2002 PLP (Trib (PTD)

5. As far as the appeals of the appellant for the assessment years 1997-98 and 1998-99 are concerned, the contention of the learned AR for the appellant is that a foreign currency account not only in Pakistan but outside as well is not only immune from probe but also exempt from the levy of income-tax, and wealth tax. As such, the orders of the learned two forums below are wrong and illegal. In order to examine the contention of the learned A.R. for the appellant, it would be appropriate to re-produce below the relevant provisions of law, on the issue, which are contained in clause (m) of section 2 of the Wealth Tax Act and section 5 of the Act. For. the sake of convenience these are re-produced below: (i)???????? Clause (m) of section 2 of the Wealth Tax Act. "net wealth" means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act,, is in excess of the aggregate value of all the debts owned by the assessee on the valuation date other than

??????????? (i)???????? ..........................????????????????????? (ii)??????? ?????? (iii)?????? ............................. (ii)??????? Section 5 of the Economic Reforms Act: "5.??????? Immunities to foreign currency accounts.

(1) All citizens of Pakistan residents in Pakistan or outside Pakistan who hold foreign currency accounts in Pakistan, and all other persons who hold such accounts, shall continue to enjoy immunity against any enquiry from the Income Tax Department or any other taxation authority as to the source of financing of the foreign currency accounts. (2)??????? The balance in the foreign currency accounts and income there?from shall continue to remain exempted from the levy of wealth tax and income-lax and compulsory deduction of Zakat at source. (3)??????? The banks shall maintain complete secrecy in respect of transactions in the foreign currency accounts. (4)??????? The State Bank of Pakistan or other banks shall not impose any restrictions on deposits and withdrawals from the foreign currency account and restrictions, if any, shall stand withdrawn forthwith. "

6. From the definition of the net assets as reproduced above, it is clear that assets of an assessee, "wherever located" whether in or outside Pakistan is taxable under the Wealth Tax Act. Now perusal of section 5 of the Act, as also reproduced above, would show that subsection (1) of B the same section immunes from enquiry or probe as to its sources, only those foreign currency accounts which had been maintained in Pakistan, while subsection (2) exempts from the payment of income-tax and wealth tax such accounts in Pakistan and not outside Pakistan. The contention of the learned A.R. for the appellant is that the word "such" has not bean used with the words `foreign currency accounts' occurring in sub?section (2), as is occurring in subsection (1), which means that foreign currency accounts both in and outside Pakistan are exempt. In the alternate, he contended that by not using "such" in subsection (2), at the most, there is ambiguity in the language of this subsection, and the Act being a fiscal statute, its provisions are to be liberally interpreted in favour of the appellant. In support of this contention he placed reliance on: (i)???????? 1995 PTD 540; 1971 PTD 2000 and (1992) 86 Tax 296 (SC).

7. Both these arguments are without force. Though, the word "such" has not been used in subsection (2) and there was actually no need to use such a word therein but not only the language of the subsection is unambiguous but the intention of the Legislature behind it is also clear. It may be mentioned here that this subsection does not grant or allow any new exemption but merely it re-affirms the exemptions already granted from income-tax and wealth tax. On the income-tax side, the exemption already granted is contained in clause (78B) of Part I of the Second Schedule to the Income Tax Ordinance, 1979, added vide S.R.O. No. 219(1)/91, dated 16-3-1991 and on the wealth tax side, in clause (8) of the Second Schedule to the Wealth Tax Act added vide, S.R.O. No. 220(1)/91, dated 16-3-1991. These clauses, respectively, are re-produced below for the sake of convenience:

(i) "Clause (78B).

Any income derived from a private foreign currency account held with an authorized bank in Pakistan, in accordance with the Foreign Currency Accounts Scheme introduced by the State Bank of Pakistan by a resident citizen of Pakistan." (ii) "Clause (8).

Asset representing the amount deposited in a private foreign currency account held with an authorized Bank in Pakistan in accordance with the Foreign Currency Accounts Scheme introduced by the State Bank of Pakistan."

8. Perusal of both the clauses clearly show that balances only in foreign currency account maintained in Pakistan are exempt from the C levy of income-tax and wealth tax. The interpretation, which the learned A.R. for the appellant wants us, to be placed on subsection (2) is not only against its clear and unambiguous language but will also run counter to the intention of the Legislature behind it. By enacting this subsection, the intention of the Legislature was to attract more foreign currency accounts to the country in order to boost up economic activities D and if the exemption from income-tax and wealth tax is also allowed to foreign currency accounts, outside Pakistan, which play no role in the economic activities in Pakistan, then this will run counter to the purpose which was obviously not the intention of the Legislature.

9. As, there is neither any ambiguity in the plain language of the subsection nor any substantial deficiency in its words, therefore, the well-established principles of interpretation of fiscal statutes that such statutes are to be strictly interpreted and in the case of substantial deficiencies in the wordings, such statutes are to be interpreted liberally in favour of the assessee and re-affirmed by their Lordships of the Supreme Court of Pakistan in the authorities cited by the learned AR for the appellant are not applicable to the facts of the case.

10. The learned AR for the appellant also contended that by virtue of the provisions contained in section 3 of the Act, it overrides the provisions of the Wealth Tax Act, as such, the amount in the foreign currency account in Switzerland of the appellant cannot be included in his total assets under clause (m) of section 2 of the Wealth Tax Act. This argument is also without force. No doubt, the provisions of the Act are overriding in nature and it overrides the provision of other laws as mentioned in section 3 of the Act but to the extent these laws are affected by the provisions of the Act or in other words, if the amount in foreign currency account in Switzerland of the appellant was exempt from income-tax or wealth tax, then the said amount could not be included in his total assets but this is not the case, as already discussed.

11. As a result., the three appeals fail and are hereby rejected. C.M.A./M.A.K./145/Tax(Trib.) ????????????????????????????????????????????????????????? Appeals rejected.