03 12 2012Apportionment Final Study

8/11/2019 03 12 2012Apportionment Final Study

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1. Introduction

The tax structure in Pakistan is based on Universal Self Assessment Scheme

(USAS), promulgated by the Government of Pakistan with effect from 1st

July 2002.According to the said scheme every tax-payer, whether it is an Individual, Association

of Persons or company is empowered to self assess their annual income and compute

annual income tax liability accordingly. As per provision of section 120 of the

Income Tax Ordinance, 2001 every return filed under section 114 is deemed to be as

an assessment order, issued by the Commissioner under section 120 ibid. The

taxpayers declare their income under Presumptive Tax Regime (PTR) and Normal

Tax Regime (NTR) or both. In the presumptive tax regime whole of the

turnover/sales are presumed as income of the taxpayer and no deductions are allowed

against such income and tax is charged on whole of the turnover / income being

presumptive income as per law. In the normal tax regime expenses incurred to earn

income are allowed, against the sales/turnover to arrive at taxable income and tax

charged on taxable income according to the rates as specified in the 1 st Schedule to

the Income Tax Ordinance, 2001. In the Textile Sector local sales as well as exports

are made by the textile mills which are covered under normal tax regime and

presumptive tax regime where expenses are required to be apportioned between

presumptive income i.e. exports and normal income i.e. local sales.

According to section 67 of the Income Tax Ordinance, 2001, where an

expenditure relates to the derivation of more than one head of income or derivation of

income comprising of taxable income and any class of income to which sub-sections

(4) and (5) of section 4 apply or the derivation of income chargeable to tax under a

head of income and to some other purpose, the expenditure shall be apportioned onany reasonable basis taking account of the relative nature and size of the activities to

which the amount relates, further rule 13 of the Income Tax Rules, 2002 provides

methodology of apportionment of expenses between presumptive tax regime and

normal tax regime. Where the expenditure is not apportioned by the taxpayers

between the two tax regimes, Income Tax Ordinance, 2001 provides for amendment

of assessment under section 122 and rectification of mistakes if any under section 221

to amend or rectify the assessment in order to assess the correct amount of income to

be charged to tax as provided under the law.


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2. Audit Objectives:-

Audit planned to see:-

i) Whether tax payers correctly compute their annual

income and tax liability after apportionment of expenses

between Presumptive Tax Regime and Normal Tax Regime.

ii) Whether the Department has designed controls

and checks in the E-filing system for such apportionment of

expenses and ensured compliance thereof by the taxpayers.

ii) whether business and tax depreciation losses

have properly been assessed / apportioned and correctly

carried forwarded / adjusted in subsequent tax years.

iii) Whether the taxpayers have paid their

admitted tax liability with the return in

the case of assessed losses.

3. Audit Scope & Methodology

The audit covered income tax cases of Individuals, Association of Persons

(AOPs) and companies of textile sector of Regional Tax Offices at Faisalabad, Multan, and

Large Tax payers Unit at Lahore. The data of the taxpayers of textile sector was obtained

from Data Base Administrators of Pakistan Automation Private Limited, through chief

commissioner offices of respective RTOs/LTU to assess internal controls employed and

assessment of income and tax made by Department.The methodology included conducting the audit of textile units in accordance with

the legal provisions as provided under the Income Tax Ordinance, 2001 and Income Tax

Rules made from time to time. The exports as well as local sales data of textile mills, was

reviewed in order to assess the risk during assessment and collection of income tax in textile

sector. The evaluation of internal controls was also made to know the effectiveness of checks

employed by the PRAL for electronic filing of returns made by the taxpayers.


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4. Audit Findings:

During the course of audit of RTOs/LTU, the following shortcomings

were noticed.

Para-4.1 Short levy of tax due to incorrect apportionment of expenses betweennormal and presumptive income - Rs. 2632.36 million

According to section 67 where an expenditure relates to the derivation of more

than one head of income or derivation of income comprising of taxable income and any class

of income to which sub-sections (4) and (5) of section 4 apply or the derivation of income

chargeable to tax under a head of income and to some other purpose, the expenditure shall beapportioned on any reasonable basis taking account of the relative nature and size of the

activities to which the amount relates, further rule 13 of Income Tax Rules, 2002 provides

methodology of apportionment of expenses between final tax regime and normal tax regime.

During the Scrutiny of income tax assessment record of twenty nine taxpayers

for the tax year 2011 under the jurisdiction of RTOs, Faisalabad, Multan and LTU Lahore, it

was noticed that the taxpayer derived income from export of textile products / supply of

cotton lint under presumptive tax regime as well as local / normal sales thereof however,

taxpayers did not apportion expenses between the normal tax regime and final tax regime as

required under the law. The lapse resulted in to short levy of tax amounting to Rs.2632.36

million as detailed in annexure-A.

The matter was brought to the notice of the Department during April to June,

2013 for remedial action as per law. In reply the Department reported that the assessment

proceedings were initiated in cases involving Rs. 2134.72 for legal action as per law. One

case involving Rs.497.64 million was contested by the Department. The DAC directed the

Department to complete the assessment proceedings in under process cases, get the

compliance verified by Audit in contested case and report to Audit / FBR by 15 th September

2013. Further, progress was not intimated till the finalization of the Report.

Recommendations: Assessment proceedings may be finalized in under process cases at the earliest

and tax charged / recovered accordingly.


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Internal controls may be strengthened to assess the correct amount of tax toavoid occurrence of such lapse in future.

Action may be taken against those are responsible for negligence.

Para-4.2 Excess assessment of loss due to non apportionment of expenses betweennormal and presumptive income with potential tax effect - Rs.392.705

According to section 57 (1) Where a person sustains a loss for a tax year under

the head Income from Business (other than a loss to which section 58 applies) and the loss

cannot be wholly set off under section 56, so much of the loss that has not been set off shall

be carried for ward to the following tax year and set off against the persons income

chargeable under the head Income from Business for that year.

Further, as per sub section (2) of section 57 if a loss sustained by a person for a

tax year under the head Income from Business is not wholly set off under sub-section (1),

then the amount of the loss not set off shall be carried forward to the following tax year and

applied as specified in sub-section (1) in that year, and so on, but no loss can be carried

forward to more than six tax years immediately succeeding the tax year for which the loss

was first computed.

Section 67 provides for apportionment of expenses, where an expenditure relates

to the derivation of more than one head of income or derivation of income comprising of

taxable income and any class of income to which sub-sections (4) and (5) of section 4 apply

or the derivation of income chargeable to tax under a head of income and to some other

purpose, the expenditure shall be apportioned on any reasonable basis taking account of the

relative nature and size of the activities to which the amount relates further rule 13 of Income

Tax Rules, 2002 provides methodology of apportionment of expenses between final tax

regime and normal tax regime.

During examination of income tax returns of nine taxpayers assessed in RTO,

Faisalabad, Multan and LTU Lahore, it was noticed that taxpayers derived income from Final

Tax Regime and income under normal law for tax year 2011 . The taxpayers are

manufacturer, derived income from export as well as local sale of textile goods but expenses

were incorrectly apportioned between local and exports sales. The incorrect apportionment

resulted in excess assessment / determination of loss with potential tax effect of Rs. 392.705

million as detailed in Annexure-B.


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The matter was brought to the notice of the Department during April to June, 2013

for remedial action as per law. In reply the Department reported that an amount of Rs.3.005

has been charged for recovery, assessment proceedings were initiated in cases amounting to

Rs. 389.699 for legal action as per law. The DAC directed the Department to recover the

amount charged, complete the assessment proceedings in under process cases, and report to

Audit / FBR by 15 th September 2013. Further, progress was not intimated till the finalization

of the Report.

Recommendations: Amount of tax charged may be recovered and got verified by Audit. Assessment proceedings may be finalized in under process cases at the earliest

and tax charged accordingly. Internal controls may be strengthened to avoid occurrence of such lapse infuture.


Para-4.3 Non realization of minimum tax due to non apportionment of turnover

between FTR and PTR - Rs.147.867 million

According to section 113 of the Income Tax Ordinance 2001, Minimum tax on theincome of certain persons is leviable, if the tax paid under normal law is less than tax

payable under section 113 @ 1 % , the taxpayer shall pay tax on turnover from all sources

excluding tax assessed as final discharge of the tax liability

Scrutiny of Seventy four taxpayers under the jurisdiction of RTO Faisalabad,

Multan & LTU Lahore revealed that the taxpayers are manufacturer / wholesale trader of

textile products, derived income from normal as well as final tax regime. The taxpayers did

not apportion normal and Presumptive turnover as required under the law for tax year 2011 .

The lapse resulted in to short/non realization of minimum tax amounting to Rs.147.867 as

detailed in annexure-C.


2013 for remedial action as per law. In reply the Department reported that recovery in one

case involving Rs.0.332 was made, an amount of Rs.2.451 has been charged for recovery,

assessment proceedings were initiated in cases amounting to Rs. 132.856 for legal action as


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per law. Cases amounting to Rs.8.349 were contested by the Department. Further,

verification in one case involving Rs.1.820 was pending and one case of Rs. 2.059 was

transferred to other RTO on the point of jurisdiction. The DAC directed the Department to

recover the amount charged, complete the assessment proceedings in under process cases, get

the position verified where verification was pending and report to Audit / FBR by 15 th

September 2013. Further, progress was not intimated till the finalization of the Report.

Recommendations: Amount of tax charged may be recovered and got verified by Audit. Assessment proceedings may be finalized in under process cases at the earliest

and tax charged accordingly. Internal controls may be strengthened to avoid occurrence of such lapse in

future. Action may be taken against those are responsible for negligence.

Para-4.4 Short levy of tax due to non recovery of tax on cotton seeds u/s 153 of theIncome Tax Ordinance 2001 amounting to Rs.9.420 millionAccording to section 1 53 (1) (a), read with part III Division III of 1 st schedule

Every prescribed person making a payment in full or part including a payment by way of

advance to a resident person or permanent establishment in Pakistan of a non-resident person

for the sale of goods i.e. cotton seed; shall deduct tax at the rate of 1.5 % of the amount of

supplies

During scrutiny of income tax record of certain taxpayers assessed in the RTO

Multan, it was observed that the taxpayers derived income from cotton ginning and supply of

cotton lint but did not declare supply of cotton seed, or other income as declared in parallel

cases meaning thereby that the taxpayers concealed income of cotton seed or other income i.e

sale of oil. The lapse resulted in loss of Rs. 9.420 million during Tax Year 2011 as detailed in

Annexure-D


2013 for remedial action as per law. In reply the Department contested the para. The

contention of the Department was not acceptable as other income of the taxpayers was to be

taxed u/s 18 of the Income Tax Ordinance 2001 the Department was also requested to

reconsider the cases. The DAC directed the Department to complete the assessment

proceedings and report to Audit/ FBR by 15 th September 2013. Further, progress was not

intimated till the finalization of the Report.


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Recommendations: Either the stated position be justified or the amount pointed out be recovered. Internal controls may be strengthened to avoid occurrence of such lapse in

future.


Para-4.5 Short realization of tax amounting to Rs.16.342 million on local supplies oftextile goods

According to clause (45A) (a) of the Income Ordinance 2001, the rate of

deduction of withholding tax under clauses (a) and (b) of sub-section (1) of section 153 shall

be one percent on local sales, supplies and services of textile and articles thereof to the sales

tax zero-rated taxpayers,

During the Scrutiny of income tax assessment record of M/s Crescent Textile

Mills Ltd, (NTN 0710140-6) for the tax year 2011 under the jurisdiction of RTO Faisalabad,

it was noticed that the taxpayer derived income from export of textile goods as well as local

sales thereof. The taxpayer filed statement u/s 115(4) of the Income Tax Ordinance 2001

and declared receipts on account of supplies services amounting to Rs. 3,268,357,000 and

paid tax @ 0.5 percent instead of 1 percent as required under the law. This resulted in short

recovery of tax amounting to Rs. 16,341,785 for tax year 2010.


2013 for remedial action as per law. In reply the Department reported that the assessment

proceedings were initiated in all the cases. The DAC directed the Department to complete the

assessment proceedings and report to Audit / FBR by 15 th September 2013. Further, progress

was not intimated till the finalization of the Report.





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Para-4.6 Non / short levy of tax due to incorrect adjustment of carried forwardlosses Rs 2.015 million

According to section 57 (1) Where a person sustains a loss for a tax year under the

head Income from Business (other than a loss to which section 58 applies) and the loss cannot be wholly set off under section 56, so much of the loss that has not been set off shall be

carried for ward to the following tax year and set off against the persons income chargeable

under the head Income from Business for that year.

Further, as per sub section (2) of section 57 if a loss sustained by a person for a

tax year under the head Income from Business is not wholly set off under sub-section (1),

then the amount of the loss not set off shall be carried forward to the following tax year and

applied as specified in sub-section (1) in that year, and so on, but no loss can be carried

forward to more than six tax years immediately succeeding the tax year for which the loss

was first computed.

During examination of income tax assessment record of M/s Roomi Cotton

Ginning Industries (pvt) Ltd, Multan (NTN 2536557-6) for the tax year 2011 under the

jurisdiction of RTO Multan, it was observed that the taxpayer declared net income

amounting to Rs.5,551,000 during tax year 2011. The taxpayer adjusted the whole income

against the brought forward losses, whereas scrutiny of previous year record / return revealedthat no such loss is available in the credit of taxpayer rather taxpayer earned income

amounting to Rs.205,213 and paid tax accordingly in tax year 2010. The lapse resulted in

non/short levy of tax due to incorrect adjustment of brought forwarded loss Rs. 2,015,013.

The matter was brought to the notice of the Department during April to June, 2013

for remedial action as per law. In reply the Department reported that the assessment

proceedings were initiated in all the cases. The DAC directed the Department to complete the

assessment proceedings and report to Audit / FBR by 15 th September 2013. Further, progress

was not intimated till the finalization of the Report.





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Internal Control Issues

Para-4.7 Acceptance of invalid returns of taxpayers against provisions of the of theIncome Tax Ordinance 2001,

According to section 114 (2) of the Income Tax Ordinance 2001, a return ofincome

(a) shall be in the prescribed form and shall be accompanied by such annexures,statements or documents as may be prescribed;

(b) shall fully state all the relevant particulars or information as specified in the form ofreturn, including a declaration of the records kept by the taxpayer.

Further, as per section, 120 (2) a return of income shall be taken to becomplete, if it is in accordance with the provisions of sub-section (2) of section 114, Where

the return of income furnished is not complete, the Commissioner shall issue a notice u/s 120(3) to the taxpayer informing him of the deficiencies (other than incorrect amount of tax

payable on taxable income, as specified in the return, or short payment of tax payable) anddirecting him to provide such information, particulars, statement or documents by such dateas specified in the notice. Where a taxpayer fails to fully comply, by the due date, with therequirements of the notice under sub-section (3), the return furnished shall be treated as aninvalid r eturn as if it had not been furnished vide sub section 4 of section 120.

During scrutiny of income tax returns filed by the taxpayers of Regional TaxOffice, Faisalabad & Multan it was noticed that certain companies failed to furnish the annualaudited accounts duly certified by the chartered accountants. The returns filed by thetaxpayers without furnishing the annual audited accounts with the return u/s 114 (2) becomesinvalid u/s 120 (4) of the Income Tax Ordinance 2001, in this regard notices u/s 120 (3) wererequired to be served upon the taxpayers to get the requisite accounts / documents. It is also

pertinent to mention here that there are no checks in the web portal of PRAL where returnsare E-filed because certain taxpayers filed returns with blank folder of accounts, as such,invalid returns were accepted by the Department as detailed Annexure-E.

It was requested that notices under section 120 (3) of Income Tax Ordinance, 2001

may be issued to the concerned taxpayers for furnishing audited accounts duly certified by

the Chartered Accountants. It was further advised that certain checks/controls may bedeveloped in the web portal of PRAL in order to avoid acceptance of such invalid returns.

In reply Department reported that the time limit for issuance of notices u/s 120 (3) for

removal of discrepancy expired on 31 st December 2012, hence remedial action cannot be

taken at this stage. The DAC took serious view for not taking proper action and directed the

RTOs to complete the proceedings as per law and report compliance to Audit / FBR by 15 th

September 2013. Further, progress was not intimated till the finalization of the Report.


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Recommendations: Internal controls / E-filing system may be strengthened to avoid occurrence of

such lapse in future. Action may be taken against those are responsible for negligence.

Para-4.8 Excess adjustment of brought forward depreciation and business lossesagainst declared income

According to section 57 (1) Where a person sustains a loss for a tax year underthe head Income from Business (other than a loss to which section 58 applies) and the losscannot be wholly set off under section 56, so much of the loss that has not been set off shall

be carried for ward to the following tax year and set off against the persons incomechargeable under the head Income from Business for that year.

Further, as per sub section (2) of section 57 if a loss sustained by a person for a tax yearunder the head Income from Business is not wholly set off under sub-section (1), then theamount of the loss not set off shall be carried forward to the following tax year and applied asspecified in sub-section (1) in that year, and so on, but no loss can be carried forward to morethan six tax years immediately succeeding the tax year for which the loss was first computed.

During examination of income tax returns filed by the taxpayers of Regional TaxOffice, Faisalabad & Multan following discrepancies have been noticed:-

1. In the absence of proper controls and data base of business and depreciation losses, anumber of companies incorrectly assessed the business and depreciation losses andadjusted the same against the income of subsequent years, resulting huge loss togovernment exchequer (Annexure-B)

2. According to section 22 read with 3 rd schedule to the Income Tax Ordinance 2001,Depreciation is allowed on WDV (written down value) of assets and is not allowed onrevalued assets, a number of companies in textile sector have revalued their assets andclaiming depreciation on such assets as per accounts which require a properassessment of depreciation to be allowed to such taxpayers but the needful was notdone(Annexure-F)

It was requested that data base (as developed in sales tax side of carry forward and

brought forward stocks) of assessed business and depreciation losses be developed to avoid

excess adjustment of brought forward business and depreciation losses against subsequent

years income. In this regard adequate internal controls may be designed and effectively

implemented to plug the loopholes in the system to make the loss good sustained by the

national exchequer.

In reply Department reported that the assessment proceedings were under process The

DAC directed the Department to finalize the proceedings as per law and report compliance to


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Audit / FBR by 15 th September 2013. Further, progress was not intimated till the finalization

of the Report.

Recommendations:

It is recommended that ledgers of assessed business and depreciation losses bemaintained by the PRAL so that correct amount of losses could be adjustedagainst subsequent years income.

5- Conclusion:-

After the promulgation of Income Tax Ordinance, 2001 the tax system in Pakistan is

operating on self assessment basis . There is no physical control on the persons (including

industrial concerns) registered under different taxes regimes, except under specialcircumstances i.e. special or total audit. The universal self assessment scheme (USAS)

promotes voluntary-compliance, self-documentation, self-assessment, and self-policing.

Audit is the only instrument of control with the FBR through which compliance level of

registered persons is monitored i.e. whereby the government checks whether a registered

person/ taxpayer has correctly determined his tax liability, deposited due tax to the

government and is making adjustments of input tax etc. to which he is legally entitled.

Sectoral audit revealed that taxpayers were not properly allocating expenses between

presumptive income and normal income . In a number of cases, it was noticed that taxpayers

were not paying even their admitted tax liability along with return u/s 137 of the Income Tax

Ordinance 2001. Further, taxpayers were adjusting excess business and depreciation l osses

and the Department has not designed any checks and controls over such adjustment of losses.

Some taxpayers have revalued their assets i.e. plant and machinery but no assessment

proceedings made by the department as depreciation is allowable only on written down value

(WDV) of assets and no depreciation is allowed on revalued assets. Further, no data bases of

depreciation and business losses developed by the (PRAL) / FBR for adjustment of correct

amount of loss against declared income. A number of corporate tax payers filed their income

tax returns without audited accounts which being invalid return but no internal controls /

checks developed in the electronic return filing system.


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ACKNOWLEDGEMENT

We wish to express our appreciation to the management and staff of Large Taxpayer Unit(LTU), Lahore, Regional Tax Offices (RTOs), both Faisalabad and Multan, for extendingtheir cooperation to the audit team during this assignment.


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Annexure-A

STATEMENT SHOWING SHORT LEAVY OF TAX AMOUNTING TORs.2624.028 MILLION DUE TO INCORRECT APPORTIONMENT OF

EXPENSES BETWEEN NORMAL AND PTR INCOME

S# A.ONo.

Name & NTN # AMOUNTin Million

LTU/RTO

1 1 M/s PAK KUWAIT, Ltd,(NTN 0657793-8)

33.119 LTU Lahore

2 7 M/s Azgard Nine Ltd,(NTN 1319140-3)

133.665 LTU Lahore

3 8 M/s Fazal Cloth Mills Ltd,(NTN 0101056-5)

76.775 LTU Lahore

4 9 M/s Ellcot Spinning Mills Ltd,(NTN 0658189-7)

30.486 LTU Lahore

5 10 M/s Prosperity Weaving Mills Ltd,(NTN 0801380-2) 0.787 LTU Lahore

6 11 M/s ALZAMIN TEXTILE MILLS, Ltd,Faisalabad (NTN 1956281-7)

22.059 RTOFaisalabad

7 12 M/s Becon Impex (pvt) ltd Faisalabad (NTN2560721-9)

11.523 RTOFaisalabad

8 13 M/s Fab traders , Faisalabad (NTN 0659091-8)

2.006 RTOFaisalabad

9 14 M/s H.A HAQ SPINNING MILLS (Pvt) Ltd,Faisalabad (NTN 2466633-5)

2.133 RTOFaisalabad

10 16 M/s Ishaq Textile Mills Ltd , Faisalabad

(NTN 1137081-5)

19.227 RTO

Faisalabad 11 17 M/s J.K SPINNING MILLS, Ltd, Faisalabad

(NTN 0658695) 24.922 RTO

Faisalabad 12 18 M/s J.K SPINNING MILLS, Ltd, Faisalabad

(NTN 0658695) 52.360 RTO

Faisalabad 13 19 M/s JUBILEE TEXTTILE INDUSTRIES

(PVT) LTD, Faisalabad (NTN 1540149-9) 9.785 RTO

Faisalabad 14 20 M/s JUBILEE TEXTTILE INDUSTRIES

(PVT) LTD, Faisalabad (NTN 1540149-9) 15.633 RTO

Faisalabad 15 21 M/s ZAHID JEE LTD, Faisalabad (NTN

0804274-8) 89.270 RTO

Faisalabad 16 30 M/s AMIN FABRICS, Faisalabad (NTN

1736153-2) 0.106 RTO

Faisalabad 17 49 M/s Shah Shams Cotton Industries (pvt) Ltd

(NTN 0133527-8) 3.820 RTO Multan

18 50 M/s Alhamad Corporation (pvt) Ltd (NTN0101016-6)

3.326 RTO Multan

19 52 M/s Fazal Rehman Fabrics Ltd (NTN254644-0)

9.344 RTO Multan

20 53 M/s Mehmood Textiles Mills Ltd (NTN0133340-2)

100.633 RTO Multan

21 54 M/s Maqbool Textiles Mills Ltd (NTN0711064-2)

4.938 RTO Multan

22 60 M/s Abbasi Almadni Cotton Industries 0.249 RTO Multan


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Annexure-B

STATEMENT SHOWING EXCESS ASSESSMENT OF LOSS WITHPOTENTIAL TAX EFFECT OF Rs. 392.705 MILLION DUE TO

INCORRECT APPORTIONMENT OF EXPENSES BETWEEN NORMALAND PTR INCOME

S# A.ONo.


LTU/RTO

1 2 M/s Shahzad Textile Ltd, (NTN 0657813) 1.644 LTULahore

2 3 M/s Shahraj Fabrics (pvt) Ltd, (NTN 0688353-2)

6.450 LTULahore

3 5 M/s Hashir Textile Ltd (NTN 1203588-6) 3.005 LTULahore

4 43M/s Best Exports (pvt) Ltd (NTN 0659084-5)

150.817 RTOFaisalabad 5 44 M/s ASIM TEXTILE LIMITED

(NTN 1344407-7) 36.884 RTO

Faisalabad 6 45 M/s CHENONE STORES LIMITED

(NTN 1177309-0) 31.616 RTO

Faisalabad 7 58 M/s Fatima Enterprises Limited

(NTN 0101073-5) 47.793 RTO

Multan 8 116 M/s Shams Textile Ltd, (NTN 0712105-9) 14.637 LTU

Lahore

9 117 M/s Ghazi Fabric international Ltd, (NTN0225875-7)

99.859 LTULahore

TOTAL 392.705


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Annexure-C

STATEMENT SHOWING NON/SHORT REALIZATION OF MINIMUM TAXAMOUNTIN TO RS.147.867 MILLION

S# A.ONo.


LTU/RTO

1 4 M/s Suraj Cotton Mills, Ltd,(NTN 0698469-0)

1.890 LTU Lahore

2 6 M/s Azgard Nine Ltd,(NTN 1319140-3)

1.801 LTU Lahore

3 15 M/s Hilal Dyes (PVT) ltd,(NTN 2303271-5)

2.117 RTOFaisalabad

4 22 M/s A.Q TEXTILES (PVT) ltd,(NTN 1223320-0)

0.053 RTOFaisalabad

5 23 M/s SHAHID WEAVING,(NTN 1159190-7)

0.448 RTOFaisalabad

6 24 M/s IBRAHIM TEXTILE DYING INDUSTRY,Faisalabad (NTN 2212360-1)

1.145 RTOFaisalabad

7 25 M/s AYSHA SIZING, Faisalabad (NTN 1129187-7) 0.360 RTOFaisalabad

8 26 M/s USMAN SIZING, Faisalabad (NTN 2536964-4) 0.748 RTOFaisalabad

9 27 M/s Allah Tawakal Textile, Faisalabad (NTN 2203102-2)

0.080 RTOFaisalabad

10 28 M/s A & H DYING, Faisalabad (NTN 2959426-0) 0.108 RTOFaisalabad

11 29 M/s AYSHA TEXTILE PROCESSING IND.Faisalabad (NTN 1354384-9)

0.029 RTOFaisalabad

12 31 M/s STAR FABRICS.C/O MAJID NASEERFaisalabad (NTN 0081192-7)

0.250 RTOFaisalabad

13 32 M/s SILVER IND. C/O SAMINA RAFAQATFaisalabad (NTN 0280236-8)

1.111 RTOFaisalabad

14 33 M/s Bismillah Traders C/O Tariq Mehmood, Faisalabad(NTN 1200572-0)

0.520 RTOFaisalabad

15 34 M/s Ahmed Sizing Industry C/O Shamim Akhtar,Faisalabad (NTN 3204749-5)

0.650 RTOFaisalabad

16 35 M/s Quality Thread Industry C/O Khawaja MuhammadUsman, Faisalabad (NTN 1314589-4)

0.279 RTOFaisalabad

17 36 M/s Khawaja Corporation C/O Zafar Ahmed Faisalabad(NTN 1465282-0)

0.580 RTOFaisalabad

18 37 M/s Umer Spinning C/O Manzoor Ahmad, (NTN-0063109-4)

0.856 RTOFaisalabad

19 38 M/s AMMAR TEXTILE C/O ASGHAR ALIFaisalabad (NTN 0090946-7)

0.411 RTOFaisalabad

20 39 M/s ELAHI IMPEX C/O MASOOD ELAHI Faisalabad(NTN 0092676-7)

0.168 RTOFaisalabad

21 40 M/s ZANIB TEXTILE CORPORATION C/O ABDUL

MAJEED Faisalabad (NTN 0092676-7)

0.398 RTO

Faisalabad 22 41 M/s FAIZ WEAVING FACTORY C/O SYED 1.025 RTO


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BOOTAY SHAH Faisalabad (NTN 0093668-2) Faisalabad 23 42 M/s ZAIGHAM MIAN SIZING C/O WAQAS

ZAIGHAM Faisalabad (NTN 1250053-5)0.368 RTO

Faisalabad 24 51 M/s Colony Mills Ltd Multan (NTN 2585135-7) 1.313 RTO Multan 25 55 M/s Reliance Weaving Mills Ltd, Multan (NTN

0133480-8)

42.266 RTO Multan

26 57 M/s Ahemd Hassan Textiles Mills Ltd, Multan (NTN0100978-8)

15.090 RTO Multan

27 59 M/s Fatima Enterprises Limited(NTN 0101073-5)

0.099 RTO Multan

28 62 M/s IKHLAQ BROTHERS COTTON GINNINGFACTORY & OIL MILLS (NTN 2144907-4)

3.238 RTO Multan

29 63 M/s AFZAL COTTON GINNING AND ALLIEDINDUSTRIES (NTN 2950693-0)

0.434 RTO Multan

30 64 AL-REHMAN COTTON GINNERS (NTN 3612449-4) 0.762 RTO Multan 31 65 M/s AMJAD FAROOQ COTTON INDUSTRIES

(NTN 1615637-4)

0.224 RTO Multan

32 66 M/s AWAIS COTTON FACTORY AND OIL MILLS(NTN 2533150-7)

0.429 RTO Multan

33 67 M/s AWAIS COTTON FACTORY AND OIL MILLSUNIT-2 (NTN 2738837-9)

0.285 RTO Multan

34 68 M/s BABA FARID CORPORATION (NTN 1744311-3)

0.239 RTO Multan

35 69 M/s BAJWA MODEL COTTON GINNING FCTORYAND OIL MILLS (NTN 3151755-2)

0.471 RTO Multan

36 72 M/s CHAUDHARY MODEL COTTON GINNERS(NTN 2145798-7)

0.235 RTO Multan

37 73 M/s ELAHI FABRICS(NTN 1525690-1)

0.334 RTO Multan

38 74 M/s GHAFFAR COTTON GINNING, PRESSING &OIL MILLS(NTN 3548089-7)

0.618 RTO Multan

39 75 M/s HABIB COTTON INDUSTRIES & OILMILLS(NTN 2238926-1)

1.215 RTO Multan

40 76 M/s HAJI GHAFOOR & COMPANY(NTN 1298909-6)

0.731 RTO Multan

41 77 M/s HAJVERY COTTON FACTORY & OILMILLS(NTN 2490908-4)

0.540 RTO Multan

42 78 M/s HIRAJ COTTON GINNING, PRESSING & OILMILLS(NTN 2951305-7)

0.651 RTO Multan

43 79M/s AL-HUSSAIN COTTON GINNERS (NTN1726423-5) 0.343 RTO Multan

44 80 M/s HUSNAIN IRFAN COTTON GINNERS (NTN1686606-1)

0.130 RTO Multan

45 81 M/s ATTA-UR-REHMAN COTTON INDUSTRIES(NTN 0100989-3)

0.472 RTO Multan

46 82 M/s ITTEFAQ COTTON GINNERS & OIL MILLS(NTN 2732086-3)

0.164 RTO Multan

47 83 M/s ITTEFAQ INDUSTRIES COTTON GINNINGFACTORY (NTN 2029783-1)

0.049 RTO Multan

48 84 M/s JANNAT INDUSTRIES (NTN 2283329-3) 0.698 RTO Multan 49 85 M/s JHOOLAY LAL COTTON GINNERS & OIL

MILLS (NTN 3541775-7)0.195 RTO Multan

50 86 M/s KASHIF COTTON FACTORY & OIL MILLS 1.166 RTO Multan


18/25

18

(NTN 2140042-3)51 87 M/s KHAN COTTON INDUSTRIES (NTN 2464463-

3)1.288 RTO Multan

52 88 M/s MIAN COTTON INDUSTRIES & OIL MILLS(NTN 3541775-7)

1.82 RTO Multan

53 89 M/s MAHR COTTON INDUSTRIES (NTN 3333218-5) 1.171 RTO Multan

54 90 M/s AL-MANZOOR COTTON INDUSTRIES (NTN1725600-3)

0.767 RTO Multan

55 91 M/s MACCA COTTON INDUSTRIES (NTN1686603-7)

0.269 RTO Multan

56 92 M/s KHALIL COTTON INDUSTRIES (NTN1686613-4)

0.059 RTO Multan

57 93 M/s MUKHATAR COTTON GINNERS (NTN2976680-0)

1.179 RTO Multan

58 94 M/s MUZAMMAL LATIF COTTON INDUSTRIES(NTN 2396490-1)

0.466 RTO Multan

59 95 M/s NASUHA MODEL COTTON INDUSTRIES(NTN 2767660-9)

0.948 RTO Multan

60 96 M/s PAK MILLAT COTTON GINNING FACTORY(NTN 2210406-2)

2.019 RTO Multan

61 97 M/s PRIME COTTON INDUSTRIES (NTN 2144909-7)

1.667 RTO Multan

62 98 M/s QUAILTY COTTON GINNERS (NTN 2475548-6)

0.557 RTO Multan

63 99 M/s REHMAT INDUSTRIES (NTN 1805769-1 0.758 RTO Multan 64 100 M/s NISHAT ASHRAF COTTON GINNERS (NTN

3551646-1)

0.287 RTO Multan

65 101 M/s SATTAR COTTON GINNERS (NTN 3170041-1) 0.450 RTO Multan 66 102 M/s NIZAMI COTTON FACTORY & OIL MILLS

(NTN 2632769-4)0.362 RTO Multan

67 103 M/s SHURJEEL AMJAD COTTON GINNERS (NTN1698104-9)

0.187 RTO Multan

68 104 M/s SUBHAN ALLAH COTTON INDUSTRIES (NTN1885325-3)

0.382 RTO Multan

69 105 M/s SUBHAN COTTON INDUSTRIES (NTN2964089-0)

0.168 RTO Multan

70 106 M/s WASEEM COTTON INDUSTRIES (NTN1686610-0)

0.061 RTO Multan

71 107 M/s YOUSAF AYUB CORPORATION (NTN2495892-1)

0.405 RTO Multan

72 108 M/s SHOAIB SULMAN TEXTILE MILLS (NTN2555230-9)

3.692 RTO Multan

73 109 M/s ASHAQ ALI CHUDARY (NTN 0837990-4) 2.367 RTO Multan 74 110 M/s KHALID AND COMPANY C/O KHALID ALI

(NTN 3211406-7)0.073 RTO Multan

75 116 M/s ARAIN MILLS LTD(NTN 0225871-4)

6.271 RTO Multan

76 117 M/s ARAIN TEXTILE MILLS LTD (NTN 0658181) 3.423 RTO Multan

77 118 M/s Maqbool Usman Fiber pvt ltd (NTN 2232163-2) 9.509 RTO Multan


19/25

19

78 119 M/s Marral Fiber Mills pvt ltd (NTN 22664438-5) 0.820 RTO Multan

79 120 M/s Rahim Buksh Textile Mills ltd (NTN 1146615-4) 3.516 RTO Multan

80 121 M/s Sulman Spinning Mills ltd (NTN 1146615-4) 6.507 RTO Multan

81 122 M/s Pak Nippon Carliner pvt ltd (NTN 1146615-4) 8.633 RTO Multan

147.867


20/25

20

Annexure-D

Statement showing Short levy of tax amounting to Rs.9, 420,271 due to non recovery oftax on cotton seed u/s 153 of the Income Tax Ordinance 2001

S#

Name NTN # Supply ofcotton lint

% of cotton seed tocotton lint declared in

parallel cases (6%Approx.)

Tax [email protected]%

1 Abdullah cotton ginners 1749531-8 423,185,100 25,391,100 380,8662 Ajmeer cotton ginners 3157556-7 336,968,981 20,218,138 303,2723 Akram & company

cotton ginner2120116-1 279,125,662 16,747,540 251,213

4 Ali sammad trader,cotton ginners and

pressing factory

2492546-2 366,015,200 21,960,912 329,414

5 Allah tawakal cottonginners

1180225-1 335,076,178 20,104,571 301,569

6 Anmol cotton ginners 1686965-6 250,095,392 15,005,724 225,0867 Data cotton ginners 2456527-0 137,991,622 8,279,497 124,1928 Darishak cotton

industries0999668-7 337,857,516 20,271,451 304,072

9 Five star cotton ginners 2151100-4 358,350,376 21,501,022 322,51510 Global cotton industries 1615054-6 375,992,314 22,559,539 338,39311 Hafiz cotton ginners 1270338-9 745,929,373 44,755,762 671,33612 Hassan cotton factory 2490947-5 400,574,487 24,034,469 360,517

13 Kashmir cotton factory 2272556-3 433,821,659 26,029,299 390,43914 Abdullah maaz cottonind.

2324165-9 1,097,101,655 65,826,099 987,391

15 Mehmood cottonginners

0913525-1 459,071,619 27,544,297 413,164

16 Mastooi cotton factory 1686608-8 532,969,000 31,978,140 479,67217 Mohib cotton industry 1522691-3 872,498,282 52,349,896 785,24818 Al-nasar cotton industry

& oil mills2302394-5 737,468,602 44,248,116 663,722

19 Ahmed saad cottonindustries

2287386-4 353,864,312 21,231,858 318,478

20 Al talib cotton industries 1805767-5 398,469,114 23,908,147 358,62221 Zafar brother cotton

ginning & pressingfactory

2297338-9 590,288,323 35,417,299 531,259

22 Zahid sadiq cotton ind. 1727357-9 644,256,812 38,655,409 579,831Total 9,420,271


21/25

21

Annexure-E

STATEMENT SHOWING ACCEPTANCE OF INVALID RETURNS U /S 114 (2) OF THEINCOME T AX O RDINANCE 2001

Sr. No.

Name NTN TaxYear

Remarks RTO/LTU

1A. Q Textile (pvt) Ltd, 1223320-0

2011 Audited Accounts notfiled by the Taxpayer

RTOFaislaabad

2 Alka (pvt) Ltd, 1312902-3 2011 Audited Accounts notfiled by the TaxpayerRTOFaislaabad

3 Al-Zamin Textile MillsLtd, 1956281-7


RTOFaislaabad

4 Anjum Textile Mills(pvt) Ltd, 0688524-1


RTOFaislaabad

5 Beijing Print (pvt) Ltd, 1330752-5 2011 Audited Accounts notfiled by the Taxpayer RTOFaislaabad6

Best Exports (pvt) Ltd, 0659084-52011 Taxpayer filed blank

folder instead ofAccounts

RTOFaislaabad

7 Bin Bashir Texile Mills(pvt) Ltd, 3283606-6


RTOFaislaabad

8 Bilal Taxtiles (pvt) Ltd, 0688497-7 2011 Audited Accounts notfiled by the TaxpayerRTOFaislaabad

9FAB Traders (pvt) Ltd, 0659091-8

2011 Taxpayer filed blankfolder instead of

Accounts

RTOFaislaabad

10 H. A Haq (pvt) Ltd, 2466633-5 2011 Audited Accounts notfiled by the Taxpayer

RTOFaislaabad

11 HILAL DYES (PVT)LTD.

2303271-5 2011 Taxpayer filed blankfolder instead ofAccounts

RTOFaislaabad

12 Ideal Spinning MillsLtd,

0804273-0 2011 Audited Accounts notfiled by the Taxpayer

RTOFaislaabad

13 Ishaq Textile Mills Ltd, 1137081-5 2011 Audited Accounts notfiled by the Taxpayer

RTOFaislaabad

14 Ittehad (Pvt) Ltd, 1422643-0 2011 Audited Accounts notfiled by the Taxpayer

RTOFaislaabad

15 J. K Spinning Mills Ltd, 0658695-3 2011 Audited Accounts notfiled by the Taxpayer

RTOFaislaabad

16 Jubilee TextileIndustries (Pvt) Ltd,


RTOFaislaabad

17 K.P.I (Pvt) Ltd, 3352143-3 2011 Taxpayer filed blankfolder instead ofAccounts

RTOFaislaabad

18 M.K.B. Spinning Mills

(Pvt) Ltd,

2574210-8 2011 Audited Accounts not

filed by the Taxpayer

RTO

Faislaabad19 Nisar Hameed Textiles 1147148-4 2011 Taxpayer filed blank RTO


22/25

22

(Pvt) Ltd, folder instead ofAccounts

Faislaabad

20 Progressive Weavers(Pvt) Ltd,


RTOFaislaabad

21 Rana Textile MillsLimited


RTOFaislaabad

22 Rashid Textile PrintingIndustries Pvt Ltd,


RTOFaislaabad

23 Sadaqat Ltd, 0688413-0 2011 Audited Accounts notfiled by the Taxpayer

RTOFaislaabad

24 Sahib Textiles (Pvt) Ltd, 0658529-9 2011 Audited Accounts notfiled by the Taxpayer

RTOFaislaabad

25 Shoaib Usman TextileIndustries Pvt Ltd,


RTOFaislaabad

26 T & N Pakistan (Pvt)Ltd,


RTOFaislaabad

27 Taj Rafique Textiles(Pvt) Ltd,


RTOFaislaabad

28 Tauseef Enterprises(Pvt) Ltd,


RTOFaislaabad

29 United Textile PrintingInds (Pvt) Ltd.


RTOFaislaabad

30 Zahidgee Textile Mills

Ltd,

0804274-8 2011 Audited Accounts not

filed by the Taxpayer

RTO

Faislaabad31 Zahid Pacakages (Pvt)

Ltd,2777537-2 2011 Taxpayer filed blank

folder instead ofAccounts

RTOFaislaabad

32 Al-Hilal Industries (Pvt)Ltd, 0800582-6


RTOMultan

33 Fazal Rehman FabricsLtd, 2546440-0


RTOMultan

34 Maqbool Textile MillsLtd, 0711064-2


RTOMultan

35 Masood Fabrics Ltd, 1417347-6 2011 Audited Accounts notfiled by the Taxpayer RTOMultan36 Mehmood Textiles Ltd, 0133340-2 2011 Audited Accounts notfiled by the Taxpayer

RTOMultan

37 Roberts CottonAssociates (Pvt) Ltd, 0133459-0


RTOMultan

38 Roomi Industries (Pvt)Ltd, 2963239-7


RTOMultan

39 Shah Shamas CottonIndustries (Pvt) Ltd, 0133527-8

2011 Taxpayer filed blankfolder instead ofAccounts

RTOMultan

40 Shujabad WeavingMills Ltd,


RTOMultan


23/25

23

41 Wasaya Spinning MillsLtd.


RTOMultan

42 Zeyneb Textile Mills(Pvt) Ltd,


RTOMultan


24/25

24

Annexure-FLIST OF CASES WHERE ASSETS REVALUED BY THE TAXPAYERS

Sr. No.

Name NTN TaxYear

Amount ofrevaluation of

assets

Remarks RTO/LTU

1 M.K.B.SpinningMills (Pvt)Ltd,

2574210-8 2011 251,841,949 Property plant ofequipmentrevalued to be

probed by thedepartment forallowance ofdepreciation

RTOFaislaabad

2 AsimTextileMillsLimited

1344407-7

2011 135,102,000 -Do- RTOFaislaabad

3 BilalTextiles(Pvt) Ltd,

0688497-72011 180,118,392 -Do- RTO

Faislaabad

4 Chenab Ltd, 0688377-0 2011 4,140,493,058 -Do- RTOFaislaabad5 Crescent

TextileMills Ltd,

0710140-62011 1,640,526,000 -Do- RTO

Faislaabad

6 Ittehad

(pvt) Ltd,1422643-0 2011 365,174,637 -Do- RTO

Faislaabad7 J.K.SpinningMills Ltd,

0658695-32011 2,921,684,981 -Do- RTO

Faislaabad

8 T&NPakistan(Pvt) Ltd,

1128673-32011 206,510,468 -Do- RTO

Faislaabad

9 ZahidjeeTextileMills Ltd,

0804274-82011 64,856,885 -Do- RTO

Faislaabad

10 Acro

Spinning &WeavingMills Ltd,

0709640-2 2011 452,964,035 -Do- RTO Multan

11 AhmadHassanTextileMills Ltd,

0100978-8 2011 544,014,548 -Do- RTO Multan

12 Al-HamadCorporation(Pvt) Ltd,

0101016-6 2011 1,341,246,190 -Do- RTO Multan

13 GhafoorCottonMills (Pvt)

0133398-4 2011 27,898,640 -Do- RTO Multan


25/25

Ltd,14 Khawaja

BashirAhmad &Co.(Pvt)

Ltd,

3179847-7 2011 138,886,599 -Do- RTO Multan

15 RelianceweavingMills Ltd,

0133480-8 2011 452,271,382 -Do- RTO Multan

Total 12,863,589,764

Documents

03 12 2012Apportionment Final Study