ZeePedia buy college essays online


Taxation Managment

<<< Previous STATUTORY DEFINITIONS Next >>>
 
img
Taxation Management ­ FIN 623
VU
MODULE 3
LESSON 3.5
STATUTORY DEFINITIONS
Legal concepts and technical words are to be understood in the legal and technical perspective.
 Dictionary meanings can also be referred in the absence of statutory definition.
 In addition to words defined in Section 2, certain words are also defined in other sections.
Type of Definitions
Exclusive or Exhaustive Definition:
 It excludes ordinary dictionary meanings of the word. Exclusive definitions start with the expression
`mean' or `means'.
Examples of exclusive definitions are given below:
Sec. 2(2) Appellate Tribunal means the Appellate Tribunal established under section 130.
2(5A) "assessment year" means assessment year as defined in the repealed Ordinance;2(6)
"association  of  persons"  means  an  association  of  persons  as  defined  in  section
80;2(13)"Commissioner" means a person appointed as a Commissioner of Income Tax under section
208, and includes a taxation officer vested with all or any of the powers, and functions of the
Commissioner;
2(15) "debt" means any amount owing, including accounts payable and the amounts owing under
promissory notes, bills of exchange, debentures, securities, bonds or other financial instruments;
2(23) "fee for technical services" means any consideration, whether periodical or lump sum, for the
rendering of any managerial, technical or consultancy services including the services of technical or
other personnel, but does not include:
(a)  Consideration for services rendered in relation to a construction, assembly or like project
undertaken by the recipient; or
(b)
Consideration which would be income of the recipient chargeable under the head "Salary";
2(36) "non-profit organization" means any person, other than an individual, which is:
(a) established for religious, educational, charitable, welfare or development purposes, or for the
promotion of an amateur sport;
(b) formed and registered under any law as a non-profit organization;
(c) approved by the Commissioner for specified period, on an application made by such person in the
prescribed form and manner, accompanied by the prescribed documents and, on requisition, such
other documents as may be required by the Commissioner; and none of the assets of such person
confers, or may confer, a private benefit to any other person;
Inclusive Definition:
Examples of inclusive definitions are given below:
It includes dictionary meanings as well as meanings conveyed by definition.
Sec. 2(9)--Business includes any trade, commerce, manufacture, profession, vocation or adventure or
concern in the nature of trade, commerce, manufacture, profession, vocation, but doesn't include
employment.
(11A) "charitable purpose" includes relief of the poor, education, medical relief and the advancement
of any other object of general public utility;
2(22) "employment includes:
 a directorship or any other office involved in the management of a company;
 a position entitling the holder to a fixed or ascertainable remuneration; or
 the holding or acting in any public office;
2(19) "dividend" includes:
(a)
any distribution by a company of accumulated profits to its shareholders, whether capitalized or not, if
such distribution entails the release by the company to its shareholders of all or any part of the assets
including money of the company;
7
img
Taxation Management ­ FIN 623
VU
(b)  any distribution by a company, to its shareholders of debentures, debenture-stock or deposit certificate in
any form, whether with or without profit, to the extent to which the company possesses accumulated
profits whether capitalized or not;
(c)
any distribution made to the shareholders of a company on its liquidation, to the extent to which the
distribution is attributable to the accumulated profits of the company immediately before its liquidation,
whether capitalized or not;
(d)  any distribution by a company to its shareholders on the reduction of its capital, to the extent to which
the company possesses accumulated profits, whether such accumulated profits have been capitalized or
not; or
(e)
any payment by a private company or trust of any sum (whether as representing a part of the assets of
the company or trust, or otherwise) by way of advance or loan to a shareholder or any payment by any
such company or trust on behalf, or for the individual benefit, of any such shareholder, to the extent to
which the company or trust, in either case, possesses accumulated profits;
But does not include:
(i)
a distribution made in accordance with sub-clause (c) or (d) in respect of any share for full cash
consideration, or redemption of debentures or debenture stock, where the holder of the share or
debenture is not entitled in the event of liquidation to participate in the surplus assets;
(ii)
any advance or loan made to a shareholder by a company in the ordinary course of its business, where
the lending of money is a substantial part of the business of the company; and
(iii)  any dividend paid by a company which is set off by the company against the whole or any part of any
sum previously paid by it and treated as a dividend within the meaning of sub-clause (c) to the extent to
which it is so set off;
2(58) "share" in relation to a company, includes a modaraba certificate and the interest of a beneficiary
in a trust (including units in a trust);
2(59) "shareholder" in relation to a company, includes a modaraba certificate holder, a unit holder of a
unit trust and a beneficiary of a trust;
Exclusive as well as Inclusive Definition:
Such definitions contain both elements as enumerated above.
Examples of above type of definitions are given below:
Sec 2(7) `banking company means a banking company as defined in the banking companies ordinance,
1962 and includes any body corporate which transacts the business of banking in Pakistan.
2(41) "permanent establishment" in relation to a person, means a fixed place of business through
which the business of the person is wholly or partly carried on, and includes:
a)
a place of management, branch, office, factory or workshop, premises for soliciting orders, warehouse,
permanent sales exhibition or sales outlet, other than a liaison office except where the office engages in
the negotiation of contracts (other than contracts of purchase);
b)
a mine, oil or gas well, quarry or any other place of extraction of natural resources;
c)
a building site, a construction, assembly or installation project or supervisory activities connected with
such site or project but only where such site, project and its connected supervisory activities continue
for a period or periods aggregating more than ninety days within any twelve-months period;
d)
the furnishing of services, including consultancy services, by any person through employees or other
personnel engaged by the person for such purpose
e)
a person acting in Pakistan on behalf of the person (hereinafter referred to as the "agent"), other than
an agent of independent status acting in the ordinary course of business as such, if the agent
f)
has and habitually exercises an authority to conclude contracts on behalf of the other person;
g)
has no such authority, but habitually maintains a stock-in-trade or other merchandise from which the
agent regularly delivers goods or merchandise on behalf of the other person; or
h)
any substantial equipment installed, or other asset or property capable of activity giving rise to income.
Tax Year:
Sec. 2(68) read with Sec. 74---Tax year means a period of 12 months ending on June 30th which is also
called Normal Tax Year.
Special Tax Year:
In case a person has a different accounting period from normal tax year or adopted such a period after
seeking approval from commissioner under section 74(3) it is called special tax year.
Explanation--a tax year can be a period of less than 12 months under special circumstances for example
discontinuance of business u/s 117.
8
img
Taxation Management ­ FIN 623
VU
Section 117 is reproduce below:
117. Notice of discontinued business
(1) Any person discontinuing a business shall give the Commissioner a notice in writing to that effect
within fifteen days of the discontinuance.
(2) The person discontinuing a business shall, under the provisions of this Ordinance or on being
required by the Commissioner by notice, in writing, furnish a return of income for the period
commencing on the first day of the tax year in which the discontinuance occurred and ending on the
date of discontinuance and this period shall be treated as a separate tax year for the purposes of this
Ordinance.
(3) Where no notice has been given under sub-section (1) but the Commissioner has reasonable grounds
to believe that a business has discontinued or is likely to discontinue, the Commissioner may serve a
notice on the person who has discontinued the business or is likely to discontinue the business to
furnish to the Commissioner within the time specified in the notice a return of income for the period
specified in the notice.
(4) A return furnished under this section shall be treated for all purposes of this Ordinance as a return of
income, including the application of Section 120.
Person--Sec. 2(42) read with section 80. Person includes:
 An individual
 A company or association of persons incorporated or formed in Pakistan or elsewhere; and
 The federal Government, a foreign
 government, a political sub division of
 foreign government, or public
 international organization
For the purpose of the above:
 "An association of persons"--includes a firm, a Hindu Undivided Family, any artificial juridical person and
anybody of persons formed under a foreign law, but doesn't include a company.
"Company" means---
o  A company as defined in companies ordinance, 1984
o  A small company as defined in sec. 2(59A)
o  A body corporate formed by or under any law in force in Pakistan;
o  A modarba
o  A body incorporated by or under the law of a country outside Pakistan, relating to incorporation of
companies;
o  A trust, a cooperative society or a finance society
o  A foreign association whether incorporated or not, which the central board of revenue has, by general
or special order, declared to be a company for the purpose of this ordinance;
o  A provincial govt.;
o  A local authority in Pakistan
c) Firm means the relation between persons who have agreed to share the profits of a business carried on
by all or anyone of them acting for all;
d) Trust means an obligation annexed to the ownership of a property and arising out of the confidence
reposed in and accepted by the owner, or declared and accepted by the owner for the benefit of another,
or of another and the owner, and includes a "unit trust"; and
e) "Unit trust" means any trust under which beneficial interest are divided into units such that the
entitlements of the beneficiaries to income or capital are determined by the number of units held.
9
Table of Contents:
  1. AN OVERVIEW OF TAXATION
  2. What is Fiscal Policy, Canons of Taxation
  3. Type of Taxes, Taxation Management
  4. BASIC FEATURES OF INCOME TAX
  5. STATUTORY DEFINITIONS
  6. IMPORTANT DEFINITIONS
  7. DETERMINATION OF LEGAL STATUS OF A PERSON
  8. HEADS OF INCOME
  9. Rules to Prevent Double Derivation of Income and Double Deductions
  10. Agricultural Income
  11. Computation of Income, partly Agricultural,
  12. Foreign Government Officials
  13. Exemptions and Tax Concessions
  14. RESIDENTIAL STATUS & TAXATION 1
  15. RESIDENTIAL STATUS & TAXATION 2
  16. Important Points Regarding Income
  17. Geographical Source of Income
  18. Taxation of Foreign-Source Income of Residents
  19. Exercises on Determination of Income 1
  20. Exercises on Determination of Income 2
  21. SALARY AND ITS COMPUTATION
  22. Definition of Salary
  23. Significant points regarding Salary
  24. Tax credits on Charitable Donations
  25. Investment in Shares
  26. SALARY AND ITS COMPUTATION EXERCISES 1
  27. SALARY AND ITS COMPUTATION EXERCISES 2
  28. SALARY AND ITS COMPUTATION EXERCISES 3
  29. Tax treatment of Gratuity
  30. Gratuity Exercise
  31. PROVIDENT FUND
  32. Exemptions on Business income, Treatment of Speculation Business
  33. Deductions Allowed & Not Allowed
  34. Deductions: Special Provisions, Depreciation
  35. Methods of Accounting
  36. Taxation of Resident Company
  37. Taxation of Companies: Exercises
  38. Computation of Capital Gain
  39. Disposals Not Chargeable To Tax
  40. TAX RETURNS & ASSESSMENT OF INCOME UNIVERSAL SELF ASSESSMENT SCHEME
  41. Normal Assessment, USAS, Provisional Assessment, Best Judgment Assessment
  42. ADVANCE TAX COLLECTION & RECOVERY OF TAX PENALTIES & PROSECUTION
  43. What is Value Added Tax (VAT)?
  44. SALES TAX
  45. SALES TAX RETURNS