PAKISTAN ENGINEERING CONGRESS, LAHORE VS DIRECTOR, EXCISE AND TAXATION, LAHORE
2012 P T D 1220
2012 P T D 1220
[Lahore High Court]
Before Nasir Saeed Sheikh, J
PAKISTAN ENGINEERING CONGRESS, LAHORE through President
versus
DIRECTOR, EXCISE AND TAXATION, LAHORE
Writ Petition No.2878 of 2006, decided on 12/04/2012.
(a) West Pakistan Urban Immovable Property Tax Act (V of 1958)---
---Ss. 3, 4(d)(f) & 24---West Pakistan Urban Immovable Property Tax Rules, 1958, R. 24---Constitution of Pakistan, Art. 199---Constitutional petition---Petitioner/Pakistan Engineering Congress (PEC)---Demand of property tax upon rental income derived by the Congress from its commercial building---Petitioner claimed exemption from such tax on ground that congress being dedicated for promotion of profession and practice of engineering was working for charitable purposes---Refusal of authority to accept such claim---Validity---Petitioner had neither obtained any certificate nor was a certified charitable institution in terms of R.24 of West Pakistan Urban Immovable Property Tax Rules, 1968-Statements of income and expenditures produced by petitioner/Congress for years 2001-2002 to 2010-2011 would show that petitioner was not an organization or society devoted to public charitable purpose exclusively nor rent being derived from its building was applied exclusively to public charitable institutions---Use of term "exclusively" in Cl. (ii) of proviso to S. 4(f) of West Pakistan Urban Immovable Property Tax Act, 1958 would not admit use of rental income for any other purpose except those mentioned therein---Nothing on record to show exclusive or sole use of income derived by petitioner from its building to public charitable institutions---Mere optional and occasional donations of some portion of rental income to flood relief fund, provincial activities of world water day, arranging of lectures for such purpose and granting of scholarships to graduate engineering students etc., and that too without reliable documentary evidence could not be considered as. a proof of exclusive spending of entire rental income by petitioner upon purposes specified in law---Petitioner had paid such tax for ninety years i.e. since 1912 till year 2001-2002 without claiming or raising plea that its rental income was exclusively used for public charitable institutions---Excise Department or Government could recover such tax from rental income not qualifying to exemption as envisaged in Cl. (ii) of Proviso-I of S. 4(d) of West Pakistan Urban Immovable Property Tax Act, 1968---Mentioning of purposes in Memorandum of Association of petitioner-company was one thing but proving case for grant of exemption as per statutory provisions of law was absolutely another thing---Petitioner was not entitled to claimed exemption---High Court dismissed constitutional petition in circumstances.
Madan Gopal and 4 others v. Maran Bepari and 3 others PLD 1969 SC 617; Keramat Ali and another v. Muhammad Yunus Haji and others PLD 1963 SC 191; Muhammad Husain Munir and others v. Sikandar and others PLD 1974 SC 139; Pakistan through the Secretary, Ministry of Defence v. Province of Punjab and others PLD 1975 SC 37; Trustees of Port of Karachi v. Secretary (Ex Officio) and Director-General, Excise and Taxation, Karachi and another .1990 CLC 92; Sheikh Sultan Trust v. Excise and Taxation Officer and others 2006 YLR 573; Muhammadi Steamship Co. Ltd. v. The Commissioner of Income Tax (Central), Karachi PLD 1966 SC 828; Lords Atkin, Thankerton, Russell of Killowen, Alness and Maugham, Maritime Eclectic Co., Ltd. v. General Dairies, Ltd. AIR 1937 Privy Council 114; Shahul Hamid v. Tahir Ali 1980 SCMR 596; 2004 SCMR 1649 and PLD 1983 SC 457 ref.
Fauji Foundation and another v. Shamimur Rehman PLD 1983 SC 457 rel.
(b) Interpretation of statutes---
----Fiscal statute---Provision of fiscal statute would be construed strictly.
Province of the Punjab through Secretary, Government of the Punjab Excise and Taxation Department and others v. Muhammad Aslam and others 2004 SCMR 1649 and Messrs Mehran Associates Limited v. The Commissioner of Income-Tax, Karachi 1993 SCMR 274 rel.
A.K. Dogar for Petitioner.
Malik Abdul Aziz Awan, A.A.-G. for Respondents.
Date of hearing: 2nd March, 2012.
JUDGMENT
NASIR SAEED SHEIKH, J.---The petitioner Pakistan Engineering Congress is a society registered under the Societies Registration Act No,XXI of 1860 and is operating since 1912 as per contents of the writ petition. The petitioner society owns property bearing No.S.XX-A-97/A-D/1 known as PEC Building, Liberty Market, Gulberg-III, Lahore. It is a matter of record and more particularly that the petitioner society has been previously paying property tax continuously till the year 2001 upon the rental income being derived from its PEC building which building is admittedly rented out in different portions to different tenants. On 18-5-2002 a demand bill of Rs.712,932 was addressed by the Excise and Taxation Authorities of Gulberg Circle-IV Lahore to the petitioner society for the recovery of property tax for the period 1-1-2002 to 30-6-2002 in respect of income being derived by the petitioner society from its PEC building. The petitioner society through its Director, Admin and Finance (Mr. A.H. Siddiqui) addressed an appeal dated 3-8-2002 to the Director, Excise and Taxation, Appeals and Inspection (Region-B) Government of the Punjab Lahore against this demand. This appeal is annexure-C and comprises three paragraphs and is reproduced:--
"Subject: APPEAL ON LEVY OF PROPERTY TAX BILL OF Rs. 7,12, 932 FOR THE PERIOD JANUARY TO JUNE 2002 AND SUBSEQUENT ASSESSMENT FOR 2002-2003.
Dear Sir,
(1) We are in receipt of the Property Tax Bill for the amount of Rs. 7,12, 932 pertaining to the period January, 2002 to June, 2002 in respect of property No. SXXA 97-D/1, Gulberg-III, Lahore.
(2) In the First instance the amount of the bill is not due and justified because the property tax paid by us for the whole year 2001-2002 was for the amount of Rs. 5, 82, 255 as shall be seen from the paid voucher. The present bill is for six months only for the same year and exceeds the yearly amount of the previous years billed and paid amount. Moreover, as the previous payment covers the period from January, 2002 to June 2002, therefore, the tax has already been paid for the period January 2002 to June 2002 and the present payment is either misconstrued or the result of some miscalculations which may kindly be cancelled/ annulled and the property tax may kindly be assessed according to the prevailing land based formula. The occupancy position of the property is as under:--
| | S.No | Location | Rented Area | Vacant/ Common Area | Self Occupied Area | Total Covered Area |
| | 1 | Basement | Nil | Nil | 3803 , | 3803 |
| | |
| | 2 | Ground Floor | 2616 Avis Waljis 5000 Saudi Pak Bank 7616 | 4060 | Nil | 11676 | | |
| | 3 . | 1st Floor | Nil | 9645 | Nil | 9645 | | |
| | 4 | 2nd Floor | 5120 AMC 3895 Shell Pak 9015 | 587 | Nil | 9602 | | |
| | 5 | 3rd Floor | 2424 Bestway Cement | 1820 | 5358 | 9602 | | |
| | 6 | ' 4th Floor | Under- construction | Nil | 9602 | 9602 | | |
| | | Total Area | 19055 | 16112 | 18763 | 53930 | | |
| | | | | | 34875 | | | |
| | | | | | | | | |
| | | | | | | | | | | | | | |
(3) A copy of the approved plan is attached showing the existing and proposed area. We had completed the 2nd and 3rd Floor in 1998 but the 4th Floor has been recently started and is still under construction which can be verified at site, thus attracting no property tax.
The total plot area is 29763 sft. (3307 Syd.) and the covered area self occupied and under construction and vacant/common is 34875 Sft. (16112 and 18763 Sft.) and thus the proportionate self-occupied land area comes to 2139 yards whereas the proportionate rented land area is 1168 Syd.
It is requested that Judicious property tax assessment may kindly be arrived at on the basis of actual areas and under construction on ground and their utilization status, as most of the areas are self--occupied, not rented-out and the property tax has been charged over it which is unjustified being exorbitant because as per our calculation attached, herewith, the annual tax liability for this property comes only for Rs.540880.
The petitioner submitted additional grounds to the said appeal vide letter dated 30-10-2002 whereby the petitioner society for the first time sought exemption from payment of property tax on the ground that the petitioner society is a charitable institution within the meaning of clause (f) of section 4 of the West Pakistan Urban Immovable Property Tax Act 1958 and is dedicated for the promotion of profession and practice of engineering. The Director, Excise and Taxation (Region-B), Lahore vide order dated 23-5-2003 decided the appeal in the following manner:
"Mr. A.H.Siddiqui (Director Admn. and Finance) representative of Messrs Pakistan Engineering Congress is present and has been heard in detail. He contents that the property under appeal is a multistorey building having total area of land 3307 sq. yards and the total covered area of the building is 53930 sq.ft. in which only 19055 sq.ft. covered area is rented out and remaining 34875 sq.ft. covered area is in self-use/vacant. He provided floor wise detail in this respect as under:---
| Location | Rented Area | Vacant/ Common Area | Self Occupied Area | Total Covered Area | |
| Basement | Nil | Nil | 3803 | 3803 | |
| Ground Floor | 2616 Avis Waljis 5000 Saudi Pak Bank | 4060. | Nil | 11676 | |
| | 7616 | | | | |
| 1st Floor | Nil | 9645 | Nil | 9645 | |
| 2nd Floor | 5120 AMC 3895 Shell Pak | 587 | Nil | 9602 | |
| | 9015 | | | | |
| 3rd Floor | 2424 Bestway Cement | 1820 | 5358 | 9602 | |
| 4th Floor | Under- construction | Nil | 9602 | 9602 | |
| Total Area | 19055 | 16112 | 18763 | 53930 | |
| 34875 |
He also provided copy of approved Site Plan showing the existing and proposed area and also argued that 2nd and 3rd floor has been completed in 1998 but the 4th floor has been recently started and its still under construction which can be verified at site. He therefore, requests to reduce the assessment in accordance with the actual accommodation.
The Excise and Taxation Inspector Incharge is also present in the court along with relevant property tax record and he submitted his report that the said property is a multistory building in which 19055 sq. ft. portion is on rent and remaining 34875 sq. ft. portion is under self use. 4th floor is still under construction. He further reported that during survey the covered area of the property unit was recorded 56000 sq. ft. white the appellant claims that its covered area 53930 sq.ft. the Excise and Taxation Officer Incharge reported after spot enquiries that the total covered area is less than the mentioned as in record but no documentary evidence provided by the appellant and he proposed that the appeal may be decided on production of documentary evidence.
The report of Assessing Authority as well as Rana Muhammad Sabir Assistant Excise and Taxation Officer Zone-V is not comprehensive one and does not assist me to reach the conclusion. For detail comprehensive report the Assistant Excise and Taxation Officer and Excise and Taxation Inspector appeals deputed for spot verification and he submitted his report that the total covered area is 56000 sq.ft out of which 12810 sq. ft. is in self occupied/ vacant whereas the 43190 sq. ft. portion is rented out to the different tenants i.e. , on ground floor Messrs Avis Waljis Family of business, Holiday Makers, Saudi Pak Bank Ltd. at 2nd floor Messrs Shell and 3rd floor Messrs Best Way Cement. He also reported that 4th floor of the building is under construction which is near to complete.
Arguments heard in detail, record perused and fresh spot report of Excise and Taxation Inspector appeals has also been seen, which is accepted to this extent and the Gross Annual Value is reduced and fixed at Rs. 42,16, 640 on the basis of above facts. The Assessing Authority is directed to amend the record accordingly and take tip the case under section 9c(iii) when. the construction work is completed and rented out.
It is certified that order containing two page has been dictated, read and signed by me."
2. The petitioner society instituted a Writ Petition No.16709 of 2003 before this Court against the levy of the property tax upon its income and also prayed for the refund of an amount of Rs.60,27,250 already paid by the society towards the property tax. This writ petition came up for hearing before a learned single Judge of this Court on 22-12-2003 and was disposed of with the following short order:--
"The representative of the respondent state that if petitioner makes appropriate application seeking exemption from payment of property tax, the same shall be dealt with, considered and decided in accordance with law. The response of the learned counsel for the petitioner is that in view of the above this petition is not pressed for the time being as the petitioner will make an appropriate application to claim exemption from payment of property tax and also to seek refund of the paid amount, which is subject matter of the present constitutional petition. He, however, requests that respondent/Department be bound down to expeditiously decide petitioner's application when made, in accordance with law.
(2) In view of the above, this petition is disposed of as not pressed for the time being. The petitioner may make an appropriate application before the relevant authority who shall deal with and decide the same within a period of 60 days from the filing of the application.
(3) Disposed of. "
The petitioner society then submitted an application dated 8-1-2004 before the Assessing Officer, Excise and Taxation Circle-IV, Lahore with the same prayer for seeking exemption from the levy of property tax and further for the refund of the already paid amount of property tax. The District Officer/Director, Excise and Taxation (Region-B), Lahore heard the arguments upon the said application and after noting down the respective detailed contentions of the petitioner as well as of the Excise and Taxation Officer dismissed this application while passing the following operative note in the order dated 13-3-2004:--
"I have heard in detail the arguments given by Mr. A.K.Dogar, counsel of the Engineering Congress as well as Ch. Zafar Ullah, Excise and Taxation Officer (Assessing Authority). The record produced by both the sides has been perused. Keeping in view the legal position explained by the Assessing Authority as well as the advice given by the Finance Secretary/Additional Secretary Law, the undersigned has reached this conclusion that the request of the Engineering Congress is not covered under the provisions of the Punjab Urban Immovable Property Tax Act, 1958/Rules made thereunder and as such grant of exemption is not admissible under the law."
3. The petitioner preferred a revision petition against the order dated 13-3-2004 (conveyed on 15-4-2004 to the petitioner) to the Executive District Officer (Revenue) Lahore and the revision petition was dismissed vide order dated 4-3-2006. The EDO(Revenue), Lahore recorded the following observation in para-4 of the order dated 4-3-2006:
(4) From the perusal of record, it reveals that Pakistan Engineering Congress is not a charitable institution as it serves the only class of "Engineers" and the general public .is not benefited by the objectives as given in the petition. Under section 4(d) of the Punjab Urban Immovable Property Tax Act, 1958, buildings and lands or portions thereof used exclusively for educational purposes including schools, hostels owned by Government or by a body owned or controlled by the Government are exempted from the payment of property tax. Section 4(e) is only for the public parks, playgrounds and libraries. The property of the Engineering Congress does not fall in any of these categories. The perusal of record shows that the Collector/Director passed his order after perusing the record and hearing the arguments advanced on behalf of the petitioner. He had also taken into consideration the documents presented in support of contentions of the petitioner. The Collector/Director has rightly held that Pakistan Engineering Congress does not fulfill the requirements/conditions for exemption from payment of property tax under the Property Tax Act, 1958. I find no ground to interfere. The revision petition is dismissed."
4. Through the instant Writ Petition No.2878 of 2006 the petitioner society has assailed the order dated 4-3-2006 passed by the Executive District Officer (Revenue) Lahore.
5. Para wise comments were requisitioned in the matter from the respondents.
6. Through C.M. No.3 of 2011 the petitioner society sought permission to produce the evidence in respect of its charitable activities oil the record of this case and a typed document has been placed on the record. Para-2 of this document prepared by the Secretary (PEC) (Engr. Akhtar Abbas Khawja) is relevant and is reproduced:
"(2) In this connection, following information is enclosed:--
The total income of the organization for the period 2006-2007 to 2010-2011 was 2075.48 Lac. The Rental Income included therein is 1400.99 Lac. (Annexure-I), as against it, the expenditure was Rs.1003.91 Lac showing a saving of Rs.1071.59 Lac.
Recently 10,000 Sq.ft. of 1st Floor and 2nd Floor of the Congress building has fallen vacant due to moving-out of Shell Pak Ltd.
The year vise income/expenditure for each of the Financial Years 2006-2007 to 2010-2011 are given in Annexure-II and III.
Along with this narration of facts the petitioner produced a statement of income/expenditure for the years 2006-2007 to 2010-2011 with the following facts and figures which are reproduced:--
Pakistan Engineering Congress
Statement of Income/Expenditures
For the FY 2006-2007 to 2010-2011
| |
| | 1 | Income:- | | (Rs.in Lac) | |
| | | * Rental Income * Electricity/Water/Gas * Recoveries from Lessees * Profit on Bank Deposits * Membership Fee | 1400.99 217.08 452.51 4.90 | 2075.48 | |
| | | | | | |
| | 2 | Less:- Expenditure | | | |
| | | * Congress Website | 10.58 | | |
| | | * Contribution to the PM's Flood * Relief Fund 2010 | 100.00 | | |
| | | * Professional Activities World Water Day/World Environment Day/Lectures | 55.48 | | |
| | | Symposium/Technical Visits and | 109.18 | | |
| | | ICID Conferences | 23.84 | | |
| | | * Scholarship for Graduate | 34.05 | | |
| | | Engineering Studies | 28.87 | | |
| | | * 70th Annual Session Expenses (Publications/Organizational | 67.79 | | |
| | | Expenses) | 58.88 | | |
| | | * Donation for Conferences/ailing | 20.50 | | |
| | | Engineers | 418.33 | | |
| | | * Publication for Books | 76.41 | (1003.91) | |
| | | * Operation of Diesel Generator Due to Electricity Outage/Maintenance of Building * Financial Expenses * Other Expenses .. * Admn Expenses/Salaries/Electricity Charges etc. Depreciation of assets | | | |
| | 3 | Saving:- | | 1071.59 | |
| |
The respondents denied the claim of the petitioner society as raised in the petition that it is a charitable institution. The petitioner society submitted a rejoinder as well to the para wise comments of the respondents.
7. On the basis of available record the arguments of the learned counsel for the parties have been heard.
8. It is contended by the learned counsel for the petitioner that the Pakistan Engineering Congress is an Organization which has been established in the year 1912 and its objectives are specifically enumerated in the Memorandum of Association then chalked out in its Paragraphs Nos.2 and 3 which learned counsel for the petitioner highlighted and are reproduced below:--
(2)THE OBJECTIVES OF THE CONGRESS ARE:
(i) To promote science, profession and practice of engineering.
(ii) To afford its members opportunities for meeting periodi?cally to discuss propagate and pursue matters of professional interest.
(iii) To have a Code of Ethics which shall govern the professional conduct of its Members.
(3) The income and property of the Congress whencesoever (whensoever) derived shall be applied solely towards the promotion of the objectives of the Congress as set forth in this Memorandum of Association, and no portion thereof shall be paid or transferred or distributed directly or indirectly by way of dividend, bonus or interest or otherwise to Members of the Congress."
The learned counsel for the petitioner thus stressed that whatever the rental income the Pakistan Engineering Congress-petitioner is deriving from its commercial building is being used exclusively for public charitable purposes therefore the petitioner's rental income is exempt from the levy of property tax under the provisions of Urban Immoveable Property Tax Act, 1958. The learned counsel contended that the term public charity has been specifically discussed in the well known judgment reported as FAUJI FOUNDATION AND ANOTHER V. SHAMIMUR REHMAN (PLD 1983 SC 457) at pages 673, 674 and 676. The learned counsel for the petitioner in this context specifically relied upon the following extract from the judgment from Page 676:--
"As to the purport of the charitable purpose", one has to look to the definition of this term in the Act itself. In section 2 of the Charitable Endowments Act, 1890, the word "charitable purpose" is defined to include "relief of the poor education, medical relief and the advancement of any other object of general public utility..." The legal connotation of the word "charitable" is: "Having the inclination to relieve others from the burden of pain, poverty, or ignorance, and to promote the betterment of the public." (Ballentine's Law Dictionary, Third Edn., p.193). The word 'include' in the definition clause does not limit the meaning of the words "charitable purpose", but has an extending force. Accordingly, charitable purpose favourably. compares in legal parlance with the word 'charitable'. All the enumerated items are without doubt purposes involving benefit to a large community of the population and in that view of the matter relatable to public purpose or public welfare. This view seems to gain support further from the use of expression "any advancement of any other object of general public utility" which necessarily connotes some beneficial advantage and service to the public. The charitable activities of the appellant about which some indication has been given earlier extends to Cottage Industries Training Centres for giving training in embroidery, knitting, cutting, sewing and carpet weaving to the wives and children of ex-servicemen, technical training of ex-army personnel and their sons in the industrial project of the appellant,' stipends for promotion of education here and abroad, pre-release Training of Army Personnel in technical projects, Hospitals and Day Health Centres for providing medical aid, cash grants to Services Headquarters for the beneficial use of those serving in the armed forces, low cost housing projects for disabled ex-servicemen, manufacture of artificial limbs etc. These activities are meant to provide benefit to serving. personnel including their families as well as ex-servicemen and their families, and ' by their nature and purport they could not otherwise but be for a "public purpose" or "public welfare" as because of the criterion of general benefit or advantage to a large segment of the population."
The learned counsel in this context relied upon section 4(d) and (f) of the Act of 1958 to argue that the petitioner organization is working for public charitable purposes and its rental income from the commercial building in question is exempt from the levy of property tax. The learned counsel in this context has also referred to an affidavit which according to the learned counsel for the petitioner was placed before the Collector/Director Excise and Taxation, Region-B, Lahore and has been referred to in the order dated 13-3-2004 passed by him. The learned counsel further contended that the petitioner produced the necessary material before the Executive District Officer (Revenue) Lahore who has decided the revision petition against the order dated 13-3-2004 of the Director Excise and Taxation Lahore. In this context the learned counsel for the petitioner contended that the petitioner Pakistan Engineering Congress is undertaking research work for scarcity of water in Pakistan, had maintained a research library, it subscribes the funds for granting scholarships for different educational institutions and all the above mentioned facts and figures given by the petitioner Pakistan Engineering Congress before the forums below of Excise and Taxation Department, according to the learned counsel for the petitioner, conclusively established the charitable purposes for which the earning of the petitioner from its commercial property , is being utilized. The learned counsel contended that findings of facts recorded by the forums below have a binding effect upon the High Court while deciding a writ petition and in this context the learned counsel relied upon the judgments reported as MADAN GOPAL AND 4 OTHERS V. MARAN BEPARI AND 3 OTHERS (PLD 1969 SC 617), KERAMAT ALI AND ANOTHER V. MUHAMMAD YUNUS HAJI AND OTHERS (PLD 1963 SC 191) and MUHAMMAD HUSAIN MUNIR AND OTHERS V. SIKANDAR AND OTHERS (PLD 1974 SC 139). Tile learned counsel for the petitioner in his arguments also placed reliance upon the judgments reported as PAKISTAN THROUGH THE SECRETARY, MINISTRY OF DEFENCE V. PROVINCE OF PUNJAB AND OTHERS (PLD 1975 SC 37), TRUSTEES OF PORT OF KARACHI V. SECRETARY (EX OFFICIO) AND DIRECTOR-GENERAL, EXCISE AND TAXATION, KARACHI AND ANOTHER (1990 CLC 92), SHEIKH SULTAN TRUST V. EXCISE AND TAXATION OFFICER AND OTHERS (2006 YLR 573) and MUHAMMADI STEAMSHIP CO. LTD. V. THE COMMISSIONER OF INCOME TAX (CENTRAL), KARACHI (PLD 1966 SC 828) to highlight the concept of "Public Charity Purposes". The learned counsel for the petitioner in the end concluded that notwithstanding the previous payment of property tax by the petitioner organization, there was no estoppel against the petitioner to claim exemption from the year 2002 onwards on the ground that the petitioner-Pakistan Engineering Congress is functioning for charitable purposes and its income is exempt from the levy of property tax under the Urban Immovable Property Tax Act, 1958. The learned counsel for the petitioner also prayed that even the previous recovery of the property tax from the petitioner be ordered to be refunded to the petitioner as prayed for in the prayer clause of the writ petition. IIn this context the learned counsel relied upon the judgments reported as LORDS ATKIN, THANKERTON, RUSSELL OF KILLOWEN, ALNESS AND MAUGHAM, MARITIME ECLECTIC CO., LTD. V. GENERAL DAIRIES, LTD. (AIR 1937 Privy Council 114) and SHAHUL HAMID V. TAHIR ALI (1980 SCMR 596) in support of his contentions.
9. The learned Assistant Advocate General has controverted the contentions of the learned counsel for the petitioner by arguing that the petitioner-organization is admittedly owner of a multistoreyed commercial building from which it is deriving gross annual income as determined by the lower forums which part of the finding of the lower forums is not assailed or disputed by the petitioner. It is further contended that the petitioner did not produce any documentary proof of the fact that it was a charitable organization or a society as it did not get itself registered as such under the Societies Registration Act 1860. It is further argued by the learned A.A.-G. that nothing was produced by the petitioner before the lower forums to establish that the rental income of the petitioner from the commercial building was being exclusively used for charitable purposes and in the absence of which the petitioner does not have any case for the grant of exemption. The learned A.A.-G. contended that concurrent findings of facts have been recorded against the petitioner by the two forums below that the petitioner has failed to prove a case for grant of exemption from property tax before the forums below which findings of facts call for no interference as there is nothing to prove the entitlement of the petitioner to the grant of exemption as claimed for. It is further contended that the petitioner has been paying the property tax till the year 2002 without any objection and the sudden plea raised by the petitioner for seeking exemption from property tax from the year 2002 onwards is not a legally sustainable plea. It was argued by the learned A.A.-G. that one who seeks the grant. of exemption from property tax has to make out a case on the basis of legally admissible proof of the entitlement for the same and the petitioner having failed to do the needful for the purpose before the lower forums, the controversial questions cannot be agitated and further resolved in the exercise of writ jurisdiction by this Court.
10. The learned A.A.-G. also pointed out that the petitioner gave a cheque of Rs.7.4 million as directed by this Court vide order dated 27-9-2011 which cheque still remains uncashed upon the direction of the petitioner which is a mala fide act on the part of the petitioner to avoid the payment of necessary government dues since the year 2002 onwards. The A.A.-G. contended that the petitioner then submitted a statement of its income and expenditure before this Court along with its rejoinder in which the saving of Rs.431.27 lass has been reflected for the financial years 2001-2002 to 2005-2006 and the petitioner organization is liable to pay the property tax on the facts and figures disclosed by it even before this Court. The learned A.A.-G. contended that there is no estoppel against the statute for the Excise and Taxation Department to claim and recover the property tax from the petitioner in accordance with law. The learned A.A.-G. thus prayed for the dismissal of the writ petition.
11. I have considered the arguments of the learned counsel for the parties and have perused the available record with their assistance.
12. The Urban Immovable Property Tax Act, 1958 hereinafter referred to as Act of 1958, which is a provincial statute, was promulgated as an Act No.V of 1958 vide Gazette of West Pakistan, 1958 Extraordinary, pp. 319 and 320. Its preamble reads as follows:
"Preamble.---Whereas it is expedient to consolidate the law relating to the levy of a tax on Urban Immovable Property in the Province of Punjab/Sindh/N. W. F.P. /Balochistan. "
Vide Punjab Law (Adaptation) Order, I of 1974 it was adopted for application in the Province of Punjab in the year 1974. Previously it was a law which was enforced throughout the then West Pakistan. The honourable Supreme Court of Pakistan in the judgment reported as (2004 SCMR 1649) laid down that the provisions of the West Pakistan Immovable Property Act, 1958 being fiscal in nature would required to be construed strictly and that the courts have to go by the language clearly implied by the legislature in the fiscal statute. Section 3 of the Act of 1959 in which the levy of property tax is provided for is reproduced: ---
"(3) Levy of tax.
(1) Government may by notification specify urban areas where tax shall be levied under this Act:
(2) Provided that one urban area may be divided into two or more rating areas or several urban areas may be grouped as one rating area.
There shall be charged, levied and paid a tax on the annual value of buildings and lands in a rating area at the rate of ten per cent of such annual value:
Provided that. where a building is occupied (for residential purposes by the owner himself), the tax shall be levied at the said rate on one-half of the annual value of such building, if the owner or any member of his family does not own any other property in that rating area:
Provided further that Government may, by notification, remit for reasons to be recorded in whole or in part, the payment of the tax by any class of persons in respect of any category of property. "
There were some subsequent amendments added to section 3 of the Act of 1958 which are not relevant for the purpose of the instant case' and need not to be produced. Section 4 of the Act of 1958 enumerate the buildings which are exempt from the levy of property tax under the Act of 1958 and its clauses (d), (e) and (f) are particularly relevant for the decision of the controversy raised in the instant writ petition and are reproduced below:--
"(4) Exemptions.---The tax shall not be leviable in respect of the following properties namely:---
(d) buildings and lands or portions thereof used exclusively for education purposes including schools, boarding houses, hostels, and libraries;
(e) Public Parks and playgrounds;
(f) Buildings and lands or portions thereof used exclusively for public worship or public charity including mosques, churches, dharamshalas, gurdawaras, hospitals, dispensaries, orphanages, alms houses, drinking water fountains, infirmaries for the treatment and care of animals and public burial or burning grounds or others places for the disposal of the dead:
?Provided that the following buildings and lands or portions thereof shall not be deemed to be used exclusively for public worship or for public charity within the meaning of this section, namely-
(ii) buildings in or land on which any trade or business is carried on unless the rent derived from such buildings or lands is applied exclusively to religious purposes or such public charitable institutions as may be prescribed.
Buildings or lands in respect of which rent is derived and such rent is not applied exclusively to religious purposes or to public charitable institutions; and"
Section 23 of the Act of 1958 authorizes the government to make rules for carrying out the purposes of the Act and resultantly West Pakistan Urban Immovable Property Tax Rules, 1958 have been framed. Rule 24 is relevant in this context which is reproduced below:---
"24. Charitable Institutions.
(1) The Deputy Director, Excise and Taxation, may on anapplication of the manager of any of the following insti?tutions--
(a) an orphanage;
(b)? a hospital or dispensary;
(c) an alms-house;
(e) a drinking water fountain for public use in a public place;
(e) an infirmary for the treatment of animals;
(f) a burial place;
(g) a cremation ground;
(h) a place for the disposal for the dead otherwise than by burial or cremation; and
(i) an education institution approved by Government;
certify that the institution is a prescribed public charitable institution for the purposes of proviso (i) to clause (1 of sub-section (1) of section 4 of the Act. "
It is a matter of record that no such case has been built up by the petitioner either before the forums below or before this Court that the petitioner-organization has obtained any certificate or is a certified charitable institution as per provisions of Rule 24 of the West Pakistan Urban Immovable Property Tax Rules, 1958. The case built up before this Court by the petitioner thus needs to be examined in the light of exemptions incorporated in section 4 clauses (d), (e) and (f) of the Act of 1958 only.
13. It is manifestly explicit that the legislature has created the exemption clauses (d), (e) and (f) in respect of those buildings which are exclusively used for educational purposes, public charitable purposes and in this context the proviso to clause (f) needs to be examined very carefully and is again reproduced:--
Provided that the following buildings and lands or portions thereof shall not be deemed to be used exclusively for public worship or for public charity within the meaning of this section, namely--
(i) buildings in or land on which any trade or business is carried on unless the rent derived from such buildings or lands is applied exclusively to religious purposes or such public charitable institutions as may be prescribed.
(ii) Buildings or lands in respect of which rent is derived and such rent is not applied exclusively to religious purposes or to public charitable institutions; and"
14. In the case of the present petitioner the building subject matter of the controversy as per the self prepared statement of income and expenditure produced by the petitioner annexed along with their rejoinder submitted before this Court vide Diary No.3996 dated 20-2-2012 for the financial years 2001-2002 to 2005-2006, the petitioner disclosed its income and list of expenditures as per Annexure-A as follows:-
Pakistan Engineering Congress Statement of Income/Expenditures For the FY 2001-2002 to 2005-2006
| | |
| | 1 | Income:- | | (Rs.in Lac) | |
| | | * Rental Income | 682.10 | | |
| | | * Electricity/Water/Gas | 122.72 | | |
| | | * Profit on Bank Deposits " | 44.81 | | |
| | | * Subscription | 3.59 | | |
| | | | | Rs.855.04 | |
| | | * Others | 1.82 | | |
| | | | 855.04 | | |
| | | | | | |
| | 2 | Less: Expenditure * Professional Activities (World Water Day/Environment Day) | 12.81 | | |
| | | * Scholarships | 4.48 | | |
| | | * Donation against Earthquake effected peoples | 61.88 | | |
| | | | 6.70 | | |
| | | * Publications * Financial Expenses | 41.73 | | |
| | | * Operation of Diesel Generator | 14.69 | | |
| | | * Other Expenses | 7.50 | | |
| | | * Admin Expenses (Salary/Electricity Charges) | 217.92 | | |
| | | * Depreciation | 56.06 | | |
| | | | | | |
| | | | 423.77 | | |
| | | | | (Rs.423.77) | |
| | | | Saving | | |
| | | | | Rs.431.27 | |
| | | | | | |
| | |
The petitioner placed on record certain other documents through C.M. No.3 of 2011 and also placed on record a typed statement of income and expenditures for the financial years 2006-2007 to 2010-2011 as Annexure-I which is reproduced below:-
Pakistan Engineering Congress
Statement of Income/Expenditures
For the FY 2006-2007 to 2010-2011
| | | Income:- | | (Rs.in Lac) | |
| | | * Rental Income | 1400.99 | | |
| | | * Electricity/Water/Gas | 217.08 | | |
| | | * Recoveries from Lessees | 452.51 | | |
| | | * Profit on Bank, Deposits * Membership Fee | 4.90 | 2075.48 | |
| | | | | | |
| | 2 | Less:- Expenditure | | | |
| | | * Congress Website | 10.58 | | |
| | | * Contribution to the PM's Flood Relief Fund 2010 | 100.00 | | |
| | | * Professional Activities World Water Day/World Environment Day/Lectures Symposium/Technical Visits and ICID Conferences | 55.48 | | |
| | | * Scholarship for Graduate Engineering Studies | 109.18 | | |
| | | * 70th Annual Session Expenses (Publications/Organizational Expenses) | 23.84 | | |
| | | * Donation for Conferences/ailing Engineers | 34.05 | | |
| | | | 28.87 | | |
| | | * Publication for Books * Operation of Diesel Generator due to Electricity Outage/Maintenance of Building | 67.79 | | |
| | | * Financial Expenses * Other Expenses | 58.88 | | |
| | | * Admn Expenses/Salaries/ | 20.50 | | |
| | | Electricity Charges etc. | 418.33 | | |
| | | Depreciation of assets | 76.41 | (1003.91) | |
| | | | | | |
| | 3 | Saving:- | | 1071.59 | |
| |
15.. In the light of above admitted facts, it is to be seen as to whether a clear case for the grant of exemption from property tax is made out in favour of the petitioner or not.
16. The matter was previously brought before this Court through Writ Petition No.16709 of 2003 and was remitted with the consent of the parties vide order dated 22-12-2003 to the respondent department that a proper application to claim exemption from payment of property tax and also to seek refund of the already paid tax amount was to be presented by the petitioner and was further directed to be decided by the respondent authority in accordance with law. It is a matter of record that an application dated 8-1-2004 was moved by the petitioner before the Excise and Taxation Officer for the purpose and its Paragraphs Nos.5 to 12 are relevant and are reproduced below:
"(5) That a bill for Rs. 7,12, 932 as property tax from 1-1-2002 to 30-6-2002 was sent to the applicant. In answer to the said bill (Annex-C) the applicant filed an appeal on 3-8-2002 (Annex-D) which has been decided on 23-5-2003 (Annex E). The applicant filed a Writ Petition No.16709 of 2003 in the Lahore High Court wherein an order has been passed on 22-12-2003 which has already been appended as Annex-A to this application. The grounds on which applicant claims exemption and refund of the amount already paid are as under. In place of the bill of Rs. 7,12, 932, the Congress had ultimately to pay Rs.11, 36, 552 for the year 2002-2003 and Rs.901,307 for the year 2003-2004 and even that based on highly inflated and incorrect figures as detailed below.
| | Sr. No. | Description | Figures adopted by Collector /Director E&C (S9 ft) | Actual Figures by Congress (Sq.ft.) | Difference | 1 Remarks | |
| | 1. | Rented out | 43190 | 21715 | 21475 | Over- | |
| | | portion | | | | stated | |
| | 2. | Common/ | 12810 | 12533 | 9416 | Under | |
| | | vacant | | | | stated | |
| | 3. | Self- occupied | -- | 9693 | | | |
| | G. Total | | 56000 | 43941 | 12059 | | |
| |
| |
(6)??????? That it is self-evident from the contents of the paras above that the???????? applicant/congress??????? is a?????? charitable??????????? institution withinthe meaning of? ??????????? clauses (d) and (f) of section 4 of the West Pakistan Urban Immovable Property ????????? Tax Act, 1958.
(7) That applicant is an institution which is dedicated to the science of engineering and for the promotion of profession and practice of engineering.
(8) That para 3 of the Memorandum of Association indicates that the income and property of the Congress, from whatever sources derived shall be applied to the achievement of the objectives set out in its Memorandum of Association.
(9) That it has been stated in the aforementioned para-3 that no portion of the income of the Congress shall be paid or transferred or distributed directly or indirectly to any member of the Congress.
(10) That it goes without saying that the petitioner Congress is not a commercial enterprise, but has been established merely for charitable and public purposes.
(11) That the applicant/Congress is not engaged in the business of Construction and sale or letting out property for purposes of business. The rent received by the petitioner is spent exclusively for the advancement of science or engineering.
(12) That it is interesting to submit that the applicant/congress applied for exemption from the levy of income tax, on the same ground as above the Commissioner of Income Tax agreed with the plea and accepted the stand of the applicant which has now been confirmed by the Income Tax Appellate Tribunal (Annex. F.) "
17. The Assessing Authority noted the following reasons as advanced by the Excise and Taxation Officer of the respondent department for holding that the petitioner is not.. entitled to the grant of exemption: --
(1) (i) That under section 4(d) of the Punjab Urban Immovable Property Tax Act, 1958 "Buildings and Lands, or Portions thereof used exclusively for educational purposes including schools, boarding houses and hostels owned by the Government or by a body owned or controlled by the Government" are exempted from the payment of Property tax. In the instant case neither the building is used for education purposes nor it is owned by the Government or by body owned or controlled by the Government.
(ii) An educational institution approved by Government under rule 24(1)(i) of the Punjab Urban Immovable Property Tax Act, 1958.
(2) Likewise, section 4(e) is only for the Public Parks, Playgrounds and Libraries and Property of the Engineering Congress does not fall in any of the three categories. Rather, it is a multi storied commercial building, which is rented out to different tenants.
(3) With regard to grant of exemption under section 4(f), the Assessing Authority stated that section 4(f) says that "buildings and lands or portions thereof used exclusively for public worship or public charity including mosques, Temples, churches, Dharmshalas, alms houses, drinking water fountains, infirmaries for the treatment and care of animals and public burial or burning grounds or other places for the disposal of the dead" are entitled for grant of exemption. The Assessing Authority reiterated that the Engineering Congress is also not a Charitable Institution under Rule 24 of the Punjab Urban Immovable Property Tax Act, 1958.
(4) Moreover, the rents derived from the buildings or lands are not applied exclusively for religious purposes or prescribed public Charitable purposes as laid down in section 4(f) (i) and (ii) of the act ibid."
?The Revisional Authority i.e. Executive District Officer Revenue Lahore before.whom the order of the Assessing Authority dated 13-3-2004 was challenged, in para-4 of the revisional order dated 4-3-2006 observed as follows:
(4) From the perusal of record, it reveals that Pakistan Engineering Congress is not a charitable institution as it serves the only class of "Engineers" and the general public is not benefited by the objectives as given in the petition. Under section 4(d) of the Punjab Urban Immovable Property Tax Act, 1958, buildings and lands or portions thereof used exclusively for educational purposes including schools, hostels owned by Government or by a body owned or controlled by the Government are exempted from the payment of property tax. Section 4(e) is only for the public parks, playgrounds and libraries. The property of the Engineering Congress does not fall in any of these categories. The perusal of record shows that the Collector/Director passed his order after perusing the record and hearing the arguments advanced on behalf of the petitioner. He had also taken into consideration the documents presented in support of contentions of the petitioner. The Collector/ Director has rightly held that Pakistan Engineering Congress does not fulfill the requirements/ conditions for exemption from payment of property tax under the Property Tax Act, 1958. I find no ground to interfere. The revision petition is dismissed.
18. The above findings of facts recorded by the two forums below further get strength from the statements of accounts (income/ expenditures) submitted by the petitioner before this Court which are admitted documents as are presented by the petitioner itself for the years 2001-2002 to 2005-2006 and 2006-2007 to 2010-2011. A perusal of the orders passed by the two forums below and the statements of income and expenditures submitted by the petitioners leaves no doubt that the petitioner is not an organization or society devoted to public charitable purpose exclusively nor the rent being derived by the petitioner from its building is applied exclusively to public charitable institutions.
19. The use of the word exclusively by the legislature is not to be treated without any importance. The term "exclusively" is defined in the Googles internet dictionary of words to mean solely, totally, entirely, wholly and uniquely. The petitioner did not produce any reliable and convincing documentary evidence before the forums below to prove the exclusive dedication of its voluminous rental income from its PEC commercially rented building to the public charitable institutions. A person who seeks grant of exemption from the property tax in respect of its building or lands from which rent is being derived can only be granted exemption if he proves the application of all its rent derived exclusively to "religious purposes or to public charitable institutions". The use of the term exclusively by the legislature in the above provision does not admit the use of the income for any other purpose except those mentioned in clause (ii) of the proviso to section 4(f) of the Act of 1958. The two forums below have recorded concurrent findings that there is no exclusive or sole use of the income derived by the petitioner from its building. in question to the public charitable institutions. The perusal of the statements of income and expenditures submitted by the petitioner also does not make out a case of an exclusive use of the rental income from the building in question by the petitioner to any public charitable institution and in this context the concept of public charitable purposes have been explained by the honourable Supreme Court of Pakistan in the judgment reported as PLD 1983 SC 457 at pages 675 and 676 reproduced in the Para 8 above. Mere optional and occasional donations claimed by the petitioner of some portion of its income as reflected in the statement of income and expenditure for the years 2001-2011 to flood relief fund, provincial activities of world water day, arranging of lectures for this purpose and granting of scholarships to graduateengineering students etc. and that too without any documentary supporting material cannot be considered as a proof of the exclusive spending of the entire rental income of the petitioner upon the purposes specified in the law so as to qualify it as using the same exclusively on public charitable institutions as required by the provisions of section 4(f) proviso-1 clause (ii) for the grant of exemption from the property tax. The provisions of the fiscal statute are to be construed ] strictly as laid by the honourable Supreme Court of Pakistan in the judgment. reported as PROVINCE OF THE PUNJAB THROUGH . SECRETARY, GOVERNMENT OF THE PUNJAB EXCISE AND TAXATION DEPARTMENT AND OTHERS V. MUHAMMAD ASLAM AND OTHERS (2004 SCMR 1649) and MESSRS MEHRAN ASSOCIATES LIMITED V. THE COMMISSIONER OF INCOME-TAX, KARACHI (1993 SCMR 274). If the petitioner seeks the interpretation of the fiscal provisions of Act of 1958 strictly then the exemption clause to be invoked from such a statute will also have to be strictly proved. The petitioner further acquiesced till the year 2001-2002 in paying the property tax on the rental income of its building without claiming or without raising any plea that its such income was exclusively used for public charitable institutions. It is after about ninety years since the year 1912 that the petitioner for the first time attempted to seek exemption on the above ground which was never pleaded before and that too without any reliable evidence. There is no estoppel for the Excise and Taxation department or for that purpose the Government to recover the property tax from the rental income of the building of the petitioner which income does not qualify to the exemption as envisaged in clause (ii) proviso-1 of section 4(d) of the Act of 1958. The concurrent findings of facts have been recorded by the two forums below. No material whatsoever has been produced before this Court as well entitling the petitioner to the grant of exemption as convassed by the learned counsel for the petitioner. The mentioning of the purposes in the Memorandum of Association as framed in the year 1912 is one thing but proving the case for the grant of exemption as per statutory provisions of law as noted above is absolutely another thing.
20. The case-law cited by the learned counsel for the petitioner does not in any sense favour the grant of exemption to the present petitioner and the reference to the same made by the learned counsel therefore cannot be construed to be supportive to the case of the petitioner in that context.
21. For all what has been stated above the petitioner is not held entitled to the grant of exemption from the payment of property tax upon the rental income being derived from its PEC building described earlier on the basis of statutory provisions of section 4(d) of the Act of 1958. The instant writ petition is accordingly dismissed with no orders as to costs.
S.A.K./P-9/L?????????????????????????????????????????????????????????????????????????????????????? Petition dismissed.