Treatment of Royalty - urgent question

[fawadiqbalmemon]

assallam o alaikum

under ito 2001 ....royalty include disposal also.... sec2 54(g)...
so chargeable to other income....but sec 24 of intangibles include that gain on disposal of intangible (trademark)should be shown as income from business ....or loss as deduction to income from business.....
what should i treat .....
also if the sale of trademark is between residents what rate shou8ld
be applied....

for the purpose of clarity isint this income be treated as capital
gains????

[LapTop]

Fawad Bhai,,,

Royality aap ki income hoti hay jo k FTR may aati hay,,,,,

jabky Trademark aap ka asset hota hay,, is ko sale karny par capital gain hota hay.

[faisal_desperado]

Dear Fawad,

At the outset, I appreciate your query; Since after a long time there has a technical query been arisen by a member in Tax Forum, so i am bound to appreciate the same.

Undoubtedly, There is a Contradiction in between the two said sections, however, if it is assumed that the transaction has been taken place between resident individuals, then section 24 should be applied and any gain / royalty will be treated as "income from other source" and the same should be clubbed with total income to arrive at the taxable income. In such a case, the rate to be applied depends on the proportion of individual's Salary income and business income.

However, if the principle activity of the resident individual is to deal in the business of royalty, then section 54 will be applicable, and the income earned though royalty will be treated as business income and accordingly rate for business individuals will be applicable.


Let me know if confusion still exists.


Best Regards,

Faisal.

[fawadiqbalmemon]

jazkallah faisal bhai

capital asset ka samajh nahi aaya ......kionke capital gains mein
capital asset ki definition mein likha hai ke "property in respect to
which amortization is entitled"......should not be included in
capital asset....however from accounting point of view it can be capital
assett.....kiya is provision se contradiction nahi aa raha?

jab ke intangibles sec 24 of it0 2001 mein likha hai ke gain ko
business income mein le jaye......

anyway mein chahta hon ke tax appropriate tareeqa se file ho
aur kam se kam tax lage

[faisal_desperado]

Dear Fawad,

To my apprehension, you could not have understood my last reply correctly, had you understood the same, you would not have asked the relevant/same query again.

Furthermore, there is a progressive tax system at our country.
If your earning is higher, tax will be higher accordingly.

How can tax be lower in case of high earnings? )

Apart from the above, please explain your latest query again, as it is not clear.

Best Regards,

Faisal.