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Income‑tax Reference No. 50 of 1976, decided on 23rd October 1985.

----S. 10(2)(xvi)‑Head Office Administration charges‑‑Any expendi ture laid out or expended wholly and exclusively for purposes of a assessee's business, profession or vocation, held, could be allowed as an allowance.

‑‑S. 10(2)(xvi)‑Allowable deduction ‑Head Office administration charges‑Expenditure consistently claimed by assessee, which were allowed by Income‑tax Appellate Tribunal‑Such expenditure, held, could be allowed on oasis of practice and precedent previous order allowing such expenditure by Tribunal having not been challenged by department.

Shaikh Haider for Applicant.

Surridge and Beecheno for Respondent.

Date of hearing: 23rd October, 1985.

.‑The following question has been referred to us by the Commissioner of Income‑tax Karachi :‑

"Whether, there was any material on record to justify the learned income‑tax Appellate Tribunal to hold that a sum of Rs. 73,746 claimed by the assessee as Head Office Administration charges was incurred wholly and exclusively for the purpose of assessee s business and allowable under section 10(2)(xvi) of the Income‑tax Act. "

The respondent has its Head Office in United Kingdom and it had claimed a deduction of Rs. 73,746 as Head Office Administration Charges. The Income‑tax Officer did not allow these expenses because they had not been accounted for in the books of accounts of the branch at Karachi. He also, however, noted that such charges were disallowed in previous years by his predecessor, but the same had been allowed by the Appellate Assistant Commissioner in appeal and the Department had gone in land Appeal before the Income‑tax Appellate Tribunal.

In appeal from respondent the I. T. A. Tribunal allowed the said expenses on the ground that the nature of these expenses and other circum. stances surrounding the claims were precisely the same as in the preceding year. The Tribunal noted that in fact the Tribunal had upheld the order of the Appellate Assistant Commissioner for previous year and had allowed these expenses.

Mr. Shaikh Haider, learned counsel for the applicant has submitted that there was no law, which provided for allowing the expenses of the Head Office. We, however, find that under section 10(2)(xvi) of the Income‑tax Act, 1922 any expenditure laid out or expended wholly and exclusively for the purposes of such business, profession or vocation could be allowed as an allowance,

Since such charges have been consistently claimed by the respondent and have been allowed by the Tribunal and at least it is clear from the order of the Tribunal itself that it had allowed such expenses in the appeal filed by the applicant and the order of the Appellate Assistant Commissioner had been upheld, therefore, there was a justification for the Tribunal to show such expenses on the basis of practice and previous precedent which has been allowed to become final as tae applicant's counsel has not been able to show that the previous order of appellate Tribunal was challenged before this Court. On the other hand Mr. A. A. Sharif for respondent has made a statement at the Bar that the previous order is not challenged.

The Commissioner of Income‑tax in his reference has not even mentioned that he had filed any reference in respect of the previous order of the Appellate Tribunal. There is nothing before us to show that the observations of the Appellate Tribunal, to the effect that the nature of these expenses and other circumstances surrounding the claims were precisely the same as in the preceding year, were in any way not justified. It was, therefore, a question of fact whether such expenses could be allowed by the Tribunal. We, therefore, answer the question in the affirmative.

M.B.A Reference answered affirmative

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