MUHAMMADI SHOE MARKET through Bilal Ahmed Mir VS SPECIAL OFFICER OF INCOME TAX/WEALTH TAX, 2006 PTD-LAHORE-HIGH-COURT-LAHORE 693 (2005)

Wealth Tax Act (XV of 1963)---

----Ss. 14(2) & 17--Wealth Tax Rules, 1963, R.8(3)---Valuation of rented building---Assessment on basis of General Annual Letting Value (GALV) of building---Dismissal of appeal by Tribunal on the ground that capitalized value of building on basis of A.L.V. had been approved by Inspecting Assistant Commissioner---Validity---Tribunal, though recorded objection of assessee that Assessing Officer had given no basis or reasons for evaluating building at impugned value, but had failed to deal with and decide same---Duty of Tribunal was to examine as to whether Appellate Authority and Assessing Officer had estimated value of building by giving due regard to parameters prescribed in R.8(3) of Wealth Tax Rules, 1963---High Court remanded appeal to Tribunal for its fresh decision in accordance with law.

Shehbaz Butt for Appellant.

Muhammad Ilyas Khan for Respondent.

Date of hearing: 18th October, 2005.

JUDGMENT

MUHAMMAD SAIR ALL, J.---These two appeals bearing I.T.A. No.65 of 2001 and I.T.A. No.66 of 2001 involve identical questions of law and facts and are therefore decided together through this judgment.

2. Upon notices under section 17 read with section 14(2) of the Wealth Tax Act, 1963, returns for the assessment years 1994-95, 1995-96 and 1996-97 were filed by an AOP i.e. Muhammadi Shoe Market, Moti Bazar, Lahore. This jointly owned market comprised three level construction over 10 Marlas of land and was let out by the joint owners. The assessment was made by the Assessing Officer i.e. the Special Officer of Income Tax/Wealth Tax by working out General Annual Letting Value (GALV) at Rs.33,84,000 for each assessment year. This order was appealed against by the appellant by filing three appeals i.e. one for each year. Through order dated 31-3-1999, the Appellate Additional Commissioner of Income Tax/Wealth Tax accepted the appeal in respect of the assessment year 1996-97 by setting aside the assessment order thereof and directing re-assessment by the Assessing Officer. However, appeals as to the assessment years 1994-95 and 1995-96 were rejected for the sole reason that "The A.L.V. was enhanced with the prior approval of Range IAC". Appeals thereagainst were dismissed by the learned Income Tax Appellate Tribunal, Lahore Bench, Lahore through order dated 1-2-2001 by recording that:

"The value adopted for the years under consideration has been worked out properly and statutory approval of the IAC has also been obtained as stated in the assessment order and as confirmed by IAC, the two appeals are therefore dismissed being devoid of merits."

3. Hence the present further appeals seeking opinion of this Court on the following questions.

(1) Whether on the facts and in the circumstances of the case when both the authorities below have failed to give any plausible reason for determining A.L.V., the learned Tribunal was right in confirming the A.L.V. and the capitalized value was on the ground that prior approval of I.A.C. has been obtained?

(2) Whether on the facts and in the circumstances of the case when particularly no basis of adopting A.L.V. have been provided, the mere approval of the I.A.C. shall justify the determination of G.A.L.V. qua the capitalized value?

(3) Whether on the facts and in the circumstances of the case when no basis whatsoever have been provided by the lower forums, the mere approval of the I.A.C. shall satisfy the conditions for determining capitalized value in terms of rule 8(3) of the Wealth Tax Rules?

4. The respondents appeared through Mr. Muhammad Ilyas Khan, Advocate.

5. The learned counsel for the parties fully argued the appeals and requested the same to be treated as admitted/Pacca appeals which are accordingly being decided as admitted appeals.

6. Having heard the learned counsel for the parties, we find a lot of substance in the submissions of the learned counsel for the appellant that the learned Tribunal decided the appeals without considering the essential conditions and parameters prescribed in rule 8(3) of the Wealth Tax Rules, 1963 which reads as under:--

"Rule 8(3)- Valuation of lands and buildings. The value of lands and building [excluding agricultural land] shall be estimated with due regard to the nature and size of the property, the amenities available and the price prevailing for similar [property] in the same locality or in the neighbourhood of the said locality."

7. Bare reading of the above reproduced rule reveals that the value of the lands and the buildings (excluding the agricultural land) is to be assessed with due regard to;

(i) The nature of the property;

(ii) The size of the property;

(iii) The amenities provided in the property; and

(iv) The price prevailing for similar property in the same locality or in the neighbourhood of the same locality.

8. The learned Tribunal in exercise of its appellate authority was obligated to examine as to whether the First Appellate Authority and the Assessing Officer had estimated the value of the above referred building in keeping with the four parameters prescribed in the above reproduced rule or not. And also as to whether the powers were exercised by the assessing authorities in terms of the mandates laid down in the rules or not. Instead the learned Tribunal upheld the order of the First Appellate Authority and the Assessing Officer on the basis of general and wide observations that the value was worked out properly and the statutory approval of IAC had been obtained. The learned Tribunal thus upheld the orders respectively passed by the Special Officer of the Income Tax and Wealth Tax and the Appellate Additional Commissioner of Income Tax/Wealth Tax who in turn appear to have exercised, their powers oblivious of the mandatory requirements of rule 8(3) of the Wealth Tax Rules, 1963. Furthermore, the learned Tribunal recorded the objection of the appellant that the Assessing Officer had given no basis or reasons for evaluating the property at the impugned value yet the learned Tribunal failed to deal with and decide the same.

9. Without giving due regard to the parameters laid down in rule 8(3) of the Wealth Tax Rules, 1963, the learned Tribunal was not justified in confirming the capitalized value of the property on the basis of so-called A.L.V. merely because the same had been approved by the IAC.

10. The questions as raised by the appellant are thus answered in the negative. As a result, the appeals shall be reheard and re-decided by the c learned Income Tax Appellate Tribunal, Lahore strictly in accordance with the applicable provisions of the law and the rules.

11. Decided as above.

S.A.K./M-9/LCase remanded.