Computation of Taxable Income Chapter- 06
Where the Commissioner is satisfied with the report of the independent chartered
accountant or cost and management accountant, the FMV of asset, product,
expenditure or service determined in the report shall be treated as definite information
for the purpose of sub-section (8) of section 122. Where the Commissioner is not stratified with the report of the independent chartered
accountant or cost and management accountant, the Commissioner may record
reasons for being not satisfied with the report and seek report from another
independent chartered accountant or cost and management accountant, to determine
the fair market value of asset, product, expenditure or service at the time of transaction. The Commissioner shall seek report as referred above with prior approval of the Board.- Transactions under dealership arrangements [U/S 108B]
Where a person supplies products listed in the Third Schedule to the Sales Tax Act, 1990 or
any other products as prescribed by the Board, under a dealership arrangement with the
dealers who are not registered under Sales Tax Act, 1990 and are not appearing in the
active taxpayers’ list under this Ordinance, an amount equal to 75% of the dealer’s margin
shall be added to the income of the person making such supplies. For the purposes of operation of this section, 10% of the sale price of the manufacturer shall
be treated as dealer’s margin.- Recharacterisation of income and deductions [U/S 109]
For the purposes of determining liability to tax under this Ordinance, the Commissioner may –(a) recharacterise a transaction or an element of a transaction that was entered into as part
of a tax avoidance scheme;
(b) disregard a transaction that does not have substantial economic effect; or(c) re-characterise a transaction where the form of the transaction does not reflect the
substance.
(d) From tax year 2018, disregard an entity or a corporate structure that does not have an
economic or commercial substance or was created as part of the tax avoidance
scheme."; and In this section, tax avoidance scheme means any transaction where one of the main purposes
of a person in entering into the transaction is the avoidance or reduction of any person‘s liability
to tax under this Ordinance. Reduction in a person's liability to tax as referred above means a reduction, avoidance or
deferral of tax or increase in a refund of tax and includes a reduction, avoidance or deferral of
tax that would have been payable under this Ordinance, but are not payable due to a tax treaty
for the avoidance of double taxation as referred to in section 107. from tax year 2018 and onwards, treat a place of business in Pakistan as a permanent
establishment, if the said place fulfills the conditions as specified in sub-clause (g) of clause
(41) of section 2.- Liability in respect of certain security transactions [U/S 112]
Where the owner of any security disposes of the security and thereafter re-acquires the
security and the result of the transaction is that any income payable in respect of the security is
receivable by any person other than the owner, the income shall be treated, for all purposes of
the Ordinance, as the income of the owner and not of the other person. In this section, security includes bonds, certificates, debentures, stocks and shares.