Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S.17‑B & Second Sched., Cl.(7)(i), (ii)‑‑‑Powers of Inspecting Assistant Commissioner to revise Wealth Tax Officer's order‑‑ Exemption‑‑‑Foreign remittances were received in the account of husband of assessee‑‑‑Property/house was purchased from such foreign remittances in the name of wife/assessee‑‑‑Exemption of such property/house was claimed on the plea that it was purchased out of foreign remittances which was allowed by the Assessing Officer‑‑ Inspecting Assistant Commissioner cancelled the order on the ground that account in which said foreign remittances had been received was not in the name of the assessee but was in the name of her husband and hence the assessment was erroneous and prejudicial to the interest of Revenue‑‑‑Validity‑‑‑Husband and wife are independent assessee in law and each of them being entitled to two basic exemptions in terms of one million or a residential house it could not be said that one could be allowed the benefit of the other‑‑‑Foreign remittances being in the name of husband it was only he who was entitled to the benefits of Cls.(7)(i) & (7)(ii) of Second Sched to the Act and none else‑‑‑Wife, son, real brother or parents could not be allowed to take benefit of such remittance in terms of Cl.(7) of the Second Sched. of the Wealth Tax Act, 1963 if the same was not in his own name‑‑‑Order of the Inspecting Assistant Commissioner under S. 17‑B of the Wealth Tax Act, 1963 was well within his .legal jurisdiction‑‑‑Allowance of exemption was an error and the same had caused prejudice to the interest of Revenue also‑‑‑Appeal was dismissed by the Tribunal being without merits.

1969 PTD (Trib.) 144; (2001) 83 Tax 197 (SC Ind.); 2001 PTD (Trib.) 2919; 1990 PTD (Trib.) 524; (1997) 75 Tax 20; (2000) 81 Tax 29; 2001. PTD 795; 1984 PTD 381 and 1984 PTD 326 ref.

Ahmed Shuja Khan for Appellant.

Muhammad Asif, D.R. for Respondent.

Date of hearing: 12th January, 2002.

ORDER

KHAWAJA FAROOQ SAEED (JUDICIAL MEMBER).‑‑‑This appeal filed by the assessee is against order under section 17‑B of the Wealth Tax Act finalized by I.A.C., Sialkot Range, Sialkot. The reason for cancellation of the order is that the exemption allowed to the assessee in respect of residential house claimed to have been purchased through foreign remittances was found as erroneous and prejudicial to the interest of Revenue.

The background of holding the same as erroneous was that account in which said foreign remittances has been received was not in the name of the assessee but in the name of her husband. While cancelling the I.A.C. made following observations:‑‑‑

"Examination of assessment records revealed that the assessee had purchased a house situated in Gulberg‑M, Lahore exemption whereof was claimed on the plea that it was purchased out of foreign remittances. The records further revealed that an amount of Rs.44,00,000 was received from abroad in A/C. No:10744 U.B.L., Sialkot Cantt. Branch, Sialkot maintained by Mr. M Y ..husband of the assessee since the amount through which the said remittance was received was maintained by a person other than the assessee, the assessee was, therefore, not entitled to claim either direct receipt of foreign remittances or any such exemption on any asset purchased by her. The officer however, did not realize these facts at the time of assessment and completed the assessments in the above manner, allowing exemption in respect of the said house erroneously. Since the assessments so framed were erroneous and prejudicial to the interest of Revenue, the assessee was required vide this office show‑cause notice to explain as to why her assessments may not be cancelled/revised under section. 17‑B of the Wealth Tax Act, 1963."

So long as the fact that the amount was received in the A/c of Mr. M .Y is concerned it is not disputed. However, learned A.R. quite vehemently argued that this does not make any difference if seen from the cultural and religious angle in Pakistan. In his opinion even if the amount has come in the account of the husband, the wife is entitled to exemption. The objection of learned I.A.C. that it is a case of multiple conversions and that clause (7)(i) does not permit of such a conversion is said to be misapplication of law. In his opinion in this case clause 7(i) was not at all attracted and that (7)(ii) applied on all fours. He brought our attention to clause (7)(ii). of the Second Schedule of the Wealth Tax Act that speaks as follows:‑‑‑

Assets:

"(ii) Created by an assessee out of remittances received, or brought into Pakistan through normal banking channels, during the period referred to in sub‑clause (i)."

Above provisions he, said permit creation of an asset out of remittances received in or brought into Pakistan. The language he said is very clear as it allows exemption to any asset, which has been created from the foreign remittances, received by him or brought into Pakistan. On a particular ocular question he replied that it is only the nexus of the foreign remittances and the assets created that determine the exemption. In his opinion it is immaterial as to who has received that foreign remittances. This way he wants us to enlarge the scope of exemption to the extent that if an asset is created from foreign remittances it becomes entitled to exemption notwithstanding the fact that whether it was received by him in Pakistan or by any other person. Proceeding further he referred judgment reported as 1969 PTD (Trib.) 144, (2001) 83 Tax 197 (SC Ind.) and 2001 PTD (Trib.) 2919 to say that an error alone cannot enthrust jurisdiction upon the I.A.C. to cancel an assessment and it requires fulfilment of the twin requirement i.e., it should be erroneous as well as prejudicial to the interest of Revenue. Further, he said that the error should not be a simple change of opinion from that of the Assessing Officer. For this purpose the referred 1990 PTD (Trib.) 524; (1997) 75 Tax 20. The learned A.R. then referred the other famous judgment on the subject of interpretation of fiscal statute and remarked that this now is almost settled principle of jurisprudence, that where two interpretations of a fiscal statute are possible the one favourable to the assessee should always be preferred. In favour of his argument he has referred (2000) 81 Tax 29; 2001 PTD 795; 1984 PTD 391 and 1984 PTD 326.

Reverting back to his first argument that while interpreting the legal provisions one has to see, the realities of life and social aspects of our Society. A matt cannot be expected to live in seclusion by detaching himself from his social, moral, legal and religious obligations. Further no one can be expected to completely exclude his family members from the enjoyment of his property particularly when he is legally bound to maintain, provide shelter and abode to‑them. While interpreting the provision under consideration one cannot close his eyes to the realities of life and social aspect. Considering this aspect one would be reluctant to give a limited and restricted interpretation to the term "his own residence" to exclude husband, wife, children, parents and dependent blood relations living with the assessee.

He further said that similar position exists in this case. The money has been received in Pakistan by the husband and the same has been expended upon construction of the residential house which is claimed as exempt. He, therefore, wants the cancellation of the order of that I.A.C. under section 17‑B.

Regarding observation of the I.A.C. at page 3 of the order that it is. only the recipient of the remittances who would alone enjoy the exemption, he said that the instructions of the C.B.R. are not binding upon the Tribunal. Furthermore, the C.B.R. has been held to be as not a part of the judicial hierarchy of Pakistan by Supreme Court in the, famous judgment of Central Insurance Company.

The learned D.R. first of all objected to the very appeal and said that the arguments are not relevant to the grounds. He remarked that the provision of law is obviously to be read as a whole and no pick and chose is permitted for interpreting a provision of law. The language of law is conjunctive and not disjunctive. Even if the argument of learned A.R. is accepted that provisions of clause (7)(i) were not applicable, it would still not help the assessee. It was definitely any asset created out of foreign remittance, but this assessee did not receive amount. It is a settled law that nothing can be read beyond the letters of law. Applying the same the language here does not give any impression that if an asset is created from foreign remittance received by any third person the exemption can be allowed. The exemption he said is to the assessee and not to the asset. So far as cultural and religious impact is concerned in view of unequivocal legal situation that husband and wife are two separate legal entities being separately taxed respectively for their properties, the claim of their being one cannot he held as correct under law.

Regarding change of opinion he said that is necessarily has to be a change of opinion in the case of 17(13) though certain parameters have been fixed for the same to determine `error' and `prejudice to the interest of Revenue'. Regarding two interpretations he' said that it is not applicable here as the language of clause ('7)(i) and (7)(ii) is clear in its application.

We have given our earnest consideration to the arguments of both the rivals. In our humble opinion and with full respect for the argument of learned A.R. this is not a case where question of two opinions arise. We have full respect for the ratio decidendi of the judgments referred by learned A.R. and there cannot be any question for its non‑observance by us. However, in this case the principle that requires, application is the golden principle of interpretation i.e. nothing should be added beyond the letters of law it should also not. go without saying that in case of ambiguity interpretation favourable to the assessee should be adopted, is not applicable here being an exemption provision. though this principle is now settled one, however, for the one who may desire we refer the famous case reported as (2000) 81 Tax (Trib.) 81.

Now we come to the provision of law under discussion.

The Second Schedule while granting exemption from tax in its part one speaks as follows:‑‑‑

"Wealth tax shall not be payable by an assessee ir, respect of, following assets and such assets shall not be included in the net wealth of the assessee. ",

(7) Assets:

(i)brought or remitted by an assessee into Pakistan; or received by an assessee from outside Pakistan, in the year in which they are brought remitted or received and the following five years;

(ii)created by an assessee out of remittances received, or brought into Pakistan, through normal banking channels, during the period referred to in sub‑clause (i)."

As is evident that wealth tax is not to be paid by an assessee in respect of assets created by him out of remittances received in and brought into Pakistan. The emphasis in the language is totally on granting exemption to an assessee for an asset created by him out of remittances received by said 'assessee. It cannot be stretched to include any person other than the said assessee who would mean granting a blanket chit to all subsequent buyers or owners in interest of an asset that has been created from some foreign remittance. This cannot be said to be the intention of the Legislature in any manner. It is true that the husband and wife in our culture are mutually exclusively but the law having given them separate exemptions for each one of them has declared them as independent individual assessee: If each one of the two is entitled to two separate basic exemptions in terms of one million or a residential house; it cannot be said that one can be allowed the benefits of the others. The circumstances in which the Honourable supreme Court has allowed exemption referred by us supra are entirely different hence we are unable p to agree with learned A.R. that the exemption had rightly been allowed by the Assessing Officer. The foreign remittances being in the name of husband it was only he who was entitled to the benefits of clauses (7)(i) and (7)(ii) and none else: Wife, son, real brother or parents cannot be allowed to take benefit of this remittance in terms of clause (7) of the Wealth Tax Schedule if the same is not in his own name. In this case the order of the I.A.C. under section 1713, therefore, was well within his legal jurisdiction. The allowance of exemption was an error and the same, has caused prejudice to the interest of Revenue also.

This appeal, therefore, is considered without merits for all the three years and the same is dismissed.

C.M.A./M.A.K./350/Tax(Trib.)Appeal dismissed.