2003 P T D (Trib.) 535

[Income‑tax Appellate Tribunal Pakistan]

Before Khawaja Farooq Saeed, Judicial Member and Imtiaz Anjum, Accountant

Member

W.T.As. Nos. 1103/LB to 1107/LB of 2001, decided on 27/04/2002.

(a) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑Ss.2(m)(iii), 2(d) (2)(16) & 2(4)‑‑‑Qanun‑e‑Shahadat (10 of 1984), Art. 85(5)‑‑‑Registration Act (XVI of 1908), Ss.17(1)(b) & 17(2)(v)‑‑ C.B.R. Letter C. No. 1568‑5 (W.T.)/80, dated 22‑9‑1980‑‑‑Net wealth -Status, determination of‑‑‑Arbitration award made rule of the Court‑‑ Joint properties‑‑‑Bifurcation through agreement in ascertainable shares‑‑‑Some of the properties were rented out jointly ‑‑‑Assessees filed their returns in individual status‑‑‑Department assessed such property by assigning status of Association of Persons‑‑‑Validity‑‑‑Arbitration award had been accepted by all the parties and the same was not objected to even by the Department and after it was made rule of the Court, the separate ownership was established‑‑‑Department itself having assessed it in the names of such owners in income-tax as well as in wealth tax, was estopped from challenging its title ‑‑Award, however, did not determine or ascertain the specific properties hence a further agreement in consequence thereof was made which had determined as to who was owner of what‑‑‑Separate 'independent units had been registered accordingly in the Excise and Property Tax Department and were statedly being charged to property tax respectively‑‑‑Agreement had only ascertained file shares of which the individuals were already owners by way of Arbitration and rule of the Court and did not require any further registration or another decree from the Court ‑‑‑Assessee had still continued with some joint agreements in respect of certain assets in which agreements earlier jointly signed still existed in some of the relevant assessment years‑‑‑Though in the agreement such properties had been specifically assigned to individuals still assessee's action of not having a new agreement proved that they wished to retain its status as Association of Persons‑‑‑Having become a separate owner a new notice as per law by the incumbents and subsequent renewal of agreement in individual status could have settled the issue‑‑‑Continuation of agreement with the tenants gave a genuine impression that such part of the property even after partition was not separately identifiable or ascertainable‑‑ Such properties shall remain assessable in the status of Association of Persons till a new agreement by the individual owner with tenant was framed‑‑‑Appellate Tribunal set aside the case with the directions that after the agreement and registration with Excise Department wherever the petitioners had made separate individual agreements, the status of Association of Persons shall not be assigned‑‑‑Assessment shall be finalized in their individual hands under R.8(3) of the Wealth Tax Rules, 1963‑‑‑Properties, which had still been rented out jointly even after agreement shall be assessed as an Association of persons till the respective owners agreed in an agreement mentioning their specific portion with the tenant‑‑‑Except for assessment yea: 1997‑98 for which the concept of Association of Persons was non‑existent in the Wealth Tax Act, 1963 and for which Appellate Tribunal had directed for cancellation of the order, in all other years, the assessments were set aside with above specific directions.

1989 PTD (Trib.) 364; 1998 PTD 2054; 1987 PTD (Trib) 720; 1989 PTCL CL 315; 1998 PTD (Trib.) 2054; 1988 PTD (Trib.) 1027; 1989 PTD (Trib.) 364 and 1991 SCC 773 rel.

160 ITR 920; PLD 1983 SC 251; (1960) 2 Tax (III‑437); PLD 1977 Kar. 88; AIR 1963 Pat. 62; PLD 1965 SC 274; 1987 MLD 2835; 1994 MLD 2458; 1994 CLC 1811 and 1986 SCMR 1121 ref.

(b) Wealth Tax Act (XV of 1963)‑‑‑

--‑Ss.2(5)(ii) (2)(e)(ii) & 3‑‑‑C.B.R. Circular No. 8 of 1997, dated 24‑7‑1997‑‑‑Assets‑‑‑Status‑‑‑Assessment years 1997‑98‑‑‑Charge of wealth tax to Association of Persons‑‑‑Validity‑‑‑No charge was provided for an Association of Persons or body of individuals for assessment year 1997‑98‑‑‑Legislature having intentionally deleted same, no assessment in the status of Association of Persons could be made for assessment year 1997‑‑98‑‑‑Appellate Tribunal cancelled the assessment framed for assessment year 1997‑98 in the status of Association of Persons.

1984 PTD (Trib.) 65 ref.

(c) Wealth Tax Act (XV of 1963)‑‑‑‑

‑‑‑Ss.3, 2(16) & 2(5)(ii)‑‑‑Charge of wealth tax‑‑‑Association of Persons‑‑‑Assessment year 1999‑2000‑‑‑Assessee contended that S.2(6) of the Wealth Tax Act, 1963 did not define Association of Persons till 3‑6‑1998 hence the charge of the same started from assessment year 1999‑2000‑‑‑Validity‑‑‑If the definition of "Association of Persons" was not available in the Wealth Tax Act, 1963 help could be sought from the Income Tax Ordinance, 1979 and if it also did not help the ordinary dictionary meanings the judgments on the subject could come to rescue‑‑ Its absence in the definition S.2(16) of the Wealth Tax Act, 1963 did not exonerate it from S.3 of the Wealth Tax Act, 1963‑‑‑In S.2(5)(ii) of the Wealth Tax Act, 1963, while defining "assets" had included Association of Persons‑‑‑Contention of the assessee was repelled by the Appellate Tribunal.

(d) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑Ss.2(4) & 3‑‑‑Income Tax Ordinance (XXXV of 1979), S.2(8) ‑‑Assessment year‑‑‑Definition and application of‑‑‑Assessment year basically was the year that starts after the end of the financial year and had been so defined in the Income Tax Ordinance, 1979 vide S.2(8)‑‑ Definitions given in the Income Tax Ordinance, 1979 could be applied mutatis mutandis in the proceedings under S.2(4) of the Wealth Tax Act, 1963‑‑‑Language of S.3 of the Wealth Tax Act, 1963 had not happily been worded; however, it did not give any impression that the financial year in wealth tax shall also be its assessment year.

Dr. Ilyas Zafar and Javed Iqbal Qazi for Appellant.

Muhammad Asif, D.R. for Respondent.

Date of hearing: 1st September, 2001.

ORDER

KHAWAJA FAROOQ SAEED (JUDICIAL MEMBER).‑‑ These appeals have been filed by the assessee. They are against the order of the CIT (A) decided by her on 4‑6‑2001. The grievance, which is common for all the years, is that the assigning of the status of A.O.P. for assessment years 1994‑95 to 1999‑2000 is not justified.

Before dilating upon the issue going through the facts shall be of relevance:‑‑‑

(a) Property No. 131‑E‑1, Gulberg‑III, Lahore comprising 8 Kanals and 7 Marlas was transferred to Mrs. Sabiha Jillani through sale‑deed in 1980.

(b) Later, in the front portion of the said property a building was constructed on an area of 2 Kanals jointly by the lady and her children namely. ‑‑‑

Mr. Usman Jillani‑son

Mrs. Samina Tahir

Mrs. Asima Jahangir daughters

Miss Hina Jilani

For personal reasons the co‑owners decided to distribute the property and for this purpose matter was referred to a sole arbitrator namely Dr. Khalid Ranjah, Advocate on 30‑11‑1982. The Arbitrator gave award on 1st January, 1983. The award was accepted by the whole family and was then filed before the Civil Judge on 22‑3‑1983 on which a compromise decree was announced.

By virtue of this award and decree of the Court structure was Distributed in the following manner:‑‑‑

1. Malik Usman Jillani	2/3rd
2. Mrs. Sabiha Jillani.	1/6th
3. Mrs. Samina Tahir	1/6th
4. Mrs. Asima Jahangir	1/6th
5. Miss Hina Jillani	1/6th

This portion of the plot was separated from rest of the property in August 1987 and a new number was allotted to it i.e., 131‑A, E‑1. The co‑owners continued construction thereon which completed in parts, by the end of 1991.

Subsequently the owners entered into another agreement on 10th June, 1993 for implementation of the award and decree by specific apportionment of the property considering that the right time for separate individual ownership had approached.

The specific separate portions were earmarked and distributed. The tenants were notified and rent subsequently was received by individual owners respectively on the basis of such apportionment. There remained one exception in the manner that in the case of a tenant the joint agreement continued which is to expire in June, 2005. The apportionment map was prepared as agreed by all individual owners and the Assessing Officer was intimated that all the beneficiaries be assessed separately and independently of their respective definitive and determinate shares.

For the assessment years 1991‑92 to 1993‑94 assessments were framed in the status of A.O.P. as declared. For Assessment years 1994‑95 to 1995‑96 returns filed by the assessee were in individual status. The department assigned status of A.O.P. to the extent of above property, however, in respect of other assets the assessments of all the four persons were finalized in their individual hands.

In the case of Mrs. Samina Tahir, the Assessing Officer passed the order on 30‑6‑1997 for assessment year 1994‑95 for her portion in Property No. 131‑A, which is still infact and is very well in existence.

The order in the status A.O.P. and 4 others in individual status were challenged before A.A.C., who decided the same on 30‑6‑1998, saying that, in the case of A.O.P. the order is not sustainable and the assessments have to be made in their respective hands. In the cases of individual 4 owners similar order was passed by learned A.A.C. on 30‑5‑1998. The Department only challenged the order in A.O.P. status before ITAT but the instructions/directions contained in the order of individuals were not assailed before ITAT and These orders have attained finality. The order in A.O.P. status was set aside by the ITAT on 8‑6‑1999. The Wealth Tax Officer passed reassessment order of these two‑assessment years alongwith assessment years 1997‑98 to 1999‑2000, in the status of A.O.P. on 29‑2‑2000.

On the basis of above facts learned A.R. argued that the department for assessment year 1996‑97, itself framed assessments in the hands of 5 independent ostensible owners of independent portions respectively. He argued that while passing the combined orders, dated 29‑2‑2000 on page‑14 and onwards, property pertaining to each individual has been valued separately and then the valuation has been aggregated for each assessment year. This way he remarked that impliedly the Assessing Officer has accepted that each portion is independent. He has not taken it as a single unit.

Objecting to the validity of the charge for 1998‑99 he said that section 2(m)(iii) of the Wealth Tax Act, was inserted through Finance Ordinance, 1980 and section 2(16) (previously section 2(m) was substituted by Finance Act, 1997, without clause (iii), which was added again by Finance Act, 1998. It is apparent that clause (iii), of section 2(16) was not available for the period 1‑7‑1997 to 30‑6‑1998. Therefore, A.O.P. status cannot be assigned for assessment year 1998‑99.

Similarly in charging section 3, the words "A.O.P." was omitted by Finance Act, 1996, which was inserted by Finance Act, 1997, therefore, the same was not available in the charging section for the period 1‑7‑1996 to 30‑6‑1997 (Assessment year 1997‑98), therefore, the status of A.O.P. cannot be allotted for assessment year 1997‑98.

Learned A.R. argued that the Assessing Officer has opted to assess for the assessment years for every charge year. The same have been determined by considering the following year as assessment year, as per section 2(8) of the Income Tax Ordinance, 1979. He said that for Wealth Tax, financial year and the assessment year have to be the same and for this purpose referred section 2(4)(2)(d) and section 3 of the Wealth Tax Act. He said that although the returns of individuals have been filed, showing as the assessment years itself but the Wealth Tax Officer has to apply the correct provision of law. His reliance is on 160 ITR 920‑928. It was further submitted that the illegality could not be cured with the consent of parties, reliance. PLD 1983 SC 251. It was also argued that the status of a property can only be determined through documents and even the C.B.R. has treated the same to be as final evidence in C. No. 1568‑5 (W.T.)/80, dated 2nd September, 1980 wherein as per clarification contained in para. (ii), it has been said;

"The right, title or interest to or in any immovable property is determinable in the eye of the law on the basis of position obtaining in Government Records. The registration documents shall, therefore, be treated as the final evidence in this regard".

He added that the Government records, includes Excise record in the form of PT‑1, which are in the individual names, of each member of separately. Such documents are statedly public documents as per Article 85(5) of the Qanun‑e‑Shahdat, 1984. It was also submitted that each portion has to be valued separately and beneficiaries have to be assessed separately and independently on their respective definitive and determinate shares. Reliance has been placed on following:

(i)W.T.A. 331‑332/LB of 1985‑86, dated 5‑12‑1983 paras. 3 and 5, (in this case the ITAT upheld the order of Commissioner of Income Tax (Appeals) wherein the building was portioned and the decree of the Court was accepted as a proof).

(ii) 1989 PTD (Trib.) 364.

(iii) (1960) 2 Tax (iii‑437).

(iv) 1998 PTD 2054 (2056).

It was added that the decree of the Court on compromise basis does not require registration according to section 17(2)(v) of the Registration Act. The Assessing Officer's reliance on section 17(1)(b) was said to be a misapplication of law. In this regard the cases referred by the Wealth Tax Officer were said to be as irrelevant. Our attention was drawn to page‑8 (bottom) and page‑9 of the impugned order that relates to partition deed and not the decree of the Court. In support of his contentions he produced a plethora of cases though without pointing out relevant paras. The same are as follows:‑‑‑

PLD 1977 Kar. 88 (88)(c), AIR 1963 Pat. 62, PLD 1965 SC 274, 1987 MLD 2835, 1994 MLD 2458, 1994 CLC 1811 and 1986 SCMR 1121.

The learned D.R. strongly supported the order of the CIT. Contradicting various arguments of learned A.R. he said that wherever there are duplications in by assessments those which are not legally sustainable can be cancelled by application of the relevant provisions. So far as the argument that the Assessing Officer has himself calculated separate value, no such impression comes from the order of the Assessing Officer. He said it was on the basis of the declared value (which has been accepted by the Department) that the value after its accumulation was determined. The Assessing Officer has only added all the four separate declared amounts and have assessed it as an A.O.P. There is, therefore, no force in this argument.

Regarding validity of charge for 1997‑98 and 1998‑99 he said that the argument is a misconception. This charge was very well there and omission of clause (c) in definition section does not oust the wealth of A.O.P. from the charge being otherwise covered by the Ordinance. He said that the law should be read as a whole and not in piece meal. At various places the Wealth Tax Act has held the A.O.P. to be chargeable wherever the properties have been held for the purposes of construction and sale and letting out. Similarly the mentioning of assessment year as against the financial year, also has no adverse effect to the assessee. Practically speaking use of two separate connotations has not brought any material change or effect. The assessee action of having filed returns itself support the contention of the department, the D.R. remarked. Coming to the issue of separate ownership he said that the only record, which can be made base, is the registration with the Registrar of Land Revenues i.e. Deputy Commissioner. No one else can be said to be an authority as unless somebody holds rights to alienate his property, he cannot be said to be a rightful owner. The ascertainment of the share he remarked is also doubtful in the manner that some agreements are by the individuals while still a notable part continues to be jointly let out by the owners. Regarding mentioning of section 17(2) he remarked that section 17(2)(vi) is more relevant. He, therefore, remarked that even this argument is of no help.

Regarding various judgments the learned D.R. said that these are not relevant to the facts of this case. The only fact that the partnership deed is not registered alone is enough to hold that the transfer of the title of ownership is not complete. He argued‑that if the Arbitration award had attained finality by rule of the Court there was no reason to frame another agreement. He referred 1987 PTD (Trib.) 720 and 1989 PTCL 315 and said that without registration no document can entitle anybody to claim ownership of property with the right to further alienate it. He said that even the judgment relied by asses see reported as 1998 PTD (Trib.) 2054 goes against him. In any case, the award does not describe and ascertain the separate shares. It only says that Property No. 6‑K belongs to one party while 2‑K belongs to the other 5 persons. Their names have been mentioned but the portions have not been ascertained. The assessee conduct he remarked also does not create a right in their favour as they themselves opted to be assessed as an A.O.P. in earlier years, while in these years they claim a different status.

We have heard both parties and have also perused the record. Before we come to a conclusion it will be in the fitness of things that the facts are reviewed once again.

Begum Sabiha Jillani (mother) and Malik Usman Jillani (son) and the daughters (3) entered into an agreement to construct a commercial property on the land owned by Mrs. Sabiha Jillani (mother). This agreement was dated 30‑11‑1982. Later, through an arbitration award dated 1‑1‑1983 this property was distributed in the following manner:‑‑‑

"(i) The property comprising two Kanals of land in Plot No.131‑E‑1, Gulberg III, Lahore, facing the road for which site plan shall vest in Mst. Sabiha Jillani to the extent of 1/6th shall hereby stand transferred to daughters namely Mrs. Samina Tahir, Mrs. Asma Jahangir and Miss Hina Jillani to the extent of 1/6th each and the remaining 2/3rd of the said property shall vest in Malik Usman Jiilani. Their title in the property stands so determined..

(ii) As far as the unconstructed portion of the plot is concerned Construction of which is on the way, it shall also stand transferred against the parties of the 1st Part and parties of the 2nd Part in the above said ratio. As and when the construction is competed, same shall be deemed apportioned in the above said manner."

This arbitration award was made rule of the Court. Since it was a compromise decree after receiving Tasleemi reply from the respondents 1 to 5 (present tax payees), the award stands accepted in letter and spirit. The lady owner of the land has accepted that her children are bona fide owners of the building already constructed from their sources and also of the balance under construction on the earmarked land. This undisputed joint ownership remained, in fact till 10th day of June, 1993 when the petitioners further distributed the property in the following manner:‑‑‑

"1. Mrs. Sabiha Jillani, the first party shall be the exclusive and sole owner of premises measuring 2400 (twenty‑four hundred) square feet on the ground floor of the Building, presently occupied by Messrs ANZ Grindlays Bank as tenant. The rent of the said property shall henceforward be collected and retained by the said party. The area specified in the paragraph is marked `A' in the Floor Plan Schedule 1.

2. Mr. Usman Jillani Malik, the second party, shall be the exclusive and sole owner of premises measuring 3000 (three thousand) square feet on the first floor of the building, presently leased out to the First Women Bank Limited, and marked as `B' in the Floor Plan Schedule. Id addition the said party would also be sole and exclusive owner of premises 900 (nine hundred) square feet on the ground floor, presently leased out to Banker's Equity Limited, and marked as ' B2' on the Floor Plan Schedule 1.

3. Mrs. Simina Tahir, the third party, shall be the sole and exclusive owner of premises measuring 1300 (thirteen hundred) square feet on the ground floor of the building presently leased out to First Women Bank Limited and marked as 'C1' in the Floor Plan Schedule 1. In addition she shall hold sole and exclusive ownership over 1352 ft. (thirteen hundred and fifty- two) on the second floor of the building, presently leased out to Al‑Ata Modaraba and marked as 'C2' on the Floor Plan Schedule 1.

4. Mrs. Asma Jahangir, the fourth party, shall be the sole and exclusive owner of premises measuring 1800 (eighteen hundred) square feet on the Lower Ground Floor of the building. Marked as 'D1' on the Floor Plan Schedule 1, and presently leased out to Unipex Travels. In addition the said party shall also be sole and exclusive, owner of an area measuring 1600 (sixteen hundred) square feet on the second floor of the building, which shall be the area marked as `D2' on the Floor Plan and is already in possession of the said party.

5. Mrs. Hina Jillani, the fifth party, shall be the sole and exclusive owner of premises measuring 2000 (two thousand) square feet on the first floor of the building, marked as `E1' on the Floor Plan Schedule 1, and presently leased out to ANZ Grindlays Bank Ltd. In addition the said party shall also be the sole and exclusive owner of an area measuring 1600 (sixteen hundred) square feet on the second floor of the Building, marked as `E2' on the Floor Plan Schedule 1, which is already in possession of the said party.

6. Schedule 1 to this agreement, being the Floor Plan of building with specific areas mentioned in paragraphs 1 to 5 demarcated and bearing the marks showing separate ownership of each of the parties, shall be an integral part of this agreement and has already been signed by all the parties as testimony of their unqualified assent to apportionment in accordance with this agreement.

This is the agreement that has bifurcated the property in ascertainable shares. Keeping above facts in view if we look into the arguments of the two sides that whether the assessees are individual owners or not we have noticed a very surprising position. The cross arguments of the two sides mostly are with regard to interpretation of the provisions of the Registration Act with special reference to section 17. Both have referred different provisions interpreting the same in their favour. However, none pointed out that this was riot in fact the issue, which required a long debate as practically on record they had agreement to that extent.

The Department interpreted section 17 in its favour by saying that the arbitration award and agreement does not confer any ownership right upon these individuals while the assessee says that the award having been made the rule of the Court had conferred them ownership right and it does not require any further registration. The departmental claim is not harmonious to its action in the manner that if these assessees have not become owners through these documents, why have the department assessed them in the status of A.O.P. earlier. In that case this property should have been assessed in the name of Mrs. Sabiha Jillani alone. The acceptance of returns and assessment, thereafter, in the status of A.O.P. settles the issue that all five are owners of the property under discussion. A person can be assessed in the status of an A.O.P. if he owns that property and not if he does not have any right, title or interest in such immovable property. The matter to this extent is clear. Be that as it may, the argument that assessees are not owner being self‑denied by the action of making an assessment on the basis of the same is repelled and we move on to actual controversies and issues.

A number of judgments have been referred by the assessees as well as the learned D.R. in 1998 PTD 2054 Mr. Nasim Sikandar, the then Judicial Member, now Mr. Justice, has held as under;

"The concept still remains unclear as in the view of the Revenue if four persons purchase four different but contiguous houses or different flats in a multistoried building, though otherwise distinguishable from other, may still constitute an A.O.P. The stress on registration of a property in the name of more than one person naturally provides for the negative. It means that if separate sale‑deeds are executed and got registered then various co‑owners will not constitute. A.O.P. Although they would have had if they had joined in the one registered deed. The practice on the part of the Assessing Officer/W.T.Os. further complicated the concept. They created terms like `specific and identifiable portions' of a property to accept that a registered deed did not constitute an A.O.P. and proceeded to reject the same when so desired, by using equally ambiguous terms of 'unspecific portion' etc. the fault certainly lies in the general words used in the explanation‑ (iii) of section 2(m) of the Wealth Tax Act and then half cooked interpretation by Circular letters including C.B.R. Circular No. 1568‑S (WT)/80, dated 22‑9‑1980. The Revenue conveniently forgets that the share of an individual in an immovable property can never be uncertain or unspecific. It is always ascertained or is capable of being ascertained. Every co‑share in an immovable property owns the smallest article constituting that property to the extent of his interest. Therefore, to say that in some cases the share of a co- share was specific and in other case it was not so, is essentially incorrect. As long a unit of immovable property is jointly owned by more than one co‑owner mere mention of a specific portion or its possession by one of the co‑owner will not make him an independent owner of that portion in which the other will continue to have proportionate title subject to some legal advantages which come alongwith possession. It will be noted that without a partition the possession of one co‑owner is deemed as possession of all other as far the third parties are concerned. Their position, inter se, is also not much different. A possession of a specific portion out of joint property even to the extent of one's interest is held on behalf of all the other co- shares till such portion devolves and falls to the possessing co -owner by way of a partition, surrender or conveyance recognized by law. Therefore, the legal position remains that a co‑owner will continue to be so even if created by a separate sale‑registered deed or even if he is in possession of a particular portion thereof with or without the consent of other co‑owners. The moment he becomes independent owner of an identifiable portion of the property again with or without permission he ceases to be a co‑owner and therefore, the question of his being a member of the A.O.P. does not arise at all. To become a separate and independent owner in an erstwhile joint property is possible only by way of partition, surrender or conveyance of the remaining share in favour of a co‑owner. After happening of this legal incidence of significance between co‑owners, each of them and the property falling to his share will be an independent and separate unit of property. The consequence that follows would be that portioned portion will be capable of exercise of all incidences of ownership including possession to the exclusion of the rest of the world as well as the previous co‑owners. The principle being that a person is an independent owner of a specific portion or part of a bigger whole if he can exercise his proprietary rights independent of the others and can legally transfer a specific portion alongwith its possession."

The view that in order to create an A.O.P. a volition on the part of the constituent members was a necessary element is qualified and subject to certain changes. For certain situations element of volition is qualified with certain rules. These rules would decide volition vis‑a‑vis desire. This principle becomes relevant in this case as the co- owners at all stages having showed their intention to bifurcate their property in specific independent shares. In this case certain other principles have been laid by the honourable member which are as under:‑‑‑‑

1. The "immovable property" will have to be interpreted as a unit of property identifiable from rest of the kind on account of its size, nomenclature, or recognition as an independent unit by allocation of distinct letters, figures, numbers or marks in public record.

2. The moment he becomes an independent owner of an identifiable portion of the property again with or without permission he ceases to be a co‑owner (Underlining is ours).

3. The principle being that a person is an independent owner of a specific portion or part of a bigger whole if he can exercise his proprietary rights independent of the others and can legally transfer a specific portion alongwith its possession. Also, that in case of his death or (dissolution/liquidation of an artificial judicial person) the defined property so devolves upon the successor without reference to the parts owned by other persons.

4. However, where an independent registered deed, be if of partition of sale, mentions a specific and identifiable portion of a total sale, mentions as specific and identifiable portion of a total whole, with meters and bounds the owner shall not be taken as a member of A.O.P.

For the above discussion the learned Tribunal had taken strength from 1988 PTD (Trib.) 1027.

In 1989 PTD (Trib.) 364 the Hon'ble Tribunal found that the assessee owner of a commercial building partitioned the same by way of a registered deed. It was treated as an A.O.P. which was confirmed by the CIT(A) on the basis of registered partitioned deed in the perspective of Circular No. 1568‑S(WT)/80, dated 22‑9‑1980. A Division Bench of the Tribunal at Islamabad rejected the contention of the Revenue, it was held that the property under consideration passed on the different parties w.e.f. the date of registration of the partitioned deed and, therefore, could only be charged to tax in the respective hand of the parties in their individual capacity and not in the status of A.O.P.

In 1989 PTD (Trib.) 364 the learned Tribunal accepted an agreement which was registered on 2‑1‑1982 and held that for the charge year 1982‑83 the assessee could not be treated as an A.O.P. for the purposes of assessment to wealth tax. Prior to the same the status of A.O.P. assigned by the department was maintained.

In W.T.As. Nos. 331 and 332/LB of 1985‑86 (assessment years 1982‑83 and 1983‑84) order, dated 5‑12‑1983 the learned Tribunal gave its finding in the following manner:‑‑‑

"We are inclined to agree with the learned A.R. The contention of Assessing Officer that earlier the property had been assessed as an A.O.P: and does not create a bar on the co‑owner to partition the property. There is, award of the Arbitrator, which has been made rule of the Court. Since, the property had beer partitioned before 30th June, 1982, therefore, on 30‑6‑1982 the assessment could not be framed on an A.O.P. As for the contention that this was a collusive arrangement, partition of a joint property is always with mutual consent and therefore, for that mater, can be said always to be collusive. Every joint owner of a property has a legal right to get it partitioned and therefore, the W.T.O. or any other person has no right to object to a mutual partition made by the co‑owners. The objection of the Assessing Officer that the record of the Excise Department is for the purpose of property tax cannot be denied. However, this can certainly be produced as evidence that the partition did take place, which has been recognized by a Government Agency. As for the contention that this had been made in order to avoid the wealth tax, again this is a legal right of every individual. In the first instance it is not necessary that a partition of a property is done for avoidance of tax as there can be other reasons as well. However, even if it be assumed that this has been done for the avoidance of the wealth tax, this being legally permissible, no objection can be taken on this account. Lastly, the Tribunal has already held in the reported case cited above, in similar circumstances that if property is partitioned the assessment is to be made at the individual hands. A similar view has been taken by the Tribunal in W.T.A. No. 365/LB of 1985‑86 and W.T.A. No. 75/LB of 1985‑86 heard on 28‑2‑1987. We, therefore, see no reason to interfere in the order of the learned CIT(A). The appeals are dismissed."

This reminds us the famous case of Supreme Court of Pakistan in the case of A.G. Siemen's reported as 1991‑SCC‑773. The august Court has held that an agreement made between two parties should not be doubled by a third party. In this regard the Honourable Supreme Court has further observed that even the Income Tax Department cannot be allowed to dishonour or disregard a valid contract between two muslims. The intention may be any, it can be a plan to reduce the rigours of law. Tax planning is right of every assessee and tax avoiding is also equally permissible. Even the law itself has provided several exemptions and reductions. Tax evasion, however, is an offence, which the Courts can never permit. The arrangements in the present case do not warrant any suspicion or doubt that the documentation was un-genuine. The Arbitration Award has been accepted by all the parties and the same is not objected even by the department. Similarly, after its confirmation by the Court which in legal phraseology is called as rule of the Court, the separate ownership is established. The department itself having assessed it in the names of such five owners in income tax as well as in wealth tax is estopped from challenging its title. The award, however, does not determine or ascertain the specific properties hence a further agreement in consequence thereof was made which has determined as to who it owner of what. These separate independent units have been registered accordingly in Excise and Property Tax Department and are statedly being charged to property tax respectively.

The judgments referred above have considered such a distribution as valid for separate assessment in the hands of individuals and rightly so. In this case controversy as to whether Arbitration Award or rule of the Court being automatically settled as assessment of Income Tax and Wealth Tax have already been made. Whether, the partition agreement needs further registration can easily replied as `no'. This agreement, dated 10‑6‑1993 has only ascertained the shares of which the individuals were already owners by way of Arbitration and rule of the Court. It, therefore, did not require any further registration or another decree from the Court. In other words this agreement has only determined the specific individual portions of the property of which they were earlier joint owners. These properties later have been rented out by them separately as individual owners hence the status of A.O.P. assigned to them needs review. The assessee, however, have still continued with some joint agreements. There are certain assets, in which agreements earlier jointly signed, still exist in some of the relevant assessment years. This is where an exception can be taken. Though in the agreement such properties have been specifically assigned to individuals still assessee action of not having a new agreement prove that they wish to retain its A.O.P. status. Having become a separate owner a new notice as per law by the incumbents and subsequent renewal of agreement in individual status could have settled the issue. Continuation of the agreement with bank gives a genuine impression that this part of the property even after partition is not separately identifiable or ascertainable. The result, therefore, is that such properties shall remain assessable in the status of A.O.P. till a new agreement by the individual owner with said tenant is framed.

Having gone through the relevant provisions of law judgments and the arguments, we consider it more appropriate to set aside the case with the directions that after the agreement and registration with Excise Department wherever the petitioners have made separate individual agreements, the status of A.O.P. shall not be assigned. The assessment shall be finalized in their individual hands under rule 8(3) of the Wealth Tax Rules. Those properties, which have still been rented out jointly even after agreement shall be assessed as an A.O.P. till the respective owner agrees in an agreement mentioning his specific portion with the tenant. These findings are for all the year subject to separate specific order given hereafter for the year maintained therein.

The A.R. has challenged that concept of A.O.P. was not there in law for 1997‑98 as in charging section the words "Association of Persons or body of Individuals" were missing during the period 1‑7‑1996 to 30‑6‑1997. This concept was introduced by Finance Ordinance, 1980 but was later withdrawn by Finance Act, 1996. The charging section i.e. section 3 of the "Wealth Tax Act; 1963" before addition of the above mentioned words in 1997 reads as follows:‑‑‑

4. Charge of wealth tax.‑‑‑Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of July, 1963, a tax (hereinafter referred to as wealth tax) in respect of the net wealth (for assets) on the corresponding valuation date of every (individual, Hindu undivided family, firm, and company), at the rate or rates specified in the Schedule."

A plain reading of above proves it beyond doubt that there was no charge provided for as Association of persons or body of individuals for assessment year 1997‑98. The Legislature had deleted it with intention hence no assessment in the status of A.O.P. can be made for the assessment year 1997‑98. We, therefore, cancel the assessment framed for 1997‑98 in the status of A.O.P. and confirmed by the CIT(A) being without jurisdiction. Our reliance is upon the case of reported as 1984 PTD (Trib.) 65. In the referred case under similar circumstances it was held that provisions of section 13(1)(a)(a) not being there for assessment year 1979‑80 having been inserted by the Finance Act, 1979 applicable from 1‑7‑1979 and after, the addition under said provision was liable to deletion. We find further support from the C.B.R. Circular No. 8 of 1997, dated 24‑7‑1997, which speaks as follows:‑‑‑

"The concept of 'association' of persons', applicable under the Wealth Tax Act prior to the amendments made through the Finance Act, 1996, has been restored as before. Consequently, jointly owned properties other than agricultural land, shall be taxed in the hands of an A.G.P. However, any assets on which tax is paid by an A.O.P. shall not be taxed in the hands of individual owners/co‑shares."

In this Circular the C.B.R. has confessed that through Finance Act, 1996 this charge was withdrawn while it was restored through. The Finance Act, 1997 applicable for the year starting from 1-7-1997.

The arguments that section 2(16) did not define A. O. P. uptill charge of the same starts from 1999‑2000 in our humble view is a total misconception. If the definition of A.O.P. was not available in Wealth Tax help can be sought from the Income Tax Ordinance, 1979. If it also does not help the ordinary dictionary meanings and the judgments on the subject can come to rescue. Its absence in the definition section 2(16) does not exonerate it from section 3. In any case in section 2(5) while defining "Assets" has included A.O.P. vide sub‑clause (ii). This argument, therefore, is repelled.

This brings us to the argument with regard to the charge of the assessment on the basis of financial year. Unlike Income Tax where the charge has been created for the assessment year commencing on or after the first day of July, 1979, in Wealth Tax Act the charge has been created by mentioning, finance year on and from the first day of July, 1963. This difference in language in the opinion of the A.R. leads to the conclusion that the assessment framed by the Assessing Officer is without jurisdiction, hence should be cancelled. The learned A.R. could not substantiate from the language as to how it has caused prejudice to the assessee and under what circumstances the same becomes without jurisdiction. The charge in Wealth Tax has admittedly been created for every finance year but the same is in respect of the net wealth or assets as on the corresponding valuation date. By adding the words `valuation date the Legislature has made its intention clear. Assessment year basically is the year that starts after the end of the financial year and has been so defined in the Income Tax Ordinance, 1979 vide section 2(8). This hardly needs any mentioning that the definitions given, in Income Tax Ordinance can be applied mutatis mutandis in the Wealth Tax proceedings under section 2(2) of the Wealth Tax Act, 1963. The language of section 3 of the Wealth Tax Act has not happily been worded, however, it does not give any impression that the financial year in wealth tax shall also be its assessment year. This is just a misinterpretation, which cannot be given any weight.

The upshot of the discussion is that except for assessment year 1997‑98 for which the concept of Association of Persons was non‑existent in the Wealth Tax Act, 1963 and for which we have directed for cancellation of the order, in all other years, the assessments are set aside with specific directions. The assessee appeals for all the years therefore, stand decided in the manner and to the extent as mentioned above.

C.M.A./520/Tax/Trib.)Order accordingly.