W. T. As. Nos. 1271/LB and 1272/LB of 2002, decided on 15th August, 2003. VS W. T. As. Nos. 1271/LB and 1272/LB of 2002, decided on 15th August, 2003., 2004 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1084 (2003)

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

----Ss. 2(16), 16(3) & 17B---Wealth Tax Rules, 1963, R. 8(3)---Transfer of Property Act (IV of 1882), S. 53-A---Net wealth---" Belonging"-- "Ownership"---"Possession"---Value of plot was declared in accordance with the "agreement of sale" registered with the Sub-Registrar-- Assessing Officer assessed the same in accordance with the District Collector rates ---Assessee contended that no sale-deed for plot had been executed and title had not yet passed to him and he was not liable to be treated as "owner" of the plot---Amount paid for the purchase of the plot was liable to be assessed as "advance"---Validity---Seller of the plot of land having received full payment and having handed over the possession to the purchaser in the presence of a formal document viz. agreement to sell, registered---Neither the seller could curtail in any manner, the rights of the purchaser in the said property nor anyone claiming title to the said plot under the seller could alter the rights of the purchaser of his disadvantage ---Assessee was "owners" of the said plot of land for all practical purposes and for purposes of levy of wealth tax under the Wealth Tax Act, 1963---Assessee had admittedly made full payment and there was no advance payment involved at all---Plot in question had been declared by the assessee as part of his immovable property assessee, therefore, could not approbate and reprobate in the same breath ---Assessee had made full payment to the seller pursuant to agreement of sale and was in full possession of such plot on the valuation date ---Assessee was required to be treated as "owner of plot" in circumstances---First Appellate Authority was misconceived in its view that assessee was not the rightful "owner" of the plot---Order of First Appellate Authority was vacated by the Appellate Tribunal and that of Assessing Officer was restored.

W.T.As. Nos. 124 - 126/LB of 2002 per incurium.

PLD 1964 SC 456; Burma Railway Co. v. Secretary of State 1 ITC 140 (Burma); W.T.As. Nos. 662-666/LB of 2001; W.T.A. No. 1123/LB of 2000; W.T.As. Nos. 136 to 140/LB of 2003 and Inayat Ullah and others v. Shah Muhammad and others PLD 1961 (W.P) Lah. 372 rel.

Abdul Rasheed, D.R. for Appellant.

Shafqat Mehmood Chohan for Respondent.

Date of hearing: 13-8-2003.

ORDER

MUHAMMAD MUNIR QURESHI (ACCOUNTANT MEMBER).-----These appeals by Revenue arise out of order of the CWT(A), Silakot Zone, Sialkot, dated 4-4-2002.

2. It is the departmental contention that the First Appellate Authority has unjustifiably vacated order passed by the Assessing Officer under section 16(3)/17B of Wealth Tax Act, 1963 (since repealed).

3. Briefly stated, the relevant facts in this case are that the assessee, an individual, is co-owner in a plot situated at Zafar Ali Road, Silakot Cantt. and assessee's share in the property has been determined at 170-Marlas and appraised for purposes of levy of wealth by the Assessing Officer Rs.1,27,000 per Marla which comes to Rs.2,15,90,000. As against this, in the return of net wealth filed by the assessee, the said plot has been declared by the assessee to show a value of Rs.8 lacs which represents assessee's share in the total payment made at Rs.32 lacs for the entire property that has been purchased through an "agreement for sale" duly registered with the Sub-Registrar, Sialkot, dated 20-3-1999, pursuant to execution of a registered general-power of attorney in the name of Mian Khalid Pervaiz.

4. According to the Assessing Officer, the property in question having been duly declared in the wealth tax return by the assessee, the same was liable to be appraised for purposes of levy of wealth tax, as per express stipulation obtaining in rule 8(3), 1st proviso, at the DC notified rate that had been fixed at Rs.1,27,000 per Marla vide entry at Sr. No.73 of the rate list notified by the District Collector and the assessee having declared the same at Rs.8 lacs only which was much less than the value arising as per DC notified rate list, the Assessing Officer redetermined the value of assessee's share in the said plot at Rs.2,15,90,000 @ Rs.1,27,000 per Maria for 170 Marlas:

5. Before the Assessing Officer, the assessee had contested the treatment intended to be accorded by the Assessing Officer that had been earlier confronted to him. It was the assessee's contention that the plot in question was "disputed" by another claimant, Maj. (R.) Pervaiz Iqbal and civil suit had been lodged by the said claimant. It was pointed out that no sale-deed for the plot had been executed and little had therefore, not passed to assessee and assessee was accordingly not liable to be treated as "owner" of the plot.

6. Assessee's submissions were considered and rejected by the Assessing Officer who held that the assessee having purchased the plot through an "agreement of sale" duly registered with the Sub-Registrar and very importantly, the assessee being effective possession of the said plot, was liable to be treated as its `owner' for purposes of levy of wealth tax under the Wealth Tax Act, 1963.

7. Before the First Appellate Authority, the assessee reiterated his submissions made earlier before the Assessing Officer and argued that since legally he was statedly not the owner of the said plot, the same could not be assessed in his hands in the manner done by the Assessing Officer and at best the amount paid at Rs.8 lacs may be included in the assessee's net wealth as "Advance" paid by the assessee for the said plot.

8. The assessee's submissions found favour with the CWT(A) who held that the, assessee was not the "owner" of the said plot, there being no registered sale deed and hence title had not passed to the assessee.

9. The department is aggrieved with the finding as recorded by the CWT (A).

10. According to the DR, the assessee alongwith the other share holders in the said plot having made full payment to the seller for the property and the property being in the complete possession' of the purchasers and in the presence of a formal arrangement/viz agreement to sell, duly registered with the Sub-Registrar, Sialkot, there could be no doubt that the property in question was indeed an asset `belonging to the assessee" and hence liable to be treated as integral component of assessee's net wealth under section 2(16) of the Wealth Tax Act, 1963.

11. AR of the assessee/respondent has strongly contested the arguments as made by the DR. According to the AR, the title to the property in question had not passed to the assessee uptill the valuation date, as no registered sale deed had been executed and the agreement to sell, though registered with the Sub-Registrar, Sialkot, was not sufficient to lead to at transfer of title from seller to the purchaser. It is pointed out that this has been so held by the ITAT in W.T.As. Nos. 124 - 126/LB of 2002 (Assessment Years 1997-98 to 1999-2000, dated 26-2-2002. It is the AR's contention that as per the cited order of the Tribunal the word `belonging" used in section 2(m) of the Wealth Tax Act. 1963 (since repealed), in the context of "net wealth" refers to full and complete ownership and purchase of property through an "agreement to sell" did not vest the purchaser with full and complete ownership rights, as envisaged in law and hence the said property did not constitute an asset of the assessee and could not therefore, be included in the assessee's net wealth. The AR has also emphasized that title to the said property was the subject of litigation as another claimant, one Maj, (R) Pervaiz Iqbal, also claimed to hold title to the said property and in view of the dispute between the parties, the assessee could not be treated as rightful owner of the said property.

12. We have heard both sides and have examined the available record and our findings are recorded as under:--

(1) Admittedly, in the case of the present assessee, the assessee's share in the plot is in his full and complete possession and he has made full payment to the seller in order to be allowed to so hold the plot. Admittedly also, there is a formal arrangement in existence viz an agreement of sale that has been duly registered with the Sub-Registrar, Sialkot. Furthermore, it is also admitted that the Seller has received full payment for the complete plot from all the shareholders. It is also acknowledged that the assessee has himself cited the said plot in his personal wealth tax return as part of his net wealth. The question now arises whether the assessee is liable to be treated as "owner" of the said plot, given the facts and circumstances cited supra, including the case law referred to by the assessee's AR before the Tribunal.

The assessee has referred to a judgment of the Tribunal (W. T. A. 'Nos. 124-126/LB of 2002 (Assessment Years 1997-98 and 1999-2000), dated 26-2-2002 in which the assessee's point of view has been upheld and in which case the facts and circumstances pertaining to nature of purchase, agreement to sell, and disputed title are on similar lines as in the case of the present assessee.

However, in our considered judgment, in view of the Hon'ble Supreme Court of Pakistan decision as recorded in the case of Mst. Ghulam Sakeena v. Umer Baksh and another (Civil Appeal No.66 of 1963 decided on 2nd April, 1964 and reported as PLD 1964 SC 456), the seller of the said plot of land having received full payment and having handed over possession to the purchaser in the presence of a formal document viz agreement to sell, duly registered, there was no way that the seller could curtail in any manner, the rights of the purchaser in the, said property and there was no way anyone claiming title to the said plot under the seller could alter the rights of the purchaser to the purchaser's disadvantage. In view of ratio of the Hon'ble Supreme Court or Pakistan decision, therefore, there can be no doubt in our mina that the assessee is indeed the "owner" of the said plot of land for all practical purposes and certainly for purposes of levy or wealth under the Wealth Tax Act, 1963.

(2)"Ownership" for purposes of levy of wealth tax under the Wealth Tax Act, 1963 (since repealed) does not have the narrow and technical meaning that has been assigned to it by the CWT(A). It is significant that the term "owner" has not been defined in the Wealth Tax Act, 1963, and this, in our view, this is deliberate and if the law had indeed intended to define "owner" in a narrow technical sense of the word then it would have done so. The fact that the law had not done so shows that the law never intended to give it this narrow and technical meaning that has been wrongly, held to be applicable by the CWT(A).

In Burma Railway Co. v. Secretary of State (1 ITC 140 (Burma), it has been held that:--

"It must be presumed that the legislature was aware that the expressions `owner', ownership' and the verb `to own' in its various tenses have been frequently used in Acts of a similar--nature and further that they can be and are used in various meanings in different Acts, in some of which they have been specially defined for the purposes of particular sections. Nevertheless, the expression has not been defined for the purposes of this Act. It may have the narrow and technical meaning of the full ultimate and legal owner, but if this was intended, it could easily have been expressed and the failure to do so points to its not having been so intended."

In view of the observations, recorded supra, we hold that "ownership" as envisaged under the Wealth Tax Act, 1963 (since repealed) is required to be construed in its broader context which would be in line with the ratio laid down by the Hon'ble Supreme Court of Pakistan, in its landmark judgment cited supra.

(3)The assessee having himself declared that the said plot of land was his asset cannot now renege and say that he had only made `advance payment' for the said land. The hard fact of the matter is that the assessee has admittedly made full payment and there is no advance payment involved here at all. Had this been a case of `advance payment' then the payment made by the assessee would have been so cited and included in movable property of the assessee. This has not been done and the plot in question has been consciously declared by the assessee as part of his immovable property. It is trite law that the assessee cannot approbate and reprobate in the same breath."

It has been held by the Tribunal in W.T.As. Nos. 662-666/LB of 2001 (Assessment Years 1997-98), 1998-99 & 1999-2000), dated 27-6-2003, for purposes of levy of wealth tax, it is the `ground reality' as on the valuation date that has paramount significance. In the case of the present assessee, the ground reality is that the assessee has made full payment to the seller pursuant to an agreement of sale duly registered before the Sub-Registrar, Sialkot and the assessee is in full possession of the: said plot on the valuation date. This ground reality cannot be ignored and the assessee is hence required to be treated as "owner" of the said plot which in fact he is and he has as declared in the wealth tax return filed by him wherein the said plot is clearly cited as his assets.

(4)The fact that a civil suit has been lodged by one Maj. (R.) Pervaiz Iqbal, makes no difference to the ground reality explained above. Any number of civil suits can be filed but these suits cannot divest the purchaser of his rights in the plot that he has acquired after making full payment to the seller. As it is, the Hon'able Lahore High Court has finally rejected the claim lodged by Maj. (R) Pervaiz Iqbal, (as intimated to the Tribunal by the counsel of the assessee).

(5)In W.T.A. No.1123/LB of 2000. (Assessment-year 1998-99), dated 31-7-2003, the Tribunal has held that where the ambient circumstances are compelling; and clearly suggest that a person is in possession of the property for which he has made necessary payment to the seller and there is no contest to the transaction by the seller, then that person is to be treated as `constructive owner' of the premises for purposes of levy of wealth tax under the Wealth Tax Act, 1963.

(6)In the case of land leased out by the Military Estate Officer in the Cantonment areas, it has been held by the Tribunal in W.T.As. Nos. 136 to 140/LB of 2003 (Assessment years 1995-96 to 1999-2000), dated 19-5-2003 that "Land leased out by the Military Estate Officer in the Cantonment areas is invariably treated as the property of the lessee during the currency of the lease and on expiry, the lease is extendable by the lessor. Also, lessee is free to make construction on the leased property and to dispose it off in the open market at market rates. At the time of sale of such property by the original lessee the lease hold rights are routinely transferred to the new owner and the change is so recorded in the office of the Military Estate Officer. That being so, lease-hold properties in the Cantonment areas of Pakistan are quite distinguishable from other leased out properties and the lessee is rightly treated as "owner "by the Assessing Officer for purposes of levy of wealth tax under the Wealth Tax Act, 1963".

(7)Section 53-A of the Transfer of Property Act, effectively debars a transferee from enforcing any right against a transferee in possession but does not prevent a transferee from seeking relief. Thus the Transfer of Property Act protects a transferee whether he comes to Court as defendant or plaintiff (PLD 1961 (W.P) Lah. 372 (Inayat Ullah and other and Shah Muhammad and other). Thus, in the instant case the assessee stands fully protected so far as his purchase of the property is concerned and he must therefore, be treated as "owner" for purposes of section 2(16) of the Wealth Tax Act, 1963.

(8)In view of the reasons recorded Supra, we hold that the CWT(A) is misconceived in his view that the assessee is not the rightful "owner',' of the plot in question. As for the assessee's reliance on Tribunals' order bearing W.T.As. Nos. 124 to 126/LB of 2002 (Assessment years 1997, 98 to 1999-2000), dated 26-2-2002, we find that reliance is misplaced as the I findings recorded in the said order regarding definition of "owner" conflicts with the ratio of the Hon'ble Supreme Court of Pakistan's judgment in PLD 1964 SC 456 referred to supra. Tribunal's cited order is therefore an order `per incurium' and has no force in law. We therefore, vacate the order of the CWT(A) and reinstate the order passed by the Assessing Officer.

Resultantly, the appeals are accepted.

C.M.A./1048/Tax (Trib.)Appeals accepted.