W.T.AS. NOS.475/LB AND 476/LB OF 1992-92. VS W.T.AS. NOS.475/LB AND 476/LB OF 1992-92.
1997 P T D (Trib.) 2106
[Income-tax Appellate Tribunal Pakistan]
Before Abdul Rashid Qureshi, Judicial Member and
Inam Elahi Sheikh, Accountant Member
W.T.As. Nos.475/LB and 476/LB of 1991-92, decided on 31/03/1996.
(a) Wealth Tax Act (XV of 1963)---
----S. 5(1)(xvi)---Residential house---Exemption---Residential house of whatsoever size, if self-occupied, was exempted from wealth tax.
(b) Wealth Tax Act (XV of 1963)---
----S. 7---Valuation of intangible assets---Appellant purchased adjacent house for declared value of Rs.5 lass---Partition wall between two houses was removed to make single unit---Wealth Tax Authorities enhanced appellant's wealth on account of intangible addition---Appellant had not claimed credit for addition, there being no tangible asset---Held, A.A.C. was not justified in upholding valuation of asset which never existed to income-tax assessment---Valuation was taken as cost whereas in self-assessment valuation was assessed at fair market price on valuation date---No justification existed for further addition as asset was neither declared nor available with assessee.
Qazi Masood Ahmed, C.A. for Appellant.
Javed Rehman, D.R. for Respondent.
Date of hearing: 10th October, 1995.
ORDER
ABDUL RASHID QURESHI (JUDICIAL MEMBER). ---These are two further appeals pertaining to assessment years 1987-88 and 1988-89 filed at the instance of the assessee in which the orders passed by the learned A.A.C. Range-IV Lahore on 21-11-1991 and 22-10-1991 respectively have been challenged.
2. Both the learned A.R. and D.R. are present.
3. Relevant facts of the case are that the assessee an individual against whom original assessment with regard to the year 1987-88 was framed on 30-7-1988 on total wealth of Rs.7809450. The assessee preferred an appeal before the learned CIT (Appeals) who set aside the assessment vide order dated 17-10-1988. Statutory notices were served and complied with the valuation of House No.86-C New Muslim Town, Lahore was adopted at Rs.15.00 lacs and the valuation of House No.85-C, New Muslim Town, Lahore was estimated at Rs.6.00 lacs and an addition of Rs.38.00 lacs was made by the learned Wealth Tax Officer Cir-III. Lahore vide order dates 16-7-1989. For the assessment year 1988-89 original return was filed on 15-10-1988 declaring total wealth at Rs.4353447. Subsequently revised return was filed declaring total wealth as Rs.3425227. The learned Wealth Tax Officer Cir-III, Lahore estimated the value of House No.85-G, New Muslim Town, Lahore at Rs.6.50,000 and of House No.86-G New Muslim Town, Lahore at Rs.16.00 lass vice order dated 16-7-1989.
4. Aggrieved by both the impugned orders, the assessee preferred two appeals before the learned A.A.C. Range-IV Lahore who dismissed the appeal pertaining to assessment year 1987-88 vide order dated 21-11-1991 and pertaining to assessment year 1988-89 vide order dated 22-10-1991. Hence the instant appeals.
5. The assessee has taken five grounds of appeal for the year 1987-88 and nine grounds for the year 1988-89. However, the learned A.R. has argued both the appeals on the issue of valuation of residential house at No.85/86-C New Muslim Town. Lahore on the enhancement of wealth by Rs.38.00 lacs on account of intangible addition for the year 1987-88. It is contended that the assessee built a House at 86-C, New Muslim Town. Lahore by investment at Rs.3,50,000 in the period relevant to 1983-84 assessment. It is further contended that the house was used for self-residence and as the accommodation was insufficient for the assessee's family. Therefore, House No.85-C adjacent to House No.86-C was purchased on 7-4-1984 for a declared value of Rs.5.00 lacs. It is emphasised by the learned A.R. that the partition wall between both the houses was removed and those were converted into a single unit. The house has one boundary wall and one entrance gate. The learned A.R. forcefully submits that claim for exemption of both the houses as a self occupied unit was not admitted. The learned A.R. further submits that two separate units exist for which form PT-1's had been issued by the Excise and Taxation Deptt but actually it is a one house being used for self-residence. The learned A.R. claims exemption as envisaged under section 5(1)(xvi) of the Wealth tax Act. The learned AR. contends that there is no justification for making an addition of Rs.38.00 lacs. The learned D.R. strongly supported both the orders passed by the learned A.A.C. Range-IV, Lahore.
6. We have heard both the learned A.R. and D.R. and perused all me orders passed by the learned lower authorities. It is an established fact that residential house of whatever size, if self-occupied is exempted from "'wealth Tax Act under section 5(1)(xvi). There is no restriction as to the size of tile property how large it may be. The assessee's plea that both the units constitute one residential house and are being occupied for sell-residence carries weight, as already conceded by the department from 1989-90 to onward. The claim for exemption of self-occupied house being legal and justified is hereby allowed. The assessee has not claimed any credit for the addition of Rs.38.00 lacs in the form of cash or any moveable or immovable property, there being no tangible asset. The learned A.A.C. was not justified in upholding the valuation of an asset which never existed. In the income tax assessment the value of asset is taken as cost whereas in the scoff-assessment the valuation is assessed at the fair market rate on the valuation date. The asset having being valued at fair market value, there is no justification left for further making the aggrieved addition of Rs.38.00 lacs. As the asset which was neither declared, nor available in any form with the assessee As the addition is without basis, therefore, it is deleted accordingly. No other point was pressed.
7. Both the appeals succeed in the manner as indicated above.
C. M. S./291 /Trib ????????????????????????????????????????????????????????????????? ??????Order accordingly.