2010 P T D (Trib.) 1685
[Income-tax Appellate Tribunal Pakistan]
Before Khawaja Farooq Saeed, Chairman and Liaquat Ali Khan, Accountant Member
I.T.A. No. 1613/IB of 2005, decided on 19/12/2006.
(a) Income Tax Ordinance (XXXI of 1979)---
----Second Sched. Cl. 6(H) & S.13---Exemption---Pre-conditions for exemption from S.13 of the Income Tax Ordinance, 1979: That the amount should be invested for purchase of assets auctioned or sold in consequence of a court order or decree, and the said auction should be by a banking company or DFI controlled by Government.
(b) Income Tax Ordinance (XXXI of 1979)---
----Second Sched. Cl. 6(H) & S.13---Exemption---Requirement of the management and control of the Federal or Provincial Government is in respect of only DFI and not in respect of a banking company---`Banking company' or a `DFI' separates DFI whose management or control vests in the Federal or a Provincial Government---Properties purchased from banking companies and from DFls managed and controlled by some government were exempt from application of S.13 of the Income Tax Ordinance, 1979.
Muhammad Ali Shah, D.R. for Appellant.
Atif Waheed for Respondent.
ORDER
KHAWAJA FAROOQ SAEED, CHAIRMAN.---This appeal on behalf of the department says that the ,CIT(A) was not justified to hold that property purchased by assessee in the auction of the Citi Bank is entitled to exemption under clause 6(H) of the 2nd Schedule.
2. The D.R. supporting his claim said that Citi Bank is not a Government and is only a financial institution. It is neither owned by the Federal Government nor by the Provincial Government. The same, therefore, does not apply on the facts of the case. The provision of law relevant to the issue is as follows:---
Clause (6H): The provisions of section 13 or Chapter XI or Chapter XII shall not apply in respect of any amount invested in the purchase of assets auctioned or sold as a consequence of a court order or decree in a case filed by a banking company or a DFI whose management or control vests in the Federal or a Provincial Government.
3. The above provision speaks of exemption from section 13 on the basis of following pre-conditions:
(i) That the amount should be invested for purchase of assets auctioned or sold in consequence of a court order or decree, and;
(ii) That the said auction should be by a banking company or DFI controlled by Government.
4. This obviously means that a banking company is very well covered if the other condition that the sale of the asset by the said company is in consequence to a court order. The D.R. therefore, does not appear to be as justified in saying that this exemption does not provide for exemption to sale of property by a banking company. The requirement of the management and control of the Federal or Provincial Government is in respect of only DFI and not in respect of a banking company. In this case it is not in dispute as to whether the seller Citi Bank is a banking company or not. The dispute is that the Citi Bank not being controlled and managed by the Federal or Provincial Government, the assets purchased from them are not entitled to exemption, as argued by the D.R.
5. The assessee's case is that disjunctive or in the terms `banking company' or a `DFI' separates DFI whose management or control vests in the Federal or a Provincial Government. This way properties purchased from banking companies and from DFIs managed and controlled by some government are exempt from application of section 13.
6. The arguments of the learned CIT(A) for deletion of the addition are more or less the same. However, his comment that if the legislature had intended to provide this exemption to only the sale by government owned banking Companies, it could have used the term `and' in place of `or' is quite valid and convincing. We, therefore, do not agree with the D.R. that the requirement of exemption includes that the banking company also should be owned by the Federal or Provincial Government and, therefore, allow this exemption.
7. The appeal obviously stands accordingly decided.
C.M.A./60/Tax (Trib.)Order accordingly.