(a) Income Tax Ordinance (XXXI of 1979)----

----Ss. 14, 62, 66-A & Second Sched., cl. (129), Part I---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Exemption in respect of wealth tax paid ---Assessees claimed exemption in respect of wealth tax paid during relevant year, but Inspecting Additional Commissioner issued show-cause notice to the assessees under S.66-A of Income Tax Ordinance, 1979 to take action against them ---Assessees replied notices contending that payment of wealth tax was admissible deduction in view of cl. (129) of Second Sehed. to Income Tax Ordinance, 1979, but Inspecting Additional Commissioner added back wealth tax paid by assessees in assessment of relevant year---Validity-- Provisions of cl. (129) in Part I of Second Sched: to Income Tax Ordinance, 1979 had clearly provided for exemption in terms of S.14, of income Tax Ordinance, 4979 that wealth tax paid by assessees was an, admissible deduction---Order adding back wealth tax paid by the assessees in their assessment was declared without lawful authority and void.

Pak. Kawait Textile Mills Ltd., Lahore v. C.I.T., Lahore CTR 80 of 1990 ref.

(b) Income Tax Ordinance (XXXI of 1979)---

----Ss. 2(3)(13), 3, 4 & 5---Interpretation of law ---Central Board of Revenue could issue administrative instructions'; but in no case could proceed to interpret provision of law---Law could be interpreted by Inspecting Additional Commissioner or Appellate Authority or superior Courts.

Ziaullah Kayani for Petitioner.

M. Ilyas Khan for Respondent.

Date of hearing: 22nd January, 2002.

JUDGMENT

This judgment shall decide Writ Petition No. 6056 of 1996 and Writ Petition No.6057 of 1996 as common questions are involved.

2. The petitioners in these two cases while filing returns for the assessment year 1993-94 claimed exemption in respect of wealth tax paid during the said year. The assessments were completed in both these cases under section 62 of the Income Tax Ordinance, 1979 by the Deputy Commissioner of Income/Wealth Tax. The respondent No.3 issued show- cause notice under section 66-A of the said Ordinance proposing to take action under the said provisions with reference to assessment years 1992-93 to 1994-95 vide notice, dated 31-1-1996 (Annex-C in both the paper books). The notice was replied with averments that wealth tax payment is an admissible deduction in view of clause (129) of the Second Schedule to the Income Tax Ordinance, 1979. The respondent No.3 proceeded under section 66-A and modified the assessments inasmuch as wealth tax paid in the assessment year 1993-94 was added back.

3. Learned counsel for the petitioners contends that wealth tax payment is an admissible deduction and respondent No.3 has no jurisdiction to add back the same. Leaned counsel for the respondents on the other hand has tried to support the impugned orders of respondent No.3.

4. During the relevant period clause (129) Part I of the Second Schedule to the Income Tax Ordinance read as follows:--

(129) any amount paid by an assessee by way of wealth tax under the Wealth Tax Act, 1963."

5. Later this clause was omitted vide Finance Act, 1994:

6. A plain reading of the said provision in the Second Schedule providing for exemption 4n terms-of section 14 of the Income Tax 1 Ordinance, 1979 leaves one in no manner of doubt that wealth tax paid by the petitioners in these two- cases was an admissible deduction.

7. Learned counsel for the petitioners has also brought to my attention a judgment, dated 6-3-1996 in Civil Tax Reference No.273 of 1991 (Commissioner, Income-tax v. Javed Razzaq) where Division Bench of this Court while relying upon the case of Pak. Kawait Textile Mills Ltd., Lahore v. CIT, Lahore (CTR 80 of -1990) held that the amount of wealth tax paid during a particular year is allowable from the taxable income of the assessee for the purpose of income-tax during that year. Reference, was answered accordingly.

8. I find that respondent No.3 instead of following letter of the law has proceeded to act on a Circular (No.1 of 1979) of the C.B.R. Suffice it to say that C.B.R. may issue Administrative Instructions but in no case can proceed to interpret the provisions of law. The law has to be interpreted by respondent No.3 or the appellate authority in the income-tax hierarchy or superior Courts. The impugned order of respondent No. 3 is against the said clear provision of law as interpreted by this Court in the said reference. The writ petitions are accordingly allowed and impugned orders of respondent, No.3 in both the cases adding back I the wealth tax paid by the petitioners in both the cases in their assessment year 1994-95 is declared to be without lawful authority and as such void. No order as to costs.

H.B.T./K-114/L

Petitions allowed.