PRESENT: MUHAMMAD MUJEEBULLAH SIDDIQUI, CHAIRMAN, SHARIQ MAHMOOD, VS PRESENT: MUHAMMAD MUJEEBULLAH SIDDIQUI, CHAIRMAN, SHARIQ MAHMOOD,
2002 P T D (Trib) 134
[Income-tax Appellate Tribunal Pakistan]
Present: Muhammad Mujeebullah Siddiqui, Chairman, Shariq Mahmood, Accountant Member and Muhammad Tauqir Afzal Malik, Judicial Member
W.T.As. Nos. 635/LB to 645/LB of 1998, decided on /01/.
th
September, 1998. (a) Wealth Tax Act (XV of 1963)---
----S.16(3)---Assessment---Inclusion of value in net wealth of inherited properties under litigation for partition and possession ---Assessee showed only his share in the properties and no value was attached to these properties being belonging to his late father and assessee being not in the possession of the same---Assessing Officer discarded the assessee's stand and added the value to the properties on the ground that the assessee was in joint possession of the properties---Such addition was deleted by the First Appellate Authority with the observation that properties continued to be in the name of the assessee's father and in possession/occupation of his younger brother---Validity---Parties were co-heirs and co-owners of the joint suit properties and were still in its joint possession as co-owners and co-heirs---Even otherwise the legal position was that immediately after ,the death of the father of the assessee the asses had become owner in the inherited property to the extent of his share envisaged in Shariat Law and also retained its constructive possession---Deletion of valuation of the disputed property from the hands of the assessee by First Appellate Authority was uncalled for as he had become joint owner in the legacy of the deceased father---Guideline for valuation of property could be inferred from the value written for the purpose of jurisdiction of the Court---Assessing Officer thus rightly included the share owned by the assessee in the properties left by his father---Findings of First Appellate Authority were vacated and treatment given by Assessing Officer was restored by the Tribunal.
(b) Interpretation of statutes---
---- Plea of hardship and harshness cannot provide justification for ignoring the law as enacted by the Legislature---When a law enacted by the Legislature is very clear then the consideration of hardship and harshness cannot impede the implementation thereof by the Court.
Sameera Yasia, D.R. for Appellant. Rashid Sarwar, F.C.A. for Respondent.
Date of hearing: 12th September, 1998.
ORDER
Assessment Years 1986-87 To 1996-97:
SHARIQ MAHMOOD (ACCOUNTANT MEMBER).---The consolidated order of the First Appellate Authority CIT(A), Zone-II, Lahore, dated 6-4-1998 in case of assessments framed under section 16(3) of the Wealth Tax Act for the charge years 1986-87 to 1996-97 is assailed by the Revenue where the issues agitated are:
"(i) That the learned CIT(A) was not justified to exclude the property situated at Lawrence Road, Lahore, as the matter is still in the Court and the assessee can get his title of ownership as result of judgment of Court.
(ii) That the learned CIT(A) was not justified to exclude the property situated at Okara; as the matter is still in the Court and the assessee can get his title of ownership as a result of judgment of Court.
(iii) That the learned CIT(A) was not justified to allow exemption on account of Zakat as the same was disallowed on non-production of evidence."
2. The above, we find, are similar and identical for all the eleven impugned years. We, therefore, intend to dispose of the same through a combined order.
3. Assessments in the case of an individual under section 16(3) of the Wealth Tax Act have been framed vide two orders i.e. one for 1986-87 and the other for charge years 1987-88 to 1996-97. The main issue in appeal pertains to the title, right of ownership, possession etc. in case of two properties:--
(i) House at Lawrence Road, Lahore.
(ii) Shops/rooms at Okara.
The assessee in his return showed 2/5 share in the house at Lawrence Road and the similar percentage in case of 11 shops and 6 rooms at Okara for the charge years 1987-88 to 1993-94 Further, no value was attached to these two immovable assets as it was submitted that the said properties belong to his late father and after his death he did not have possession over the same. In order to assert and acquire his right, obtain possession and enjoy the fruits of ownership he had gone into litigations against his other family members (including his brother) who were denying him of his legal share and had neither passed it on to him nor given physical possession. In support he submitted before the Assessing Officer copy of the relevant civil suit. The Assessing Officer did not accept the plea after he found "perusal of copy of civil suit shows that the assessee is in joint possession of the property". After discarding the assessee's stand he attached value to the property as indicated in the relevant orders.
4. Appeals were preferred which have been disposed of vide the abovementioned impugned orders. The First Appellate Authority examined the evidence, facts and the assessee's argument detailed at pages 2 and 3 of the impugned order.
In the light of the same it was concluded that the property still continues to be in the name of the appellant's father and in possession/occupation of his younger brother. He accordingly deleted the additions worked out in case of these two immovable assets.
5. The learned A.R. supports the impugned order and calls for its upholding. He further emphasized that the conclusions drawn by the Assessing Officer were contrary to the facts-on record as:---
A. Civil Suit:
(i) That the defendants were requested by the plaintiff to partition the suit property and to deliver the legitimate share of the plaintiff to him, which he has lawfully inherited from his late father, according to the Shariat Law.
(ii) That in view of the defendants' denial to partition the suit property and to deliver the plaintiff's legitimate share to him, the plaintiff has no other alternative but to get his own share separated and to obtain possession of the same.
B. Reply filed by the appellant's brother to the above civil suit:--
"Para. 3 is admitted with the rider that House No. 50, Lawrence Road, Lahore, is in the exclusive ownership and possession of answering defendant.
C. Copies of P.T.I. Form issued by Assessing Authority showing that the said property still exists in the name of the assessee/respondent's late father. No division according to the inheritor shares has taken place.
D. The civil suit is still pending adjudication.
6. In the light of the above it was pleaded that the observations and conclusions drawn by the Assessing Officer were not only according to facts on record but also to the factual and legal position.
7. The learned D.R. could not controvert the arguments and submissions made on behalf of the assessee/respondent. Support and strength was drawn from the action of the Assessing Officer as reflected in his orders. We are, therefore, of the opinion that the Revenue has failed to make out a case, convince us, neither controvert the findings of the First Appellate Authority nor the evidence furnished by the assessee before various forums in support of his stand. The assessee, neither being in possession nor enjoying the fruits of ownership over the two assets, has been rightly treated so .by the First Appellate Authority. The deletion of the additions by the CIT(A) is confirmed.
8. The third issue regards the treatment in case of exemption allowed on account of Zakat paid where the First Appellate Authority has observed:---
"Inclusion of Zakat paid assets in the wealth of the appellant has also been agitated in all the years under appeal. However, the factual position as per assessment order is that the appellant claimed exemption in respect of such assets in the assessment years 1988-89, 1990-91 and 1996-97. The Assessing Officer is directed to allow exemption after verifying in the evidence produced by the appellant in this behalf."
9. The D.R.'s objection to the above is that at the time of assessment proceedings no evidence was furnished. The assessee's reply, through his A.R., that when the order was passed, no opportunity was afforded and neither was the assessee called upon to furnish necessary evidence and proof; this is borne from the assessment orders. The First Appellate Authority has directed that exemption should be allowed, after verifying the facts. Further also this issue pertains to the charge years 1988-89 and 1996-97 only while the Revenue, for reasons best known to it, has agitated it for all the 11 years. It seems that even the impugned order has not been seriously read. When nothing has been brought before us to show that the impugned order is erroneous we uphold the decision of the CIT(A) and dismiss the departmental plea.
10. The order of the First Appellate Authority filed before us is also not certified. Condition of Rule 11 of the I.T.A.J. Rules, 1981 is not fulfilled.
11. In the light of our foregoing observations and facts on record we are of the opinion that the Revenue has -not been able to make out a case before us. The 11 appeals are dismissed.
MUHAMMAD TAUQIR AFZAL MALIK (JUDICIAL MEMBER),
Contra.---I have gone through the judgment of my learned brother, the Accountant Member and respectfully disagree with his findings on the two issues whereby he has upheld the order of CIT(A) and excluded the properties situated at Lawrence Road and Okara respectively and ordered that the value of the same should not be taxed in the hands of the assessee as he is not in possession of the same.
13. Brief facts giving rise to the above issues are that the father of the assessee has died leaving behind the abovesaid properties. The share of assessee is 2/5th in both the disputed properties. The assessee filed as a suit for partition and also for separate possession of his share by metes and bounds. Needless to say that after giving description of the total properties in para. 2 in plaint it has been averred that "the parties are co?heirs and co-owners of the joint suit property. They have been and are still in its joint possession as co-owners and co-heirs". Even otherwise the legal position is that immediately after the death of the father of the assessee the respondent has become owner in the inherited properties to the extent of his share as envisaged in Shariat law. Technically speaking he also retains (Constructive Possession). Therefore, the deletion of A valuation of the disputed properties from the hands of the assessee by CIT(A) was uncalled for as he has become joint owner in the legacy of the deceased Rana Jehanded Khan; father of the assessee. It is further added that in the suit for separate possession through partition of his share and for permanent injunction pending in the Civil Court the valuation of the suit properties for the purpose of jurisdiction has been written by the assessee/himself as Rs. 50,00,000 which also gives a guideline for valuation of the properties. In this view of the matter the appeals of the Revenue on these two points should have been accepted and I respectfully disagree with the findings recorded by my learned brother, the Accountant Member in this regard. On the third issue I fully agree with the findings of my learned brother.
14. Since a difference of opinion has been arisen between the two learned Members the case is referred to the Hon'ble Chairman for nomination of third Member to resolve the following question:
"In the facts and circumstances of the case whether the CIT(A) was justified in excluding the value of properties to the extent of his share from the hands of the assessee when as a legal heir he has become owner and is contesting in Court of law for separate possession of the same?"
MUHAMMAD MUJEEBULLAH SIDDIQUI (CHAIRMAN).??
The difference of opinion between the learned Members of the Division Bench has arisen on the point if the properties inherited by the respondent assessee are to be included in net wealth or not. The necessary facts have been elobrated by both the learned Members in their respective orders.
16. Heard Mr. Muhammad Asif Hashmi, learned representative for the department and Mr. Rashid Sarwar, F.C.A. learned representative for the respondent. The learned counsel for the respondent has candidly conceded that the respondent inherited share in the properties left by his father in accordance with the Shariat Law of Inheritance. He has further conceded that according to Shariat Law, properties left by the father of respondent has developed on the legal representatives of the deceased including respondent and they have become co-owners/co-sharers in the said properties. He has further conceded that by virtue of inheriting the property, the respondent has become joint owner of the properties till its partition for which suit is pending in Civil Court. He has further conceded that according to the settled law the legal heirs of a Muslim deceased are deemed to be in joint possession -of the property left by the deceased although each one of them may, not be in actual physical possession. The sole contention of the learned counsel for the respondent is that the respondent has been deprived of the physical possession, benefits and usufruct of the properties. He has submitted that since the properties left by the deceased father of the respondent is in possession of respondent's brother and litigation is going on in the Civil Court for partition and possession of the properties, therefore, the properties may not be included in the net wealth of the respondent. However, he has conceded that according to section 3 of the Wealth Tax Act, 1963 wealth tax is to be charged in respect of the net wealth and net wealth has been defined to mean the amount by which the aggregate value computed in accordance with the provisions of Wealth Tax Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on the valuated date is in access of -the aggregate value of all the debts owned by the assessee on the valuation date. He has further conceded that there is no provision in the Wealth Tax Act which provides that only such assets shall be included in the net wealth as are in physical possession of the assessee or from which he is deriving any benefit for the time being. He has urged that notwithstanding the facts that the respondent is owner of the properties left by his father to the extent of his share according to Islamic Law, it would be unjust and improper to tax the same in the hands of respondent when the property is in physical possession of the respondent's brother which is deriving all the benefits from the property. On the other hand the learned D.R. has submitted that according to the law as it stands the share in the properties left by respondent's father to the extent of inheritance by the respondents is required to be included in the net wealth of the respondent. He has submitted that the considerations of hardships and harshness of the law are within the domain of Legislature and the Court is required to implement the law as enacted by the Legislature.
17. I have given my anxious consideration to the admitted facts on record, relevant law and the contentions raised by the learned representatives for the parties. I am persuaded to agree with the submissions of learned D.R. The learned counsel for the respondent has candidly conceded that according to law for the time being on force the properties inherited by the respondent owned by him and have to be included in the net wealth of the respondent. His pleas of the hardships and harshness cannot provide justification for ignoring the law as enacted by the Legislature. The contentions raised by the learned representative for the respondent cannot be accepted without doing violence to the clear provisions of law. When a law enacted by the Legislature is very clear then consideration of hardship and harshness cannot impede the implementation thereof by the Court. I am, therefore, of the opinion that the Assessing Officer rightly included the share owned by respondent in' the properties left by his father. The learned CIT(A) was not justified in deleting the properties from the net wealth of the respondent. For the foregoing reasons I am not persuaded to agree with the opinion of learned Accountant Member. I am in respectful agreement with the opinion of learned Judicial Member and consequently the appeals at the instance of the department are allowed to the extent of issue relating to inclusion of share of the respondent in the properties left by his father in the net wealth of respondent. The impugned findings of the learned CIT(A) in this behalf are hereby vacated and the treatment given by the Assessing Officer in all the assessment years under appeal are hereby restored. The point of difference, referred to me stands disposed of as above.
C.M.A./M.A.K./133/Tax(Trib.)?????????????????????????????????????????????????????????? Appeals allowed.