A. KC Views upheld and Recommendations for Millions of savings of Taxes & Levies

1. In our Certificate of Tax Management Level 4/5 and Advance Company Tax High Level Workshops, the Initial Allowance is claimable on Computer Hardware, ancillary equipment, etc., without any shadow of doubts. 

2. Hence, to save millions in taxes & levies on several matters, please send attend / send send to relevant tax / levies / HR officials to attend our Workshop (refer to separate emails to be sent shortly with the Subscribers Discount). For CTM courses from time to time, please Click here to refer to CTM course details. Please call UAN 0331 1118 786 for more details.    

B.  IHC Order 

1. This Reference Application u/s 133(1) of the ITO, 2001 challenged the Tribunal’s decision which upheld the disallowance of initial allowance claimed by the taxpayer on various assets including Computer Hardware, HVAC systems, elevators, security systems, electrical fittings, and firefighting equipment.

2. The core issue before the Court was whether these assets fall within the meaning of “Plant and Machinery” under Section 23 read with Part II of the Third Schedule, thereby qualifying for initial allowance at the prescribed rate.

3. The Court observed that:

• These assets are undisputedly depreciable under Section 22 and are not excluded under Section 23(5).
• Merely because Computer Hardware is assigned a separate depreciation rate does not remove it from the broader category of Plant and Machinery.
• There is no legal requirement that only assets directly used in manufacturing/production qualify as Plant and Machinery.
• Judicial precedents support a wide interpretation of “Plant”, covering equipment essential for business operations, not just production.

4. Accordingly, the IHC concluded that the impugned assets qualify as Plant and Machinery and are eligible for initial allowance u/s 23.

II. DETAILS

A. Reference, Issue &

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B. Facts & History

1 to 4

C. Question referred to before IHC

1 & 2

D. Learned Counsel (Hafiz M Idris & Syed Farid) for Applicant Submissions

1 & 2

E. Learned Counsel (Ch. Imtiaz Ahmed) for Respondent Submissions

1 & 2

F. IHC Deliberations

Arguments advanced by the learned counsel for the parties have been heard and documents placed on record examined with their assistance.

1 to 6 with several sub-points

G. IHC Decision

In view of the above discussion, the titled Income Tax Reference Application is allowed. Resultantly, the Impugned Order is set-aside. Questions framed through the titled Income Tax Reference Application are answered in the affirmative.

III. FURTHER DETAILS & SERVICES

Should you require any clarification or explanations in respect of the above or otherwise, or require Advance on 4B or 4C, Income Tax, Federal & Provincial Sales Tax or Withholding Tax Statement, Advisory, Return Filing or Review services, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com, asif.s.kasbati@professional-excellence.com.

Best regards for Here & Hereafter
Asif S Kasbati (FCA, FCMA & LLB)

Managing Partner 

Kasbati & Co (1760+ Tax, Levies, Companies, Economy, Inflation, HR, Banking, Finance, etc Quick Commentary Service Provider and High Level 440+ Tax & Levies Laws Consultants) 

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