W. T. A. NO.313/IB OF 1997-98, DECIDED ON 14TH JUNE, 1999. VS W. T. A. NO.313/IB OF 1997-98, DECIDED ON 14TH JUNE, 1999.
1999 P T D (Trib.) 3513
[Income-tax Appellate Tribunal Pakistan]
Before Mansoor Ahmed, Accountant Member and Syed Masood-ul-Hassan Shah, Judicial Member
W. T. A. No.313/IB of 1997-98, decided on 14/06/1999.
Wealth Tax Act (XV of 1963)---
------S.7---Wealth Tax Rules, 1963, R.8(1A) & (3)---Valuation of assets other than cash ---Assessee declared value of house on the basis of Gross Annual Letting Value---Cost of house was higher than Gross Annual Letting Value-- Assessing Officer rejected declared value on the ground that as per R.8(1A) of the Wealth Tax Rules, 1963 the value of the house could not be determined at a value less than the cost of such house---Validity---Contention that sub-rule (1A) overrides the provisions of sub-rule (3) of R.8 of the Wealth Tax Rules, 1963 did not ,stand to reason---Provisions of sub; rule (I A) applied only to those assets which were otherwise to be valued under sub-rule (1)---Since the house was not covered by sub-rule (1), same was to be valued as per sub-rule (3) of R.8 of the Wealth Tax Rules; 1963-- Direction of First Appellate Authority to accept the declared value was upheld by Appellate Tribunal.
Imran Raza Kazmi; D. R. for Appellant.
Tanveer Ali Agha for the Assessee.
Dateof hearing: 17th April, 1999.
ORDER
MANSOOR AHMED (ACCOUNTANT MEMBER).---This departmental appeal is directed against order dated 5-11-1997 by the learned A.A.C., Islamabad in respect of assessment year 1996-97.
2. Mr. Imran Raza Kazmi, D.R. on behalf of the department and Mr. Tanveer Ali Agha, the assessee himself, present. Parties have been heard.
3. The facts of the case are that the assessee owns a House bearing No.404, Street No.12, F-10/2, Islamabad, the value of which was declared at Rs.19,80,000 in the wealth tax return for the year under consideration. The Assessing Officer observed that the assessee had obtained Capital Value Tax certificate wherein the purchase price of plot measuring 666 Sq. yds. was declared at Rs.53,50,000. He determined the value of house by separately valuing plot and house constructed thereon. The value of plot was adopted at Rs.53,50,000 and value of building was estimated at Rs.29,97,000 by applying construction rate of Rs.500 per Sq. Ft. on the entire area of plot measuring 666 Sq. yds. (5994 Sq. Ft). In this way the value of property was determined at Rs.83,47,000, The Assessing Officer rejected the declared value on the ground that as per rule 8(l A) of the Wealth Tax Rules, 1963, the value of an asset, other than cash, cannot be determined at a value- less than the cost of acquisition of such asset. At the first appeal stage, the assessee took the plea that the house in question was let out at monthly rent of Rs.16,500 and the value declared was on the basis of GALV as per rules. The learned AAC did not give any finding on the applicability or otherwise of rule 8(1A) which formed the basis of assessment. Instead, the learned AAC held that since the Assessing Officer had failed to obtain permission of the Commissioner to assess the asset at a value which is more than 12 times of the GALV, the estimation made by the Assessing Officer was void. He directed the Assessing Officer to accept the declared value after verifying the GALV on the basis of lease agreement. This decision has brought the department in appeal before this Tribunal.
4. The learned D.R. of the department argues that the Assessing Officer was justified to apply the provisions of rule 8(1 A) as the declared value was even less than the purchase price of plot alone. Therefore, the assessing officer worked out the cost of acquisition by adopting the actual purchase price of plot and adding to it the value of building by applying a reasonable rate of construction. The assessee, who is personally present states that the Assessing Officer wrongly field that plot alone had been purchased on which building was constructed by him (the assessee). In fact, a constructed house had been purchased by him. He produced a copy of Agreement to sell dated 4-6-1995. As per the terms in the, agreement, full purchase consideration of Rs. 53,50,000 had been paid and possession of house was taken over by the assessee. The aforesaid document shows that property purchased was not an open plot of land but a constructed house. The Assessing Officer, therefore, wrongly determined the value of land and building thereon, separately.
5. As regards the valuation of property under consideration, the learned D.R. states that the purchase price of the house has to be adopted as its value in view of the provisions of mile 8(1A) and the learned AAC was not justified to direct that the declared value on the basis of GALV be accepted. On the other hand, the assessee contends that the value declared was on the basis of actual rent, which was bona tide GALV and according to the rules and hence the first appellate authority was justified to order its acceptance. We have considered the arguments of both sides and proceed to examine the relevant wealth tax rules in the light of submissions made by the respective parties.
6. Rule 8 of the Wealth Tax Rules, 1963, deals with valuation of assets, other than cash, and its sub-rules prescribe the method of valuation of different types of assets. We find that sub-rule (2) through (9) deal with valuation of specified assets. Sub-rule (3) deals with valuation of lands and buildings. In the case of a building this sub-rule prescribes the valuation to be made on the basis of GALV. Sub-rule (1) is residuary in character and deals with valuation of assets, other than those covered by sub-rule (2) through (9). For facility of reference, sub-rule (1) is reproduced as under:---
"(1) Subject to the provisions of sub-rules (2), (3) (3A), (4), (4A), (4C); (5), (6), (7), (8), and (9), the value of any asset (other than cash) shall, for the purposes of assessment to wealth tax, be estimated to be the price which in the opinion of the Deputy Commissioner it was fetched if sold in the open market on the valuation date. "
The Assessing Officer has relied on sub-rule (IA), which was inserted through Notification No. SRO 817(1) /94, dated 28-8-1994. The said sub-rule reads as under:--
"(1A) Notwithstanding contained in sub-rule (1), the value of any asset, other than cash, motorcars or jeeps in the personal use of the assessee, shares and securities, shall not be determined at a value less than the cost of acquisition of such asset. "
The plain reading of the aforesaid sub-rule shows that it overrides the provisions of sub-rule (1) in the matter of valuation of those assets, which are otherwise governed by the provisions of sub-rule (1). As we have already noted, sub-rule (1) prescribes the method of valuation of only such assets as are not covered by specific provisions of sub-rule (2) through (9). Therefore, the department's contention that sub-rule (1A) overrides the provisions of sub-rule (3), dealing with the method of valuation of lands and buildings, does not stand to reason. While it is true that the exceptions made in sub-rule (1A) in respect of cars, jeeps, shares and securities give the impression as if these assets were otherwise to be valued at market price as per the provisions of sub-rule (1), but in our view these exceptions were wholly unnecessary because specific sub-rules, namely, sub-rule (2) for shares and securities and sub-rule (2A) for cars and jeeps, already exist. We are, therefore, of considered view that the provisions of sub-rule (1A) apply only to those assets which were otherwise to be valued under sub-rule(1). Since the lands and buildings are not covered by sub-rule (1) but in fact are to be valued as per sub-rule (3), the provisions of sub-rule (1A) do not apply to these assets. In the present case, the house was let out and there was no finding that the rent received was less than the GALV. Therefore, 'the learned AAC was justified to direct the Assessing Officer to accept the declared value based on GALV his order is upheld.
7. The departmental appeal fails,
C.M.A./M.A.K./75/Tax(Trib.)Appeal dismissed.