(a) Wealth Tax Act (XV of 1963)---

----Ss. 2(5)(16). 2(e)(m), 3 & 17B---Powers of Inspecting Assistant Commissioner to revise Wealth Tax Officer's order---Land under litigation-- Inclusion of such land in net wealth---Land declared by assessee in his wealth statement was not assessed in wealth tax assessment by Assessing Officer, Inspecting Assistant Commissioner concluded that assessment made was erroneous as well as prejudicial to the interest of Revenue and therefore, included the value of such land in the net wealth of the assessee---Assessee contended that he was the owner of land but he was not in possession the same being under litigation and the occupants had claimed their title by way of adverse possession for over 12 years, therefore, unless the title was cleared by the Court and its possession was duly delivered to the assessee, the land in question could not be assessed in the hands of assessee-- Validity---Assessee was the owner of land in question duly declared by the' Supreme Court of Pakistan which formed his asset as defined by the Wealth Tax Act, 1963---Law did not distinguish the assets which were in possession of the assessee and which were not in possession---Tendency of litigation in respect of said land did not exclude same from the ownership of the assessee---Requirement of law was that the asset must belong to the assessee as on the valuation date---Assessment made was not only erroneous but was prejudicial to the interest of Revenue also---Assessment was rightly modified by the Inspecting Assistant Commissioner in circumstances:

Black's Law Dictionary, 5th Edn. and Webster's Law Dictionary ref.

(b) Wealth Tax Act (XV of 1963)---

----S. 7(2) (aa) (i)---Wealth Tax Rules, 1963, R.8(3)---Value of assets how to be determined ---Assessee purchased agricultural land and got approved a housing scheme on the said land by Cantonment Board---Said Agricultural land remained no longer available for use of agricultural purpose after the development. of Housing Scheme---One piece of land from said scheme was not in possession of the assessee and was under litigation---Value of such piece of land was determined under R.8(3) of the Wealth Tax Rules, 1963 and was included in the net wealth of the assessee---Assessee pleaded that he purchased agricultural land including the land in question, therefore, it was agricultural land for all practical purposes, and it should have been assessed under S.7(2) (aa) (i) of the Wealth Tax Act, 1963 and not under R.8(3) of the Wealth Tax Rules, 1963---Assessee further contended that assessment in- respect of land in question, being under litigation, ought to be suspended till the final decision of the Court---Validity---In and around the land in question a housing colony had been. developed and people had raised constructions over there---Occupants of the land in question were also using same for residential and business purposes---Nature of land had been totally changed and it was no more capable of being used for purposes sub-survient to agriculture---Such land, therefore, could not be assessed under S.7(2) (aa) (i) of the Wealth Tax Act, 1963---Land was rightly valued on the basis of market value under R.8(3) of the Wealth Tax Rules, 1963---Assessments could not be suspended as that would become time-barred, there being no bar against assessment during pendency of litigation.

Black's Law Dictionary 5th Edn. Punjab Tenancy Act, 1877 and Law Reforms Regulation, 1972 ref.

Habib Fakhruddin; F.C.A. for Appellant (in W.T.A. N0.37(IB) of 1998-99).

Muhammad Ali Shah, D.R. for Respondent (in W.T.A. No.37(IB) of 1998-99).

Muhammad Ali Shah, D.R. for Appellant (in W.T. As. Nos.314(IB) and 315(IB) of 1998-99).

Habib Fakhruddin, F.C.A. for Respondent (in W.T. As. Nos.314(IB) and 315(IB) of 1998-99).

Date of hearing: 1st May, 1999.

ORDER

The above three wealth tax appeals one by the assessee relating to assessment year 1993-94 and two by the Department relating to assessment years 1994-95 and 1995-96, raise a common issue regarding the valuation and taxability of land, measuring 180 Marlas, situated in village Topi, Rawalpindi. These appeals will be disposed of by this common order.

2. The relevant facts giving rise to these appeals are that while examining the assessment record for the year 1993-94, it was found by the learned IAC of Income Tax/Wealth Tax, Range-I, Rawalpindi, that the land measuring 180 Marlas (9 Kanals) was not assessed in spite of the fact that this land was declared by the assessee in his wealth statement as on 30-6 1994. The learned IAC, thus, came to the conclusion that the assessment made for that year was erroneous as well as prejudicial to the interest of Revenue. A show-cause notice under section 17B of the Wealth Tax Act, 1963 (hereinafter called the Act) was issued which was complied with. The reply of the assessee was found unsatisfactory. Consequently, the learned IAC modified the assessment by including this land in the wealth of the assessee and valuing it at the rate of Rs.35,000 per Marla.

3. For the assessment years 1994-95 and 1995-96, the assessments were finalized by valuing the said land at the rate of Rs.35,000 per marla. In appeals, the assessee raised objection, about the valuation of said land at the above rates and including it in the-wealth of the assessee for wealth tax purpose. It was pleaded that no doubt, the assessee is the owner of the said land, but for obtaining possession of it, a suit for possession of the land, had been filed by the assessee which is pending adjudication in the civil Court, therefore, the land being under litigation, it could not be included in the wealth of the assessee. Agreeing with the contention, raised by the assessee, the learned CIT/WT(A) directed that the value of the land measuring 180 Marlas determined at tile rate of Rs.35,000 per Marla should be excluded from the total wealth of the assessee. The assessee is aggrieved by the order of the learned IAC dated Nil relating to assessment year 1993-94 while the Department objects to the order of the Commissioner of Income Tax/Wealth Tax (Appeals) relating to assessment years 1994-95 and 1995-96 as being against facts and unjustified.

4. Mr. Habib Fakhruddin, F.C.A. on behalf of the assessee and Mr. Muhammad Ali Shah, for the Department have been heard and relevant orders perused.

5. The sole question which arises for our consideration is whether the land under litigation is assessable in the hands of the owner (assessee) who is not in possession of it. In order to fully understand the respective contentions of the parties it is desirable to briefly state the history of the case. The assessee purchased land measuring 285 Kanals including the land in question in village Topi, Rawalpindi, vide registered sale-deed somewhere in 1964 Soon after the purchase of the said land, and went up to the Supreme Court of Pakistan where vide order dated 10-8-1987 it was decided in favour-of the assessee and he was declared the owner of the land. Thereafter, the assessee gilt demarcated the land, had taken its possession and got approved a housing scheme on :his and by Cantonment Board, Rawalpindi. At that time Muhammad Jan, Muhammad Ramzan and Muhammad Aslam were in possession of land measuring 2 Kanals and-3Marlas as tenants where they had built houses for their residences and the remaining .7 Kanals and 18 Marlas was in possession of Major Mahtab Khan where he built a garage, a small room and a boundary wall. A suit for possession of the land measuring 2 Kanals, 3 Marlas was filed against the above three persons alleging that they were Pant and built houses as tenants after the development of the housing scheme the agricultural land remained no longer available for the use of agriculture purposes, therefore, they have no right to retain its possession. In respect of the land which was in possession of Major Mahtab Khan, ejectment proceedings in the Revenue Court were initiated where he denied his status as tenant and also raised objection to the jurisdiction of the Revenue Court. That ejectment petition was dismissed by the Revenue Court: The assessee accepted the renunciation of tenancy and accordingly filed a civil suit for possession after demolition of the structure built thereon, on the ground that the defendant (Maj. Mahtab Khan) was, in unauthorized possession of the said land and was not entitled to retain its possession.

6 It is no body's case that the land in question does not own by or belong to the assessee and hence it was wrongly assessed in the hands of the assessee. Admittedly, the assessee is the owner of the land and he has been declaring the said land in his return of wealth tax It is vehemently canvassed before us that as the assessee is not in possession of the land in question which is under litigation, and the occupants have claimed their title by way of adverse possession for over 12 years, therefore, unless the title is cleared by the Court and its possession is duly delivered to the assessee, till then the land in question cannot be assessed in the hands of the assessee. In order to appreciate the contention of the leaned A.R., .it is beneficial to make a brief reference to the relevant provisions of Wealth Tax Act, 1963. Section 3 of the Act which is the charging section says that charge of wealth tax is on the net wealth of the assessee on the relevant valuation date. The term "net wealth" is defined in section 2(m) .of the Act as to "means the amount by which the aggregate of the assets belonging to the assessee on the valuation date, including the assets required to be included in his wealth, is in excess of the aggregate value of the debts, owned by the assessee on the valuation date." However, certain debts as referred to in sub-clauses (i) and (ii) in clause (m) have been excluded from the ambit of determining aggregate value of the debt owed. Section 2(e) of the Act defines the "assets" as under:---.

"(e) 'assets' includes--

(i) in the case of an individual and a Hindu Undivided Family, property of every description movable or immovable, except.

(a) growing crops, grass or standing trees on agricultural land; and

(b) any building owned or occupied by a cultivator or receiver of rent or revenue out of agricultural land:

Provided that the building is on or in the immediate vicinity of the land and is a building which the cultivator or the receiver of rent or revenue by reason of his connection with the land requires as a dwelling house or a store house or an out house; and

(ii) in the case of a firm, an association of persons or a body of individuals, whether incorporated or not, and a company, immovable property held for the purpose of the business of construction and sale or letting out, of property."

7.From the plain reading of above provisions of law it transpires that the property of every description movable or immovable belonging to an individual except the properties mentioned in sub clauses (a) and (b) above are the assets of that individual. The assessee, an individual, being the owner of the land in question, which belongs to him, is the asset of the assessee and forms his wealth under the Act and assessable as such in his hands. The contention that the land being to litigation does not include the land from the ownership of the assessee. We find that the separate suits for possession have been filed by the assessee on the basis of ownership We also find that the assessee has been declared the or of the land including the land in question by the Supreme Court of Pakistan. In these circumstances the assessee is the owner of the land in question, which' forms his asset as defined by the Wealth Tax Act. The defendants only claimed ownership by way of adverse possession. The law does not distinguish the assets which are in possession of the assessee and which are not in his possession. The pendency of the litigation in respect of said land does not exclude it from the ownership of the assessee. The only requirement of law is that the asset must belong in the assessee as on the valuation date. The word "belong" according to Black's Law Dictionary Fifth Edition means "to appertain to, to be the property of, to be member of, to be appropriate, to own". In Webster Dictionary words "belonging to" mean to be owned, by to be in possession of. Therefore, the word "belonging to" a person has the meanings firstly, the ownership and secondly, absolute right of use. The phrase "belong to" has a wider meaning including the ownership. It also connotes not only an absolute title but also possession of an interest. Hence for all practical purposes the land in question belongs to the assessee as being the owner of the land and hence it is his "asset" and assessable under the Act.

8. At the time of hearing of appeal the learned A.R. has filed an application for permission to take an additional ground which is as under:--- .

That without prejudice to ground Nos. 1 to 3 the disputed land measuring 180 Marlas is agricultural land and as such its valuation made by treating the same as non-agricultural land is illegal unwarranted and against the provisions of section 7(2) (aa) (i) of the Wealth Tax Act, 1963. "

This plea has not been raised before the authorities below and further whether a land is an agricultural land, is a question of fact which cannot be raised at this stage. But, as it is a question of public importance and its decision would be a help to the Assessing Officer, we proceed to decide it on merits.

9.The learned A.R. has contended that as the assessee purchased agricultural land including the land in question, therefore, it is an agricultural land for all practical purposes, and it should have been assessed under section 7(2)(aa)(i) of the Act and not under rule 8(3) of the Wealth Tax Rules, 1963.

10.We do not subscribe to the arguments of the learned A.R., as the contention raised is factually and legally misconceived. The land has not been defined in the Act. Therefore, we have to take its dictionary meanings and also to seek guidance from the provisions of other enactment wherein the land has been defined. In the Punjab Tenancy Act; 1877, the land is defined as "land". means land which is not occupied as the site of any building, in a town or village and is or has been let for agricultural purposes or for purposes subservient .to agriculture or for pasture and includes the sites of buildings and other structure on such "land". The word "land" has also been defined in the Law Reforms Regulation, 1972 as the "land" means the land which is not occupied as the site of a town, a village, factory or industrial establishment and occupied or has been or can be or let for agricultural. purposes allied or subservient to agricultural and includes the sites of building or other structure on such land. The word "agricultural" according to Black's Law Dictionary means pertaining to, or dealing with agriculture. The, agricultural land, thus means a land which is used or being used for agricultural purposes or purposes pertaining to agriculture. According to the assessee's own showing the land in question measuring 9 Kanals is not being used for agricultural purpose or for purposes subservient to an agricultural or for pasture for more than many years. In and around of this land a housing f colony has been developed and the people has raised construction over there. The occupants of; this land are also using the land in question for residential and business purposes. The nature of land has been totally changed and now it is not capable of being used for an agricultural purpose car for purposes subservient to agriculture. Therefore, the plea of the assessee that the land being agricultural, be assessed under section 7(2)(aa)(i) of the Act has no force. We are of the considered view that the land does riot fall in that category of agricultural land and it was rightly valued on the basis of market value by the Assessing Officer under rule 8(3) of the Wealth Tax Rules, 1963.

11. Lastly, the, learned A.R. has contended that assessment in respect of the land in question, being under litigation, may be suspended till the final decision of the Court. We cannot agree with the contention of the learned A.R. of the assessee on the ground that after decision of the Civil Court by the. assessee, the assessment for these years may become time-barred and secondly, we do not find any support either from law on. the subject or from the case law that in case of litigation, in respect of the asset (land) of the assessee, it should not be assessed in the hands of the assessee till the dismissal of such case-

12. As a result of what has been discussed above we find no illegality or material irregularity in the order of the learned IAC relating to assessment year 1993-94 as the assessment made for the year 1993-94 was not only erroneous but was prejudicial to the interest of Revenue. Hence assessment was rightly modified by the learned IAC in exercise of his corrective powers under section 17B of the Act. We, therefore, uphold the findings of the learned IAC for the assessment year 1993-94. For the assessment- years 1994-95 and 1995-96 the order dated 24-9-1994 passed by the learned CIT(A) suffers from material irregularity and legal infirmity as pointed out hereinabove, therefore, this order is vacated and that of the Assessing Officer is restored. However, we may like to observe here that the assessment made for all these years in respect of the land in question will remain subject to the final decision of the Court.

13. All the appeals are disposed of as above.

C.M.A./M.A.K./16/Tax (Trib.)Order accordingly.