W.T.As. Nos. 265/LB, 264/LB, 155/LB and 156/LB of 2002, decided on 21st August, 2002. VS W.T.As. Nos. 265/LB, 264/LB, 155/LB and 156/LB of 2002, decided on 21st August, 2002., 2003 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 108 (2002)

Wealth Tax Act (XV of 1963)‑‑‑

---Second Sched., Cl. 12(2)‑‑‑Exemption‑‑‑Shop‑‑‑Association of Persons‑‑Exemption of shop was rejected by the Assessing Officer as the business was being conducted by the Association of Persons consisting of the assessee as member/partner and not solely by the assessee who was the sole owner of the shop‑‑‑First Appellate Authority directed that the claim for exemption of shop under Cl.12(2) of the Wealth Tax Act, 1963 be accepted to the extent of 50% and the rest of 50% value be added in the taxable wealth‑‑‑Validity‑‑‑Order of the First Appellate Authority for allowing the exemption to the extent of 50% of the assessed value was upheld by the Appellate Tribunal as the said premises had been used by the appellant/assessee, also for the reason that it comfortably fell within the scope of Cl. 12(2) of the Wealth Tax Act, 1963 but as far as the method evolved for valuation of shop in the order was concerned it was not at all in conformity with the R.8(3) of the Wealth Tax Rule, 1963 so it was vacated and the Assessing Officer was directed to determine the Gross Annual Letting Value of the shop for its valuation:

Muhammad Zulfiqar Ali D.R. for Appellant (in W.T.As. Nos.265/LB and 264/LB of 2002).

Muhammad Ramzan for Respondent (in W.T.As. Nos. 265/LB and 264/LB of 2002).

Muhammad Ramzan for Appellant (in W.T.As. Nos. 155/LB and 156/LB of 2002).

Muhammad Zulifqar Ali, D.R. for Respondent (in W.T.As. Nos. 155/LB and 156/LB of 2002).

Date of hearing: 21st August, 2002.

ORDER

The assessee and the Department both have assailed the combined order pertaining to assessment years 1997‑98 and 1998‑99 passed by the learned CIT/WT(A) by filing cross‑appeals in respect of common issues involved in both the years.

Brief facts of the case are that the assessee claimed exemption for shop under clause 12(2) of the Second Schedule in the Wealth Tax Act, 1963 but the Assessing Officer reject it as the business was being conducted by an A.O.P. consisting of the assessee as member/partner and not solely by the assessee who is the sole owner of the impugned shop. In other words the exemption for shop could be enjoyed only when such owner is himself running the business. Then after rejecting the claim for exemption, the value of the shop was worked out by adopting the rate of land notified by D. C. for Stamp Duty and added to it the cost of construction determined by applying per sq. ft. rate. The entire total value so arrived at was added in the taxable wealth.

The' learned CIT/WT(A) in appeal held that the claim for exemption of shop under clause 12(2) of the Wealth Tax Act be accepted the extent of 50% and the rest of the 50% value so determined as per order be added in the taxable wealth. The learned CIT(A) fixed the value of the impugned shop on the basis of the formula given below for both years under appeal:‑‑‑

(i) The value adopted at Rs.4,37,700 by the Department for 1995‑96 should be adopted for the 1996‑97 with increase of 20% and,

(ii) in the subsequent year i.e. 1997‑98 the value should be adopted with 50% increase of the value assessed for 1995‑96. The one half value of the shop so determined be added for levying wealth tax in the hands of assessee/appellant.

The assessee is, contesting for acceptance of claim for exemption of shop in toto and in alternative also seeking further reduction in the value of the shop. Whereas the Department is agitating against allowing the 50% claim for exemption of shop and also the reduction in the assessed value of the shop.

The learned A.R. argued that the claim for exemption of shop is a statutory one which is to be allowed to the assessee as business is being conducted in these premises by the assessee and there is nothing in law which‑ precludes the allowing of exemption when business is carried on by the owner in partnership with one or more persons. It was stated by the learned A.R. that as a normal practice the shop is utilized for trading storing the stock and as a sitting place for negotiation with the customers and also for maintaining the relevant record. The learned A.R. also produced the copy of the assessment order for the assessment year 1996‑97 where claim of exemption for the self‑occupied shop was allowed by the department in the case of this very assessee. It was asserted that by a following the history as determined by the department for assessment year 1996‑97 the exemption for S.O.S. shall, be allowed.

The learned D.R. argued against allowing exemption to the assessee that it is not merely a shop but also Godown and office of the assessee which could not enjoy exemption under clause 12(2) of the Second Schedule of the Income‑tax/Wealth Tax Act. As far as allowing the exemption in the assessment year 1996‑97 is concerned the learned D.R. failed to distinguish on allowing the exemption by the Assessing Officer while rejecting this claim in both the years under appeal. The learned D.R. could not deny the fact that the assessee/appellant has his own 50% business in this shop and trading is being carried on. The matter which has attracted the attention of the Court is that 50% own business in own shop and the activity of trading have also not been challenged by the department.

Arguments have been heard and the available record perused.

After proper analysis of the foregoing discussion over the Subject‑matter it looks quite reasonable to us that the order of the learned CIT/WT(A) for allowing the exemption to the extent of 50% of the assessed value should be upheld as to that extent the own premises have been used by the appellant/assessee, also for the. reason that it comfortably falls within the scope of clause 12(2) (ibid), but as far as the method evolved for valuation of shop given in the impugned order is concerned it is not at all inconformity with the Rule 8(3) of the Wealth tax Act, so it has to be vacated and the Assessing Officer is directed to determine the GALV of the shop for its valuation in the Wealth Tax Act. As a result the appeal is disposed of to the extent and in the manner as indicated above.

C. M. A./500/Tax(Trib.) Order accordingly.