2010 P T D (Trib.) 1046
[Income-tax Appellate Tribunal Pakistan]
Before Malik Abdul Samad, Accountant Member
I.T.A. No.65/KB of 2009, decided on 08/11/2009.
Finance Act (V of 1989)---
----Ss. 7(7) & 7(CA)(A)(ii) & 8(1)---Levy of tax on capital value of certain assets---Assessee acquired right (to use for more than twenty years) in the leasehold plot acquired by the original lessee for the term of 99 years---Value of property was not recorded on original deed of assignment--While executing lease assignment in favour of assessee, value was recorded on sub-lease deed and Capital Value Tax @2% was paid---Assessing Officer charged Capital Value Tax @ Rs.50 per sq. yd. on the ground that value of immovable property was not recorded---First Appellate Authority annulled the order with the observation that since value of plot had duly been recorded as per Conveyance Deed on which CVT was charged 2% of the recorded value, action of Taxation Officer to charge CVT @ 50 per Sq.yd. was contrary to express provisions of law---Validity---Property had duly been registered with Registrar Office and the value has also been recorded therein---Capital Value Tax had rightly been charged @ 2% on the recorded value of the property---Order of First Appellate Authority was upheld by the Appellate Tribunal and department appeal was dismissed by the Appellate Tribunal.
Dr. Abdul Sattar Abbasi, D.R. for Appellant.
AS. Jaffri for Respondent.
ORDER
MALIK ABDUL SAMAD (ACCOUNTANT MEMBER).---The instant appeal has been filed by the Department against the order of AppealKarachi/Hyderabad, dated 30-12-2008 on the following grounds of appeal:
(i) That, the order passed by CIT(Appeals) Hyderabad is bad in law and against facts of the case.
(ii) That, taxpayer acquired right (to use for more than twenty years) in the leasehold plot No. N-30, SITE, through deed of Assignment.
(iii) That, taxpayer did not purchase Plot No. F/8, SITE, Kotri.
(iv) That, value of immovable property is not recorded.
(v) That, applicable rate of CVT is Rs.15,00,000 by taxpayer represents consideration for transfer of rights and interests in the leasehold property."
2. On due date of hearing, Dr. Abdul Sattar Abbasi, argued on behalf of the Department while the taxpayer was represented by Mr. A.S. Jafri of Messrs A.I. Jafri and Co. Hyderabad.
3. Brief facts of the case are that the taxpayer acquired lease hold rights of an industrial plot bearing No. N-30, SITE, Kotri vide assignment deed dated 24-2-2007 duly registered in the Sub-Registrar Kotri office. The said plot was originally leased out to Messrs Shaikhanis Private Limited for the term of 99 years vide lease deed duly executed between the above party and Messrs SITE Ltd., Karachi on 2nd April, 2005 and registered in the Sub-Registrar Kotri office on 28-4-2005. Subsequently, with the prior permission and consent of the SITE Limited, Karachi vide letter No.380, dated 19-1-2007, the mutation of the said plot was made in favour of Mr. Topen Mal Tekchand s/o Thaku Mal, the sole proprietorship concern with same sanctioned trade of "Textile" vis-a-vis on the above plot subject to usual conditions. However, assignment deed was executed on 24-2-2007 between Messrs Shaikhanis Private Limited, Mr. Topal Mal Tekchand and SITE Limited, Karachi at a value of Rs.15,00,000 which was duly registered in the Sub-Registrar, Kotri on 6-3-2007 and later on in the Registrar Office, Hyderabad on 15-3-2007. While registering the said property, CVT @ 2% was charged thereon under section 7 of Finance Act, 1989 as amended from time to time. However, the Taxation Officer Enforcement Unit-II, Regional Tax Office, Hyderabad observed that as per law CVT was payable/leviable @ Rs.50 per sq.yd. as the value of immovable property was not recorded. So he passed order under section 8(1) read with section 7(7) of Finance Act, 1989 on 13-11-2007 and charged CVT @ Rs.50 per sq.yd., in view of provisions of section 7(CA)(a)(ii) of Finance Act, 1989. The taxpayer being aggrieved filed appeal before the CIT(Appeals). The learned CIT(Appeals) Karachi/Hyderabad vide order dated 30-12-2008 observed as under:---
"The arguments advanced by the A.R. of the appellant are considered, the perusal of order of Taxation Officer it transpires that the appellant purchased Industrial Plot No.F/8, SITE, Area, Kotri on which CVT @ 50 Sq.Yds. was charged by Taxation Officer as per Clause CA in subsection (2) of section 7(a)(ii) of Finance Act, 2006. Since the value of Plot has duly been recorded at Rs.15,00,000 as per Conveyance Deed duly C registered with Sub-Registrar, Kotri and on which CVT was charged @ 2% of the recorded value of said plot at Rs.30,000 in the light of Finance Act, 2006 which is correct. Therefore, the action of the Taxation Officer to charge CVT @ 50 per Sq.Yd. is contrary to express provisions of law, therefore, the impugned order is not sustainable therefore, annulled.
The appeal is disposed of as indicated above."
4. Against the above finding of CIT(Appeals) the Department has preferred second appeal before the Tribunal.
5. During the hearing of the case D.R. argued that the taxpayer has only acquired right to use this property for the period of 99 years and has executed only Assignment Deed and not proper Conveyance Deed. He further argued that sum of Rs.15,00,000 was paid for right to use this property and not as a sale consideration. As per D.R. the letter written by Messrs SITE Limited, Karachi dated 19-1-2007 shows that the Conveyance Deed will be executed within a month but the said Conveyance Deed has not been executed till date. It means that the value of the property is not recorded and registered. Therefore, the Taxation Officer has rightly charged @ Rs. 50 per Sq.Yd. in view of provisions of section 7(CA)(a)(ii) of Finance Act, 1989.
6. On the other hand, the A.R. of the taxpayer filed written arguments vide letter dated 10-9-2009. It was argued by the A.R. that the SITE Limited, Karachi in its letter dated 19-1-2007 have consented that on fulfilment of related requirement, the mutation of the said plot in favour of Messrs Topan Mal Tekchand has been made and Conveyance Deed will be executed within a month. Accordingly Assignment Deed have duly been executed between the taxpayer, the original assignee Messrs Shaikhanis (Pvt.) Ltd. and SITE Ltd. on 24-2-2007. Therefore, the D.R. is not correct to say that the Conveyance is not executed. He has further stated that for leased out properties, assignment deed and not conveyance deed is required to be executed.
7. The A.R. further argued that the value of the said property has duly been recorded. Further to above, the said Assignment Deed has also been registered in the office of sub-Registrar, Kotri and the Registrar, Hyderabad. Therefore, it is incorrect to say that the value of the property has not been recorded.
8. The arguments of the D.R. as well as the A.R. of the taxpayer has been considered and all the related documents have also been examined. There is no doubt that the property has duly been registered with the Registrar Office, Kotri and later on with the Registrar Office, D Hyderabad and the value has also been recorded therein. In view of the facts I am convinced that he CVT has rightly been charged @ 2% on the recorded value of the said property as per provisions of section 7(CA)(a)(i). Accordingly the order of the CIT(Appeals) is upheld and no interference is called for.
9. The departmental appeal accordingly fails as above.
C. M. A./192/Tax(Trib.)Appeal dismissed.