Wealth Tax Act (XV of 1963)----

----First Sched., Part I, Para. B---Pakistan Citizenship Act (II of 1951), S.14(1) & (3)---S.R.O. 581(9)/2002, dated 29-8-2002---Rates of wealth tax ---Rebate---Assessee American citizen as well as citizen of Pakistan---First Appellate Authority allowed 50% rebate on wealth tax on the ground that assessee was not citizen of Pakistan at the time of making assessment---Validity---When a Pakistani citizen became an American citizen, he did not cease to be a citizen of Pakistan and such a person could hold a dual nationality---Section 14(3) of the Pakistan Citizenship Act, 1951 provided that the provisions of S.14(1) of the Pakistan Citizenship Act, 1951 shall not apply and shall never be deemed to have been applied at any stage to a person who was having at any time the citizenship of Pakistan ---Assessee who was holding the status of citizenship of U.S.A. did not cease to be a Pakistani citizen and therefore, no talc rebate was available as the same was available to an assessee who "was not resident of Pakistan"---First Appellate Authority was not justified to allow the rebate---Order of the First Appellate Authority was vacated and that of the Assessing Officer restored by the Appellate Tribunal.

Naushad Ali Khan, D.R. for Appellant.

Jamil Ahmad, A.C.A. for Respondent.

Date of hearing: 13th November, 2002.

ORDER

MAHMOOD AHMAD MALIK (ACCOUNTANT MEMBER).-- This is a department appeal directed against order, dated 9-4-2001 of the learned CIT(A) Zone-1, Islamabad. The department is aggrieved but the directions given by the learned CIT(A) that 50% tax rebate be allowed to the assessee under para B Part-1 of the First Schedule to the Wealth Tax Act, 1963.

2. The facts of the caste briefly stated are that the assessee had claimed wealth tax rebate under Para. B of Part I of the First Schedule to the Wealth Tax Act, 1963 which reads as under:--

"Where an assessee is an individual who is not a citizen of Pakistan and is not resident in Pakistan, the wealth tax payable by him in respect of any assessment year computed in accordance with the rates specified in the First Schedule shall be reduced by an amount equal to fifty per cent thereof."

The Assessing Officer did not allow this claim on the ground that though the assessee was a non-resident but he was also holding the citizenship of Pakistan apart from being an American Citizen whereas the requirements to allow tax rebate are that the assessee being an individual should neither be a citizen not a resident of Pakistan.

3. The assessee being aggrieved filed appeal before the first appellate authority who allowed the appeal stating that the assessee was a non-resident and he was holding an American passport and therefore, tax rebate was available to him. Hence the present appeal.

4. The learned DR submitted that assessee was both an American citizen as well as the citizen of Pakistan and therefore, tax rebate was not admissible. The learned AR supported the order of the first appellate authority stating that at the time of making assessment the assessee was not a citizen of Pakistan and therefore he was entitled to 50% tax rebate as given in under para B of Part I of the First Schedule to the Wealth Tax Act, 1963.

5. We have examined the facts and circumstances of the case. Subsection (1) of section 14 of the Pakistan Citizenship Act provides as under:--

"Subject to the provisions of this section if any person is a citizen of Pakistan under the provisions of this Act, and is at the same time a citizen or national of any other country, he shall, unless he makes a declaration according to the law of that other country renouncing his status as citizen or national thereof, cease to be a citizen of Pakistan."

However, exceptions have been provided in subsection (3) of section 14 of the said Act which is reproduced hereunder:--

Nothing in subsection (1) shall apply, or shall be deemed ever to have applied at any stage, to a person who, being or having at any time been a citizen of Pakistan, is also the citizen of the United Kingdom and colonies or of such other country as the Federal Government may, by notification in the official Gazette, specify in this behalf."

The above quoted provision lays down that in case a citizen of Pakistan is also a citizen of the U.K. or any other country as the Federal Government may notify in this regard he would not cease to be a citizen of Pakistan on becoming the citizen of U.K. or any other country so notified under subsection (3) of section 14. In exercise of the powers conferred by subsection (3) of section 14 of the Pakistan Citizenship Act, the Federal: Government has through S.R.O. 581(9)/2002, dated 29-8-2002 (published in the Gazette of Pakistan Extraordinary, dated 2-9-2002) specified that the provisions of subsection (1) of section 14 of the Pakistan Citizenship Act, 1951 shall not apply in case of a citizen of Pakistan who is also h citizen of the U.S.A. The said notification reads as under:--

"In exercise of the powers conferred by subsection (3) of section 14 of Pakistan Citizenship Act,.1951 the Federal Government is pleased to specify United States of America to be one of the other countries referred to in that subsection."

6. A combined reading of the above provisions would show that when a Pakistani citizen also becomes an American Citizen, he does not cease to be a citizen of Pakistan and that such a person can hold a dual, nationality. Subsection (3) of section 14 also provides that the provisions of subsection (1) shall not apply and shall never be deemed to have been applied at any stage to a person who was having at any time the citizenship of Pakistan. In these circumstances the respondent who was holding the status of citizenship of U.S.A. did not cease to become a Pakistani citizen and therefore, no tax rebate was available. The tax rebate as provided in para 13 of part 1 of the First Schedule to the Wealth Tax Act, was therefore, not available to him because the said tax rebate is available to an assessee who "is not resident in Pakistan".

7. The learned A.R. argued that the said amendment was made in the Pakistan Citizenship Act vide notification, dated 29-8-2002 and therefore, the assessee was not the citizen of Pakistan at the time of making of assessment which was made much before the said notification was issued. This argument is misconceived because subsection (3) of section 14 of the Pakistan Citizenship Act as reproduced above specifically provides that the provisions of subsection (1) shall not apply or shall not be deemed ever to have applied at any stage. Further the change brought about through Notification, dated 29-8-2002 is of a procedural nature. The appeal proceedings are in continuation of assessment proceedings and therefore, the change in law brought about through notification, dated 20-8-2002 being of a procedural nature would apply retrospectively in the case of the assessee.

8. In view of the above discussion the learned CIT(A) was not justified to allow rebate to the assessee: The order of Assessing Officer did not suffer from any infirmity. Accordingly the order of the first .appellate authority is vacated that of the Assessing Officer is restored.

9. The appeal accordingly succeeds.

C.M.A./702/Tax(Trib.)Appeal allowed.