Trust which has been formed and works only of a specific type of disease. God forbids if one is caught by the said dangerous specific disease only then he can take the benefit of the facilities of that organization. Thus one cannot say that it is not for general public welfare. Furthermore, there are organizations that work for one community. These also serve as asocial welfare organization and are popularly known as of general welfare. On the same pattern the company under discussion has been formed. It is correct that the same has been registered for its effective working under the company law but, however, it remains as of a set up in which the members make dealing with themselves. It has not been formed for trading or making profits but for providing mutual benefit to its members i.e. insurance companies which then are providing another set of welfare to its clients. Such or similar organizations have been considered as charitable generally. Reference was made to some judgments. These referred cases have in fact been discussed by the learned CIT(A) in detail. We, therefore, would like to summarize the same for avoiding unnecessary discussion.

The claim of the assessee of it's being a charitable institution was mostly supported, through the argument that the Government in terms of Ministry of Commerce, Government of Pakistan registration under section 26 of the Companies Ordinance, 1984 has decided the, issue. Said section which has been discussed by the CIT(A) speaks as follows:

"26(1). Power to dispense with "Limited" in the name of charitable and other companies.--- Where it is proved to the satisfaction of the Authority that an association capable of being formed as a limited company has been or is about to be formed for promoting commerce, art, science, religion, sports, social service, charity or any other useful object, and applies or intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members, the local Government may, by licence...direct that the association be registered as a company with limited liability, without the addition of the word "Limited" to the name, and the association may be, registered accordingly. (Stretching it too far)."

In fact so far as the definition of charitable purposes is concerned the CIT(A) has not agreed with learned AR that the above registration is of any help. We also agree with the CIT(A) that this registration does not provide for any guidance or any binding force for determining the status under Income Tax Ordinance, 1979. In a chain of judgments we have held that importing meanings from other laws has never been safe. The law of interpretation has always remained that the meaning should be adopted as explained in the concerned enactment. If the main law does not give a guideline then the ordinary dictionary meaning are to be adopted. In the Income Tax Ordinance, 1979 case the `charitable purpose' has been defined to include relief of poor, education, medical relief and advancement of any other object of public utility. Claiming that above provision having been applied while granting permission under Company Law makes it a Charitable Society shall not be of help. The learned AR has made reference to the judgments quoted as (1965) 55 ITR 722 (SC) and (1967) 60 Tax 195. Further reference has been placed on the case of the ITAT which was further confirmed by the Hon'ble high Court and judgment was reported as 1985 PTD 287 which reads as follows:--

"In this case the appellant was an association registered under section 26 of the Companies Act, 1913. Its main purpose was the advancement of management profession and all its rights, privileges, advantages, concessions and benefits were exclusively reserved for its members. It claimed exemption to its income from certain sources including receipts from its members. However, the Assessing Officer denied the claim of exemption on the ground that the institution was a professional organization concerned with and interested in management. On appeal, however, the ITAT allowed the exemption on the following grounds and held that its income cannot be subjected to tax:

The association is a charitable institution within the meaning of sections 4(3)(i) and 4(3)(ii) of the Income Tax Act, 1922.

That entire income is solely applied for the purpose of the institution as is evident from its Articles and Memorandum of Association.

No portion of its income of property is payable or transferable to the Members of the Association.

The Department however, felt aggrieved with the decision and filed a reference before the High Court. The Honourable High Court upheld the decision of the learned ITAT by observing:---

"We have already seen that the respondent is registered under section 26 of the Companies Act and thus it is under a legal obligation not to distribute any of its profits to its members. Moreover, the Tribunal has found by reference to Articles 4 and 46 of the Articles of Association of the respondent that its entire Income is solely applied to the objects of the respondents and that finding is not challenged before us in any manner. It has also been observed by the Tribunal that it was nobody's case that the respondent does not carry on its objects as stated in the. Memorandum of Association."

???????????

The Memorandum of the respondent shows that some of the objects of the respondent are:

(4) To collect and disseminate information on management.

(5) Practises by establishing libraries, publishing periodical journals and by arranging conference seminars etc.

(6) To provide facilities for the study of any inquiry and research into management and management problems among members and if necessary to establish scholarships, grants rewards and prizes for this purpose.

(7) To develop management courses of all kinds whether independently or in cooperation with the educational and research institutions.

The perusal of the above objects shows that these objects are educative in nature and also are of public utility as study of and inquiry and research into management problems is in pursuit of knowledge and similarly dissemination of information on management practice to be done by them is again for the purposes of expansion of knowledge and is of public utility. They have also to develop management courses of all kinds either independently or in cooperation with the education and research institutions, which is evidently for the purposes of imparting education and training in respect of the Science of Management and are bound to benefit the public. They also have the object of holding examinations and tests of knowledge and experience of management theory and practice which again is the process of ascertainment of the results of the education imparted by them. Since the respondent-Association has been registered as an Association under section 26 of the Companies Act, 1913, it clearly means that it was termed for promoting Commerce, Art, Science, Religion, Charity of any other useful object and that its profits or other income is intended to be applied for promotion of its objects and that it has prohibited the payment of any dividend to its members. The respondent could not have been registered under section 26 of Companies Act unless the Government has been satisfied in respect of the above positions and had then issued a licence directing the Registrar of Companies to register the respondent as such. Therefore, this shows that the respondent is an association whose entire profits are to be utilized for the promotion of its objects and no dividend is to be distributed amongst its members. The same is also the finding of the Tribunals based on the reading of Articles 4 and 46 of the Articles of Association of the respondent. The respondent is therefore, an Association not for profit.

Moreover, the income of the respondent from contribution is also bound to be spent on the objects of the Association which are basically charitable and hence they are except under section 4(3)(ii) of Income Tax.

At this stage it would be useful to consider whether the objects of the Association could be called to be of general public utility, in spite of the fact that it. is a professional organization????? It's objects are to collect and disseminate information on management practices to develop courses and to exchange information with other bodies....There can be no doubt that the object of providing facilities for study and research of the science of management and to formulate standards of conduct., for members are definitely objects of general public utility....A Community where the business, Industry and other Institutions are managed by capable people, who have learnt the Science of management, would be a much better organized society than the one where duly trained managers are not available. Moreover by selling standards of professional conduct the general Public would be saved from those management people who could adopt unethical and unfair methods. Therefore, the bulk of the objects of the respondents are of general Public Utility and hence it is in every sense and Association for a charitable purpose."

Above quotation is reproduction from the order of the CIT(A), learned first appellate authority as already mentioned has discussed the referred case in detail. We consider ourselves convinced that the above case does not apply in all fours in this case. Obviously an explanation clause is to be given restrictive meanings. The facts of each case separately decide the question of exemption of its income. In the referred judgment the purpose primarily is betterment of the public at large by way of developing information through research. All surpluses of the said organization are further to be utilized for research oriented projects through which management of works of public interest is to be improved. Management of the available resources for improvement of Society and accelerating progress of art is normally for general public interest. The purpose of our assessee in comparison to the same are restricted to the insurance companies. We may agree with the AR that number may not be the criteria but the status of the beneficiaries is quite relevant. The questions that whether legal persons in terms of Insurance Companies getting together for the mutual benefit can be considered as General Public and whether the term doctorine of mutuality can be applied in the circumstances so as to grant exemption to this association clearly decides the issue in hand.

Insurance Companies are those corporate bodies which are carrying on the insurance business. They are undoubtedly legal persons but not natural persons. The term benefit to the public at large cannot be stretched to include legal persons doing profitable business. Furthermore, the term `public' stands for `the people' and `the general body of mankind'. Similarly the `charitable purpose' may not be restricted to charity only. However, the term, public at large cannot be stretched beyond the living persons. We find ourselves convinced for the reason that the `public places' and `public parks' etc. cannot be used by any non-living person. Public at large as used in this exemption clause, therefore, only includes human beings and not those persons who cannot breathe or enjoy the nature.

Another important aspect that requires discussion here is that exemption is only for those persons who come within fours of the language of exemption. The golden principle of interpretation i.e. `strict application of the language of law' applies with full strength. The exception to this rule, which is now being settled, is that doubt in case of exemption is to be resolved in favour of revenue and not the assessee. This exception in the case of exemption clauses is unique in its nature. This is for the reason that exemption is a special facility, an additional benefit which can only be advanced to the people for whom the same has m been provided. Nobody can by way of extending the meaning of law or creating a doubt therein can claim that he is exempt from tax. Tax is a national responsibility and is charged on income. Whosoever, comes within the charge is taxed. The law provides for certain sources or classes of income on which said charge is exempt. By way of a similarity in such provided exemption payment of tax cannot be denied. In this regard another aspect needs consideration. The object of the company as mentioned in CIT(A) order is to promote support and protect status, common interest and welfare of the companies and bodies carrying on the business of insurance in Pakistan. It can at best, therefore, be considered as an association doing research to find ways and means for increasing business of its members or such and similar other common interests. It is an association of business rivals who have united on common interests. Obviously, this cannot be in the form of general public interest. If the welfare of the member companies is the only purpose, it is neither a `charitable purpose' nor a general public welfare motive. Apparently on one hand these companies are getting the benefits of deduction of the membership fee and other contributions to this association from their accounts and on the other hand are claiming exemption in the case of this association which is not meant for of public welfare at all. Had these companies united for a charitable hospital or for N an educational institution with non-profit motive, the matter could be decided in their favour. If the main purpose was to maintain, run etc; educational institution, research or other institutions for development of technology in the country for the welfare and uplift of the general Pakistani public or to assist in establishment of hospitals and clinics and dispensaries, or to construct houses and buildings for housing poor class, and to help poor by providing food and clothing to down trodden public etc. such an exemption could be granted. This is where reference to the judgment of Hyderabad Race Club v. CTT (1985) 153 ITR 521 decided by Supreme Court of India shall be of help. The same speaks as follows:-

"Held, that a perusal of the memorandum of association of the company showed that it was specifically mentioned that carrying on the business of a race club was an object for which the society was established. It was not in the nature of a power conferred on the society. The memorandum of association of the assessee after its incorporation clearly stated that the main object to be pursued by it was to carry on the business of a race club. The main object for which the assessee was established could not be regarded differently for the purpose of the Companies Act and the I.T Act. It could not be held that the main object for purposes of the Companies Act was the carrying on of the business of a race club and the main object for purposes of the I.T. Act was scientific breeding of horses. The provisions contained in the memorandum of association were unequivocal and did not warrant any such classification. Moreover, scientific breeding and training of horses as envisaged by assessee was not an object of general public utility. The so-called object of scientific breeding of horses by the assessee was confined to such category of horses useful for the conduct of races. The assessee did not undertake scientific breeding of horses not useful for conducting races e.g. horses which were used for transport in small villages. Scientific breeding or horses connected with the conduct of races hardly conferred any benefit on the community. It was also not denied that the assessee did not undertake the preservation and protection of bovine and infirm horses as a measure of kindness towards animals and prevention of cruelty towards them. The object for which the assessee was established either as a society or as a company did not spell out any charitable purposes."

We have already mentioned earlier that exemption statutes are clearly in derogation of the normal rights and are a kind of special privileges. Such statutes, therefore, are always subject to strict construction against claimant be that a legal person or juridical person. In such like cases before an exemption can be allowed the right for the of same should be clearly given rather establish from the statute itself. Doubt in such cases must always be resolved against the existence of such an exemption. Obviously, if the right of a person of an exemption stands established efforts should not be made to defeat the purpose. However, at the same time such a right cannot be established by debates or arguments and the doubt shall remain a doubt against the tax payer. There are long lines of judgments on the issue. One may refer the case of Fisher's Blend Station v. Tax Commissioner (Wash.) 45 Pac. (2) 942, Union Pass. R.Co. v. Philla. 101 U.S. 528, 25 L.Ed. 912; Harper v. England, 124 Fla. 296, 168 So. 1403; Common v. Hazel 155 Ky. 30, 159 S.W. 673; State v. Soards Directory Co., 148 La 1013, 88 So. 251; Springfield v. Smith 138 Mo. 645. 40, S.W. 757, 37 L.R.A. 446; People v. Morgan, 69 N.Y.S. 263. 59 Ap. Div. 302; Common v. Cover 215 Pa. 556. Atl. 686; St. Louis v. Boatmen's Ins. Co. 17 Mo. 150; Camas Stage Co v. Kozer, 104 Ore. 600, 209 Pac. 95 ALR 27. Also see New Orleans v. Robira, 42 La. Ann. 1098, 8 So. 402. 11 L.R.A. 141 and Portland v. Kozer, 108 Ore. 375, 217 Pac. 833.

Similar language has been used by Mr. M. Mehmood in his Book "The Interpretation of Statutes" at page 166 of its Chapter 23. The exemption classes in relation to fiscal statutes have been held to be of strict application in the following words:--

"Provisions granting exemption or privileges have to be construed strictly against the person claiming the exemption or the privileges. It is for him to show that he is entitled to the exemption. If the rules do not refer to an item of capital there can be no exemption with regard to it. Where an exemption from taxation is claimed the words of the exempting clause must be strictly construed in favour of the State. It is based on the theory that the obligation to pay tax is co-extensive with the protection received by the subject and in obtaining an exemption from taxation the particular subject is seeking relief from the obligation at the cost of other assessees but when the words of the notification in its plain reading entitles to the exemption' specified therein, the Court cannot go beyond the wordings of the clause to withhold that relief on the theory for equal obligation for equal protection.

All exemptions from taxation increase the burden on the other members of the community, they should be deprecated except to the extent permissible by the express language of the Statute, provisions granting exemptions or privileges have to be construed strictly against the person claiming exemption or privilege. The onus in this connection lies on the assessee claiming exemption to establish his plea. The exemption must be strictly construed and confined to the exemption itself and not extended beyond it."

Above para. which we have borrowed from the said Book is based upon PLD 1966 SC (sic), PLD 1966 Dacca 523 and 1973 PTD 361.

For the reason of our discussion earlier and also following the above judgments it is held that above organisation is not entitled to exemption under the Second Schedule of the Income Tax Ordinance, 1979.

This leaves us other part of the assessee grounds, which in relation to add backs from the P&L account. The assessee claim is that addition made under the heads:--

(a) Bad debts,

(b) Telephone expenses,

(c) Motor vehicle expenses, and

(d) Entertainment expenses

are not as per law and facts of the case.

So far as Bad debts is concerned it is a legal issue and if it does not fulfil the requirements as are prescribed for allowance of an expense like this under section 23 of the Income Tax Ordinance, 1979 obviously an addition can be made. However, in respect of other expenses I fail to understand as to how the same can either be unverifiable or of personal nature/excessive in keeping view the fact that this is .a case of Insurance Association of Pakistan. All the arguments which have been used by us against the assessee determining that it is not a case of exemption goes to favour the assessee to the extent of this issue. How can an expense be made in case of an organization like this without proper authentication and approval by the concerned authority. In fact so far as the case of allowance of expenses is concerned this association being promoted by those companies in which acceptance of account has been provided by law itself such add back seems to be as naive. Normal practice of partial add backs in telephones and additions on the basis of stock phrases in the case of motor vehicle expenses and entertainment etc. therefore, cannot be supported at the Tribunal stage. In this regard we are guided by the famous judgment reported as (2003) 87 Tax 122 (H.C.) in which the Hon'ble High Court has directed to refrain from making additions on the basis of stock phrases etc. We, therefore, do not agree with the additions made under the head telephone, motor vehicle expenses and entertainment. All three of them are hereby deleted.

Regarding bad debts full particulars have not been provided before us. We, therefore, set aside the case on this issue. The Assessing Officer shall re-determine the status of the same in the light of sections 23 and 24 of the Income Tax Ordinance, 1979; and then either allow or disallow the same.

This disposes all the appeals filed by the assessee as well as the department.

C.M.A./535/Tax (Trib.)??????????????????????????????????????????????????????????????????????? Order accordingly.