(a) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑Second Sched., Part I, Cl. (8‑A)‑‑Exemption‑‑‑Foreign currency account ‑‑‑Encashment of‑‑‑Such encashed money was used for payment of loan which was originally used for purchase of shares‑‑‑Such shares were claimed exempt from wealth tax being asset created from encashment of foreign currency account‑‑‑Claim was disallowed on the ground that encashed money was only used to pay the loan and payment of an existing loan did not amount to creation of asset‑‑‑Validity‑‑‑Law provides exemption to rupee amounts or assets created out of withdrawal of foreign currency‑‑‑Shares were not directly purchased through foreign currency but were got converted into rupee, and then the encashed money was paid to repay the loan used for purchase of shares‑‑‑Assets were neither created when the foreign currency was converted into rupee nor when encahsed rupees were paid to repay the loan in order to purchase shares‑‑‑Provision of Cl. (8‑A) of Part I of the Second Sched. of the Wealth Tax Act, 1963 would also apply to the assets created out of foreign currency after 29‑5‑1998 but assets through purchase of shares had been created much prior to the encashment of foreign currency account‑‑‑Since shares had already been purchased, though on loan, decrease in liability through repayment of loan could not be by any stretch of imagination considered creation of assets‑‑‑Assets were created when the shares were purchased and any subsequent repayment of loan through encashment of foreign currency could not be treated as the assets created as a result of encashment of foreign currency as envisaged by Cl. (8‑A) of Part I of the Second Sched. of the Wealth Tax Act, 1963 for the purpose of allowing exemption‑‑‑Order passed by the Assessing Officer and affirmed by the First Appellate Authority disallowing the exemption claimed on account of foreign currency was upheld by the Appellate Tribunal.

Black's Law Dictionary, Sixth Edn. ref.

(b) Words and phrases‑‑‑

‑‑"Increase"‑‑‑"Creation"‑‑‑Distinction‑‑‑Increase in something is distinguishable from creation because word `increase' ostensibly implies the existence of something, while creation of a thing denotes bringing something into existence.

Black's Law Dictionary, Sixth Edn. ref.

Muhammad Akbar, C.A. for Appellant.

Mahboob Alam, D.R. for Respondent.

Date of hearing: 16th February, 2002.

ORDER

SYED NADEEM SAQLAIN (JUDICIAL MEMBER). ‑‑‑Titled appeals for the assessment years 1998‑99 and 1999‑2000 at the instance of the assessee/appellant have been directed against the order dated 12‑6‑2000 recorded by learned CWT, Lahore.

2. Right from the outset, the learned A.R. submitted that he does not want to press Grounds Nos.2 and 3. The sole ground which was agitated at the bar as with regard to disallowing of claim of exemption of foreign currency by the Assessing Officer and confirmation thereof by the learned First Appellate Authority.

3. Facts in brief, leading to the filing of present appeals are that assessee/appellant is a Director of (Pot.) Ltd. Co. titled as Khalid Shafique Spinning Mills Ltd. The assessee claimed exemption from Wealth Tax of Rs.12,967,667 on account of encashment of the foreign currency account which was subsequently utilized for repayment of the loan which was originally used for the purchase of shares. The Assessing Officer did not accept appellants plea that in his opinion, any asset has been created out of encashment of foreign currency. The assessee also failed before the First Appellate Authority, hence the instant appeals.

4. Both the parties have been heard and relevant orders perused. The learned A.R. has vehemently argued the case and contended that the Assessing Officer as well as the learned CWT(A) erred in law while disallowing claim of exemption pertaining to encashment of foreign currency. He submitted that encashed money out of foreign currency was used in repayment of loan utilized in order to purchase of shares. Further elaborated that when an existing liability was discharged this had caused to increase the assets of the appellant which resulted in creation of assets. Thus bringing it within the purview of clause (8A) of part I of Second Schedule to the Act.

5. Conversely, the learned D.R. has opposed the arguments advanced by the learned A.R. at the bar. It was argued by the learned D.R. that encashed money only used to pay the loan. He contended that payment of an existing loan does not amount to creation of asset as postulated by clause (8‑A) of part I of the Second Schedule to the Act. He supported the assessment order as well as impugned order and pleaded that no interference is warranted by the Tribunal.

6. Arguments heard, relevant orders perused. After hearing the arguments advanced by the learned counsel for the rival parties, we are constrained to observe that assessee had no case at all. Admittedly, shares were purchased on loan and the too prior to the encashment of foreign currency, so one can easily say that foreign currency was not used for the purchase of shares. We must say that assets were purportedly created when the shares were purchased and not when the loan utilized for purchase of shares was paid. At this juncture, it would be appropriate to reproduce relevant provisions of law which are as follows:

"(8‑A) Rupees amounts, or assets, created out of withdrawal from foreign currency accounts or encashment of US Dollar Bearer Certificates and Foreign Currency Bearer Certificates on or after the twenty nine day of May, 1998 in the year of conversion or creation of assets and the following five years:

Provided that where investment in the assets is not made entirely out of the aforesaid accounts and certificates, the exemption shall apply in the same ratio as the said conversion or encashment bears to the total investment."

7. Bare perusal of the above mentioned provision of law would show that law provides exemption to rupees amounts or assets created out of withdrawal of foreign currency. In the instant case the shares were .not directly purchased through foreign currency but was got converted into rupees, and then the encashed money was paid to repay the loan used for purchase of shares. Obviously, assets were created when the foreign currency was converted into rupees and not when encashed rupees were paid to repay the loan used in order to purchase shares.

8. Secondly, it is also worth mentioning that clause (8‑A) applies to the assets created out of foreign currency after 29‑5‑1998 but in the present case assets through purchase of share had already been created much prior to the encasement of foreign currency A/C.

9. Coming to the final argument of the learned A.R. that when the liability was paid or in the alternative decrease in liability had caused to increase the assets implying thereby that assets have been created to attract clause (8‑A) of part I of Second Schedule of the Act, we are of the opinion that it would be going too far, since accepted principle of interpretation is that one cannot go beyond what the Legislature intended, had the Legislature wanted, it would have provided that decrease in liability on payment of loan would be considered an equivalent to creation of asset. In this respect, we can seek guidance from the dictionary meanings of the two word i.e. increase and Create. Black's Law Dictionary Sixth Edition "Increase means enlargement, growth, development, increment, addition, accession, extension while create means to bring into being, to cause to exist, to produce. Going through both the words in conjunction would show that increase in something is distinguishable from creation because word increase ostensibly implies the existence of some thing, while creation of a thing denotes bringing something into existence.

10. Reverting back to the plea of the assessee, it is observed that since share had already been purchased, though on loan, decrease in liability through repayment of loan cannot be .... by any stretch of imagination be considered creation of assets. Undoubtedly, assets were created when the shares were purchased and any subsequent repayment of loan either through encashment of foreign currency cannot be treated that assets were created as a result of encashment of foreign currency as envisaged by clause (8‑A) of part I of Second Schedule to the Act for the purpose of allowing exemption.

11. In the light of above discussion, we uphold the impugned order passed by the learned CWT(A) whereby he affirmed the Assessing Officer's order disallowing the exemption claimed on account of foreign currency.

12. Accordingly assessee's appeals fail.

C.M.A./597/Tax(Trib.) Appeals failed.