1989 PLP (Trib (PTD)

All the above appeals are directed against the order dated 5-5-1983 by the learned C.I.T. (A) Zone-3, Karachi in I.T.A. Nos.254, 256, 257/CITA/Z-3/82-83.

2. The only objection raised by the department in all the three appeals is to the direction of learned C.I.T. (A) to the W.T.O. to deduct the rent paid to K.P.T. from the value of property.

3. Briefly stated the relevant facts are that the assessee (hereinafter referred to as the respondent) is a registered firm and owns properties known as Sattar Chamber and Momin Manzil. In the original assessments completed by the W.T.O. the ground rent paid to the K.P.T by the respondent was disallowed by the W.T.O. while determining net wealth of the property. The respondent preferred appeals before the learned C.I.T. (A) raising objection to the disallowance of rent paid to the K.P.T. and the learned C.I.T. (A) upheld the objection as follows: "After scrutiny of records, discussion of the case and also keeping in view the appellate decision in appeal No. 88 C.I.T. A/Z-3/81-82 dated 13-6-1982, wherein the K.P.T. rent was allowed as deduction in wealth-tax appeals I find that the claim of the appellant for deduction of rent is justified. The W.T.O. is, therefore, directed to allow the deduction of K.P.T. rent in the relevant years after verification and give relief accordingly."

4. While revising the assessment order the W.T.O. again disallowed the K.P.T. rent. In doing so the W.T.O. entered into a venture of discussing the merits of the first appellate order and made certain comments on the legality and impropriety of the first appellate order in a very objectionable manner. For the time being we restrain from making any observations on the conduct of W.T.O. However, the W.T.O. refused to allow the K.P.T. rent as liability for the purpose of working out the net wealth and the respondent again preferred first appeal before the learned C.I.T. (A). The learned C.I.T. (A) took note of the criticism by the W.T.O. and comments in this behalf on the appellate order. She ultimately repeated the direction as follows: "Regarding rent being paid, the W.T.O. has himself stated in his written reply that according to K.P.T. agreement the rent was to be paid in advance. Therefore, this admission by the W.T.O. is sufficient amount of verification. In view of above facts the arguments as advanced by the W.T.O. and the reasoning given by the W.T.O. in the revised assessment order on pages 2 and 3 is not tenable in law. The W.T.O. is, therefore, directed once again to give the appeal effect to these orders by allowing deduction of K.P.T. rent for the three years under dispute after verification of figures of rent."

5. The department has raised objection to the above direction of learned C.I.T. (A). We have heard Mr. Shahid Jamal, the learned D.R. for the Department and Mr. A.R. Butler, learned counsel for the respondent. Mr. Shahid Jamal, the learned D.R. has conceded that the ground rent paid to the K.P.T is a charge on the property and as such it is a liability. He has further conceded that the liability is to be treated as debt owed as envisaged under section 2 (m) of the Wealth-tax, Act, 1963. He has, however supported the assessment order of W.T.O., firstly, on the ground that the rent paid to the K.P.T. was not claimed by the respondent as liability in the return and, secondly, the rent payable to the K.P.T. was not payable on the valuation date as it, was already paid in advance. Mr. Shahid Jamal has submitted that if an assessee has paid any liability during the assessment year prior to the valuation date he is not entitled to the benefit of deduction of liability from the aggregate value of the property. According to the learned D.R. this concession is available to 'a defaulter but it is not available to an assessee who has discharged the burden during the assessment year and prior to the valuation date. Mr. Shahid Jamal has contended that when the assessee discharges the liability during the assessment year he thereby decreases the value of property and thereafter he is not entitled for further relief.

6. On the other hand, Mr. A.R. Butler has contended that the argument advanced by the learned D.R. is paradoxical in terms. On one hand it is admitted that the ground rent paid to the K.P.T. is a charge on the property and is thereby liable to be treated as debt owed and on the other hand, it is not being deducted from the aggregate value of the property for the purpose of horking out the net value. Mr. Butler has contended that the Wealth-tax Officer while determining the value of the property has adopted the rental value method whereby the valuation is arrived at after multiplying the gross annual rental value by 10 times. While doing so the W.T.O. has not taken into consideration the declared value of the property by the respondent and as such it does .not lie with the department to say that the liability discharged has already been considered. When the W.T.O. determines the value of the property on rental method basis then all the charges and in cumbrances on the property are to be deducted from the aggregate value thereof for the purpose of arriving at the net wealth. Regarding the contention that the assessee has not claimed the K.T.P. rent as liability Mr. Butler has invited our attention to the finding of learned C.I.T. (A) on this point wherein she has held that any claim of deduction or exemption which is not made before the W.T.O. can be made before the appellate authority by placing reliance on the decision of this Tribunal in I.T.A. No.1182/KB of 1978-79 and on the judgment of Gujrat High Court in the case of C.I.T. v. Sayaji Mills Ltd. (94) I T R

26. Mr. Butler has further submitted that when the W.T.O. proceeded to determine the value of property on the rental method basis and work out aggregate value thereof it was incumbent on him to deduct all the liabilities therein for the purpose of arriving at the net value as envisaged under section 2 (m) of the Wealth-tax Act, 1963.

7. We have carefully considered the contentions raised by the learned representatives for the parties. Since the learned D.R. has conceded that the K.P.T. rent is admittedly a liability being charged on the property and as such it would be deemed to be debt owed, we do not find any reason as to why it should not be deducted from the aggregate value of the property for the purpose of arriving at the net value thereof. Section 3 of the Wealth-tax Act which is charging section provides that 'a tax under the Wealth-tax Act shall be charged in respect of the net wealth on the corresponding valuation date of an assessee and, therefore, the wealth-tax is to be charged on the net wealth and not on the aggregate value of a property. It is a trite principle of fiscal laws that an assessee is entitled to be dealt with in accordance with the law and the tax is to be charged ' strictly in accordance with the law imposing the tax. In doing so an assessee is entitled to every benefit and relief provided to law whether claimed or not. If an Assessing Officer finds the fact floating on the record from which an assessee is entitled to a benefit then irrespective of the fact if that benefit is claimed or not at initial stage or for that matter at any stage it is the duty of taxing authorities to allow the same to an assessee. The reason being that the taxing authorities are empowered to charge that tax only which is permissible in law and the ignorance or inadvertence of an assessee will not confer the jurisdiction on an Assessing Officer to charge a tax otherwise not available in law. However we would like to add that if any fact is not brought on record or is not discernible by an Assessing Officer from the facts available on record then the assessee would not be entitled to claim the benefit, because the Assessing Officer is supposed to consider only those facts, which are available on the record. 8.The contention of learned D.R. that the benefit of liability is available to a defaulter only in the case of any liability, to wit the ground rent payable to K.P.T., K.D.A. or any other statutory authority, wealth-tax, income-tax etc. and it is not available to an assessee who has discharged the liability, is not tenable. Any interpretation of law allowing premium for defiance of a law or encouraging default and denying benefit to the law-abiding citizens cannot be countenanced I and would be deemed to be inapt and unacceptable to that extent. As the learned D.R. has stated that if the respondent would not have discharged the liability towards K.P.T. on the valuation date he would have been entitled to the' deduction of this amount from the aggregate value of the property we find no reason for disallowing the same in the case of the liability being discharged, as in either case the purpose is to arrive at the net wealth of the property.

9. For the foregoing reasons we are of the opinion that the learned C.I.T (A) has rightly directed to allow deduction of K.P.T. rent from the aggregate value of the property 'to which no exception can be taken. The departmental appeals are without substance and stand dismissed accordingly. M.B.A./628/T Appeals dismissed.