W.T.A. No. 1378/LB of 1997, decided on 18th October, 2001 VS W.T.A. No. 1378/LB of 1997, decided on 18th October, 2001, 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2629 (2001)

Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S.5‑‑‑Special National Fund Bonds Rules., 1985‑‑‑C. B. R. Notification No.S.R.O. 649(I)85, dated 1‑7‑1985‑‑‑Exemption in respect of certain assets‑‑‑Assets covered by Special National Fund Bonds‑‑‑Exemption‑‑‑Claim of exemption of those assets covered under Special National Fund Bonds was not allowed on the ground that assets covered by Special National Funds Bonds were exempted as the notification issued by Central Board of Revenue exempted only those assets which were in the form of Special National Fund Bonds and not allegedly covered by such bonds which was confirmed by the First Appellate Authority‑‑‑Validity‑‑‑Plain reading of notification brought home the fact that assets in the form of Special National Fund Bonds issued under the Special National Fund Bonds Rules, 1985 had been exempted from wealth tax‑‑‑Notification could not be interpreted, by any stretch of imagination, to grant exemption to the assets which were statedly covered by Special National Fund Bonds or which were created out of encashment of such Bonds‑‑‑Special National Fund Bonds were an independent and a separate class of assets from the assets allegedly covered by such Bonds‑‑‑Notification granted exemption only to Special National Fund Bonds from wealth tax as a class of assets and did not grant any exemption to the assets which were set off against these bonds or which were statedly covered by these bonds‑‑‑Action of the Assessing Officer and the First Appellate Authority was justified in rejecting assessee's claim and, therefore, it called for no interference‑‑‑Assets covered by Special National Fund Bonds could only be accounted for in wealth after maturity of the Bonds but that did not mean that during the period before maturity exemption should be allowed to such assets if the assessee himself declared such assets in his wealth‑‑‑Order of the First Appellate Authority was maintained and appeal of the assessee was rejected by the Tribunal in circumstances.

Shabbir‑ur‑Rehman for Appellant.

Ahmed Kamal, D.R. for Respondent.

Date of hearing: 2nd October, 2001.

ORDER

MUHAMMAD SHARIF CHAUDHARY (ACCOUNTANT MEMBER).‑‑‑Appeal has been filed by a wealth tax assessee against appellate order dated 2‑4‑1997 passed by Commissioner, Income Tax/ Wealth Tax Appeal, Zone‑II, Lahore for the year 1987‑88 under section 23 of the Wealth Tax Act where assessee's assets amounting to Rs.43 lacs statedly covered by S.N.F. Bonds have not been allowed exemption from wealth tax appellant's A.R. and respondent's P.R. have been heard. Available records have been perused.

2. It has been contended by the A.R. of the assessee that amount of Rs.43 lacs which comprised over‑statement of liability amounting to Rs.3 lacs and prize bonds worth Rs.40 lacs was covered by assessee's S.N.F. Bonds and thereof the same was exempt from levy of wealth tax under C.B.R. Circular No.S.R.O.. 649(I)/85, dated 1‑7‑1985. According to him, the assets covered by S.N.F. Bonds could only be accounted for in wealth after, maturity of the bonds in August, 1987 and, therefore, the claim of their exemption prior to that date was legally and logically justified. It has been further submitted that the Tribunal not agreeing with the previous treatment of the Wealth Tax Officer set aside the assessment order but the DCWT has arbitrarily repeated the previous treatment without any justification. Even the learned C.I.T. has arbitrarily upheld the treatment of the Assessing Officer. The A.R. of the assessee has also submitted that the Commissioners (Appeals), in many of their decisions, have allowed exemption to the assets covered/set off against SNF Bonds. He has produced copies of some decisions of Commissioners which are obtaining in the record.

3. On the other hand the learned D.R. has submitted that the treatment of the Wealth Tax Officer in rejecting assessee's claim of exemption is justified and the same has, therefore, been rightly confirmed by the first appellate authority According to the learned DR, assets covered by S.N.F. Bonds or set off against S.N.F. Bonds are not exempted because the notification issued by C.B.R. exempts only those assets which are in the form of SNF Bonds and not allegedly covered by such bonds.

4. We have considered the contentions of both the parties and have evaluated the arguments given by their authorized representatives. The assessee has claimed exemption of his assets from wealth tax which are allegedly covered by S.N.F. Bonds under Notification NO.S.R.O. 649(I)/85, dated 1‑7‑1985 issued by the Federal Government. This Notification is reproduced verbatim as udder :

"S.R.O. 649(I)/85, dated 1‑7‑1985.‑‑‑In exercise of the powers conferred by subsection (2) of section 5 of the Wealth Tax Act, 1963 (XV of 1963), the Federal Government is pleased to exempt the following assets from the tax payable under the said Act, namely:‑‑

(1) Bearer National Fund Bonds, issued under the Bearer National Fund Bonds Rules, 1985;

(2) Special National Fund Bonds, issued under the Special National Fund Bonds Rules, 1985; and

(3) Foreign Exchange Bearer Certificates, issued under the Foreign Exchange Bearer Certificates Rules, 1985.

It is a trite law that provisions of law granting exemptions should be interpreted strictly. Even if this principle is not applied to the interpretation of the above mentioned notification, the plain reading of this notification brings home the fact that assets in the form of Special National Fund Bonds issued under the Special National Fund Bonds Rules of 1985 have been exempted from wealth tax. The notification cannot be interpreted, by any stretch of imagination, to grant exemption to the assets which are statedly covered by Special National Fund Bonds or which are created out of encashment of such Bonds. The Special National Fund Bonds are an independent and a separate class of assets from the assets allegedly covered by such Bonds. The notification grants exemption only to Special National Fund Bonds from wealth tax as a class of assets and does not grant any exemption to the assets which are set of against these bonds or which are statedly covered by these bonds. In view of this situation we are unable to uphold the contention of the assessee and. the view of his A.R. In our opinion the action of the Assessing Officer and the learned First Appellate Authority is right in rejecting assessee's claim and, therefore, it calls for no interference. We do not find any force in the contention of the A.R. that the Tribunal had set aside the original assessment order made by the W.T.O. as the same was not legally justified. Had the Tribunal agreed with the view‑point of the assessee it would have accepted assessee's appeal. Since the case needed thrashing at the assessment stage the same was set aside and remanded back to the Assessing Officer for de novo consideration. Another contention of the A.R. that in some cases the Commissioners of Appeal have granted exemption to assets of taxpayers covered by S.N.F. Bonds is also not acceptable. If the law of exemption of S.N.F. Bonds has not been properly interpreted by departmental officers or by the First Appellate Authorities it does not mean that the ITAT should also follow them and interpret the law wrongly. The view of the AR that the assets covered by S.N.F. Bonds could only be accounted for in wealth after maturity of the Bonds in August, 1987, is correct, but this does not mean that during the period before maturity exemption should be allowed to such assets if the assessee himself declares such assets in his wealth. At least the notification on which the A.R. of the assessee relies upon for exemption does not support this view.

5. In the light of the foregoing discussion it would meet the ends of justice if the appeal filed by the assessee is dismissed and the impugned appellate order of the learned Commissioner is maintained.

C. M. A. /M. A. K./389/Tax(Trib.)

Appeal dismissed.