COMMISSIONER OF INCOME TAX/WEALTH TAX, ZONE-B VS Messrs S.K.F. & CO., LAHORE, 2006 PTD-LAHORE-HIGH-COURT-LAHORE 1505 (2005)

(a) Wealth Tax Rules, 1963---

---8(3)-Wealth Tax Act (XV of 1963), S.27---Gross Annual Rental Value of property---Determining such value by clubbing cost of construction and value of land fixed by District Collector---Validity---No provision of law or Rules supported such separate valuation of cost of construction and land for purpose of assigning value to a property---Only method provided by law for such purpose was R.8(3) of Wealth Tax Rules, 1963.

(b) Wealth Tax---

----Administrative instructions---Validity---Such instructions could not be issued to Assessing Officer while making assessment---Such instructions, if being against law or Rules, could not be applied against taxpayer---Principles.

Any instructions by an administrative authority against the express provisions of law or the Rules framed thereunder cannot be employed to defeat the law or the procedure to the detriment of the rights of tax-payer. Equally no administrative instructions can be issued to an Assessing Officer while he is performing quasi-judicial function of making assessment. Any such administrative instructions in the field would not be binding upon the Assessing Officer.

(c) Wealth Tax Rules, 1963---

----R.8(3), Expln.---Term "Gross Annual Rental Value" as defined in Explanation to R.8(3)---Connotation---Such value was only notional value on which a property could reasonably be expected to be let from year to year---Actual renting out of property would not be required at all for purpose of application of R.8 of Wealth Tax Rules, 1963---Principles.

(d) Precedent---

----Foreign judgment, ratio of---Applicability---In absence of a comparable provision in a Pakistani Law, such ratio could not be made applicable.

Muhammad Ilyas Khan for Appellant.

Nemo for Respondent.

Date of hearing: 8th March, 2005.

JUDGMENT

NASIM SIKANDAR, J.---ln this departmental appeal following questions proposing interpretation of Rule 8(3) of the Wealth Tax Rules, 1963 are stated to have arisen out of the impugned order of the Income Tax Appellate Tribunal, Lahore Bench, Lahore:---

"(1) Whether on the facts and circumstances of the case, the learned Income Tax Appellate Tribunal was justified to vacate the order of the Assessing Officer, as the assessee owned superstructure and also have lease hold rights as owner?"

(2) Whether on the facts and circumstances of the case, the learned Income Tax Appellate Tribunal was justified to vacate the order of the Assessing Officer without considering the evidence relating to the ownership rights of the said property vested to the respondent?

2. The respondent in this appeal, at the relevant time, was assessed to wealth tax. They filed their wealth tax return indicating different value for the moveable as well as immovable properties owned by them. The Assessing Officer after discarding the declared value of property proceeded to determine its value by clubbing the cost of construction and the value of land as determined/fixed from time to time by the District Collector concerned under section 27-A of the Stamp Act, 1899.

3. The assessee failed in first appeal. However they succeeded before the learned Income Tax Appellate Tribunal. Learned Tribunal disapprove separate determination of valuation of land and cost of one of their earlier decisions. The Tribunal directed that the method of valuation under rule 8(3) of the late Wealth Tax Rules, 1963 should be adopted.

4. On the consideration of the statements of the case in the perspective of the aforesaid proposed questions of law we are of the view that the appeal filed by the Department needs to be rejected for the following reasons:---

Firstly, the questions as framed cannot be said to have arisen out of the order ofthe Tribunal inasmuch as it was never contended nor argued before the Tribunal that the properties in respect of which the valuations were determined by the Assessing Officer were not let out.

Secondly, learned counsel for the Revenue has not been able to point out any provision of law, the Wealth Tax Act, 1963, its Rules, 1963 or any authoritative pronouncement by superior Court in support of separate valuation of cost of construction and land for the purpose of assigning of value to a property. Learned Tribunal is correct in pointing out that the only method provided by law in such cases Rule 8(3) of the said Rules.

Thirdly, as against the provisions of the said rules CBR Circular No.7 of 1994, dated July 10, 1994 cannot hold good. Any instructions by an administrative authority against the express provisions of law or the rules framed there-under cannot be employed to defeat the law or the procedure to the detriment of the rights of the tax payer. Equally no administrative instructions can be issued to an Assessing Officer while he is performing quasi-judicial function of making assessment. Any such administrative instructions in the field, therefore, not binding upon the Assessing Officer.

Lastly, the term and expression GALV as defined in explanation to sub-rule (3) of Rule 8 by itself implies that it is not necessary for a building or property to have actually been let out for the purpose of application of GALV rule. The said explanation defines "Gross Annual Rental Value" to be the one for which the property might reasonably be expected to be let from time to time. As noted above, the definition itself indicates that GALV is only a notional value on which a property could reasonably be expected to be let from year to year. The actual renting out of property for the purpose of application of the rule, therefore, is not required at all.

5. The case relied upon by the appellant in re: K.T. Kuruvilla v. District Valuation Officer and another (2001 PTD 848) = (241 ITR 691) is not relevant. There is nothing on record to show that in the Indian Wealth Tax Act, 1957 Schedule IT Rules 3 and 20 there is a provision equivalent to Rule 8(3) of the Wealth Tax Rules, 1963. In absence of a comparable provision in the Wealth Tax Rules, 1963 the ratio settled in the judgment from a foreign jurisdiction cannot be made applicable. On the other hand the impugned order of the Tribunal is supported by the provisions of Rule 8(3) of the Wealth Tax Rules, 1963.

6. Therefore, this departmental appeal shall be dismissed.

S.A.K./C-10/LAppeal dismissed.