P L D 1977 Karachi 120 (PLP)

Z. A. CHANNA, J.‑These two constitutional petitions are directed against certain orders passed, and demand notice for tax issued, under the Sind Urban Immovable Property Tax Act, 1958. hereinafter referred to as the Act, in respect of a multi‑storeyed building known as Dawood Centre. The petitioner in both the petitions is Dawood Foundation, an educational and charitable trust registered under the Societies Registration Act, 1860, which owns Dawood Centre. Petition No. 398 of 1971 seeks to impugn the orders of the Director, Excise & Taxation, Karachi, and the Director General, Excise & Taxation, respondents Nos 1 and 2 herein. rejecting the request for a certificate under proviso (i) to section 4 (f ) of the Act exempting Dawood Centre from payment of property tax for the years 1967‑68 and 1968‑69, while Petition No. 900 of 1975 calls in question the validity of a demand notice for payment of Betterment Tax amounting to Rs. 28,066.75 for the year 1975‑76 in respect of the said Centre. It may be mentioned here that Betterment Tax is being imposed in consequence of an amendment made in the Act by Sind Finance Act, 1973. This tax is to be levied at the rate of ten paisa per square foot of covered area in the case of plots for commercial purposes and at the rate of five paisa per square foot of covered area in the case of plots meant for industrial purposes. However, the provisions in the Act for exemption of tax apply equally to tax on the annual value of buildings and lands, hereinafter referred to as the property tax, as well as to Betterment tax. Since the two petitions involve common questions, they have been heard together and are being decided by this judgment.

2. The facts which have led to the filing of these two petitions, briefly stated, are that the petitioner, which owns certain other properties in addition to the Dawood Centre, applied to the Provincial Excise & Taxation authorities for exemption of tax under the Act. Exemption from tax was granted in respect of the other properties of the petitioner, which are being used exclusively for educational purposes, but the question of exemption in res pect of Dawood Contre, which is a twelve=storeyed air‑conditioned building, of which four floors are being occupied by the Dawood Group of Industries while other accommodation therein is let out on rent, was deferred until the gross annual rating value, hereinafter referred for sake of brevity as G.A.R.V., of the Centre was finally determined and the credit of the total income (including air‑conditioning and lift charges) from the Dawood Centre to the Foundation was correctly ascertained. The G.A.R.V. for the Dawood Centre; for the period 1968‑73, was finally determined by the Additional Commis sioner, Karachi. by an ‑order dated 23‑11‑1968. By this order, the air -conditioning and service charges were excluded in computing the G.A.R.V. Thereafter, respondent No. 2, by his order dated 2‑5‑1969, rejected the request for exempting the Dawood Centre farm payment of the property tax, in the interests of Government revenue, on the grounds (1) that since the Dawood Foundation had striven to show that the rental income from the Centre was less than bait of the total charge received from the tenants, it was not possible to say that the entire income from the Centre would be spent "exclusively' on public charity or education ; (2) that a big portion of the Centre was being occupied by the Dawood Group of Industries, and (3) that no expansion in the charitable or education activities of the Foundation was indicated following the big increase in its income from the Centre. The Additional Commissioner, on appeal, however, remanded the matter to respondent No. 2, with the direction to decide the question of exemption tinder the relevant provisions of law and not in the interest of Government revenue.

3. Respondent No. a, en remand, again held that the Dawood Centre did not qualify for exemption from the property tax. He came to this conclusion on the basis that whereas the income from the Centre, after deducting the total expenditure thereon of Rs. 7,67,589, was Ra 14,89,589.46, the expenditure on scholarships, etc. by the Dawood Foundation was only Rs. 12,67,857, and hence the whole of the net income from the Centre had not been utilized for charitable purposes, as required by section 4 (f ) (i) of the Act. He rejected the contention raised on behalf of the petitioner that air‑conditioning and service charges be excluded in determining the income/rent from the Centre, but at the same time, while determining the not income/rent derived from the Centre, allowed the expenditure incurred on providing these facilities as also the other expenditure on the maintenance and running of the Centre.

4. The petitioner filed a revision application against the aforesaid order, but the same was dismissed by respondent No. 1, by his order dated 13.5‑1971. It is against this order, and the order of respondent No. 2 which it confirmed, that the petitioner has filed Petition No. 398/71. Subsequently, upon receipt of ‑a demand notice for payment of Betterment 'fax in respect of Dawood Centre, the petitioner filed Petition No. 900/75, to question the said demand.

5. Mr. Nasim Farooqi, the learned counsel for the petitioner, has assailed the order's of respondents Nos. t and 2, and the demand notice for the payment of Betterment fax, on the twin grounds‑ (a) that the petitioner is validly entitled to exemption from both the property lax as well as the Betterment Tax under proviso (i) to clause (f ) of section 4 of the Act and that the respondents have wrongly interpreted and misconstrued the law ; and (b) that in computing the rent derived from the Dawood Centre, the respondents have wrong y and against the provisions of the law, included air‑conditioning and service charges.

6. The learned Advocate‑General, who appeared for the respondents, on the other hand contended‑ (i) that the air‑conditioning and service charges have in the circumstances of the case, been rightly included by t he respondents in the rent derived by the petitioner from Dawood Centre ; (ii) that the inclusion of such charges in the circumstances of the case, does not render the orders of the respondents without lawful authority; and (iii) that, in the circumstances of the cast, the petitioner, is not entitled to exemption from payment of either property tax or Betterment Tax on Dawood Centre.

7. Since the claim of the petitioner for exemption ref the two taxes is founded upon the provisions of action 4 (f), proviso (i), it is necessary to examine the said provisions and determine how far they support the petitioner's claim. They read as follows : "

4. The tax shall not be leviable in respect of the following properties, namely (f) buildings and lands car portions thereof used exclusively for public worship or public charity, including mosques, churches, dharamsalas, gurdwaras, hospitals, dispensaries, orphanages, 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 : Provided that the following buildings and lands or portions thereof shall not be deemed to be used exclusively for public worship or public charity within the meaning of this section, namely : (i) buildings in or land on which any trade or business is carried of unless the rent derived from such buildings is applied exclusively t religious purposes or such public charitable institutions as may la prescribed."

8. It will be seen that whereas the substantive provisions of clause (f) contemplate exemption from tax of the whole of a building or land, or portions thereof, proviso (i) to the said clause provides for the exemption of an entire building or land and not portions thereof. This distinction is important, for in order that any building or land should qualify for exemption from tax under proviso (i), it must be established that the rent derived from the whole building or land is used for the purposes specified in the said proviso. If rent derived from a part of a building or land is applied for the said purposes, such part will not qualify for exemption under the proviso.

9. Since both the property Tax and the Betterment tax are paid yearly, in order that the Dawood Centre should qualify for exemption from the payment of the said taxes in respect of any assessment year, it must be shown (a) what eras the rent derived from the Centre during that year, (b) that tine whole of such rent was applied, and (c) that it was applied exclusively to the purposes specified in the proviso, namely religious purposes or such charitable institutions as may be prescribed. Since it is not the case of the petitioner that any rent derived from the Dawood Centre was applied to religious purposes, it has to be shown that it was applied to prescribed public charitable institutions. Before considering whether the above conditions have been fulfilled in respect of the Dawood Centre, it is necessary to know what is meant by the expressions and word (i) "rent derived", (ii) "applied" and tits) "public charitable institutions as may be prescribed", as used in section 4 (f ) (1) of the Act.

10. It was contended by Mr. Nasim Farooqi that the expression "rent derived" means the net rent received, after deductions of all expenses, and exclusive of air‑conditioning and service charges, which do not form a component part of rent. The learned counsel urged that since the word "rent" appeared both in the proviso to section 4 (f ) as well as in section 5, it has to be given the same meaning in both the sections. He further contended that as the Additional Commissioner, for the purposes of deter mining the gross annual rent of Dawood Centre, had excluded air‑conditioning and service charges (levied for providing lifts), such charges must be excluded while determining the "rent derived" from the Centre under section 4 (f ). Now, in the first place, what has to be ascertained under the proviso to section 4 (f ) is the "rent derived", while under section 5 it i9 the annual value which has to be ascertained. the annual value has to be ascertained by estimating the gross annual rent at which the building or land concerned might reasonably be expected to be let together with appurtenances and furniture, if any, after making certain allowances. As such, whereas "rent derived" would be the net amount received as rent by the landlord, the annual value is to be based on an estimate of the gross annual rent at which a building or land may be expected to be let. Furthermore, even if we agree with the learned counsel for the petitioner that the word "rent" in section 4 (f ) and in section 5 has to be given the same meaning, this does not mean that because the Additional Commissioner, in estimating the annual value of Dawood Centre, has excluded air‑conditioning and service charges, the said charges must also be excluded in ascertaining the rent derived from Dawood Centre. The question still remains whether air‑conditioning and service charges properly form components of the rent of Dawood Centre, and, whether the learned Additional Commissioner rightly excluded such charges from the G.A.R.V. of the Centre. The learned Additional Commissioner has given no reasons in support of his view that air‑conditioning and service charges are to be. excluded in determining the G.A.R.V. of Dawood Centre and has simply followed the precedent case of the National Bank of Pakistan.

11. In support of his view that air‑conditioning and service charges are not components of rent, Mr. Nasim Farooqi referred us to the definition of `rent' in Stroud's Judicial Dictionary, Haisbury's Laws of England, 'third Edition, Vol. 23, p. 537 and Corpus Juris Secundum, Vol. 52, p. X03, and also relied upon the decision reported in P L D 1962 Kar.

293. Tae learned Advocate‑General, on the other hand, pointed out that the same authority which had excluded air‑conditioning and service charges for the purposes of determining the G.A.R.V. of Dawood Centre, had included these charges for ascertaining the rent derived from the Centre for the purposes or section 4 (f ). He further relied upon an unreported D. B. decision of this Court in Constitutional Petition No. 524 of 1972, wherein it has been held that "if there is any machinery installed which is essential for maintaining the functional capability of the building then the value of that machinery would not be required to be excluded." In that case it was held that the value of the lift installed in the building is not to be excluded in determining the G.A.R.V. of the building. The learned Advocate‑General also referred to certain English authorities to show that air‑conditioning and service charges can properly form a component of rent.

12. The word "rent" has been defined in Stroud's Judicial Dictionary. Third Edition, as : " `Rent' be in diverse manners, that is rent service, rent charge, and rent premises. Probably, it may be said that the primary meaning of 'rent' is the sum certain, in gross, which a tenant pays his landlord for the right of occupying the demised premises. So an annual sum to be paid in lieu of premium for the goodwill of the business carried on the premises, and which is payable in addition to a reserved rent of the premises, is not 'rent' within the Landlord and Tenant Act, 1709 . . . . . The words 'rent' and 'annual‑ value' are often used indiscriminately (per Cleasby, B., Sheffield Waterworks Co. v. Bennett 41 L J Ex. 240). In that case a waterworks company were empowered to charge each house supplied, according to its 'rent' per annum, which was held to mean the money payment made by the tenant, less tenant's rates payable by the landlord."

13. According to Corpus Juris Secundum, Vol. 52 : "The term 'rent' usually implies the elements of periodicity and certainty; it is applicable to compensation for the use of lands and tenements corporeal, and is something, not necessarily money, which a tenant renders out of the profits of the land which he enjoys." The distinction between 'rent' and other charges have been treated thus in the said volume : "The term 'rent' will not be extended to include all payments which by the terms of a lease the tenant is bound to make, and it does not include the obligation to perform collateral contracts or covenants. Thus the term 'rent' has been distinguished from the costs of alterations and improvements or repairs. It has further been distinguish from the payment of insurance, of a service charge, and of the value of the use and occupation. A distinction has been made between what is called 'ordinary rent' namely, the compensation for the ordinary use of land and that which arises from a use, not ordinary, but proceeding from the corpus of the land, although it has been said that no suitable terminology has been devised to distinguish the latter from ordinary rent."

14. In Halsbury's Laws of England, Third Edition, Vol. 3, pp. 536 and 537, the nature of rent is dealt thus : "Rent, that is, rent‑service, is the recompense paid to the landlord for the exclusive possession of corporeal hereditaments. The modern con ception of rent is a payment which a tenant is bound by his contract to make to his landlord for the use of the property let"

15. In the Karachi case, reported as Dr. Peshoton v. Peerozahaw (P L D 1962 Kar. 293), Qadeeruadin, J., while dealing with the question of rent under the Karachi Rent Restriction Act, 1953, observed as follows : "Now, the term 'rent' is not defined in any of the statutes of rent restriction that were and the one which is now applicable to Karachi. It is a generic term, and its meaning can be gathered from section 105 of the Transfer of Property Act, 1882 to be a price paid or promised, or money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions by the lessee to the landlord."

16. It will be seen that none of the authorities cited by Mr. Nasim Farooqi specifically deal with the question whether in the case of an air‑condi tioned building, provided with lifts, the air‑conditioning and service charges for lifts are to be deemed to be a proper component for rent. The English authorities cited by the learned Advocate‑General, however, appear to be more pertinent to the point in issue.

17. The first of the English authorities cited by the learned Advocate -General is the case of Property Holding Company Ltd. v. Clark ((1948)1 All E L R 165). In that case, by an agreement, dated June 2, 1934, the landlord's predecessors in‑title let a flat in London to a former tenant for a rent of 110 a year, and an additional payment of 30 a year, in consideration of which additional payment the landlords covenanted to provide for the use of the tenant, a gas cooker and certain other articles, which would normally be the tanant's fixtures or fittings, and for the furnishing, lightning, etc., of those parts of the building the use of which the tenant had in common with the tenants of other flats in the building. The question that arose in that case was whether the additional payment of 30 a year was also included in rent. The conclusion arrived at in that case was that the additional amount of 30 was included in rent and the contention that a covenant to pay cannot be a covenant to pay rent unless the payment is called "rent" in the lease or agreement was repelled. In that case Evershed, L. J., expressed himself as follows on the‑ question as to what constitutes rent "Prima facie the rent is the monetary compensation payable by the tenant in consideration for the grant, however it be described or allocated. Alternatively, it may be described as (Scott, L. J., has described it) as the contractual monetary obligation the payment of which is the condition of the right to enjoy the property granted. According to either test the sum of 30 a year in the present case was, in my judgment, part of the rent. The subject‑matter here granted was the exclusive right to possession of a particular flat, partly furnished, and the right to enjoy certain other amenities in connection with the flat."

18. The above decision was followed in the case of Alliance Property Co. v. Shaffer ((1949) 1 All E L R 312). In that case a flat was let on a yearly tenancy at a rent of 175, but contemporaneously with the lease the parties executed a deed, described in the endorsement as a supplemental agreement, under which the tenant and any person in whom the lease at any time might be vested covenanted to pay an additional 40 a year in consideration of decorative and other works carried out by the landlords and a further 60 a year towards the cost of the management of the building in which the flat was situated, the second agreement to run concurrently with the lease and to determine with it. It was held that the extra payment of 100 per annum was part of the monetary compensation payable by the tenant in consideration of what had been granted to him by the landlord under the two documents taken together, and, therefore, formed part of the rent. In that case Lord Denning pointed out that the practice of the Courts was to determine the standard rent of flats let before September 1, 1939, by reference to the total amount payable at September 1, 1939, for the physical hereditament and the services that go with it, such as central heating, hot water, lift and so forth.

19. The last case cited by the learned Advocate‑General is Sidney Trading Co. Ltd. v. Finsbury B. C. ((1952) 1 All E L R 460). This was a case in which the landlords, as a condition of the grant of the tenancy of a flat, required the payment of a premium of

41. In that case, Lord Goddard, C. J., referred to the observations of Evershed, L. J., in the case of Property Holding Co. Ltd, and to the decision in the case of Alliance Property Company Ltd., and expressed himself thus "It seems to me on the authority of the two cases which I have mentioned that it matters not whether the payment is for rates, for service, or for the use of furniture. If there is a sum of money which the tenant agrees to pay as a consideration for the tenancy, it is for this purpose a rent." Although, in the three cases from the British Jurisdiction cited by the learned Advocate‑General, the question of rent was considered in regard to the provisions of the English Increase of Rent and Mortgage Interest (Restriction) Act, the decisions are a useful guide as to what payments are to be included in rent.

21. In the light of the various authorities noticed above and keeping in view the provisions of section 105 of the Transfer of Property Act, we would construe "rent" for the purposes of the Act to mean any moneys or consi deration payable periodically or on stated occasions by or on behalf of the A tenant to his landlord for the use and occupation of the property comprised in his tenancy, including any facilities that necessarily go with the tenancy, whether separate charges for such facilities are made or levied or are included in the rent deed or agreement.

22. In regard to the Dawood Centre, since it is centrally air‑conditioned and also provided with lifts, accommodation therein can only be let as air‑conditioned and within the facility of lifts. Air‑conditioning and use of lifts would, therefore, be deemed to be an integral part of a tenancy in the Centre. In this circumstances, it is immaterial whether the air‑conditioning B and service charges in the Centre were being shown separately from what was considered as the rent proper or the three charges were consolidated. We are, therefore, of the opinion that rent in the case of Dawood Centre, includes air‑conditioning and service charges.

23. It next falls to be considered what is the connotation of the term 'derive'. In Commissioners of Taxation v. Kirk ((1900) A C 588), their Lordships of the Privy Council, while considering the question of income partly derived from the extraction of ore from the soil of New South Wales Colony, observed "Their lordships attach no special meaning to the word 'derived', which they treat as synonymous with arising or accruing."

24. Since a building or land can qualify for exemption from payment of tax under proviso (i) to section 4 (f ) of the Act only if the whole of the rent derived from such building or rent is applied exclusively for the purpose specified in the said proviso, it would be unreasonable to construe the expression "rent derived" as meaning the gross rent received from the building or land, but we would take it to mean that the actual amount of rent received from the building or land minus the taxes payable thereon as also the actual expenses incurred thereon by the landlord on its maintenance and providing the necessary services or facilities that go with the tenancy. This is precisely what has been done in the instant case by the Taxing Authorities. They have taken the total rent received by the petitioner from Dawood Centre and deducted therefrom various expenditures on the Centre. From the two orders of respondents Nos. I and 2, it appears that the rental income from the Dawood Centre for the year 1968‑59 was Re. 19,87,375, including the air‑conditioning and service charges amounting to Re. 1 1,93,624.60. To this amount was added a sum of Rs. 2,69,821.64, which is said to be the excess provision made for K. M. C. and property taxes. The total amount thus worked out was Re. 22,57,196.64. From this amount the following expenditure was deducted :

1. Expenditure on maintenance Rs. (a) building maintenance 1,43,369.37 (b) water charges 3,150.00 (c) electric charges 45,731.26 (d) miscellaneous expenditure on Centre 996.62

2. Administration expenses 94,297.45

3. Property and Municipal taxes 3,75,489.80 ___________ Total expenditure 7,67,589.80 ___________

25. Since the net income, after deducting the above expenditure from the total income of Re. 22,57,196.64, works out to Re. 14,89,597.46, whereas the petitioner during the year 1968‑69 had incurred a total expenditure on scholarships, etc., of Rs. 12,67,857.59, it was held by the Taxing Authorities that the petitioner had failed to show that it had applied the rent derived from the Dawood Centre exclusively upon public charitable institutions, as required by proviso (t) to section 4 (f) of the Act.

26. We have been at some pains to ascertain how the amount of Re. 2,69,821.64, which is said to be the excess provision made for K. M. C. and property tax within limit, was arrived at and how this amount could be added to the rent derived from the Dawood Centre. According to the learned Advocate‑General, whereas the petitioner had made provision for a total amount of Rs.3,75,489.80 for payment of property and municipal taxes, he bad, during the year 1968‑69, paid only an amount of Rs. 1,05,668.16 towards such taxes, thereby leaving a balance of Rs. 2,6),821.64, which the Taxation Authorities bad correctly added back to the rent or income derived from the Dawood Centre. This explanation, however, does not appear to be well‑founded. A statement of the taxes paid during the year 1969 on the Dawood Centre has been filed by Mr. Nasim Farooqi, which is to the following effect Urban Property Tax‑Paid Rs. K. M. C. Taxes‑Paid Rs. 1967‑68 23‑6‑69 1,01,062.80 26‑5‑69 39,789.02 1968‑69 23‑6‑69 1,12,265.00 14‑1‑69 1,16,963.65 __________ _____________ 2,13,327.80 1,56,752.67 Rs. ‑ 1968‑69 23‑6‑69 Cess 4,267.80 SUMMARY Rs. Property Taxes paid as above 2.17,595.30 K. M. C. Taxes paid as above 1,56,752.67 __________ Total 3,74,347.97 __________

27. The statement is supported, so far as the property taxes are concerned, by a certificate from the concerned Excise & Taxation Officer to the effect that Messrs Dawood Foundation have paid Re. 2,13,327.80 as property tax and Re. 4,267.50 as cess fund in respect of Property Unit No. C. IV/13, known as Dawood Centre, vide Challan No. nit dated 23‑6‑1969. Similarly, in respect of the Municipal taxes, a receipted challan for Re. 39,789.02 has been filed with the statement. This payment was credited on 26‑5‑1969. Additionally, a receipt from the K. M. C., dated 11‑1‑1969, has been filed showing that the Dawood Foundation had given a cheque for Re. 1,16,963.65 in respect of the plot on which the Dawood Centre is located. If, however, the position be taken that the amount of Re. 2,69,821.64, which the Taxation Authorities had added to the gross rent from Dawood Centre, was income from other sources of the petitioner or even savings of rent from the Centre for earlier years, then also this amount could not be added to the amount of gross rent received by the petitioner from the Centre for the period 1968‑

69. There would thus appear to be no justification whatsoever for adding back the amount of Re. 2,69,821.64, as has been done by the Taxing Authorities. On this view of the matter, if from the gross rent derived from‑the Dawood Centre of Re. 19,87,375 the admitted expenditure of Re. 7,675,89.80 is deducted, the balance which would remain would only be Re. 12,19,785.20. As against this, the total expenditure on scholarships, etc., by the petitioner, which has been allowed by the Taxation Authorities, is Re. 12,67,857.59 which is more than the net rent derived by the petitioner from Dawood Centre. Faced with this situation, the learned Advocate‑General referred us to the statement of the donations which were made by the Dawood Foundation from July 1968 to June 1969. He pointed out that according to this statement, whereas a sum of Re. 4,10,982.48 had been allocated to various institutions, associations, colleges. etc.. the total amount actually disbursed was only Rs.3,13,549, leaving a balance of Re. 97,439, which had not actually been disbursed during the year in question. He contended that in order to be entitled to exemption from property and Betterment taxes in respect of Dawood Centre, for any period, the petitioner must show that the rent derived by it from the Centre for such period was exclusively spent for the purposes specified in proviso (I) to section 4 (f ) of the Act and it would pot be enough if the rent derived was merely set apart or partly spent and partly set apart for such purposes.

28. It, therefore, falls to be considered what is the connotation of the word 'applied' as used in the proviso to section 4 (f ) of the Act, it was contended by Mr. Nasim Farooqi that the word 'applied' as used in the said proviso does not have the connotation of actual expenditure, but it is enough if it is shown that the rent derived has been earmarked or allocated, though spent subsequently. In support of his contention he relied upon the decision in Khurrum Khan Panni v. Commissioner ((1965) 17 D L R 286). In that case the question arose whether Wakf property was wholly exempt from the payment of tax under the Bengal Agricultural Income‑tax Act, 1944. Section 4 (b) of the said Act excluded from agricultural income "any agricultural income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes or in the case of Muslim trusts commonly known as Wakf‑al‑al‑aulad, the income applied thereto." The view taken by Chowdhury, C. J. in that case was that "income applied thereto" means the income applied thereto by the Wakf in the trust deed and not by the Mutawalli and it means set apart or delimited by the Wakif in the trust deed for the purpose and does not mean actually spent or applied by the Mutawalli for the purpose. Hasan, J., agreeing with the C. J., observed as follows " . . it is clear that the word 'applied' will convey different meanings in different set of facts, take for example, when the validity of a Waqf or a trust is questioned. in order to determine that question, it may be looked into what amount was actually applied to or in other words spent by the author of the Wakf or the trust. In those facts, the word 'applied' will necessarily mean actual application or expenditure but when validity is not questioned, there is no doubt the word 'applied' necessarily means 'set apart' when there are several items of expenditure on different kinds of religious and charitable purposes and other purposes not religious and charitable."

29. M. R. Khan, J.. however, took a contrary view and construed the word 'applied' in the following manner : "Thus having regard to the plain dictionary meaning of the word 'applied' and the context in which it is used in section 4 (b), it appears to me that the said word means actually appropriated, utilised or devoted. In a similar case of Williams v. Papwroth (1900) A C 563, the word 'applied' in a deed of settlement providing for maintenance, education and benefit of children, was construed by their Lordships of the Judicial Committee of the Privy Council as meaning "devoted to" or "employed. for the special ;purpose of". In the above view of the matter, the expression 'the income applied thereto' occurring in section 4 (b), in so tar as it relates to a waqf‑alai‑aulad, in my opinion, means the income actually appropriated to the purpose of a wakf alal‑aulad by the Mutawalli, but does not mean the income set apart or dedicated by the Wakif in the wakf deed itself for the purposes mentioned therein."

30. The learned Advocate‑General submitted that the construction put upon the word 'applied' and the expression "the income applied thereto" by M. R. Khan, J., in the above case was more appropriate and invited us to follow the same. It may, however, be pointed out that even M. R. Khan, J., construed the word "applied" in the context in which it was used in the Bengal Agricultural Income‑tax Act, and the expression "the income applied thereto" only in so far as it related to wakf‑al‑al‑aulad.

31. The learned Advocate‑General also referred us, in support of his contention that the word 'applied' means actually spent and not merely set apart, to the provisions of section 4 (3) (f) of the Income‑tax Act, which' excludes from the total income of a person any income derived from property under trust or other obligation wholly for religious or charitable purposes, and in the case of property so held in part for such purposes the income applied, or finally set apart for application thereto. The learned Advocate -General contended that if the Legislature had intended to exempt from the payment of tax under the Act, even rents 'set apart', it would have said so, as in the case of section 4 (3) (i) of the Income‑tax Act. It may, however, be pointed out that neither the Income‑tax Act is in pari materia with the Act nor ate the two Acts by the same Legislature. Even in the case of the same, Act, the same word may be used in different senses. According to Maxwell lo on `The Interpretation of Statutes', Tenth Edition : ". . . When precision is required, no safer rule can be followed than always to call the same thing by the same name. It is, at all events, reasonable to presume that the same meaning is implied by the use of the same expression in every part of an Act . . . . . . . . . . . . . . . . . . But the presumption is not of much weight. The same word may be used indifferent senses in the same statute and even in the same section."

32. No assistance can, therefore, be derived for the purposes of inter preting the word 'applied' by reference to use of the said word in the Income tax Act. Since the said word has not been defined in the Act, it has to be understood in its ordinary dictionary sense, subject of course to the context in which it has been used an the Act. In the Shorter Oxford Dictionary, the word 'applied' has been defined as : "put to practical use practical as opposed to abstract or theoretical". If. therefore, any rent derived from a building is appropriated for any purpose specified in proviso (i) to section 4 (f) of the Act, it would be applied to it.

33. This brings us to a consideration of the question of what is meant by the expression "public charitable institutions as may be prescribed" and whether the rent derived from the Dawood Centre was applied to such an institution. Now, the word 'prescribed' has seen defined in the Act as meaning prescribed by rules .under the Act. Rules, known as the Sind Urban Immovable Property Tax Rules, 1958, have been framed under section 23 of the Act. The relevant part of sub‑rule (1) of rule 24 of the said Rules reads as follows "

24. Charitable Institutions.‑(1) The Deputy Director, Excise & Taxation, may on an application of the manager of any of the following institutions (i) an educational institution approved by Government ; certify that the institution is a prescribed public charitable institution for the purposes of proviso (i) to clause (f ) of subsection (1) of section 4 of the Act."

24. A perusal of proviso (i) to section 4 (f ) of the Act read with rule 24 makes it clear that what has to be prescribed and certified is not the building or land, in respect of which exemption from tax is sought, but the F public charitable institution to which the rent derived from such building or land is applied. We would like to state that this in fact was the stand taken by the learned Advocate‑General, and in our opinion very rightly taken. The learned Advocate‑General contended that there are three stages before a ' building or land, rent derived from which is applied to an educational institution, can qualify for exemption of tax under proviso (i) to section 4 (f ). These stages, according to him, are‑‑ (a) approval of the educational institution by Government ; . (b) certification of the educational institution by the Deputy Director, Excise & Taxation ; and (c) grant of exemption to the building or land, upon showing that rent derived from it is being applied exclusively to the educational institu tion so certified.

35. In the instant case, the Dawood Foundation was approved as an educational institution as far back as 1960 by the defunct Government of West Pakistan. This approval has not been withdrawn. It also appears that the petitioner has been certified by the Excise & Taxation Department under G rule 24 of the Sind Urban Immovable Property Tax Rules, 1958, as a public charitable institution for the purposes of proviso (i) to clause (f) of section 4 of the Act. Sub‑rule (3) of rule 24 provides that the certificate to be granted by the Excise & Taxation Authorities under sub‑rule (1) in respect of an institution shall be in Form P. T. 17 and shall, unless cancelled, continue in force until the next assessment, but shall be renewable by the due date by the Director, Excise & Taxation". The petitioner has appended to his petition a photostat copy of P. T. 17 granted to it, which reads as follows "FORM P. T. 17 CERTIFICATE OF CHARITABLE INSTITUTION Certified that the institution, the particulars of which are noted below, is a Charitable Institution within the meaning of clause (f ) of section 4 of the West Pakistan Urban Immovable Property Tax Act, 1958. Particulars of the Institution Dawood Foundation (i) JM‑2/223 (ii) JM‑2/298 (iii) JM‑3/324 (iv) JM‑3/325 (v) BVI (5) 226 (Sd.) " Collector of D. E. T., Diatt. Kyc. This 2nd day of May 1968.

36. The learned Advocate‑General urged that since this Form P: T. 17 is in respect of other buildings owned by the petitioner, which are being used exclusively for educational purposes, and does not refer to the Dawood Centre, it cannot be considered to be the P. T. form or, certificate in respect of Dawood Centre. He also referred to the covering' letter, with which the P. T. form was sent to the petitioner. This covering letter is also appended to the petition and it expressly states that exemption to the Dawood Centre .will be considered after‑(i) the assessment challenged in Court by the Foundation is finally fixed, and (ii) the credit of the total income (including air‑conditioning and lift charges) from the Centre to the Foundation is correctly ascertained.

37. It appears to us that in issuing P. T. 17 to the petitioner in respect of specified buildings, which in fact are exempted from the payment of tax under the Act under section 4 (d), the Excise and Taxation Authorities "have clearly misconstrued the provisions of both proviso (i) to section 4 (f ) as well as rule

24. As already pointed out, the said provisions do not contemplate the grant of certificate in form P. T. 17 in respect of the property which is to be exempted from taxation, but it has to be in respect of the public charitable institution upon which the rent derived from such property is applied. On an educational institution being certified under rule 24 as a public charitable institution, then any building or land, the rent wherefrom is applied exclusively for the purposes of such institution, would qualify for exemption from taxation. If the Dawood Centre had not been owned by the petitioner, then, as in the case of section 15‑D of the Income‑tax Act, 1922, the payment of the rent derived from it to the petitioner would have entitled the Dawood Centre to exemption from the tax under the Act. We see no difference by reason of the fact that the Dawood Centre is owned by the petitioner. All that the petitioner, according to us, is required to do in order that the Dawood Centre be exempted from payment of tax under the Act, is to show that the rent derived from it is applied exclusively to its (petitioner's) purposes. It is not disputed that the entire rent from the Dawood Centre was received by the petitioner and credited into its account. From this account, the petitioner. in 1968‑69, spent an amount of Rs. 7,67,589.80 on the maintenance of the Dawood Centre and appropriated or allocated a further amount of Rs. 12,87,375 on scholarships and other educational or public charitable purposes. The fact that out of this latter amount a sum of Rs. 97,439, though allocated, was not actually disbursed by the petitioner, in our opinion, makes no difference. The petitioner is required by sub‑rule (2) of rule 24 to maintain regular accounts of income and expenditure, which are to be open for inspection by the District and Taxation Officer or by an officer appointed by him, who has to satisfy himself that the income from the property sought to be exempted is being spent exclusively for the purposes for which the exemption was allowed. There is no allegation that the rent derived by the petitioner from the Dawood Centre vas being spent on purposes other than those specified in clause (i) of section 4 (f ). Reference may also be made to sub‑rule (4) of rule 24, which empowers the Deputy Director, Excise & Taxation, to cancel the certificate issued under sub‑rule (1), if he is satisfied that he had wrongly issued it, or the institution to which he had issued it has ceased to be a charitable institution. The position, however, is that the certificate in form P. T. 17 issued to the petitioner is still in force and has not been cancelled. It may be mentioned here that even the Income‑tax Authorities have considered the petitioner as a charitable institution and contributions to it have been exempted from income‑tax under section 15‑D of the Income,. tax Act.

38. The learned Advocate‑General made two further submissions, namely:‑ (a) That even if the Excise and Taxation Authorities had wrongly interpreted the law, their orders are not liable to be set aside by the High Court in the exercise of its writ jurisdiction, unless there was a jurisdictional error ; and (b) that since in the petition the petitioner has only prayed for a direction to the Excise & Taxation Authorities to issue it a certificate in Form P. T. 17 in respect of Dawood Centre, it cannot be granted the relief of exemption from tax in respect of the said Centre, which relief it had not prayed for.

39. In support of his first contention, the learned Advocate‑General relied upon the decisions in Raunaq Ali v. Chief Settlement Commissioner (P L D 1973 S C 236) and Muhammad Hussain Munir v. Nikandar (P L D 1974 S C 139). In the first of the reported cases it was observed by Hamoodur Rehman, C. J., as follows "Where there is a jurisdiction to decide, then as it has often been said there is a jurisdiction to decide either rightly or wrongly, and merely a wrong decision does not render the decision without jurisdiction. To amount to a nullity, an act must be non‑existent in the eye of law ; that is to say, it must be wholly without jurisdiction or performed in such a way that the law regards it is a mere colourable exercise of jurisdiction or unlawful usurpation of jurisdiction."

40. In the subsequent case of Muhammad Hussain Munir, Muhammad Gal, J., dealt with the question thus "It is not controverted that the matter before the learned Single Judge fell to be dealt with under paragraph (ii) of sub‑clause (a) of clause (i), Article 98 of the 1962 Constitution. That being so, the learned Judge could have set aside the order, if he had reached the conclusion that the revisional order of tae learned Member, Board of Revenue was `without lawful authority and of no legal effect.' These are expressions of art and refer to jurisdictional defects as distinguished from a mere erroneous decision whether on a question of fact or even of law."

41. We may, however, refer to the decision in Muhammad Swaleh v United Grain and Fodder Agencies (P L D 1964 S97), which was referred to with approval in Raunaq Ali's case, where it has been laid down as follows "By merely showing therefore that an order passed was in violation of some provision of law or procedure, the conclusion that the order is a nullity would not follow. It should further be shown that there was such a violation of some statutory provision or principle of natural justice as would render the proceedings coram non judice"

42. In the instant case, it was not merely' a wrong interpretation of the provisions of the proviso to section 4 (f) and rule 24, but as a result of a clear misunderstanding as to its scope and intent, the Taxing Authorities instead of deciding the question whether in view of the certificate in Form P. T. 17, which bad already been issued to the petitioner, the Dawood Centre owned by it qualified for exemption from tax, they have sought to consider the question whether the petitioner was entitled to a certificate in Form P. T. 17 in respect of the Dawood Centre. As we have already shown, a certificate in Form P. T. 17 has to be, issued to an institution and once such a certificate is issued, then ‑ if the whole of the rent derived from any building or land is applied to it, such building or land would be entitled to be exempted from taxation under the Act. In failing to appreciate the fact that a certificate in Form P. T. 17 is neither to be issued to respect of building or land nor the owner thereof, but in respect of the public charitable institution to which the rent from such building or land is applied, and in further failing to notice that the petitioner having already been certificated as a public charitable institution by the Taxation Authorities and issued P. T. 17, ally building or land the rent whereof was applied to it was entitled to exemption from tax under the Act and finally in wrongly adding the amount of Rs. 2,69,821.64, to the gross rent of the Dawood Centre for the year 1968‑69 the Taxation Authorities, in our humble opinion, acted in violation of the provisions of section 4 (f ) (i) of the Act and rule

24. I the circumstances, to allow the impugned orders of the Taxing Authorities to stand would amount to perpetuate something which would be contrary t law. We accordingly consider that the impugned orders are without lawful authority and have no legal effect.

43. We are also not impressed with the final contention of the learned Advocate‑General that as no prayer has been made by the petitioner for exemption of the Dawood Centre from tax under the Act, it cannot be granted such exemption. In Petition No. 900/1975, a specific prayer has been made to declare that the respondents are not permitted by law to make the impugned demand and to restrain them from taking any measures directly or indirectly towards the recovery thereof. So far as Petition No. 398/1971 is concerned, no doubt, the prayer clause does not in so many words pray for grant of a direction to exempt the Dawood Centre from payment of tax, but it is clear from a perusal of the petition that the petitioner had applied to the respondents for exemption of Dawood Centre from tax and it was against the refusal to grant such exemption that the petitioner has sought relief from this Court. Paragraph (5) of Petition No. 398/1971, recites "That the petitioner consistent with its objects and in order to bring into uniformity exemption from taxation applied to the competent authority under section 4 (f ), proviso (i) of West. Pakistan Urban Immovable Property Tax Act (VI of 1958) read with rule 24 framed thereunder."

44. In Abdul Majid v. Chief Settlement & Rehabilitation Commis sioner (P L D 1968 S C 154), their Lordships of the Supreme Court allowed the counsel appearing for an appellant to raise the question whether the Settlement Authorities were right in treating each room in the premises in dispute as an independent commercial unit, though it was not a point on which leave was granted, on the ground that it was the real issue in the case. In the instant case the real issue is , whether the petitioner is entitled to exemption from property tax in respect of Dawood Centre. We have accordingly allowed the learned t counsel for the petitioner to raise this question, and hold the view that the petitioner cannot be denied such exemption merely because of absence of specific prayer to that effect in the prayer clause of the petition.

45. For the foregoing reasons. and specially in view of the fact that the petitioner has been granted certificate in Form P. T. 17, which is still in force, the petitioner, in our view, is entitled to exemption of Dawood Centre from the property‑tax for the year 1968‑69 as well as the Betterment tax in respect of which notice of demand was issued. We, accordingly, declare the impugned order of the Excise and Taxation Authorities and the notice of Demand for payment by the petitioner of Betterment tax on the Dawood Centre as without lawful authority, and allow the petition. In case, pursuant to such orders or the demand notice, either property tax for the year 1968‑69 or Betterment tax in respect of Dawood Centre has been recovered from the petitioner, the same should be refunded. In the circumstances of the case, there will be no order as to costs. S. Q. Petition allowed.