LEATHERWARE (PVT.) LTD:, SIALKOT through Chief Executive VS FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad, 2009 PTD-LAHORE-HIGH-COURT-LAHORE 497 (2008)

Finance Act (V of 1989)---

----S.7(2)(a) [as amended by S.12 of Finance Act (VII of 1990) and omitted by S.15 of Finance Act (IV of 1999) w.e.f. 1-7-1999]---General Clauses Act (X of 1897), S.6(c)---Levy of capital value tax on transfer of property measuring 11 Kanals through lease deed dated 27-7-1999---Omission of S.7(2)(b) of Finance Act, 1989 by Finance Act, 1999 w.e.f. 1-7-1999---Effect---Such omission would have effect of withdrawal of tax on property exceeding 250 square yards w.e.f. 1-7-1999---Charge of capital tax on transfer of property was well in field at the time of execution of such lease deed---Such omission would not obliterate liability of lessee to pay tax on property acquired through such lease deed.

J.M. Shelat v. Bhargave, C.A. Vaidialingam, K.S.M Hedge AIR 1970 SC 494 and .Abdul Azeez v. Commissioner of Income Tax Karnataka-I (1981) 128 ITR 547 ref.

Dad Muhammad v. Addl. District Judge-I, Quetta 1996 SCMR 1688 fol.

Jawahar A. Naqvi for Petitioner.

ORDER

NASIM SIKANDAR, J.---By way of section 7 (Levy of tax on Capital Value of certain assets) of the Finance Act, 1989 (V of 1989), a tax on the capital value of assets, to be called the Capital Value Tax was levied. It was payable by every individual who, inter alia, acquired by purchase an asset or a right to use thereof for more than twenty years subsection (2) of section 7 detailed the assets referred to in sub-section (1) thereof. Subsection (2) of section 7 of Finance Act, 1989 at that time read as under:--

"(2) The assets referred to in subsection (1) are---

(a) urban movable property with land area exceeding 250 square yards; and

(b) motor vehicle; not plying for hire, with engine capacity exceeding 800 cubic centimeters."

Through section 12 of the Finance Act, 1990 section 7 of the Finance Act, 1989 was amended to bring association of persons, firms and companies into the said tax net. The amendment so made read as under:--

"(1) In subsection (1),---

(a) for the word "who", commas and words "association of persons, firm or a company which may" shall be inserted; and"

2. The Finance Act, 1999, however, further amended the aforesaid Act V of 1989. Section 15 of the Finance Act omitted paragraphs (a) and (b) in subsection 2 of section 7 of the Act V of 1989, as reproduced above. The omission of sub-clause (a) accordingly had the effect of A withdrawal of capital value tax on urban immovable property exceeding 260 square yards from the date of enforcement of Finance Act, 1999 viz 1-7-1999.

3. The petitioner, a private limited company, acquired on lease a piece of land measuring 11-Kanals commonly known as "Bangalow No.47, Zafar Ali Road, Sialkot Cantt". The lease deed was executed on 27-7-1999 between the company, an assessee of the Income Tax department, and President of Pakistan through Military Estate Officer, Gujranwala. On the amount of premium mentioned in the tease deed at Rs.50,58,754 the petitioner paid a sum of Rs.120,483 as capital value tax. The Assistant Commissioner of Income Tax/Wealth Tax, Circle Zone-2, Sialkot found the tax so paid to be grossly understated for various reasons including two parallel cases mentioned in his order, dated 27-1-2000. Through that order he estimated total value of the land at Rs.2,65,20,000 and raised a demand of Rs.663,000 as the actual capital value tax payable. A sum of Rs.68,353 was also found payable as additional tax at the rate of 15% per annum. The petitioner unsuccessfully assailed that order in revisional jurisdiction of the Commissioner of Income Tax, Sialkot Zone Sialkot, through his order, dated 24-11-2000 the Commissioner refused to interfere with the assessment order finding the reasons earlier weighing with the Assessing Officer to be legal and factually unassailable.

4. Through this constitutional petition both orders recorded by the Revenue are challenged on a number of grounds. However, the most important ground being that these orders suffer from jurisdictional fact inasmuch as respondent No.3, the Assessing Officer, had no jurisdiction to make assessment after the relevant provision providing for the charge on immovable property was omitted. According to the petitioner the omission of paragraph (a) of subsection 2 of Act V of 1989 w.e.f. 1-7-1999 erased the levy from the statute book as far the charge on immovable property was concerned.

5. Heard learned counsel for parties. In support of the aforesaid proposition learned counsel for the petitioner relies upon a judgment of the Supreme Court of India in re: J.M. Shelat v. Bhargave, C.A. Vaidialingam, K.S. Hegde [AIR 1970 SC 494]. That judgment was followed by the Karnataka High Court in re: R. Abdul Azeez v. Commissioner of Income Tax, Karnataka-I [(1981) 128 ITR 5471. Their Lordships of the Karnataka High Court were considering the effect of omission of section 274(2) of the Income Tax Act, 1961. In the view of their Lordships the effect of omission of a provision was different from repeal thereof. It was held that section 6 of General Clauses Act, 1897 applied only to repeal but not to omissions it was accordingly held that after the omission of section 274(2) of the Income Tax Act, 1961 w.e.f. 1-4-1976 the IAC had no jurisdiction to pass order of penalty from that date in cases where concealment of income tax exceeded Rs.25,000 although the proceedings were pending before him.

6. Learned counsel for the Revenue, on the other hand, states and he will readily agree that the view adopted by the Hon'ble Supreme Court of India and Hon'ble Judges of the Karnataka High Court is not shared by the superior Courts in Pakistan. In re: Dad Muhammad v. Addl. District Judge-I, Quetta (1996 SCMR 1688) a Full Bench of the Hon'ble Supreme Court of Pakistan held that word "repeal" or "omission" used for amending the entire or a part of the statute carries the same effect. Therefore, section 6 of the General Clauses Act, 1897 was found applicable. The relevant part of the judgment contained in para. 9 thereof reads as under:--

"(9) The amending statute usually uses the word "omission" for textual amendment. The word "repeal" also conveys meaning of obliteration of one statute by another statute from the statute book as if it had never been passed. In my view the word "repeal" or "omission" used in statute for amending the entire or part of the statute carries the same effect. The omission of any part of a statute by an amending statute will amount to repeal of that part which has been deleted and omitted. In such a situation section 6 of the General Clauses Act will be applicable and, therefore, the pending proceedings at the time of such amendment will be decided by the Court where the proceedings were pending..."

7. In the case in hand at the time of execution of lease deed the c charge on immovable property being very well in the field, the provisions of section 6 sub-clause (c) clearly attracted. Sub-clause (c) of section 6 of the General Clauses Act provides for the effect of repeal. It is laid down that where that Act, or any Central Act or Regulation made after commencement of the Act repeals any enactment hitherto made or hereafter to be made, then unless a different intention appears, the repeal shall not "affect any right, privilege, obligation or liability acquired, accrued or incurred under the enactment so repealed." As said above, at the time of the execution of the lease deed the charge of capital value tax on transfer of immovable property being very well within the field the omission of paragraph (a) of subsection (2) of section 7 of Act, 1989 did not obliterate the liability of the petitioner to the charge. The aforesaid provisions of the General Clauses Act provided sufficient legal authority to the Assessing Officer to make the assessment. His order by any stretch of logic or reason cannot be held to be without jurisdiction.

8. Petition rejected.

S.A.K./L-1/LPetition rejected.