(a) Interpretation of statutes‑‑‑

‑‑‑‑ Explanation to a section‑‑‑Purpose, meaning and effect‑‑‑Explanation to the section is not a substantive provision and it is merely an aid to the interpretation of proviso added to the main section‑‑Explanation is added to remove any doubt as to the meaning of any proviso or section‑‑ Explanation does not enlarge the scope of main section which is supposed to explain and an explanation is added to the section by way of clarification to facilitate its interpretation‑‑‑"Explanation" must depend upon its terms and language used in it‑‑‑"Explanation" added by way of clarification to facilitate its interpretation, normally, would apply prospectively, specially when it creates substantive obligation.

PLD 1981 SC 1; PLD 1968 Lah. 202; PLD 1982 Lah. 109; PLD 1969 Lah. 228 and PLD 1982 Lah. 115 rel.

(b) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑S. 2(5)(ii) [2(e)(ii)], Explanation ‑‑‑C.B.R. Circular No.18 of 1991, dated 2‑7‑1991‑‑‑Assets‑‑‑Addition of "Explanation" of the section‑‑ Effect ‑‑‑Assessee contended that Explanation was inserted in 1991 and would apply prospectively as the same was not a substantive provision and no liability could be created retrospectively and liability created in view of any Explanation added to the main provision would apply, prospectively‑‑‑Validity‑‑‑"Explanation" was added to S.2(5)(ii) of the Wealth Tax Act, 1963 wherein it was mentioned that it shall be effective from 20th day of June, 1979‑‑‑Intention of the Legislature was clearly spelt out by the amendment and categorically the date was mentioned‑‑ "Explanation" was to take effect from 20th June, 1979‑‑‑Tax levied and order of the First Appellate Authority was confirmed by the Appellate Tribunal.

B. P. Biscuit Factory's case 74 Tax 81; PLD 1981 SC 1; PLD 1968 Lah. 202; PLD 1982 Lah. 109; PLD 1969 Lah. 228 and PLD 1982 Lah. 115 ref.

Haji Yousuf for Appellant.

Bakht Zaman, D.R. for Respondent.

Date of hearing: 13th November, 2001.

ORDER

SYED KABIRUL HASAN (JUDICIAL MEMBER).‑‑‑In these wealth tax appeals, levy of wealth tax is contested by the appellant/ assessee. The assessment years involved are 1987‑88 to 1990‑91.

2. Mr. Haji Yousuf, learned counsel for the appellant/assessee, has submitted that the definition of "assets" in clause (e) of section 2 of the Wealth Tax Act; 1963 was amended and the relevant definition of assets was:‑‑

(ii) in the case of a firm, an association of persons or a body of individual, whether incorporated or not, arid a company, immovable property held for the purpose of .the business of construction and sales, or letting out, of property."

Later on, this definition was interpreted by the Honourable Supreme Court vide case reported as 74 Tax 81 (B.P. Biscuit Factory). According to interpretation of Honourable Supreme Court, the definition of "assets"‑can be restricted to‑‑‑

(i) immovable property held for the purpose of letting out of property;

(ii) immovable property held for the purpose of business of letting out of property; and

(iii) immovable property held for the purpose of business of construction and letting out of property.

After Honourable Supreme Court's case, an Explanation was inserted in 1991 whereby sub‑clause (ii) in clause (e) of section 2 was inserted in the Wealth Tax Act, 1963 which is as under:‑‑

"Explanation.‑For removal of doubt, it is hereby declared that immovable property and the purpose, referred to in this sub‑clause, includes‑

(i) immovable property held for the purpose of letting out, or business of letting out, of property;

(ii) immovable property held for the purpose of construction and letting out of property; and‑

(iii) immovable property held for the purpose of construction and sale of property.

According to learned counsel for the assessee, any explanation added is not a substantive provision and no liability can be created retrospectively. The liability created in view of any explanation added to the main provision would apply prospectively. In this respect, he has relied upon the following case‑law:‑‑

(a) PLD 1981 SC 1; (b) PLD 1968 Lahore 202; (c) PLD 1982 Lahore 109; (d) PLD 1969 Lahore 228 and (e) PLD 1982 Lahore 115.

3. Mr. Bakht Zaman, learned D.R. on the other hand, has supported the order of learned CIT(A).

4. We have heard both the learned representatives and also perused the relevant record.

5. It is a well‑settled rule of law that all charges upon the subject must be imposed by clear and unambiguous language because in sortie degree they operate as penalties, the subject is not to be taxed unless the language of the statute clearly imposes the obligation and language must not be strained in order to tax a transaction which had the Legislature thought of it, would have been covered by appropriate words. Here, the intention of the statute was clarified by adding "Explanation" in the main provision of section 2(e) and as Circular No.18 of 1991, dated July 2, 1991 issued by the C.B.R. This Explanation was effective from 28th June, 1979, therefore, the burden of tax was presumed to be levied from such date.

6. In. order to understand the purpose of Explanation added in the statute, we would refer to the case‑law cited .by the learned counsel for the assessee.

(a) PLD 1981 SC 1:

In this case, the Honourable Supreme Court while interpreting the Explanation added to the statutory provisions, has observed:‑‑

"The contention that the Explanation relating to clause (i) of section 13(2) is not truly an Explanation but is, in fact a `deeming clause' is wholly fallacious. The Legislature is its wisdom, has specifically named it as an Explanation and made it relatable to clause, (i) of section 13(2) in order to indicate as to what the term `rent due' may include. We feel that there is no ambiguity in the words used' by the Legislature necessitating a construction other than the one indicated by a plain reading of that word."

The object of addition an Explanation to a statutory provision has been considered in the case of Colony Sarhad Textile Mills v. Collector PLD 1969 Lah. 228. It may be mentioned that the present Chief Justice of the Supreme Court (Mr. Justice S. Anwarul Haq), was a party to the said judgment. We respectfully agree with the observations made by the Court in that case which are as follows:‑‑

"The object of addition an Explanation to a statutory provision is only to facilitate its proper interpretation and to remove any possible confusion or misunderstanding about its true meaning. It does not per se create or, extinguish any liability which has to be spelled out only from the main provision sought to be interpreted with the assistance of the Explanation. In other words, the Explanation is to be relied upon only as a useful guide or in aid to the construction of the main provision. "

The objection of the Explanation in the present case is obviously the same namely to remove any doubt as to the meaning of the term `rent due' as used in clause (1) of section 13(2) and to clarify that in addition to the amount of rent simpliciter it could also include other charges and taxes agreed to by the parties. And even in the present case, the Explanation does not create, or add anything to the main section but merely illustrate as to what the term `rent due' may include. Obviously, therefore, the Explanation does not place any limitation on the type and the number of other charges the payment of which the tenants may agree to pay and which would thus become due from him.

(b) P L D 1968 Lahore 202:

In this case, the Honourable Lahore High Court has observed as under:

"The argument must in our opinion fail for more than one reason. For one thing, the Explanation is not a substantive provision. It is merely an aid to the interpretation of proviso (b) to clause (5‑A):"

(c) PLD 1982 Lahore 109:

In this case, the Honoruable Lahore High Court has observed as under:‑‑‑

"It is well‑settled that an "Explanation" does not enlarge the scope of main section which it is supposed to explain. It was held so in the Kishan Sing v. Prem Singh and others AIR 1939 Lah. 587. Generally, an "Explanation" is added to a section by way of clarification and to facilitate its interpretation. However, the true contraction of an "Explanation" must depend upon its terms and the language used in it."

(d) PLD 1969 Lahore 228:

In this case, the Honourable Lahore High Court has observed as under:--

"It is well‑settled that an Explanation does not enlarge the scope of the original section that it is supposed to explain."

(e) PLD 1982 Lahore 115:

In this case, the Honourable Lahore High Court has observed as under:‑‑‑

"Generally, an `Explanation' is added to a section by way of clarification and to facilitate its interpretation. However, the true contraction of an `Explanation' must depend upon its terms and the language used in it."

7. In view of above case‑law, it emerges that‑‑‑

(i) the explanation is not a substantive provision and it is merely an aid to the interpretation of proviso added to the main section;

(ii) explanation is added to remove any doubt as to the meaning or any proviso or section; and

(iii) it is well‑settled that an `explanation' does not enlarge the scope of main section which is supposed to explain and an explanation is added to section by way of clarification to facilitate its interpretation.

In our view, the true interpretation of an "Explanation" must depend upon its terms and language used in it and generally an explanation is added to a section by way of clarification and to facilitate its interpretation.

8. In view of whatever stated above, we are of the view that an "Explanation" is added, by way of clarification and to facilitate its interpretation. Normally; it would apply prospectively, specially when it creates substantive obligation. But in this case, the "Explanation" was added to sub‑clause (ii) of clause (e) of section 5 wherein it was mentioned that it shall be effective from 20th day of June, 1979. Therefore, the intention of the Legislature was clearly spelt out by the amendment and categorically the date was mentioned. In view of this its the effect of this "Explanation" was to take effect from 20th June, 1979. In view of this, the order of learned CIT(A) is found proper and the tax levied for these assessment years is also as per the law. The combined order of learned CIT(A) for the assessment years 1987‑88 to 1990‑91 is hereby confirmed.

8. These appeals are disposed of as above.

C.M.A./675/Tax (Trib.)Order accordingly.