122(9) (Notice to amend assessment) read with section 122(5A) of the ITO,2001

Registration 3928558
Name: NERA TELECOMMUNICATIONS (PAKISTAN) Tax Year : 2019
Address: (PRIVATE) LIMITED
10B, 10C 2ND FLOOR, NORTH SIDE, SRB PLAZA, Period : 01-Jan-2018 - 31-Dec-2018
SUPER MARKET, F-6 MARKAZ Medium : Online
Due Date : 18-Mar-2021
Contact No: 00923008441851
Document 11-Mar-2021

Please refer to this office the above.

Examination of Income Tax Return, audited accounts and withholding tax record for Tax Year 2019
reveals that the return of Income is erroneous in so far it is prejudicial to the interest of revenue and
requires amendment under section 122(5A) of the Income Tax Ordinance, 2001 for reasons as declared
below:-

Sale of Raw Material: -

Examination of Income Tax Return reveals that your company has purchased raw material during the
year under consideration at Rs.172,666,147/- out of which you have consumed raw material of Rs.
148,175,620/-, whereas, you have declared Supplies Rs.25,877,269/-. Thus difference between the
actual sale revenue and sale revenue declared comes to Rs. 122,298,351/-. Reconciliation of raw
material is as under: -

Opening Stock 16,102,234

Raw Material Purchased during the year 172,666,147
Total Raw Material available 188,768,381
Closing Stock 40,592,761
Raw Material Consumed 148,175,620
Supplies Declared 25,877,269
Raw Material Sold/Suppress Sales 122,298,351

Therefore, I intend to add the amount of Rs.122,298,351/- in your taxable Income under section 111(1)
(d) of the Income Tax Ordinance, 2001 being suppressed receipts.

Difference in Proportionate of Expenses:-

Examination of Income Tax Return for the Tax Year 2019 reveals that you have claimed loss of Rs.
123,935,788/- whereas, you have failed to calculate the proper distribution of expense between Income
declared under Normal Tax Regime and Final Tax Regime. The propose calculation is as below: -
GROSS REVENUE FTR NTR %FTR %NTR
GROSS REVENUE 184,337,720 25,877,269 158,460,451 14 86
COST OF SALES 148,175,620 20,744,587 127,431,033
GP 36,162,100 5,132,682 31,029,418
Other Income 36,740,372 36,740,372 -
Total GP 72,902,472 41,873,054 31,029,418 57 43
P & L Expenses 168,367,109 95,969,252 72,397,857
Net Profit (95,464,637) (54,096,198) (41,368,439) 57 43
Add Back Inadmissible
Accounting Dep 1,432,802
Exchange Loss 63,331,744
total Add back 64,764,546 36,915,791 27,848,755
Admissible deduction 1,639,963 934,779 705,184

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CTO Islamabad
 122(9) (Notice to amend assessment) read with section 122(5A) of the ITO,2001
Registration 3928558
Name: NERA TELECOMMUNICATIONS (PAKISTAN) Tax Year : 2019
Address: (PRIVATE) LIMITED
10B, 10C 2ND FLOOR, NORTH SIDE, SRB PLAZA, Period : 01-Jan-2018 - 31-Dec-2018
SUPER MARKET, F-6 MARKAZ Medium : Online
Due Date : 18-Mar-2021
Contact No: 00923008441851
Document 11-Mar-2021

Taxable Income/Loss (32,340,054) (18,115,186) (14,224,868)

In view of above, the undersigned intend to revise your distribution of expense between Income declared
under Normal Tax Regime and Final Tax Regime according to sharing basis formula.

Import: -
Examination of record reveals that your company has claimed import purchase of Rs.39,253,755/-
whereas, data available on FBR Portal reveals that your company has made import during the year
amounting to Rs.11,391,430/-. Thus difference between the declared import and actual import made by
your company comes to Rs.27,862,325/-. Therefore, I intend to disallow your claim of expenditure of Rs.
27,862,325/- under section 174 of the Income Tax Ordinance, 2001 being un-verifiable and inadmissible
claim from your own declaration.

Commission Rs.36,740,372/-: -
You have declared commission revenue of Rs.36,740,372/- under Final Tax Regime. The record was
examined and it was found that the no tax was deducted by withholding agent under section 233 of the
Income Tax Ordinance, 2001. Therefore, you are requested to explain the reasons as to why your
commission amount on which no tax was deducted may not be taken under normal tax regime as
Income from Business under section 18 of the Income Tax Ordinance, 2001.

Exchange Loss Rs.63,331,744/-:-

It is further pointed out that during the Tax Year you have claimed exchange loss of Rs.63,331,744/-
which is not admissible under section 59 of the Income Tax Ordinance, 2001. Therefore, I intend to
disallow your claim under section 174 read with section 59 of the Income Tax Ordinance, 2001 being
inadmissible claim

Contract Rs.73,987,772/-
Scrutiny of FBR data reveals that the withholding agent M/s Pakistan Telecommunication Company
Limited has made payment of Rs.73,987,772/- to your company and deduct tax at Rs.5,648,955/- under
section 153(1)(c) of the Income Tax Ordinance, 2001 as contract payment, whereas, as per Income Tax
Return you have failed to incorporate the revenue in your Income Tax Return. Therefore, you are
required to explain the reasons for non-declaration of receipts in Income Tax Return along with
supporting documents. In case of non-compliance or un-satisfactory reply, the amount of Rs.73,987,772
/- will be added in your receipts under section 111(1)(d) of the Income Tax Ordinance, 2001 being un-
declared revenue.

In view of the above, you are requested to file response by 18/03/2021. In case of non-compliance or un-
satisfactory reply, proceedings under section 122(9) read with section 122(5A) of the Income Tax
Ordinance, 2001 shall be finalized accordingly.

Page 2 of 3 Printed on Date: Mon, 14 Jun 2021 10:23:18

CTO Islamabad
 122(9) (Notice to amend assessment) read with section 122(5A) of the ITO,2001
Registration 3928558
Name: NERA TELECOMMUNICATIONS (PAKISTAN) Tax Year : 2019
Address: (PRIVATE) LIMITED
10B, 10C 2ND FLOOR, NORTH SIDE, SRB PLAZA, Period : 01-Jan-2018 - 31-Dec-2018
SUPER MARKET, F-6 MARKAZ Medium : Online
Due Date : 18-Mar-2021
Contact No: 00923008441851
Document 11-Mar-2021

Aamar Javed
Additional Commissioner (Audit-I)
Inland Revenue, Range-II, Zone-I
CTO
Islamabad

Page 3 of 3 Printed on Date: Mon, 14 Jun 2021 10:23:18

CTO Islamabad