W.TA. NO. 181/LB OF 1987-88, DECIDED ON 28TH NOVEMBER, 1994. VS W.TA. NO. 181/LB OF 1987-88, DECIDED ON 28TH NOVEMBER, 1994.
1995 P T D (Trib.) 1162
[Income-tax Appellate Tribunal Pakistan]
Before Ashfaq-Ahmad Accountant Member and Muhammad Zaman Khan, Judicial Member
W.TA. No. 181/LB of 1987-88, decided on /01/.
th
November, 1994. (a) Wealth Tax Act (XV of 1963)---
----S. 5(1)(xv) [before substitution by Finance Act (I of 1985)]---Object of S.5(1)(xv), Wealth Tax Act, 1963.
The object of law was to generate Foreign Exchange and it was for that purpose that incentive for exemption was given to the non-resident. So, the only material consideration for the grant of exemption at the relevant time was if the amount relevant pertained to the foreign remittance or not.
(b) Wealth Tax Act (XV of 1963)---
----S.5(1)(xv) [before substitution by Finance Act (I of 1985)]---Exempt-- Foreign remittance through normal banking channels---Such remittances despite conversion into other forms like Fixed Deposit Receipts and Khas Deposit Certificates remained exempted under S.5(1)(xv) of the Wealth Tax Act, 1963.
Qazi Masood Ahmad for Appellant.
Nazeer Ahmad, D.R. for Respondent.
Date of hearing: 20th October, 1994.
ORDER
MUHAMMAD ZAMAN KHAN (JUDICIAL MEMBER).----This appeal proceeds against the order, dated 8-12-1987, rendered by CWT(A), Zone-3, Lahore by virtue of which the order earlier passed by the W.T.O., Circle-III, Lahore under section 16(3) of the Wealth Tax Act, 1963, in respect of the assessee for the assessment year 1984-85 whereby the assessee was not allowed exemption for the entire sum of Rs.18,48,555 on account of foreign remittances, as per details furnished by him, has been upheld aggrieved by the same, the assessee has come up in second appeal.
The brief facts of the matter are that the assessee/appellant, a Pakistani national remained out of country from 4-1-1979 to 2-6-1984, while working in Saudi Arabia. While abroad he made foreign exchange remittances of the aggregate value of Rs.18,48,555 from 6-3-1979 to 26-9-1983,
Through proper banking channels. Year-wise summary of remittances is as under:---
| Year ended | 30-6-1979 | 69,620 |
| -do- | 30-6-1980 | 89,105 |
| -do- | 30-6-1981 | 108,990 |
| -do- | 30-6-1982 | 810,840 |
| -do- | 30-6-1983 | 770,000 |
The assessee/appellant submitted wealth tax return for the first time for the Assessment year 1984-85 in the status of a non-resident, showing gross value of assets of Rs.24,64,663, against which exemption of the value of Rs.18,48,555 was claimed by him under section 5(1)(xv)(i) of Wealth Tax Act, 1963, so as to leave the balance net wealth at Rs.616,108. However, W.T.O. allowed -him exemption to the extent of cash in hand and cash with Bank accounting to Rs.217,558. The claim of balance amount from Rs.18,48,555, was disallowed on the ground that certain other assets had been created out of the foreign remittances which fell outside the purview of said section. .
The claim for exemption, as indicated above, related to the assets which the assessee had repatriated through banking channels. At the time of submission of return the same was allegedly lying in the form of cash in hand, cash in Bank, F.D.Rs. and Khas Deposit etc. According to the departmental officers, except the cash in hand and Bank, the remaining amount of foreign remittances went out of the pale of exemption, as F.D.Rs. etc. had been created out of said remittances and thus to that extent said remittances had ceased to be foreign remittances and thus partial disallowance was ordered. On the other hand, the plea of the assessee is that foreign remittances continued to remain within the parameter of exemption available to the assets brought into Pakistan, in whatever form they were lying i.e. cash, F.D.Rs. or Khas Deposits etc.
We have heard the learned Income Tax consultant appearing on behalf of the assessee/appellant and the learned D.R. representing the Revenue, and have also gone through the relevant record.
At the outset, we may point out that the learned D.R. has very gracefully conceded before us that the appellant had a good case and as such he was not in a position to repel the arguments which have been advanced for the assessee. Be that as it may, we have also considered the facts of the case and after giving our anxious thought to the plea raised by the assessee, now proceed to resolve the same.
The clause relating to exemption as mentioned above, which is relevant to the facts of our case was inserted by the Finance Act, 1976 and read as follows:
"(xv) In the case of a person who is not resident in Pakistan---
(i) Assets brought by him into Pakistan in the year in which they are brought and the following five years; and
(ii) Any amount invested in the acquisition of shares or stocks of a company out of remittances received in Pakistan through normal banking channels in the year in which it is invested and the following five years."
However, in this case the relevant part is (xv)(i), as reproduced above.
The existing clause (xv) of section 5(1) relating to exemption, was substituted by the Finance Act, 1985.
It may be mentioned in the beginning that there is no cavil with the proposition that the amount in regard to which the exemption is being claimed was remitted by the assessee from abroad. The detail of the same was also furnished by the assessee in his return and the propriety of the same has never been challenged by the Department at any stage.
With the above circumstances in the background we fail to understand as to why the plane language of the relevant provision pertaining to exemption was twisted by the departmental officers. To us it so appears the object of law was to generate Foreign Exchange and it was for that purpose that incentive for exemption was given to the non-resident. So, the only material consideration for the grant of exemption at the relevant time was if the amount relevant pertained to the foreign remittances or not. As indicated above, the Department did not dispute this aspect of the matter. Rather, without any inquiry apart of the amount was granted exemption whereas the balance was arbitrarily ignored in this respect and requisite benefit was denied.
Apart from the above, when the Department had 6nce accepted the plea of the assessee that the relevant amount was remitted by the assessee from abroad the onus was on the Department to collect necessary material and verify that the assets for which the assessee had claimed exemption did not correspond or did not represent the amount of foreign remittances. For this reason as well we find that there was no justification for the departmental officers to refuse the benefit of exemption for the entire amount so claimed by the assessee.
There is also nothing before us to show that after once it was established that the amount related to foreign remittances, the question of conversion at all was relevant in those days. Even otherwise, the relevant provisions of law- of exemption, does not attach any condition relating to so called conversion and thus any such condition or interpretation would be void and cannot have the effect of violating the spirit of the original statute.
On account of what has been said above, we are of the considered vie that since the money was brought into Pakistan by the assessee through for an exchange remittances during the relevant period, it remained within the parameter of exemption, available to the assets; for a specified period. Whether it was lying in the form of cash or F.D.Rs. etc. and thus cannot be is said to have changed its basic character or nature. The exemption as claimed by the assessee to the extent of Rs.18,48,555 as such, as has been done summarily, was wrongly refused to him by the departmental officers. We, therefore, annul the impugned orders and hold that the assessee would be entitled to the benefit of relevant provision for such time as is allowable for the specified period in the assessment of his wealth in the light of the return or 1984-85 furnished by him, on yearly basis, regarding the foreign remittances.
As a sequel to the above the appeal succeeds to the extent and in the manner, as determined by us above.
M.B.A./112/TAppeal allowed.