(a) Interpretation of statutes‑‑‑

‑‑‑‑ Fiscal statute‑‑‑Express language of law maker and not the intendment should be looked into and the Courts have not to circumvent or expand the meaning of charging sections and nothing was to be read in or nothing was to be implied into the provisions of law and there was no room for equity about a tax or about a presumption with regard to a tax.

Principles of Interpretation of Statutes by Sh. Shaukat Mehmood and Sh. Nadeem Shaukat paras.163, 164; 1993 PTD 69; 1993 SCMR 274; 1999 PTD 4126; 1989 PTD 909; 1971 PTD 200 and 1977 PTD (Trib.) 43 ref.

(b) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S. 5(1)(xv)(ii) & Second Sched., Cl. (7(ii))‑‑‑Exemption in respect of certain assets‑‑‑Assets acquired subsequently by disposing of the first asset which was created out of foreign remittances‑‑‑Not exempted‑‑ Principles.

(e) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S. 5(1)(xv)(ii) & Second Sched., Cl. 7 (ii), 2, 13‑‑‑C.B.R Circular No.8/42‑WT/84, dated 30‑6‑1985‑‑‑Exemption in respect of certain assets‑‑‑Multiple conversion of foreign remittances‑‑‑Contention was that subsequent asset procured or created from an asset originally created out of foreign remittances within the period of exemption as prescribed under S.5(1)(xv) of the Wealth Tax Act, 1963 could enjoy the protection of exemption to be regarded as an asset created out of foreign remit tances‑ ‑‑Validity‑‑‑Assessee was not entitled to claim exemption under S.5(1)(xv)(ii) & Second Sched., C1.7(ii)] of the Wealth Tax Act, 1963 in respect of asset which was not created directly out of foreign remittances and which in fact was an asset acquired subsequently from the asset which was originally created out of foreign remittances and that the law had not allowed exemption to the subsequent asset procured from the sale or disposal of the first asset created out of foreign remittances‑‑‑Appeal of the Department was accepted by the Appellate Tribunal.

1996 PTD (Trib.) 388; 1993 PTD 766 = 1993 SCMR 1232; 1995 PTD (Trib.) 1162; 1997 PTD (Trib.) 1928; 1991 PTD (Trib.) 135; Principles of Interpretation of Statutes by Sh. Shaukat Mahmood and Sh. Nadeem Shaukat, paras.163, 164; 1993 PTD 69; 1993 SCMR 274; 1999 PTD 4126; 1989 PTD 909; 1971 PTD 200 and 1977 PTD (Trib.) 43 ref.

1999 PTD (Trib.) 1494 rel.

Abdul Jaleel, D.R. for Appellant.

Khawaja Tahir Rashid, I.T.P. for Respondent.

Mir Ahmad Ali: Amicus curiae.

Date of hearing: 22nd July, 2000.

ORDER

SYED MASOODUL HASSAN SHAH (JUDICIAL MEMBER).‑‑‑ This order is intended to dispose of above wealth tax appeal of the department relating to assessment year 1991‑92 directed against the order, dated 31‑5‑1993 (hereinafter referred to as the impugned order) passed by the learned CWT(A) whereby he allowed liability of an amount of Rs.2,500,000 and further directed in respect of claim of exemption under section 5(1)(xv) that if it is found that as a result of suggested rectification the assessee was entitled to a higher deduction by way of exemption under the said clause then the same may be allowed in accordance with law.

2. The department besides terming the impugned order as bad in law and against the facts of the case have solely contested on the ground that the learned CWT(A) was not justified in allowing exemption under section 5(1)(xv) on such assets which were not directly created out of foreign remittances.

3. Hence the above appeal with the prayer that the impugned order may be quashed and that of the Assessing Officer restored.

4. The above appeal came up for hearing before the learned Members of the Division Bench of the Tribunal on 20‑11‑1999 and the learned Member of the Tribunal of the then Division Bench observed as under:‑‑

"Before us the assessee has contended that in this case for the assessment years 1988‑89, 1989‑90 and 1990‑91 the exemption was allowed by this Tribunal vide W.T.A. No.8 to 10(IB) of 1992‑93 decided on 13‑8‑1996 and by virtue of decision of this Tribunal reported as 1996 PTD (Trib.,) 388, that decision is binding upon other Benches.

With all respects at our command we are of the view that the principle laid down in the above referred case by this Tribunal is not in accordance with law. Under section 5(i)(xv) such assets are exempt from the levy of wealth tax which are created out of foreign remittance, received in or brought into Pakistan and not the assets which are created subsequently, by the sale of assets directly created, out of foreign remittances. In these circumstances, we consider it appropriate to request for the constitution of a larger Bench so that a correct inter‑pretation of the provisions of section 5(i)(xv) of the Act may be made.

It is, therefore, directed that the file may be placed before the Honourable Chairman of the ITAT for proper order for the constitution of a larger Bench in order to have an authoritative pronouncement on the subject."

In the light of above order of the Division Bench, this Full Bench has been constituted by the learned Chairman of the Tribunal for decision of this case in the context of reference made by the learned Members of the Division Bench.

6. We have heard Mr. Abdul Jaleel, DR for the department/ appellant and Khawaja Tahir Rashid, ITP for the assessee/respondent.

7. We have also been assisted by Mr. Mir Ahmed Ali, Advocate, who was asked by the Bench for assistance as amicus curiae on the legal issue involving the case in hand.

8. Briefly the facts relevant to the issue raised in the appeal and as originate from the assessment order are that the assessee filed return alongwith computation chart and challan payment under section 14A of the of the Wealth Tax Act, 1963 (hereinafter called the Act) which was late and accordingly necessary notice was issued to the assessee for late submission of return. In response to the said notice, the AR of the assessee attended and filed documents and the case was discussed with him. The Assessing Officer framed the assessment and estimated the value of House No.20, St. 38, F‑8, Islamabad at Rs.1,104,000 as against declared at Rs.8,60,000 while keeping in view the location of the property and appreciation in prices of real estate and then assessed the value of plot in Kotha Kalan, Chakri Road, Rawalpindi at Rs.3,79,500 as against declared at Rs.3,45,000 on account of inflationary trend and then estimated the value of shops in Chakwal at Rs.6,00,000 in view of inflationary trend, in the prices of real estate and then determined the total wealth at Rs.67,637,208 including prices of movable assets as declared. Thereafter, in respect of claim of exemption of Rs.2,500,000 under section 5(1)(xv) of the Act, the Assessing Officer disallowed the same with the following observations and findings:‑‑

"During the assessment year 1988‑89 the assessee had advanced loan of Rs.25 lac, to Ch. Nazar Hussain. This amount had been claimed exempt under section 5(1)(xv). For detailed discussion as made in the body of the assessment order, dated 25‑6‑1991 the claim was not accepted and an addition of Rs.25 lac was made relating to the assessment years 1988‑89 to 1990‑91. Feeling aggrieved, the assessee went into appeal. The learned CIT(A) vide his order, dated 16‑3‑1992 accepted the assessee's claim. The brief facts leading to the case are that the assessee purchased the shares of Messrs Hafiz Textile Mills amounting to Rs.25 lac. out of foreign remittances. These shares were later on disposed of and the amount so released was advanced as a cash loan to Ch. Nazar Hussain. Since this cash loan was not an asset created directly out of the foreign remittances and it has been created out of the sale proceeds of some other asset i.e. shares of Hafiz Textile Mills Ltd. The exemption claimed under section 5(1)(xv) was not allowed. by my predecessor in the assessment order, dated 25‑6‑1991. For this year addition is made for the same reason as the department is not satisfied with the findings of the learned CIT(A) and second appeal against the order of the learned CIT(A) is being filed:‑‑

Rs.2,500,000."

9. Accordingly, the Assessing Officer determined total wealth at Rs.70,137,208 and finally computed taxable wealth tax Rs.5,36,840.

10. The assessee, feeling aggrieved with the above treatment of the Assessing Officer regarding valuation of immovable property and exemption as claimed in respect of two amounts of (i) Rs.2,500,000 and (ii) Rs.2,136,500 which according to assessee was being the value of assets created out of foreign remittances, went in appeal before the learned First Appellate forum and the learned Appeal Commissioner vide impugned order confirmed the valuation of immovable property as made by the Assessing Officer but allowed liability as claimed by the assessee in respect of advancement of loan of Rs.2,500,000 and further directed for claim of exemption under section 5(1)(xv) that the same may be allowed in accordance with law if it is found in the rectification application filed with Wealth Tax Officer that the assessee was entitled to a higher deduction by way of exemption under the said clause.

11. Now the department through this appeal have disputed the said action of the learned Appeal Commissioner before us is respect of allowing exemption under section 5(i)(xv) on such assets which according to the department were not created out of foreign remittances.

12. Before discussing the contentions of the parties as raised before us, we would like to frame the pertinent question for adjudication by this Bench which arises out of the case in hand in the context of observations of learned Members of the Division Bench requiring constitution of a larger Bench vide their order, dated 20‑11‑1999. The department have raised the ground to the effect that the learned Appeal Commissioner was not justified in allowing exemption under section 5(i)(xv) on such assets which were not directly created out of foreign remittances. The learned Members of the Division Bench in their order, dated 20‑11‑1999 have expressed their reservations in respect of decision of the Tribunal, dated 13‑8‑1996 passed in W.T.A. No.8 to 10/IB/1992‑93 for assessment years 1988‑89 to 1990‑91 and mentioned the case reported as 1996 PTD (Trib.) 388 in respect of binding effect of a decision of the Tribunal upon other Benches of the Tribunal. Then they accordingly viewed that the principle laid down in the above referred case by this Tribunal was not in accordance with law and under section 5(i)(xv) such assets were exempt from the levy of wealth tax which were created out of foreign remittances received in or brought into Pakistan and not the assets which were created subsequently by the sale of assets directly created out of foreign remittances. Therefore, the learned Members of the Division Bench vide said order made a request for the constitution of a larger Bench so that a correct interpretation of provisions of section 5(i)(xv) of the Act may be made.

13. In the light of above position now the issue which is to be determined by us would be as under:‑‑

"Whether a subsequent asset procured or created from an asset originally created out of foreign remittances within the period of exemption as prescribed under section 5(i)(xv) of the Wealth Tax Act, 1963 can also enjoy the protection of exemption under the said provisions to be regarded as an asset created out of foreign remittances?"

14. The learned DR while reiterating the grounds of appeal as raised by the department contended that the assessee was not entitled to exemption in respect of a subsequent asset created out of asset which originally was created from the foreign remittances and such an investment of the assessee as loan out of sale of the subsequent asset was not covered for exemption under the said provisions of law. He further contended that the very nature of asset has totally changed when firstly the assessee purchased shares of a textile mills from the encashment of foreign remittances and then he disposed of the shares and the amount so realized was advanced by him as cash loan to a person of an amount of Rs.2,500,000 and as such the assessee was not entitled to the second privilege of exemption as was allowable to him in. respect of assets firstly created out of foreign remittances.

15. The learned AR of the assessee contended that the exemption was allowed to the assessee under section 5 of the Act in order to attract the foreign remittances/foreign exchange in Pakistan and as such assets which were created out of foreign remittances within the statutory period as mentioned in the said provisions of law were also exempted from chargeability to tax and there was nothing to prohibit any multiple conversion of the assets once created out of foreign remittances in order to bar the exemption for such assets in the said provisions of law. He then also referred C.B.R. Circular No.8/42-WT/84, dated 30‑6‑1985 to support his contention that multiple conversions or change of form of assets has been allowed for granting exemption as per directions given in the said letter/Circular. He then referred section 13 of the Act to support his contention that the Wealth. Tax Officers have been obliged to follow the directions of the C.B.R., He then referred clause (7) of Part‑I of the Second Schedule to the Act and contended that the case was covered under sub‑clause (ii) of clause (7) of the Second Schedule because assets in the shape of shares were created out of foreign remittances and later on sold and then the said amount was advanced as loan for which the assessee claimed liability in the context of exemption under the said sub clause provisions of law applicable to the case of the assessee.

16. At this juncture the Bench was also assisted on the above legal issue by Mr. Mir Ahmed Ali, learned Advocate and he contended that there was no prohibition or restriction in the said provision of law barring the multiple conversion of the assets created out of foreign remittances and that the C.B.R. itself vide Circular Letter, dated 30‑6‑1985 referred to above has also directed the Assessing Officers for allowing exemption in respect of multiple conversion or change in form of the assets created out of foreign remittances and the Assessing Officer in view of the provisions of section 13 of the Act was bound to follow the directions of the C.B.R. for allowing exemption to such assets. At this juncture, it was pointed out to him by the Bench that the instructions of C.B.R. were not binding on the Assessing Officers in the matters of assessments which are obviously of quasi‑judicial nature as has been observed by the Honourable Supreme Court of Pakistan in the famous case of Central Insurance reported as 1993 PTD 766 = 1993 SCMR 1232 and several other cases. However, the learned counsel then referred provisions of clause (7) of the Second Schedule to the Act and contended that sub‑clause (i) was prescribing the period of exemption of foreign remittances and then sub‑clause (ii) was relating to the exemption in respect of asset created out of foreign remittances during the said period contended that the assets created out of foreign remittances if later changed the form would also stand exempted because there was no such restriction in the law for changing the form of assets once created out of foreign remittances or to disqualify such changed asset from the exemption. He then stated that the shares were purchased out of foreign remittances and were sold and then the amount so received from the sale of shares was advanced as loan and that would be considered as an amount or asset created out of foreign remittances and would enjoy exemption under sub‑clause (ii) of clause 7 referred to above.

17. On a question by the Bench about principles of interpretation with respect to fiscal statutes in the context of proposition in hand relating to the exemption as allowed under the then provisions of section 5 of the Act and now‑clause (7) of the Second Schedule the Act, the learned AR of the assessed stated that the intention was to be seen and the intention of the legislature was to encourage foreign remittances and so the exemption was allowed to such assets and he also mentioned about the Budget speech of the then Finance Minister delivered in 1976 stating that the exemption from wealth tax would be allowed to the assets brought from outside into Pakistan in the shape of foreign remittances and thereafter he also drew our attention to the C.B.R. Circular, dated 30‑6‑1985 already referred to above containing the directions for the Assessing Officers for allowing exemption to the assets in the case of multiple conversions or change in form. He further contended that basically if the original source is foreign remittances then it would qualify for exemption for six years as prescribed in the law and any conversion of such asset or change in form of such asset will not negate or debar such exemption.

18. Mr. Mir Ahmed Ali, the learned Advocate appearing for the assistance of the Tribunal on the above legal issue contended that the provisions of exemptions under the then section 5 of the Act as stood substituted through Finance Act, 1996 by inserting the provisions of Clause (7) of Part‑I of the Second Schedule to the Act clearly provided that the assets brought in or remitted by an assessee into Pakistan would be exempt from the chargeability to tax in the year in which they have been brought and following five years and further that the assets created out of foreign remittances received in or brought into Pakistan through normal banking channel have also been allowed exemption for the period stated above. He then referred section 3 of the Wealth Tax Act, 1963 and section 151 of the Income Tax Ordinance, 1979 and contended that exemption already allowed to the foreign remittances for the period as prescribed under sub‑clause (i) of clause (7) of the Second Schedule to the Act and then the assets created through the said foreign remittances also stood exempted under sub‑clause (ii) of said clause and hence the amount received from the sale of the such assets which was later on advanced as a loan would also enjoy exemption under the said provisions of law within the period as prescribed therein. He further stated that both the sub‑clauses of clause (7) of the Second Schedule to the Act were independent and may be seen in that perspective.

19. The learned DR while replying to the arguments as advanced in respect of the above legal proposition summed up his case by saying‑that the exemption could only be allowed once in respect of assets created out of foreign remittances and the same could not be repeated again and again by creation of new assets which if done would defeat the very purpose of law.

20. We have considered the respective contentions of the parties at length and have also gone through the relevant case‑laws.

21. Before we dilate upon the contentions of the respective sides, it would be appropriate if we refer here the relevant provisions of law on account of which the present issue has arisen or adjudication by a larger Bench and also the relevant reported case‑laws in respect of issue in question. It was evident from the order, dated 20‑11‑1999 of the learned Members of the Division Bench that the learned Members of then Division Bench were not in agreement with the principle laid down by the Tribunal while disposing of the departmental appeals in respect of previous assessment years 1988‑89 to 1990‑91 whereby the Tribunal allowed exemption to the assessee under section 5(i)(xv) of the Act in case of an amount of Rs.2,500,000 advanced as loan by the assessee to one Ch. Nazar Hussain which was an amount received from the sale of shares which were created/purchased by the assessee from the amount of foreign remittances. The learned Members in the order, dated 20‑11‑1999 were of the view that under section 5(i)(xv) such asset are exempt from levy of wealth tax which are created out of foreign remittances received in or brought into Pakistan and not the assets which are created subsequently by sale of assets directly created out of foreign remittances. Therefore, the learned Members of the Division Bench requested for the constitution of a larger Bench so that a correct interpretation of the provisions of section 5(i)(xv) of the Act may be made.

22. The Tribunal while disposing of, the appeals for the assessment years 1988‑89 to 1990‑91 vide order, dated 13‑8‑1996 passed in WTA No.8‑10/IB/1992‑93 observed and found as under:‑‑

"We agree with the reasoning advanced by the learned CIT(A) that there is no restriction in sub‑clause (xv) of subsection (1) of section 5 that the exemption would not be available if the assets changes form. Such exemption would be available within the time limit imposed by the aforesaid clauses.

For the reasons stated above, all the three appeals filed by the department are dismissed."

23. In order to have a view of the reported cases referred in respect of proposition in hand, we may like to state here the relevant parts/extracts of the orders of (i) 1995 PTD (Trib.) 1162, (ii) 1997 PTD (Trib.) 1928, (iii) 1999 PTD (Trib.) 1494, and (iv) C.B.R. Circular letter No.8/42‑WT/84, dated 30‑6‑1985.

24. In the case reported as 1995 PTD (Trib.) 1162, the Division Bench of the Tribunal at page‑1164 held as under:‑‑

"There is also nothing before us to show that after once it was established that the amount related to foreign remittances, the question of conversion at all was relevant in those days. Even otherwise, the relevant provision of law of exemption, does not attach any condition relating to so‑called conversion and thus any such condition or interpretation would be void and cannot have the effect of violating the spirit is of the original statute.

On account of what has been said above, we are of the considered view that since the money was brought into Pakistan by the assessee through foreign exchange remittances during the relevant period, it remained within the parameter of exemption, available to the assets, for a specified period. Whether it was lying in the form of cash or F.D.Rs. etc. and thus cannot be said to have changed its basic character or nature. The exemption as claimed by the assessee to the extent of Rs.18,48,555 as such, as has been done summarily, was wrongly refused to him by the departmental officers. We, therefore, annul the impugned orders and hold that the assessee would be entitled to the benefit of relevant provision for such time as is allowable for the specified period in the assessment of his wealth in the light of the return of 1984‑85 furnished by him, on yearly basis, regarding the foreign remittances. "

25. In the case reported as 1997 PTD (Trib.) 1928, the Full Bench of the Tribunal headed by the learned Chairman of the Tribunal while considering the import of the then sub‑clause (i) and sub‑clause (ii) of clause (xv) of subsection (1) of section 5 of that was of the view that "the noticeable difference between the two sub‑clauses is that while under sub‑clause (i) the asset in its original shape including cash foreign exchange is exempt in sub‑clause (ii) one time conversion of identifiable foreign exchange to another asset is also permissible for exemption." In that case the provisions of section 5 of the Act were discussed as these stood before substitution by the Finance Act, 1996. The Full Bench of the Tribunal in that case at pages‑1939 and 1940 observed and found as under:‑‑

"12‑A. The point in issue was also considered by a Division Bench at Lahore in a case reported as 1997 PTD (Trib.) 211. The claimed exemption in respect of proceeds of F.E.B.Cs. was refused and in the process another reported decision cited as 1995 PTD (Trib.) 1162 was rather found as supportive to the Revenue. In that case the assessee had purchased F.D.R., and Khas Deposit Certificates out of foreign remittances. Therefore, the ratio settled in that case was held to be distinguishable. It may be noted that the learned Division Bench at Karachi in the unreported decision, dated 7‑12‑1995 had relied upon that case which was not at all applicable to the facts in hand before it nor it is relevant to the facts of the case before us. As said above, the ratio in that case rather favoured the stand taken by the Revenue that only assets created out of foreign remittance received, brought or remitted in the prescribed manner were covered by the aforesaid exemption clause (ii).

13. Therefore, we are of the considered view that the proceeds obtained on encashment of F.E.B.Cs. are not entitled to exemption as contemplated in the said sub‑clauses of section 5(i)(xv) of the Wealth Tax Act, 1963. Both the above reported decision as also the reasons on which these were based do not call for any re‑consideration as prayed for the assessee. The submissions made at the bar for the assessee in the circumstances must fail as the above referred unreported decision, dated 7‑12‑1995 relied upon by the assessee does not state correct law.

14. These contentions raised by the learned counsel for appellant shall fail accordingly and as a result therein the appeal filed by the assessee will also fail.

26. In a recent case reported as 1999 PTD (Trib.) 1494, by a Division Bench of the Tribunal headed by the learned Chairman of the Tribunal, the provisions of section 5(i)(xv) of the Act read with clause 7(i)(ii) of the Second Schedule to the Act were discussed in the matter of claim of exemption for F.E.B.Cs. and creation of assets and extension of loan by the assessee out of encashment of F.E.B.Cs. The Tribunal in the said case in para 41 to 43 at pages 187 and 188 observed and held as under:‑‑

"41 .We have already held that the F.E.B.C. being a promissory note is currency as defined in section 2(b) of the Foreign Exchange Regulation Act, 1947 and since it is a promissory note purchasable in foreign exchange and encashable in foreign exchange at the option and discretion of the bearer and the principal as well as interest both are encashable in foreign exchange and certificates are transferable by delivery and there are no restrictions on possession, import or export of these certificates, therefore, beyond any shadow of doubt the F.E.B.C. is foreign exchange. Thus it is further held that if any assessee gets foreign remittances through normal banking channels he receives foreign exchange which enjoys exemption from levy of wealth tax under para (i) of clause (7) of the Second Schedule to the Wealth Tax Act, 1963 and further on purchases of F.E.B.C. the assessee continues to hold the same assets i.e. foreign exchange and continues to enjoy exemption under the same provision from the levy of wealth tax. This exemption shall continue for the period specified in clause (7)(i) so long an assessee retains the assets as foreign exchange as defined in section 2(d) of the Foreign Exchange Regulation Act, 1947. However, as soon as the foreign exchange is converted into any other asset whether in cash or kind or any asset is acquired out of the said foreign exchange brought through normal banking channels in the form of any movable or immovable property it would amount to creation of an assets which is a new class of asset. This brings into existence a newly created asset in .the hands of assessee. This newly‑created asset shall enjoy exemption under para (ii) of clause (7) of the Second Schedule to 'the Wealth Tax Act, 1963 and under section 5(i)(xv)(ii) as it stood before Finance Act, 1996. Thereafter, if any new asset is acquired by the assessee it shall not be entitled for exemption as it would not be crated out of foreign remittances but it would amount to creation of asset out of an asset which was already created out of foreign remittances and this such newly‑created asset will not fall within the purview of clause 7(ii) of the Second Schedule of the Wealth Tax Act, 1963.

(42)Now applying the above principles, findings and conclusions to the facts of the present case, we find substance in the contention of Mr. Rehan Hassan Naqvi that when the appellants purchased F.E.B.Cs. out of the foreign exchange received through normal banking channels, it did not amount to conversion of foreign exchange in any other asset, and the foreign exchange was converted for the first time or in other word assessee created an asset out of foreign remittances when F.E.B.Cs. were encashed in Pak. Rupee, as encashment F.E.B.Cs. in Pak, rupee is the first conversion of foreign exchange which was received through normal banking channels, therefore, it is held that such asset is entitled for exemption, under para (ii) of clause (7) of the Second Schedule to the Wealth Tax Act, 1963 and section 5(i)(xv)(ii) of the Wealth Tax Act, as it stood prior to the Finance Act, 1996.

(43)For the foregoing reasons it is held that the Assessing Officers in the appeals under consideration had rightly allowed exemption from levy of wealth tax to the Pak. Rupees acquired by the appellant as a result of encashment of F.E.B.Cs. which were purchased out of foreign remittances received through normal banking channels. To this extent the impugned orders of the learned IACs. in these appeals are hereby vacated and the appeals are allowed accordingly."

27. If we see to the text of the relevant part of the order of the Division Bench of the Tribunal in the above case, there appeared an interpretation of the provisions of sub‑clause (i) and (ii) of clause (7) of Second Schedule to the Act and the then section 5(i)(xv) of the Act that if any new asset has been acquired by an assessee then he shall not be entitled for exemption because it would not be considered to have been created out of foreign remittances but it would amount to acquiring of an asset from an asset which was originally created out of foreign remittances and such new asset will not fall within the purview of exemption allowed under clause (7) (ii) of Second Schedule to the Act but at the same time the amount received in Pak‑rupees through encashment of F.E.B.Cs. purchased out of foreign remittances through normal banking channel was allowed exemption from the levy of wealth in the said case. Whereas in the other case reported as 1997 PTD (Trib.) 1928, the Full Bench of the Tribunal was of the view that the proceeds obtained on encashment of F.E.B.Cs were not entitled to exemption as contemplated in sub‑clauses of section 5 (i)(xv) of the Wealth Tax Act, 1963, the other case reported as 1995 P.TD (Trib.) 1162 the conversion of foreign remittance into other forum like fixed deposit receipts and has Deposit Certificates was altered exception under S.5(1)(xv) of the Wealth Tax Act, 1963.

28. In the case reported as 1991 PTD (Trib.) 135, the Tribunal was of the view that the exemption could be granted to an asset which was created for the first time out of remittances received or brought in Pakistan through proper banking channels and not to subsequently created assets. It was held that the exemption has been granted to an asset which comes into existence after conversion of the already created asset. It was further held that if we apply exemption to subsequently created assets then every asset obtained on conversion of previously created asset would be exempted and thus the wealth tax would never be chargeable on it, which of course, does not appear to be the intention of the legislature.

29. Now the following are the extracts from the C.B.R.'s Circular No.8/42‑WT/84, dated 30-6‑1985, with regard to multiple conversion:‑‑

"The existing clause (xv) of section 5(1) required the person claiming exemption of assets brought into Pakistan to remain a non‑resident for the exemption period. Under the existing provisions assets brought from abroad enjoyed exemption so long as they remained in the same form, except for the remittance invested in purchase of shares of public companies. Under the revised clause (xv) there is no restriction regarding the residential status of the assessee and the assets would remain exempt for 6 years even if any changed form.

2. However, the following precautions need to be taken by the Assessing Officer, namely:‑‑

(i)the owner of the remittances be determined as he would be an assessee who would alone enjoy the exemption for the subsequent five years;

(ii)the value of the remittances be determined in the first year and the exemption period of the following five years be incorporated in the body of the assessment order;

(iii)as provided for in the new proviso to clause (xv), in the case of conversions the portion of the foreign remittances be determined and only that portion be allowed during the exemption period."

30. With regard to the above referred Circular, the main stress of the learned AR of the assessee was that the prescribed period of the exemption for such‑like asset is to be seen and change in the form of asset was immaterial because the asset in the form of shares was in fact created out of foreign remittances and then the shares were sold and the amount so received was advanced as loan and accordingly claimed exemption under the said provisions of law.

31. In order to have a clear view of the terms and phrases involved and used in the instant case for resolving the issue in hand, it is necessary to reproduce the definitions of such terms and phrases as given in the relevant law.

32. First of all, we reproduce here the definition of assets as given in the Wealth Tax Act, 1963:‑‑

Section 2

(5)"assets" includes

(i)in the case of an individual and Hindu undivided family, property of every description movable or immovable, except

(a).........................................

(b) .

Provided............................

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

Examination

33. From the above definition it meant that the definition of assets is an inclusive and exhaustive definition also containing exception of certain properties and falling in the said definition and also explanation in respect of properties falling within the said definition.

34. Now the provisions of Exemptions as contained is section 5(i) (xv) of the Act prior to the substitution by the Finance Act, 1996 are reproduced here for reference purpose:‑‑

Section 5(1) (xv) assets

(i) brought or remitted by an assessee into Pakistan, or received by an assessee from outside Pakistan, in the year in which they are brought; remitted or received and the following five years;

(ii) created by an assessee out of remittances received in, or brought into Pakistan through normal banking channels during the period referred to in sub‑clause (i):

Provided that where investment in the assets is not made entirely out of remittances received in, or brought into Pakistan through normal banking channels, the exemption shall apply in the same ratio as the foreign remittances bear to the total investment."

35. The above provisions was later on substituted through Finance Act, 1996 and the exemptions provided in section 5 were similarly inserted in clause (7) of Part‑I of the Second Schedule to the Wealth Tax Act, 1963 which read s under:‑‑

Clause (7) assets.‑

(i)brought or remitted by an assessee into Pakistan, or received by an assessee from outside Pakistan, in the year in which they are brought, remitted or received and the following five years;

(ii)created by an assessee out of remittances received in, or brought into Pakistan through normal banking channels during the period referred to in sub‑clause (i):

Provided ."

36. From the above substitution of provisions of section 5(i)(xv) and insertion of clause (7) in Part‑I of the Second Schedule to the Wealth Tax Act, 1963, it was obvious that whatever was earlier provided in section 5(1)(xv) was placed in clause (7) of Part‑I of the Second Schedule to the Act.

37. If we see to the above provisions of exemption in respect of assets, it becomes obvious that sub‑clause (i) of clause (7) of the Second Schedule which was originally sub‑clause (i) of clause (xv) of sub section (1) of section 5 of the Act was specifically dealing with the grant of exemption to assets brought or remitted by an assessee into Pakistan or received by an assessee from outside Pakistan for a period as specified therein and the assets have been defined in section 2(5)/ section 2(e) of the Act through an inclusive definition also containing exceptions and explanation of certain properties in that regard. However, the proposition in hand obviously was not in respect of exemption of asset dealt with under the then provisions of sub‑clauses (i) of clause (xv) of section 5(1) or under sub‑clause (i) clause (7) of Second Schedule to the Act but it was to be dealt with under the then sub clause (ii) of clause (xv) of section 5(1) or under sub‑clause (ii) of Clause (7) of the Second Schedule to the Act. Obviously, we have to see as to how long an asset created out of foreign remittance would be enjoying exemption under the then provisions of sub‑clause (ii) of clause (xv) of section 5(1) or sub‑clause (ii) of clause (7) of Part‑I of the Second Schedule to the Act with specific reference to the difference stages of change in the form of such asset during the statutory period of exemption as prescribed in the law.

38. In the instant case admittedly, firstly the foreign remittances were brought in Pakistan by the assessee which in that form stood exempted under sub‑clause (i) of the aforementioned provision of law and then the assessee utilized the said foreign remittances by procuring/purchasing shares of a company which too directly enjoyed exemption under the provisions of clause (ii) of the above stated provisions of law being an asset created out of said foreign remittances and thereafter the assessee disposed of/sold the said shares and the amount of Rs.2,500,000 so received was advanced by him as a loan and claimed exemption on account of liability of the said loan under the said provisions of sub‑clause (ii) of section 5(i)(xv) sub‑clause (ii) of clause 7 of Part‑I of the Second Schedule to the Act and now we have to take into consideration the above stage and have to give an answer to the proposition in the context of legal provisions to that effect.

39. Now we have to see the different stages from the receipt of foreign remittances in Pakistan to the assets created there from. Obviously, a close nexus is to, be established to the time factor and other formalities for creation of an asset out of the foreign remittances. Generally, every transaction of sale and purchase in Pakistan is made or effected in Pak‑rupees/currency which is considered as a valid tender of the consideration amount of price of the property so sold and purchased. Obviously, the purchase of shares by the assessee may have taken place by converting foreign remittances into Pak. rupees/currency firstly and then the price/consideration amount of the shares may have been tendered to the seller/vendor in Pak. currency and thereafter the second transaction of sale of said shares took place. In the above course of transactions, the first one relating to purchase of shares out of foreign remittances may safely be covered under the provisions of sub‑clause (ii) of section 5(i)(xv)/sub‑clause (ii) of clause (7) of Part‑I of the Second Schedule to the Act because the words used in the said sub‑clause were providing for such assets which have been created by an assessee out of remittances received in or brought into Pakistan through banking channel during the period referred to in sub‑clause (i). For looking to the import of the words used in the provisions of sub‑clause (ii) referred to above, to go into the principles of interpretation of fiscal statutes as laid down by superior Courts and discussed the books of law in that context.

Therefore, we would refer paras‑163 and 164 of the book on Principles of Interpretation of Statutes" authored by Shiekh Shaukat Mahmood and Sheikh Nadeem Shaukat (First Edition‑1990) which are as under:‑‑

"(4) Fiscal Statutes: There are three distinct types of provisions generally in every fiscal enactment. The charging provisions, which relate to the levy or charge of the tax, which usually state that tax is to be levied and on what matter, or goods or income and in which manner and at what rate and matters relevant thereto. The assessment provisions, which deal with the assessment, calculation or quantification of the tax for the purposes of determining the amount of tax due and payable or which has escaped collection or has been under assessed or assessed at a lower rate or on which excessive relief or refund has been allowed. The collection provisions, which relate to the mode and manner of receipt or collection of the tax. The charging sections have to be strictly construed and any benefit found therein has to be given to the taxpayer. However, the assessment and collection provisions are merely the machinery sections and they can be liberally construed.

Tax must be levied by express provision.‑‑‑When the State requires the subject to pay a tax any kind, that must be done by definite enactment strictly interpreted. In a Taxing Act one has to look at what, is clearly said. There is no room for intendment. There is no equity about a tax. There is no presumption as to a 'tax. Nothing is to be read and nothing is to be implied. One can only look fairly at the language used. The subject is not to be taxed unless the language of the statute clearly imposes the obligation; and in cases of reasonable doubt the construction which is most beneficial to the subject is to be adopted.

Ordinary meaning should be given to the words used.‑‑‑In a Taxing Statute, as in other statutes, there should be no departure from general rule that words used in a statute must first be given their ordinary and natural meaning. (see PLD 1990 SC 68). It is only when such an ordinary meaning does not make sense that resort can be had to discovering other appropriate meanings. (see PLD 1963 SC 137).

As a rule, when the Courts are construing a Fiscal rule, which imposes a liability on a subject, they have got to give a meaning to these words which would be consistent with the principles of natural justice recognized in other similar Fiscal enactments. The onus is on those who seek to put the most onerous meaning on words used in Taxing Statutes, to show clearly what meaning was intended.

Advantage given by construction not to be dented on ground of intention of Legislature. A Taxing Statute must be construed strictly, and if an assessee gets an advantage which the Legislature may not have intended, but which he is entitled to on the construction of the statute the Court should not deprive him of that advantage. Where an intention to levy a tax is apparent on the face of the enactment it is not open to. Courts to cut down the general words imposing the tax by reference to extraneous considerations or possible intention of the Legislature."

41. The superior Courts of Pakistan and the Tribunal have also laid down guiding principles and the rules for the interpretation of fiscal/ taxing statutes in cases reported as;

(i) 1993 PTD 69 = 1993 SCMR 274, (ii) 1999 PTD 4126, (Case of Maple Leaf Factory) (iii) 1989 PTD 909, (iv) 1971 PTD 200 and (v) 1977 PTD (Trib.) 43.

The basic principle which has enunciated in the said case‑laws was that the expressed language of law maker and not the intendment should be looked into and the Courts have not to circumvent or expand the meaning of charging sections and nothing was to be read in or A nothing was to be implied into the provisions of law and there was no room for equity about a tax or about a presumption with regard to a tax.

42. Now, if we minutely look into the provisions of sub‑clause (ii) of section 5(1)(xv) or subsection (ii) clause (7) of part‑I of the Second Schedule to the Act, and analyse the situation, then out rightly there appeared to be a one time exemption to an asset created out of foreign remittances received in or brought into Pakistan by an assessee because expressly the word assets created by an assessee out of remittances have been used and as such the asset which is not directly created out of the remittances perhaps would stand excluded from the purview 6f exemption provisions under the said law. The observations of the Tribunal in the recent case reported as 1999 PTD (Trib.) 1494, which have also been reproduced above are worth‑mentioning at this stage while dealing with the relevant provisions of law with regard to the exemption as provided under the sub‑clause (ii) of section 5(1)(xv) section (ii) clause (7) of Part‑I of the Second Schedule to the Act. It has been observed therein that "if any new asset is acquired by the assessee it shall not be entitled for exemption as it would not be created out of foreign remittances and it would amount to creation of asset out of an asset which was already created out of foreign remittances and this such new asset will not fall within the purview of clause (7) (ii) of the Second Schedule to the Wealth Tax Act, 1963."

43. In the, above situation, there appeared no sense or any logic to have a second opinion to the opinions expressed by the learned Members of the Division Bench through the observations as made in the said reported case and we as such are of the considered view that the legislature whatever has directly expressed in the language of the said provisions of law the same are to be followed in letter and spirit and in its literal sense and neither any other meaning can be given or implied through any presumptions to the said express provisions of the law. It is of course a one time exemption which has been allowed to an asset created out of foreign remittances and cannot be extended to the assets acquired or procured subsequently by disposing of he first asset which was created out of foreign remittances while interpreting the said provisions of law with regard to claim of exemption, of course, there is a logic in this opinion in the context of the provisions of the law. However, a close nexus will have to be developed or drawn between the creation of an asset out of foreign remittances in order to bring the same within the ambit of exemption clause and after that also the time factor and other related formalities of the transaction would be relevant factor to be looked into when an asset is firstly created out of the foreign remittances and then subsequently another asset is acquired through the disposal of asset firstly created out of foreign remittances in order to bring such subsequently created asset within the exemption clause even if that subsequent asset has been acquired within the time period as prescribed in the said provisions of law. If we allow the exemption to such a subsequently created asset then there would be no end to check the external elements which may likely to creep into the utter disadvantage of the Revenue and the object of the fiscal statute. This, situation has been expressly guarded by the statute while using the words "assets created by an assessee out of remittances" and that such assets have been created out of foreign remittances within the period as prescribed in the said provisions of law.

44. Therefore, we are of the firm view that the assessee was not entitled to claim exemption under the aforesaid provisions of law in respect of asset which was not created directly out of foreign remittances and which in fact was an asset acquired subsequently from the asset which was originally created out of foreign remittances and that the law has not allowed exemption to the subsequent asset procured from the sale or disposal of first asset created out of foreign remittances. Hence the issue in question is answered accordingly in favour of the Revenue and against the assessee.

45. Resultantly, the departmental appeal succeeds as indicated above.

C.M.A./791/Tax (Trib.)Appeal accepted.