W.T.A. No.72/LB of 2005, decided on 9th May, 2005. VS W.T.A. No.72/LB of 2005, decided on 9th May, 2005., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 967 (2005)

(a) Finance Act (V of 1989)---

----S.7---C.B.R. Circular No. 9 of 1997 dated 24-7-1997---Levy of tax on capital value of certain assets---Hearing and decision by First Appellate Authority in respect of Capital Value Tax assessment---Department contended that Capital Value Tax assessment was not appealable in the light of Central Board of Revenue Circular No.9 of 1997 where it had been provided that only revision petition could be tiled before the Commissioner of Wealth Tax and hearing of appeal and decision thereon by the First Appellate Authority was without jurisdiction and was void in the eyes of law---Validity---Through Circular No.9 of 1997 dated 24-7-1997 regarding explanation of provision relating to Capital Value Tax in Para. V, it had been specifically provided that "as there was no legal recourse to the wrong charge of Capital Value Tax, such Capital Value Tax payers had now been provided the right to file revision petition to the Commissioner of Wealth Tax"---Order of the First Appellate Authority was treated to be the decision made on the revision petition filed by the assessee---Department had no right to file appeal before the Appellate Tribunal, as in the Circular, only the assessee had been provided with the right to file revision petition before the Commissioner which he had decided in favour of the assessee.

(b) Finance Act (V of 1989)---

----S.7---Capital Value Tax Recovery and Refund Rules, 1990, R.8(2)---Wealth Tax Act (XV of 1963), S.30---Transfer of Property Act (IV of 1882), Preamble---C.B.R. Circular No.9 of 1997, dated 24-7-1997---C.B.R. Circular No.16 of 1992, dated 1-7-1992---C.B.R. Circular No.5 of 1996, dated.l-7-1996---Levy of tax on Capital Value of certain assets---Purchase of agricultural land through registered deed dated 5-3-1997---Order regarding amount of Capital Value Tax was passed against legal heirs of the assessee, which had been deleted by the First Appellate Authority without any justification---Assessee contended that land was transferred in the name of late assessee on 15-12-1973 through a registered document---Possession of land was delivered to the late assessee fulfilling all conditions as specified in the Transfer of Property Act, 1882 which were, offer, acceptance, consideration and possession---Conditions of valid transfer through registered document were completed on 15-12-1973---Land was originally allotted to assessee in respect of Islamabad Affectees Scheme and there was a dispute on the land for which the assessee had to file civil suit before Senior Civil Judge regarding specific performance of contract due to the reason that the assessee died in the meanwhile and the consent of all the legal heirs of assessee was required in respect of final deed for the transfer of property---Suit was decreed in 1995 holding that land had already been transferred in the name of late assessee and the execution of sale-deed in that regard was only a formal proceedings---Capital Value Tax was not applicable when the land was originally transferred to the late assessee on 15-12-1973 or subsequently when the dispute in the case was finally decided by Senior Civil Judge on 6-12-1995, as the Capital Value Tax on the agricultural land was made applicable through Circular No.5 of 1996 dated 1-7-1996 when the scope of Capital Value Tax was extended to purchase agricultural land---No valid jurisdiction was available with the Taxation Officer to levy Capital Value Tax on the transaction, as the transaction was effected much before the promulgation of the levy and First Appellate Authority had rightly deleted the levy---Validity---No justification was available with the Assessing Officer to levy Capital Value Tax on the transaction which had been made in 1973 through a registered sale document when there was no such levy of tax on sale of agricultural land---Later proceedings in Civil Court regarding completion of crown deed and mutation of land were the procedural matter---First Appellate Authority had rightly deleted the levy---Order of First Appellate Authority was upheld and the appeal filed by the Department was dismissed.

1992 ALD 582(1) and PLD 1964 SC 842 rel.

Abdul Ghani, D.R. for Appellant.

Rana M. Ishaque for Respondent.

Date of hearing: 30th April. 2005.

ORDER

The Department through this appeal has objected to the consolidated impugned order of the learned C.I.T.(A) dated 14-12-2004 on the following grounds:---

(1) That the learned C.W.T.(A) was not lawful jurisdiction for hearing of appeal in the CVT assessment as it is not appealable in the light of C.B.R. Circular No.9 of 1997 where it has been defined that only revision petition can be filed before the A Commissioner of Wealth Tax hence, the hearing of appeal and decision thereon by the learned C.I.T.(A) is without jurisdiction and is void in the eyes of law, (copy of circular as Annexure "A" attached).

(2) That the C.W.T.(A) was not justified to admit such evidences which was not produced before the DCIT unless he is satisfied that the assessee was not prevented by sufficient cause from producing such evidence as provided subsection (4) of section 23 of Wealth Tax Act, 1963 hence the act of the learned C.W.T.(A) was not justified.

(3) That the subsection (4) of section 7 of the CVT clearly defines that:

"The CVT shall be collected by the person responsible for registering/attesting the Transfer of Asset, in respect of which tax is payable at the time of Registering/Attesting the transfer". The transfer of assets defined "Registration Act, 1908" and the value of assets has to be determined on the value as determined for the purpose of Stamp Duty which defines in Stamp Duty Act. In the instant case, the asset was agricultural land and mutation was executed vide Registry No.30 dated 5-3-1997 on the determined value of Rs.32,00,000 and that was the date where the CVT has to be charged according to Circular No.5 of 1996 (Copy of Circular enclosed as Annexure'B);

(4) That the learned C.W.T.(A) made error in his findings that the Agricultural land in question was transferred in 1973, actually this was "an agreement to sell" duly monitored by "the law of Contract, 1872" and this cannot be considered for levy of CVT (Copy of Agreement to sell registered mutation attached).

(5) That the learned C.W.T.(A) also mis-led by taking the date of Civil Court decree dated 6-12-1995 for the purpose of CVT against the laid down procedure explained in sections 7(1) & 7(4) of CVT, defined as under:---

7(1) "A tax on the Capital Value of assets to be called CVT and shall be payable by every Individual, AOP etc. acquired by purchase whether effected orally by deed or obtained through court decree"

7(4) "The CVT shall be collected by the person responsible for registering/attesting the Transfer of Asset, in respect of which tax is payable at the time of Registration/Attesting the transfer".

(6) That during hearing, no objection was raised against the proceedings and all the "Legal Heirs" made payment on the basis of affidavit filed (copy enclosed).

Mr. Abdul Ghani Ch. representing the appellant-Department has contended that the learned C.I.T.(A) was not justified in deleting the levy of CVT made under Rule 8(2) of the CVT Recovery and Refund Rules read with section 30 of Wealth Tax Act, 1963. He has contended that the assessee late Sohrab son of Muhammad Nawaz purchased agricultural land measuring 100 Kanals in consideration of Rs.32,00,000 through registered Deed bearing No.30 dated 5-3-1997 executed before Sub-Registrar, Jehania. According to section 7 of the Finance Act, 1989 the purchaser/appellant was under obligation to pay Capital Value Tax p B 5% of the purchased value along with other professional/legal fees, taxes and levies. The order regarding amount of Capital Value Tax at Rs.1,60,000 was passed by the Taxation Officer against legal heirs of the assessee which has without any justification been deleted by the learned C.I.T.(A). The learned D.R., in this regard, has contended the same arguments as have already been reproduced supra in the grounds of appeal.

On the other hand, Rana M. Ishaque, Advocate has appeared on behalf of the assessee and is supporting the impugned order of the learned C.I.T.(A). He has contended that the subject land was transferred in the name of the late assessee on 15-12-1973 through a registered document on the consideration of Rs.50,000 out of which c Rs.48,000 were paid before Sub-Registrar while the remaining Rs.2,000 were later on paid. The possession of the land was also delivered to the late assessee fulfilling all conditions as specified in the Transfer of Property Act which are, Offer, Acceptance, Consideration and Possession. He has contended that all the conditions of valid transfer through registered document were completed on 15-12-1973. The learned counsel has submitted that as the subject land was originally allotted to Ghulab son of Feroze in respect of Islamabad Affectees Scheme and there was a dispute on the land for which the assessee in the present case has to file civil suit before Senior Civil Judge, Khanewal regarding specific performance of contract due to the reason that the said Ghulab died in the meanwhile and the consent of all the legal heirs of Ghulab was required in respect of final deed for the transfer of property. The said suit was decreed in 1995 holding in that suit that as the land has already been transferred in the name of late assessee and the execution of c sale-deed in that regard was only a formal proceeding which was decreed accordingly. According to the learned counsel, in execution of the decree issued from Court of Senior Civil Judge, the Court-fee and the stamp duty was fixed in accordance with D.C. rates as Were in 1995. The learned counsel has contended that the Capital Value Tax on the agricultural land was not applicable when the land was originally transferred to the late assessee on 15-12-1973 or subsequently when the dispute in this case was finally decreed by Senior Civil Judge, Khanewal on 6-12-1995, as the CVT on the agricultural land was made applicable through Circular No.5 of 1996 dated 1st July, 1996 when the scope of CVT was extended to purchase agricultural land. He has, therefore, contended that there was no valid jurisdiction with the Taxation Officer to levy CVT on the transaction, as the transaction was effected much before the promulgation of the impugned levy and the learned C.I.T.(A) in view of these circumstances has rightly deleted the levy.

We have heard the learned representatives from both the sides and have also perused the impugned order of the learned C.I.T.(A), the order passed by the Taxation Officer under Rule 8(2) of CVT Recovery and Refund Rules read with section 30 of the Wealth Tax Act, 1963, the case-law referred by the learned counsel for the assessee, copy of registered sale-deed, copy of suit for specific performance of agreement filed before the Civil Judge, Khanewal with the order and decree of the Court, dopy of Circular No.18 of 1992 regarding Capital Value Tax, copy of Circular No.5 of 1996 dated 1-7-1996 regarding Capital Value Tax, the decision of Hon'ble Lahore High Court reported as 1992 ALD 582(1), the decision of Hon'ble Supreme Court of Pakistan reported as PLD 1964 SC 842 and the copy of Circular No.9 of 1997 dated 24th July, 1997 regarding explanations of provisions relating to Capital Value Tax and other relevant record of the case.

We have found that the Taxation Officer in this case has levied Capital Value Tax on the assessee for the alleged reason that the assessee purchased agricultural land and according to section 7(b) of Finance Act, 1998, he was in legal obligation to pay Capital Value Tax on the said transaction, but the learned C.I.T.(A) has deleted the levy for the reason that the sale document regarding. purchase of land was executed in 1973 when there was no such levy of tax on sale of agricultural land. We have found that the agricultural land measuring 100 Kanals was transferred in the name of the assessee Sohrab Khan through a document registered on 15-12-1973 in consideration of Rs.50,000 out of which Rs.48,000 were paid before the Registrar, Rawalpindi' and the remaining Rs.2,000 were agreed to be paid at the time of final mutation of land. As per that registered document, the possession of the land was delivered to the assessee and in this way, all the three ingredients provided under the transfer of Property Act, Offer, Acceptance and Consideration and Possession were fulfilled and in this way, valid transfer through registered document was fulfilled. As the final mutation of land was under-processed, the suit for specific performance of agreement was filed in the Court of Civil Judge, Khanewal wherein the registered document dated 15-12-1973 was accepted. However, due to the dispute regarding inheritance of property, final mutation of the land could not take place for which the suit was filed. Finally in 1995, the land was mutated in accordance with law while paying the court-fee and stamp -paper duties as per D.C. rates for which purpose, the value of land was fixed at Rs.32,00,000 and the suit was finally decreed on 6-12-1995 and all the procedural requirement regarding transfer of agricultural land were fulfilled, but as the CVT till that date was not enforced, therefore, there was no question of recovery of CVT at that time. We have found that in this case, the land was transferred and was in the possession of the assessee since 15-12-1973 and it is only due to non-compliance of crown deed that mutation was not effected and for that purpose, suit for specific performance of agreement was filed which was before the promulgation of levy of CVT and issuance of Circular No. 5 of 1996 through which levy of CVT of agricultural' land was promulgated. The Hon'ble Lahore High Court in a case reported as 1992 ALD 582(1) has held that the deposit of whole price of land by a allottee of land would make him its full owner for all purposes. It has been further held in this decision that preparation and registration of final conveyance deed in such case would be a mere formality. Likewise, the Hon'ble Supreme Court of Pakistan in a case reported as PLD 1964 SC 842 has held that proprietary title had passed to the purchasers when she had made full payment of price of land and she had become full owner thereof.

Regarding the objection raised by the appellant-Department that in this case, the learned C.I.T.(A) should have rejected the appeal, as there was no right of appeal available with the. assessee, we have found that through Circular No.9 of 1997 dated 24th July, 1997 regarding explanation of provision relating to Capital Value Tax in para. V, it has been specifically provided that "as there was no legal recourse to the wrong charge of CVT, such CVT payers have now been provided the right to file revision petition to the Commissioner of Wealth Tax". We are of the view that the contention of the learned counsel for the assessee has force in it that if the impugned order of the learned C.I.T.(A) in this case is treated to be the decision made on the revision petition filed by the assessee, then the appellant department has no right to file appeal before this Tribunal, as in that Circular, only the assessee has been provided the right to file revision petition before the Commissioner which he has decided in favour of the assessee in the present case.

In view of the above facts and circumstances w, are of the view that the there was no justification for the Assessing Officer to levy CVT on the transaction which has been made in 1973 through a registered sale document when there was no such levy of tax on sale of agricultural land. Later proceedings in the Civil Court regarding completion of crown deed and mutation of land are the procedural matter, as has already been held by the Hon'ble superior Courts. We are, therefore, of the view that the learned C.I.T. (A) has rightly deleted the levy. We, therefore, find no warrant for interference in the impugned order which is upheld and the appeal filed by the Department is dismissed.

C.M.A./484/Tax(Trib)????????????????????????????????????????????????????????????? Appeal dismissed.