2003 PLP (Trib (PTD)

(3) Provided that this provision shall

(i) apply only to assessment; year 1996-97; and (ii) not apply to any person who has either been assessed to tax or filed return of wealth for any year prior to assessment year 1996-97." Wealth Tax Rule 3: "(3) Return of Net- Wealth.-(1) The return of net wealth referred to in subsections (1) and (2) of section 14 (and section 14B) shall,-- (a) .......................................... (aa) in respect of assets referred to in section 14B be in Form AA;" C B R Circular C No. 1(15)WT/96, dated 14-12-1996. The RCITs........................................... Subject: Minimum Wealth Tax .......................................... A news item appearing in a section of press no 14-12-1996 with reference to advertisements regarding liability of payment of minimum wealth tax by owners of residential plots, houses and flats has been found misconceived and misleading, by the C. B. R. (2) It has been pointed out that joint owners of urban property constitute an AOP which concept has already been deleted from the Wealth Tax law. There is, as such, no reason to believe that jointly held assets are to be clubbed together to fleece the taxpayers. However, even in the case of property jointly owned, where the share of each individual owner falls within the taxable limit, tax is payable individually by each such co-owner. (3) The following important aspects of the law in this regard may be recounted:-- (i) only new taxpayers who have never filed a wealth tax return before, are required to file minimum wealth tax returns in Form "AA" which is being published in all leading newspapers. Rates of tax have been duly indicated therein. Taxpayers are free to make as many photocopies for their use, as may be desired. Returns may be filed in any income or wealth tax office, duly enclosing the tax payable in the form of a pay order/demand draft drawn in favour of the Commissioner of Wealth Tax. (ii) minimum wealth tax is payable only in the year 1996-97 on property in urban areas which in the case of residential plots or houses should be on 500 sq. yards or more and in the case of flats or apartments be of covered area of 2000 sq. feet or more. In the cage of multiple owners of such urban property, .tax is payable by each co-owner if his individual share is of the aforementioned size. (iii) for purposes of minimum wealth tax, new taxpayers cannot claim exemption during the year 1996-97 on one house owned and occupied for their self-residence. (iv) new taxpayers owning other assets valuing rupees one million or more in addition to the said urban property, must also file separate returns of wealth tax in the regular Form "A" and pay tax thereon. For earlier years, if they were unable for any reason to declare their assets or pay tax thereon, they have the opportunity now to file returns for those earlier years. They will be immune from any penalty, additional tax or prosecution if correct returns are now filed and tax paid thereon. (v) old taxpayers can also avail immunity for past-defaults for any reason by similarly, filing returns and paying tax for past years latest by 31st December; 1996. If any further guidance/assistance is required, the nearest wealth tax office or Central Board of Revenue, Islamabad may please be contacted".

11. It is evident that the Form of Return used by the assessee was irrelevant for purposes of section 14B. Much before the extended date for the filing of the return namely, 31-12-1996, S.R.O. 1208 issued on 23-10-1996 had already prescribed a separate return fir declaring assets covered under section 14B of the Act. The AR acknowledges that such a newly prescribed return had been widely advertised in the press. Further, it is also established that the C.B.R. also sought cooperation of the tax bars to educate taxpayers in this regard. In fact, there is abundant material on record to show that circulars/letters were issued on 30-7-1996 (outlining the scope of section 14B Scheme), 9-9-1996 and 21-12-1996 (enclosing the Press Release copy), 16-12-1996 (regarding extension in last date for filing of returns and to enlist participation of the Tax Bar to educate taxpayers). In the circumstances, the return filed by the assessee on 30-9-1996 had been rendered infructuous and invalid for purposes of section 14B. As such, after the return filed by the assessee on 30-9-1996 had been rendered invalid, it was incumbent upon him to file a return in the prescribed form "Form-AA" to avail the scheme introduced by section 14B.

12. It has been admitted at the bar that no such return in the prescribed form was filed by the assessee. We also notice that the return filed by the assessee on 30-9-1996 does not conform to the requirements of section 14B. Instead, as in the case of the return required under section 14(1)(b), various others columns of the return relating to the business capital, cash and bank account, furniture, fittings and debts claimed as liabilities, have been filled in by the assessee. These details had nothing to do with the declaration required in the form of return for purposes of section 14B. The only indication of tax paid under section 14B appears as a note against the c9mputation of tax in column "J" of the return filed on 30-9-1996 in the wrong/inapplicable form. The intended scope of the 14B Scheme, is amply clear from the contents of the C.B.R. letter issued under C. No.(12)WT/96, dated 30-7-1996 which clearly states inter alia, that only such person as (a) has not filed a return of wealth tax in earlier years; and (b) owns a residential plot, house or flat in residential areas, situated among others, in the Islamabad Capital territory, is eligible to avail the concessionary rate for wealth tax payment. The condition that the asset in question be residential in nature, or belong to any of the three specific categories of being a plot, house or residential flat, also do not appear to be met by the assessee as it is to be located in the Mauve Area in G-7/1 Sector

13. In view of the foregoing facts, we are convinced that the return filed by the assessee on 30-9-1996 cannot be treated as a return in respect of assets covered under section 14B of the Act for the following:-- (i) S.R.O. 1208(I)/1996, dated 23-10-1996 amended rule 3 of the Wealth Tax Rules and inserted a new clause (aa) in sub-rule (1) which prescribed a separate Form AA for filing a return in respect of assets covered under section

14. This being a mandatory requirement, the assessee was obliged to follow the rule for availing the provisions of section 14B of the Act and file a return in the prescribed Form AA and not Form A. (ii) The return filed on 30-9-1996 does not show that it was return under section 14B. The mere mention of payable tax on, House No.5, Street 83, G-6/4, and Rafi Centre, G-7/1 under' section 14B, does not render the return on Form-A as a return valid for purposes of section 14B. In fact, it remains also to be established that the amount of tax paid at Rs.10,000 was at all the amount payable on the two immovable properties under section 14B. The mention of Nil value of House No.5, Street 83, G-6/4, with a narration "self-occupied separate block" in the return of wealth tax filed on 30-09-1996 goes against the scope of the Scheme as explained in the press release issued by the Department on 14-12-1996. It has clearly been stated therein that "for purposes of minimum wealth tax, new taxpayer cannot claim exemption during the year 1996-97 of one house owned and occupied for their self-residence". The fact that the assessee has claimed exemption for self-occupied house also indicates that the return filed by him was not under section 14B of the Act. (iii) The property known as `Rafi Centre' does, not even fall within the ambit of section 14B as is clear from the C.B.R. letter, dated 30-7-1996 referred to above. The letter explains the provisions of section which specify that only residential plots or houses/flats qualify under the provisions of section 14B Rafi Centre being a commercial/industrial building, does not qualify for being charged to under that section.

14. As a result of the facts examined above, we are of the considered opinion at the order of the Commissioner in treating the assessee as covered under section 14B was mis-directed and unsustainable in law. It is, therefore; vacated and the view taken by the Assessing Officer is upheld. However the order passed under section 16(5) of the Act appears to have been framed in disregard of rule 8(3) of the Wealth Tax Rules. The liabilities claimed by the assessee also need to be verified for which due opportunity may be provided to the assessee. The case is, accordingly, remanded back for a denovo assessment by the Assessing Officer keeping in view the relevant sub -rules (2) and (3) of rule 8 ibid.

15. The departmental appeal succeeds in the, manner as indicated above. C.M.A./787/Tax (Trib.) Departmental appeal accepted.