Mst. SHAGUFTA SABA SEEMA VS INCOME TAX APPELLATE TRIBUNAL OF PAKISTAN, LAHORE, 2005 PTD-LAHORE-HIGH-COURT-LAHORE 2370 (2005)

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

----Second Sched., para. 7(ii), (i) & S.27---Exemption---Entitlement---Requirements---Appeal to High Court---Assessee claimed exemption from incidence of wealth tax upon the machinery brought under N.R.I. Scheme, the sale proceeds thereof and/or the shares issued to the assessee by an incorporated company in line of the sale proceed of said machinery---Validity---Decision of legal question of the entitlement to exemption or otherwise of the sale proceeds of the machinery brought or remitted into Pakistan under N.R.I. Scheme and/or of the shares made from such sale proceeds also required the evidence of machinery remittance into Pakistan by the assessee under N.R.I. Scheme (the assessee had claimed that the entire evidence including bill of lading were on record); sale of the machinery to the incorporated company; the amount of the sale proceeds paid by the company and received or to be received by the assessee and purchase of shares or assets, if any, through these sale proceeds by the assessee or conversion or exchange of the machinery or its sale proceeds into the shares of such company---Tribunal granted opportunity of evidence to the assessee who was found by the Assessing Officer to be unwilling to produce evidence---High Court, in appeal, however, could not re-examine the question as to whether the required evidence was produced by the assessee before the Taxation Authorities or not---Such being a question of fact, could not be probed into unless the assessee was able to unambiguously and irrebuttably prove the availability of the entire evidence on record---Neither the affidavit, as stated by the assessee, nor the evidence in question had been placed on record of the appeal before the High Court-Assessee had not stated before the High Court that any evidence relating to the sale of the machinery, its price and purchase of the shares therefrom in the relevant years, was produced before the Assessing Officer---Tribunal in circumstances, by remanding the case to the Assessing Officer for re-decision after an opportunity of evidence to the assessee, neither caused any prejudice to the assessee nor did it commit any jurisdictional error or illegality to earn interference from High Court in exercise of its limited appellate jurisdiction---In case the Assessing Officer in the post-remand proceedings concluded that para.7(ii) of Second Sched. of the Wealth Tax Act, 1963 was attracted to the case of assessee, he shall, of course, follow the law laid down in Mst. Zarina Yousaf v. Inspecting Assistant Commissioner 2005 PTD 108 and C.I.T., Lahore v. Zoraiz Lashari W.T.A. No.180 of 2001---If, however, on the basis-of evidence, the Assessing Officer formed the opinion that cl.(i) of said para.7 was applicable to the case of the assessee, he shall, through appropriate reasons, decide the question of exemption of the assets recreated by the assessee through the sale or exchange of machinery in question.

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

----Second Sched., para.7(ii)---Exemption---Entitlement---Assets created out of the remittances brought into Pakistan, during the specified period, through the normal banking channels, despite change of ownership or the assets recreated from the sale proceeds of such assets, remained exempt throughout the specified period of exemption.

Mst. Zarina Yousaf v. Inspecting Additional Commissioner of Income Tax/Wealth Tax, Sialkot Range, Silakot an another 2005 PTD 108 and C.I.T., Lahore v. Zoraiz Lashari (W.T.A No. 180 of 2001) fol.

Syed Abrar Hussain Naqvi for Appellant.

Shahid Jamil Khan for Respondent.

Date of hearing: 28th June, 2005.

JUDGMENT

MUHAMMAD SAIR ALL, J.---The appellant, an individual filed wealth tax returns for the assessment years 1998-99 to 2000-2001 claiming exemption from the incidence of wealth tax upon the machinery brought under NRI Scheme, the sale proceeds thereof and/or the shares issued to the appellant by an incorporated company in lieu of the sale proceeds of the said machinery. The Assessing Officer disallowed the claim of exemption for the reason that upon sale of the said machinery, the nature of the assets changed. On assessee's appeal, the Commissioner of Income Tax/Wealth Tax (Appeals) set aside the assessment order and remanded the case to the Assessing Officer for re-decision after providing an opportunity of explanation to the assessee against dis allowance of the exemption. The assessee filed two appeals there against before the learned Income Tax Appellate Tribunal, Lahore. The learned Tribunal through orders, dated 22-10-2002 and 18-3-2004 upheld the above referred orders of the CIT/WT (Appeals) additionally directing the Assessing Officer to pass a speaking order on the question of exemption in the circumstances of the case.

2. Post-remand assessment proceedings after notice were conclude by the Assessing Officer through order, dated 12-6-2003. This time the claim of exemption was declined for the reason that:-

"The said fact was specifically confronted to the assessee through show-cause notice and asked the assessee to furnish complete evidence in this regard but the assessee has furnished copy of already filed reply. In view of above facts and circumstances of the case, no exemption is allowed to the assessee being not substantiated with documentary (evidence) and above said amounts are charged to tax as per original order."

3. On appeal, CIT/WT (Appeals) observed that " evidence in support of claim of exemption was neither filed before the Assessing Officer nor before this Court. The claim of exemption cannot, therefore, be entertained". The appellant assessee feeling dissatisfied preferred her appeals before the learned Income Tax Appellate Tribunal, Lahore. During the course of these appeals, an affidavit was filed by the appellant assessee deposing that all the evidence including bill of lading proving machinery's remittance to Pakistan under NRI Scheme was submitted before the Assessing Officer. The appellant, thus, claimed before the learned Tribunal that the Assessing Officer and the CIT/WT (Appeals) were not justified to reject the exemption for the purported absence of evidence. The learned Tribunal through order, dated 31-7-2004 accepted the appeals and remitted the case to the Assessing Officer "for de novo consideration" after an adequate opportunity to the assessee to produce documentary evidence in support of her claim of exemption. The above order of remand has been challenged through this further appeal by the appellant assessee.

4. The learned counsel for the appellant assessee stated that the basic moot point in the entire controversy was not the bringing of the machinery into Pakistan under the NRI Scheme but was as to whether upon sale of the machinery brought or remitted into Pakistan under NRI Scheme, were the sale proceeds or the shares or the assets made through such proceeds entitled to exemption under the law or not. And that the entire evidence was already on record, wherefor, the learned Tribunal was not justified in remanding the case to the Assessing Officer for re-decision of the legal question on the basis of evidence required to be again produced by the appellant. Following questions were, thus, submitted for the opinion of this Court:

"(1) Whether the assets created out of the remittances brought into Pakistan through normal banking channels are exempt from wealth tax under clause (ii) of para.7 of the Second Schedule to the Wealth Tax Act, 1963?

(2) Whether the Income Tax Appellate Tribunal in the facts of the case was justified to remand the case for reconsideration on the same facts and evidence already on record and whether it is abuse of the process of Court?"

5. Having heard the learned counsel for the appellant, we are of the considered opinion that the decision of the legal question of the A entitlement to exemption, or otherwise, of the sale proceeds of the machinery brought or remitted into Pakistan under NRI Scheme and/or of the shares made from such sale proceeds also required the evidence of:--

(i)Machinery's remittance into Pakistan by the appellant under NRI Scheme. (The appellant claims that the entire evidence including bill of lading are on record);

(ii)Sale of machinery to the incorporated company;

(iii)The amount of the sale proceeds paid by the company and received or to be received by the appellant; and

(iv)Purchase of shares or assets, if any, through these sale proceeds by the appellant or conversion or exchange of the machinery or its sale proceeds, into the shares of such company.

6. All that the learned Tribunal did was to grant opportunity of evidence to the appellant who was held by the Assessing Officer and the CIT/WT (A) as unwilling to produce evidence. This Court cannot re-examine the question as to whether the required evidence was produced by the appellant before the Taxation Authorities or not. This being a question of fact cannot be probed into unless the appellant is able to unambiguously and irrebuttably prove the availability of the entire evidence on record. The learned counsel for the appellant submitted that in her affidavit, the appellant had deposed as to the production of bill of B lading and all other evidence to prove the bringing of the said machinery into Pakistan under NRI Scheme. Neither the said affidavit nor the evidence in question has been. placed on record of this appeal by the appellant. In any case, it has not been stated by the learned counsel for the appellant that any evidence relating to the sale of the said machinery, its price and purchase of the shares therefrom in the relevant year(s), was produced before the Assessing Officer by the appellant. The learned Tribunal by remanding the case to the Assessing Officer for re-decision after an opportunity of evidence to the appellant neither caused any prejudice to the appellant nor did it commit any jurisdictional error or illegality to earn interference from this Court in exercise of the limited appellate jurisdiction.

7. It was further argued by the learned counsel for the appellant that the first question as framed by him had already been decided by this Court in the case of "Mst. Zarina Yousaf v. Inspecting Additional Commissioner of Income Tax/Wealth Tax, Sialkot Range, Silakot and another" (2005 PTD 108) and in judgment, dated 22-2-2005 in the case of "CIT, Lahore v. Zoraiz Lashari" (W.T.A No.180-2001). And that Clause (ii) of para. 7 of the Second Schedule of the Wealth Tax Act, c 1963 was interpreted in the above cases.. It was held that during the specified period, the assets created out of the remittance brought into Pakistan through the normal banking channels, despite change of ownership or the assets recreated from the sale proceeds of such assets, remain exempt throughout the specified period of exemption.

8. Except for placing reliance upon the above referred cases of "Mst. Zarina Yousaf v. Inspecting Additional Commissioner of Income Tax/Wealth Tax, Sialkot Range, Silakot and another" (2005 PTD 108) and "CIT, Lahore v. Zoraiz Lashari" (W.T.A. No.180-2001), the learned counsel for the appellant did not produce before us any material to determine as to whether the assets in the form of machinery were "remitted or brought into Pakistan by the assessee or were received by the assessee from outside Pakistan" to fall under Clause (i) of para. 7 of the Second Schedule of the Wealth Tax Act, 1963. Or that the assets in the form of machinery were created by the assessee out of the remittances brought into Pakistan through the normal banking channels to earn exemption under Clause (ii) of para. 7 of the Second Schedule of the Wealth Tax Act, 1963 to avail of the law laid down by this Court in the above referred cases.

9. The scope and the nature of the provisions of prescribed in Clause (i) and Clause (ii) of said para. 7 of the Second Schedule of the late Wealth Tax Act, 1963 are different. The applicable conditionalities to earn exemption for the relatable assets are also distinctive. The referred cases related to the assets created out of the remittances received or brought into Pakistan through the normal banking channels. It was not the issue before the Court nor was it decided in the said cases as to whether the assets brought or remitted by an assessee into Pakistan or received by an assessee from outside the Pakistan, would continue to be exempt under Clause (i) of para. 7 even after their conversion or re-conversion, like the assets created out of the remittance received or brought into Pakistan through the normal banking channels per Clause (ii) of said para. 7.

10. In absence of the terms of NRI Scheme before us, we are unable to determine as to which of the above referred two Clauses govern the case of the appellant who should therefore participate in the remand proceedings per the Tribunal's order to prove the same as well.

11. In view of what has been discussed above, none of the questions raised before us need to be answered. In case the Assessing Officer in the post-remand proceedings concludes that Cause (ii) of para. 7 of the Second Schedule of the Wealth Tax Act, 1963 is attracted to the case of the appellant, he shall of-course follow the law laid down by this Court in the above referred cases of "Mst. Zarina Yousaf v. Inspecting Additional Commissioner of Income Tax/Wealth Tax, Silakot Range, Silakot and another" (2005 PTD 108) and "CIT , Lahore v. Zoraiz Lashari" (W.T.A No.180-2001). If on the basis of evidence, the Assessing Officer forms an opinion that Clause (i) of said para. 7 is applicable to the case of the appellant, he shall through appropriate reasons decide the question of exemption of the assets recreated by the F appellant through the sale or exchange of the said machinery. We thus uphold the impugned order, dated 31-7-2004 passed by the learned Income Tax Appellate Tribunal, Lahore subject of-course to the observations made above.

12. This appeal is, thus, decided accordingly with no order as to the costs.

M.B.A./S-4 18/LOrder accordingly.