COMMISSIONER OF INCOME TAX/WEALTH TAX, COMPANIES ZONE-II, LAHORE VS Mrs. FARIDA HUSSAIN, 2006 PTD-LAHORE-HIGH-COURT-LAHORE 2562 (2006)

Wealth Tax Act (XV of 1963)---

---S. 27---Wealth Tax Rules, 1963, R.8 (3)---Notification S.R.O. No.534(I)/1994, dated 9-6-1997---Tenanted property---Valuation---Determination---Assessing Officer evaluated tenanted property of assessee on the basis of rate notified by District Collector under-S.27 of Stamp Act, 1898---income Tax Appellate Tribunal allowed the appeal filed by assessee and found that in case of tenantable property valuation had to be made on the basis of Annual Lease Value as provided in R.8(3) of Wealth Tax Rules, 1963---Plea raised by the Authorities was that assessment was wrongly made on the basis of Annual Lease Value---Validity---Decision of Income Tax Appellate Tribunal was devoid of any legal infirmity---Tribunal followed its earlier decision while passing the judgment and also substitution of proviso to R.8 (3) of Wealth Tax Rules, 1963 brought through Notification S.R.O. No. 534(I)/1994, dated 9-6-1997---Question raised in the appeal had already been settled in case titled Commissioner of Income Tax/Wealth Tax v. Mst. Kamal Asghar, reported as 2005 PTD 50 and only method provided by law for valuation of property in such cases was resort to the provisions of R.8 (3) of Wealth Tax Act, 1963---Separate valuation of cost of construction and land for the purposes of assigning of value to a property could not be made---High Court declined to attend to the questions raised by Authorities being questions of fact---Appeal was dismissed in limine.

1997 PTD (Trib.) 135 and 1989 PTD (Trib.) 859 ref.

Commissioner of Income Tax/Wealth Tax v. Mst. Kamal Asghar 2005 PTD 50 fol.

Nemo for Appellant.

ORDER

This single order will dispose of Income Tax Appeal No.543 titled "Messrs Commissioner of Income Tax/Wealth Tax, Companies Zone-II, Lahore v. Mrs. Farida Hussain" and Income Tax Appeal No.544 titled "Messrs Commissioner of Income Tax/Wealth Tax, Companies Zone-II, Lahore v. Mrs. Farida Hussain" as both common questions of law and facts are involved in both these appeals.

2. The assessee in his Wealth Tax Return for the years 1994-95 and 1996-97 disclosed immovable properties, including one kanal house at Gulera Gali, Murree. The property was assessed at a rate of Rs.50,000 (rupees fifty thousand only) per marla at Municipality rate with cost of construction at Rs.7,72,883. Appellate Additional Commissioner of Income Tax/Wealth Tax Appeal Range maintained the value at Rs.50,000 per marla but reduced the cost of construction from Rs.7,72,883 to Rs.7,72,000. Respondent challenged the orders of first appellate authority dated 30-06-1996 and 7-2-1998, in appeal before ITAT. Learned Tribunal, while accepting appeal to the extent of this property has held that in the cases of tenantable property, the mode and method of valuation had to be in accordance with Rule 8(3) of the Wealth Tax Rules, 1963. The substitution of proviso to Rule 8(3) through S.R.O. No.534(I)1/1994 dated 9-6-1997, debar the Assessing Officer to adopt the valuation of tenantable property on the basis of rate notified by the District Collector under section 27 of the Stamp Act, 1898. The Assessing Officer was bound to accept the declared value of Rs.7,05,893 in the year 1994-95 and also during the subsequent years, as increase in rent as per Rent Restriction Laws, permit increase of rent after three years. Learned Tribunal while holding so has followed its earlier decision, reported as 1997 PTD (Trib.) 135 and 1989 PTD (Trib.) 859.

3. The appellant through instant appeal under section 27 of the Wealth Tax Act, 1963, raised the following questions of law:---

(i) Whether according to the facts and circumstances of the case, the learned Income Tax Appellate Tribunal was justified to hold that rule 8(3) provides the basis for valuation of the constructed property only on the basis of the ALV, whereas the property was not let out.

(ii) Whether according to the facts and circumstances of the case, the learned Income Tax Appellate Tribunal was justified to direct the Assessing Officer to accept the declared value, whereas the cost of land declared by the assessee was against the law and facts of the case.

(iii) Whether according to the facts and circumstances of the case, the learned Income Tax Appellate Tribunal justified to strike down the circular issued by the Central Board of Revenue for the determination of the value of the constructed property not let out.

4. The case of the appellant as set out in the grounds of appeal is that income of assessee has wrongly been assessed on the basis of ALV. The property was not tenantable and as such it cannot be assessed on the basis of ALV. The impugned judgment of the Tribunal is against the facts and law. Learned Tribunal has failed to appreciate that C.B.R. has the powers under section 46 of the Act, to frame rules for determination of the property.

5. The impugned decision of the learned Tribunal is devoid of any legal infirmity. It has followed its earlier decision while passing the impugned judgment and also the substitution of proviso to Rule 8(3) of the Wealth Tax, Rules brought through S.R.O. 534(I)/94. The question raised in this appeal has already been settled in the case of Commissioner of Income Tax/Wealth Tax v. Mst. Kamal Asghar (2005 PTD 50) wherein it was held that the only method provided by law for the valuation of the property in such cases was resort to the provisions of Rule 8(3) of the Wealth Tax Rules 1963 and separate valuation of cost of construction and land for the purposes of assigning of value to a property could not be made.

6. For the foregoing, we are not inclined to answer question No.1 being the question of fact and not of law. The question No.2, is answered in, affirmative, resultantly we hold that valuation of tenanted property can be determined only on the basis of ALV as provided in Rule 8(3) supra. In view of our finding on question No.2 the question No.3 has become redundant and needs no answer.

7. We are not inclined to attend to the questions raised by the appellant being questions of fact and resultantly dismiss the appeals, in hand, at this limine stage.

M.H./C-37/LAppeal dismissed.