FBR has raised an income tax demand of approximately Rs1.82 billion against Faisal Town (Private) Limited for Tax Year 2020. The dispute concerns the Percentage of Completion method used to recognise revenue from a long-term real estate development project.
According to the assessment position reported in the document, the company increased its estimated project cost from Rs40.46 billion to Rs90.46 billion after expanding the stated project area. This reduced the reported completion percentage from 44.73% to 19.95% and consequently lowered the revenue and taxable income recognised for the year.
FBR rejected the revised figures on the ground that adequate contemporaneous evidence, including feasibility studies, board approvals and reliable cost estimates, had not been produced. It also observed that the revised regulatory approval was issued after the end of Tax Year 2020. The demand represents FBR’s assessment position and may remain subject to appeal and further adjudication.