W.T.AS. NOS. 1687/LB AND 1688/LB OF 1998, DECIDED ON 9TH SEPTEMBER, 1999. VS W.T.AS. NOS. 1687/LB AND 1688/LB OF 1998, DECIDED ON 9TH SEPTEMBER, 1999.
1999 P T D (Trib.) 4144
[Income-tax Appellate Tribunal Pakistan]
Before Inam Ellahi Sheikh, Accountant Member and Syed Nadeem Saqlain, Judicial Member
W.T.As. Nos. 1687/LB and 1688/LB of 1998, decided on 09/09/1999.
(a) Wealth Tax Act (XV of 1963)---
----Second Sched., Part I, c1.12(1)---Exemption---No appeal in earlier year-- Claim of exemption could not be refused merely because the assessee did not file an appeal in earlier year---Statutory allowance could be claimed in any year.
(b) Wealth Tax Act (XV of 1963)---
----Second Sched.. Part I, cl. 12(1)---Circular No. 11 of 1994, dated 17-7-1994---Exemption---Share in a house---Entitlement to exemption-- Assessee had claimed exemption of self-occupied house to the extent of his own share in the house---Claim of the assessee was rejected by Assessing Officer on the ground that law permitted exemption only in respect of one residential house and property in question was only a portion which could not be treated as one house ---Validity---Assessee having not claimed exemption in respect of more than one house and there being no requirement of law that the house must be demarcated to claim the exemption, exemption claimed by the assessee was allowed by Tribunal.
1994 PTD 25 distinguished.
PLD 1991 SC 329 ref.
Muhammad Ajmal Khan for Appellant.
Manzoor Hussain Shad, D.R. for Respondent.
Date of hearing: 30th July, 1999.
ORDER
INAM ELLAHI SHEIKH (ACCOUNTANT MEMBER).---A wealth tax assessee has filed these two further appeals against an order, dated 21-7-1 918 recorded by the learned Commissioner of Income/Weald; Tax (Appeals), Zone I, Faisalabad to agitate the disallowance of claim of exemption of a self-occupied portion of a house.
2. The relevant facts in brief are that the assessee was the owner o1' 2/3rd share in House No.22-A, People's Colony, Faisalabad and claimed the exemption in respect of his portion under clause 12(1) of the Second Schedule to the Wealth Tax Act, 1963. The Assessing Officer refused the claim of exemption in both the years under consideration in view of the fact that such claim had been rejected in the preceding year which refusal was upheld by the First Appellate Authority vide an order dated 27-2-1997 Hence the Assessing Officer while framing the assessment for the years 1994-95 to 1997-98 by a combined order, refused this claim of exemption and estimated the value of the property at Rs.2,541,000 in each year. Such treatment was confirmed by the First Appellate Authority vide the impugned order against which the assessee is aggrieved.
3. The learned counsel of the assessee has strongly agitated for the acceptance of the claim with the plea that the owner was not claiming exemption more than one house and that the 2/3rd share could be treated as a house as laid down in the Rule 12(1) (supra). It was also the plea of the learned counsel that the mere fact that the assessee did not file appeals in the earlier two years could not deny him the claim of statutory exemption which is otherwise admissible. The learned counsel for the assessee has also referred to Circular of the Central Board of Revenue No. 11 of 1994 dated 17-7-1994 to substantiate the claim of exemption in respect of a part of a house. The learned counsel also referred to a decision of an Indian Court reported as 1994 PTD 25 to support his claim. The learned counsel submitted that any ambiguity in the wording of the law should be interpreted in favour of the assessee. Reliance was placed on a decision of the Hon'ble Supreme Court reported as PLD 1991 SC 329. The learned D.R. on the other hand supported the orders of the departmental officials with the submission that the law permitted exemption in respect of one residential house and that admittedly the property in question was only a portion thereof, which could not be treated as one house. The learned D.R. also submitted, that there was not any demarcation of property. The learned D.R. also submitted that the assessee could not raise this claim after having accepted the rejection in the earlier two years.
4. The parties have been heard and relevant orders perused. We feel that the claim cannot be refused merely because the assessee did not file an appeal in the earlier year. A statutory allowance can be claimed in any year. Although Rule 12(1) of Part I of the Second Schedule to the Wealth Tax Act allows exemption of 'one' residential house, the question may be considered whether a part of a house or a share in the house could be allowed exemption under this rule. 'It may also be mentioned that the assessee is claiming exemption to the extent of his own share in the property and that only such share has been valued by the Assessing Officer. This means that at least there is another owner who may be claiming such exemption in respect of same residential house to the extent of his share or who may be paying tax on his share. The learned counsel has referred to the following extract from the Circular No. 11 of 1994 of the C.B.R.:---
"Where a house or apartment is partly self-occupied and partly let out, the owner may under clause (xvi) of subsection (1) of section 5 of the Wealth Tax Act, exclude from his non-agricultural assets the value of that portion of the house or apartment which is used by him for his own residence. The value of the self-occupied portion wherever necessary, shall be determined. Keeping in view the 'gross annual rental value' of the portion that has been let out."
This paragraph of the circular deals with the situation where a portion of the property may have been let out although the same is not the property of another person. This paragraph permits the assessee to exclude the value of such portion, which is used by him for his own residence, from the non -agricultural assets. Although this paragraph is not strictly relevant to the fact of this case, this shows that the assessee may claim exemption in respect of a part of property, which is in his own occupation and the remaining portion, which is let out may be taxed. On the same analysis, we feel that the assessee has a good case. In any case the assessee is not claiming exemption in respect of more than one house. There is no requirement in the law that the house must be demarcated to claim the exemption. In these circumstances, we are inclined to accept the assessee's appeal and direct that the exemption may be allowed.
5. The learned counsel of the assessee has relied on a decision of the Indian High Court reported as (1994 PTD 25). However, we find that such judgment is not relevant to the facts of the case as in that case the question revolved around the interpretation of the terms exclusive use and not the part or whole house. In any case, as is evident from the judgment relied upon by the learned counsel, the Indian Wealth Tax Act allows the exemption of a part of a house. The judgment of the Hon'ble Supreme Court of Pakistan is however found to be helpful in the interpretation of the law. As a result, both the appeals succeed.
C.M.A./M.A.K./87/Tax(Trib.)Appeals succeed.