W.T.A. No. 1249/LB of 2000, decided on 12th December, 2001. VS W.T.A. No. 1249/LB of 2000, decided on 12th December, 2001., 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2642 (2001)

Finance Act (XII of 1991)‑‑‑

‑‑‑‑S.12(1)(2) & (6)‑‑‑Income Tax Appellate Tribunals Rules, 1981, R.20(2)‑‑‑Corporate Assets Tax‑‑‑Return of Corporate Assets Tax was filed on specific notice with the Explanation that assets as per balance‑sheet at written down value was less than what was declared in the balance‑sheet originally which was a notional value and thus the company was not liable to pay Corporate Assets Tax‑‑‑Tax was charged on the value of assets declared in the balance‑sheet‑‑‑First Appellate Authority directed to accept‑ the contention, of the assessee that Corporate Assets Tax should be charged on the cost of the fixed assets which was below taxable limit‑‑‑Validity‑‑‑Corporate Assets Tax was to be charged on, the value of fixed assets held by a company as were shown in its balance‑sheet on the specified date‑‑‑Law gave no discretion to the Assessing Officer to discard the value of fixed assets shown by the company in its balance‑sheet make his own estimate or assessment of the value of fixed assets‑‑‑Neither the law gave right to the assessee‑Company to back out from the value of fixed assets shown by it in the balance‑sheet and urge the Assessing Authority to adopt value of fixed assets other .than the one shown in the balance‑sheet on any pretext. or excuse ‑‑‑Assessee could not demand that the value declared in the balance‑sheet should not be adopted for the purpose of levy of Corporate Assets Tax on the ground that the same was fictitious or notional or not real or the same was on the basis of re‑.valuation of assets for the purpose of taking loan from the Banks ‑‑‑Assessee also could not plead that the value of the fixed assets shown in the balance‑sheet was not real and the Corporate Assets Tax should be imposed on real value which was cost or written down value‑‑‑Value of all fixed assets held by the company as shown in its balance‑sheet had to be charged to the Corporate Assets Tax‑‑‑Value of fixed assets shown in the balance‑sheet may be on the basis of cost or written down value or on the basis of re ‑valuation of assets for the purpose of obtaining Bank loan or any other benefit, it did not make any difference‑‑‑Law did not differentiate between the value of fixed assets declared on cost basis or Written Down Value or revaluation basis but it simply says that whatever value of the fixed assets held by the company had been shown in balance‑sheet on specified date, that had to be charged to Corporate Assets Tax‑‑‑Law did not give any discretion to any of the parties, Assessing Officer as well as assessee, to differ with the value of fixed assets shown by the assessee in its balance‑sheet on the specified date on any pretext or excuse and law did not bother about basis of valuation of fixed assets or about the rationality of the declared value of fixed assets‑‑‑Appellate Tribunal found that value of the fixed assets held by a company as shown by it in its balance‑sheet on the specified date would be chargeable to Corporate Assets Tax without bothering about the questions whether it was notional or fictitious, whether it was real or not and whether it was based on cost or Written Down Value or on re‑valuation‑‑‑Appellate Tribunal vacated the order of the First Appellate Authority and restored the assessment order passed by the Assessing Officer under, S.12(6) of the Finance Act, 1991.

Ahmed Kamal, D.R. for Appellant.

Nemo for Respondent.

Date of hearing: 8th December, 2001.

ORDER

MUHAMMAD SHARIF CHAUDHRY (ACCOUNTANT MEMBER). ‑‑‑Appeal has been filed by Revenue against appellate order, dated 13‑4‑2000 passed by Commissioner Income Tax/Wealth Tax Appeal Zone‑II, Lahore under section 23 of the Wealth Tax Act for the year 1992‑93 on the issue of levy of capital assets tax. It has been contended in the grounds of appeal that the learned Commissioner was not justified to vacate the order of the Assessing Officer under section 12(6) of the Finance Act of 1991 and delete the capital assets tax because the assets had rightly been taken at Rs.10,58,87,857 as per balance‑sheet of the assessee.

2. The case was fixed for hearing on 23‑11‑2001 but the assessee‑respondent neither appeared before the Bench nor any request for adjournment was received. Case was adjourned to 8‑12‑2001 for production of record and the assessee was informed. But again on 8‑12‑2001 neither the assessee attended nor any request for adjournment was received. So, the assessee‑respondent is proceeded against ex parte under rule 20(2) of the ITAT 1981 Rules. However, the appellant's D.R. is present with assessment records. He has been heard and records have been perused.

3. Brief facts of the case are that the assessee is private limited company and it disclosed its fixed assets at value of Rs.10,58,87,857 in its balance‑sheet as on 31‑12‑1991, but the return for corporate assets tax under section 12(2) of the Finance Act of 1991 was not submitted. Therefore, the Wealth Tax Officer issued a specific notice calling upon the assessee to file its return of corporate assets tax. In response to 'the notice return was filed on 15‑1‑1996 declaring value of assets at Rs.1,30,08,936 in the return alongwith a forwarding letter with the explanation that the fixed assets as per balance‑sheet at written down value amounted to Rs.1,30,08,936 and the value declared in the balance‑sheet originally was a notional value and thus the company was not liable to pay corporate assets tax. The declared version was, however, rejected by the Assessing Officer on the plea that under section 12(1) of the Finance Act of 1991, the declared value as per balance sheet at specified date was to be made the basis of corporate assets tax. The I.T.O., therefore, assessed the declared value of fixed assets as per balance‑sheet and passed order on 15‑1‑1996 under section 12(6) of the Finance Act of 1991.

Against the above mentioned treatment of the W.T.O. the assessee did not file appeal rather an application for rectification under section 35 of the Wealth Tax Act was submitted before the Assessing Officer. This application was rejected by the Assessing Officer and against the order of rejection the assessee filed appeal before the Commissioner. It was contended before the Commissioner that the value of fixed assets declared in the balance‑sheet was nominal value as the assets were re‑valued for the purpose of obtaining loan from the Bank, and the real value of the assets on the basis of cost or written down value was Rs.1,30,08,936 which was below the limit on which CAT is chargeable. The Commissioner accepted the contention of the assessee and vacated the order of the W.T.O. It is against this action of the learned Commissioner that the department has come up in appeal before us.

4. It has been submitted by the learned D.R. that the value of the fixed assets as per balance‑sheet drawn on 31‑12‑1991 relevant to assessment year 1992‑93 is‑Rs.10,58,87,857 and so CAT is to be charged on this value. According to the learned D.R., the learned CIT has wrongly accepted the plea of the assessee that CAT, should be charged on the cost of the fixed assets which is below taxable limit.

5. We have gone through the assessment order of the W.T.O. under section 12(6) of the Finance Act of 1991 and the impugned appellate order of the learned Commissioner and we have also consulted the assessment record of the case produced before us by the D.R. We have considered the contentions of the department and the arguments of the learned D.R. We have also given our careful and conscious consideration to the contentions, arguments and pleadings made by the assessee and assessee's A.R. before the Assessing Officer and before the learned Commissioner which reflect assessee's view‑point. Our decision in the light of the contentions and arguments of both the parties and in the light of the facts available on record is as under.

6. The Corporate Assets Tax is levied under section 12(1) of the Finance Act, 1991 which reads as follows:

"Section 12(1).‑‑‑There shall be charged a tax hereinafter referred as Corporate Assets Tax in respect of the value of assets held by a company on the specified date in an amount and in the manner specified hereunder."

The expression "value of assets" has been defined under clause (d) of subsection (12) of section 12. According to this clause, value of assets means the value of fixed assets held by the company and shown in its balance‑sheet as on the specified date.

From the above mentioned provisions of law it is crystal clear that CAT is to be charged on the value of fixed assets held by a company as are shown in its balance‑sheet on the specified date. The law gives no discretion to the Deputy Commissioner of Wealth Tax to discard the value of fixed assets shown by the company in its balance -sheet and make his own estimate or assessment of the value of fixed assets. Neither the law gives any discretion to the assessee‑Company to back out from the value of fixed assets shown by it in the balance- sheet and urge the Assessing Authority to adopt value of fixed assets other than the one shown in the balance‑sheet on any pretext or excuse. The assessee cannot demand that the value declared by it in the balance‑sheet should not be adopted for the purpose of levy of CAT on the ground that the same was fictitious or nominal or not real or the same was on the basis of re‑valuation of assets for the purpose of taking loan from the banks. The assessee also cannot plead that the value of the fixed assets shown in the balance‑sheet was not real and the CAT should be imposed on real value which is cost or WDV.

According to a plain reading of the above mentioned provisions of law relating to Corporate Assets Tax, the value of all fixed assets held by the company as shown in its balance‑sheet has to be charged to the Corporate Assets Tax. The value of fixed assets shown in the balance‑sheet may be on the basis of cost or WDV or on the basis of revaluation of assets for the purpose of obtaining bank loan or any other benefit, it does not make any difference. The law does not differentiate between the value of fixed assets declared on cost basis of WDV, or revaluation basis but it simply says that whatever value of the fixed assets held by the company has been shown in balance‑sheet on specified date that has to be charged to CAT. In other words the law is very simple and plain on this issue. It does not give any discretion to any of the party, Assessing Officer as well as assessee, to differ with the value of fixed assets, shown by the assessee in its balance‑sheet on the specified date on any pretext or excuse and it does not bother about basis of valuation of fixed assets or about the rationale of the declared value of‑fixed assets.

7. In view of the foregoing discussion we are inclined to hold that the value of the Fixed assets held by a company as shown by it in its balance‑sheet on the specified date would be chargeable to Corporate Assets Tax without bothering about the questions whether it is nominal or fictitious, whether it is real or not real and whether it is based on cost or WDV or on revaluation. Since the assessee- Company has shown the value of its fixed assets in its balance‑sheet on the specified date (which is 31‑12‑1991) at Rs.10,58,87,857, it will have to pay CAT on this value. Hence the impugned appellate order passed by the learned Commissioner is vacated and the assessment order passed by the WTO under section 12(6) of the Finance Act of 1991 is restored as the latter is based on the value of assets shown by the company itself in its balance‑sheet on' the specified date.

8. Consequently appeal filed by Revenue succeeds.

C.M.A./M.A.K./388/Tax(Trib.)

Appeal accepted.