1999 PLP (Trib (PTD)

In this Act, unless there is anything repugnant in the subject or context; (b) 'currency' includes all coins, currency notes, bank notespostal notes, money orders, cheques, drafts, travellers' cheques, letters of credit, bills of exchange and promissory notes; (c) foreign currency' means any currency other than Pakistan currency; (d) 'foreign exchange' means foreign currency and includes any instrument drawn, accepted, made or issued under clause (8) of section 17 of the State Bank of Pakistan Act, 1956, all deposits, credits and balances payable in any foreign currency, and any drafts, travellers' cheques, letters of credit and bills of exchange, expressed or drawn in Pakistan currency but payable in any foreign currency; (e) 'foreign security' means any security issued elsewhere than in Pakistan and any security the principle of or interest on which is payable in any foreign currency or elsewhere than in Pakistan; (k) 'security' means shares, stocks, bonds, debentures, debenture stock and Government securities, as defined in the Securities Act, 1920, deposit receipts in respect of deposits of securities, and units or sub units of unit trusts, but does not include bills of exchange or promissory notes other than Government Promissory Notes. (C) Section 17(8) of the State Bank of Pakistan Act, 1956. 17(8) The drawing, accepting, making and issue, on its own account or on account of the Central Government, as the case may be, of any bill of exchange, hundi, promissory note or engagement for the payment within or without Pakistan, of Pakistan or foreign currency payable to bearer or to a banker on demand; but no such business shall be carried on or transacted without the previous approval of the Central Government. (D) Section 4 of the Negotiable Instruments Act, 1881.

4. A 'promissory note' is an instrument in writing (not being a bank note or a currency-note) containing an unconditional undertaking, signed by the maker, to pay (on demand or at a fixed or determinable future time) a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. (E) Foreign Exchange Bearer Certificate Rules, 1985: In exercise of the powers conferred by section 28 of the Public Debt Act, 1944 (XVII) of the Federal Government is pleased by making the following rules, namely: (1) These rules may be called the Foreign Exchange Bearer Certificates Rules, 1985. (2) These rules shall apply to Foreign Exchange Bearer Certificate of denominations of Rs.500, Rs.1,000, Rs.10,000 and Rs.1,00,000 issued at par for the period of three years from the date of issue. (3) The certificate may be issued by the State Bank of Pakistan, local and overseas branches of Pakistani Commercial Banks, Officers of the National Savings Organizations and such other offices and agencies as may be specially and generally authorised by the Government, each one of which shall be called 'Office of Issue'. (4) These certificates may be purchased by foreigners and Pakistanis without limit, against payment in foreign exchange from any office of Issue. No question shall be asked regarding source of funds. (5) The certificates may be purchased on payment in foreign exchange equivalent to the face value on the date of purchase. The foreign exchange must be paid in a convertible currency. No application for purchase of those certificates will be needed nor will they be registered. They will be transferable by delivery: (6) If the purchase is made in Pakistan, the payment shall be made from the foreign exchange currency account held in Pakistan, travellers' cheques or remittance of the equivalent foreign exchange from abroad in favour of the Office of Issue. (7) If the certificates are purchased abroad payment may be made in convertible foreign exchange to an Office of Issue located abroad or the buyer resident abroad may remit foreign exchange equivalent to the face value of the certificates to an Office of Issue located in Pakistan. The Office will then hand over the Certificates to an authorised person in Pakistan. (8) These certificates may be encashed any time at any Office of issue located in Pakistan or abroad, provided that where encashment is made in Pakistan and these bearer desires to receive the amount in foreign exchange the encashment will be made by those Offices of Issues which are authorised to deal in foreign exchange. (9) The amount payable on encashment for various denominations Certificates is indicated below : (10) When the encashment is made by bearer at any Office of Issue located abroad, the amount will be payable in convertible foreign exchange at the rate of exchange prevalent on the date of encashment. Where the bearer is located in Pakistan, the payment will be made in Pakistan rupees or at the option of the bearer in foreign exchange by issuing of Demand Draft: Telegraphic Transfer of Mail transfer in the name of the beneficiary indicated by him. (11) Profit earned on these certificates is not liable to Income-tax or compulsory deduction of Zakat in Pakistan nor is it taken into account for the purpose of determining rate of income-tax on total income. (12) There are no restrictions on possession, import or export of these certificates. (13) Where any certificate is encashed in Pakistan rupees, the Office of issue concerned will give the holder a certificate in the form as in the Annexure that the amount has been paid by conversion of Foreign Exchange Bearer Certificates. In case of amount covered by such certificates, no questions will be asked by Taxation Authorities regarding source of funds. (F) Section 2(2) of Public Debt Act, 1944. (2) 'Government security' means

(a) a security, created and issued, whether before or after .the commencement of this Act, by Government for the purpose of raising a public loan, and having one of the following forms, namely:

(i) Stock transferable by registration in the books of the Bank; or (ii) a Promissory note payable to order; or (iii) a Bearer bond payable to bearer; or (iv) a form prescribed in this behalf or notified by Government from time to time; (b) any other security created and issued by Government in such form and for such of the purposes of this Act as may be prescribed. (C) Section 28(1) of Public Debt Act, 1944. 28(1) The Government may, subject to the condition of previous publication, by notification in the official Gazette, make rules to carry out the purposes of this Act.

25. The provisions contained in section 5(1)(xv)(i)(ii) which have been taken to Second Schedule of the Wealth Tax Act, 1963 by Finance Act, 1996 as clause (7) of the Second Schedule came for consideration before several Benches of this Tribunal in various cases and there were conflicting views of different Benches which were considered by Full Bench, but it contended before us now that the relevant provision of law on the point if F.E.B.C. is itself Foreign Exchange as defined in Foreign Exchange Regulation Act, 1947 and, therefore, the Purchase of F.E.B.Cs. does not amount to conversion of asset from category of foreign exchange to any other category, were never considered and, therefore, all the observations/findings in the earlier judgment were "per incuriam." it would be necessary to have a historical view of the earlier judgments in order to appreciate the contention raised by the learned representatives for the assessees in right perspective. The first judgment of the Tribunal which has been referred to us is 1990 PTD (Trib.) 1059. The relevant facts in this case were that the assessee after en cashing F.E.B.S. in Pak. Rupees claimed the amount as exempt from Wealth Tax under section 5(xv) of the Wealth Tax Act as it then stood. The claim was declined by the Wealth Tax Officer whose finding was confirmed in first appeal. The provisions contained in the Foreign Exchange Bearer Certificate Rules, 1985 were considered. S.R.O. 649(1)/85, dated 1-7-1985 issued by C.B.R. was also considered. Circular Letter dated 22-8-1985 was also considered wherein C.B.R. had stated that amount received on encashment of F.E.B.Cs. or Bearer National Fund Bond would be liable to wealth tax under the normal Wealth Tax Act Provision. It was contended on behalf of the A.R. that the F.E.B.C. can be purchased on payment in foreign exchange, therefore, it would be presumed that they were purchased out of foreign exchange as provided by the Rules. The Division Bench of this Tribunal refused to draw the presumption for the reason that certificates are transferable by delivery as provided by rule 5 without any requirement of registration anywhere. There was restriction on possession, import or export of these certificates, and, therefore, any bearer can transfer them to any person for any type of consideration including payment in Pakistan currency and such transfer may further transfer them to any person. Thus, it was held that from mere possession, it cannot be pressured that the certificates were purchased out of foreign exchange. After examination of the 'provision contained in section 5(xv) of the Wealth Tax Act, it was held that in order to avail exemption the burden was to be discharged by the assessee. It was further held that the assessee was duty bound to establish that they had either brought or received the certificates into Pakistan from outside or that the certificates were purchased out of remittances received in Pakistan. It is also held in that case that the assessee was further required to prove that remittances were brought into Pakistan through normal banking channels. No proof was furnished to the effect that receipts of foreign exchange in Pakistan were through normal banking channels. It was, therefore, held that the case of assessee was not covered either by paragraph (i) or (ii) of clause (xv) of section 5 of the Act. The facts and circumstances in this case show that the issue was confined to the extent of proof of remittances through normal banking channels. There was no provision in this regard and, therefore, exemption was not allowed. No other issue was considered in this case.

26. The second case is reported as 1991 PTD (Trib.)

135. In this case exemption was sought on the amount received on encashment of F.E.B.Cs under clause (xv) of section 5 of the Wealth Tax Act. The facts alleged by the assessee were that he purchased certificates out of foreign exchange remitted to Pakistan and subsequently encashed them. It was observed by a Division Bench of this Tribunal in this case that if a person has brought to Pakistan travellers' cheque in US Dollars and purchased the certificates out of them it would be said that he has created asset in Pakistan out of foreign exchange brought by him but he would not be entitled to exemption under para. (ii) of clause (xv) of subsection (1) of section 5 of the Act unless he could establish that he brought into Pakistan the travellers' cheque in US Dollars through normal banking channels. It was further observed that similarly if a person receives US Dollars through proper banking channels and purchases the certificates out of them it would be deemed that he has created an asset, and of course, he would be entitled to the exemption under same provision of law. It was held that in both these illustrations the assessee would be deemed to have created assets out of remittances received or brought by him into Pakistan through normal banking channels. It was further held if a person who brings some foreign currency or receives some foreign exchange' through normal banking channels and encashes them in Pak. Rupees, he would again be deemed to have created an asset out of remittances received or brought into Pakistan through normal banking channels and would be entitled to the exemption. It was further observed as follows:

"It is important to note that the emphasis is on creation of an asset and not on asset itself. Thus, if an assessee has purchased the certificates out of remittances received or brought by him through proper banking channels in Pakistan he has surely created an asset but when subsequently he is encashing them into Pak Rupees he is converting it into another asset. The exemption has been granted to an asset which is created and not to an asset which comes into existence after conversion of the already created asset. Even if it is held that the encashment in Pak Rupees is also creation of an asset yet the exemption cannot be extended to it for the simple reason that the law has granted exemption to the asset which is created for the first time out of remittances received or brought in Pakistan through proper banking channels and not to subsequently created assets. If we apply exemption to subsequently created assets then every asset obtained on conversion of previously created asset would be exempted and, thus, the wealth tax would never be chargeable on it which of course, does not appear to be the intention of the Legislature. Let us also mention here that in the illustration given above if a person reconverts Pak Rupees into dollars or in other foreign currency he would not be entitled to claim exemption on it for the same reason which I have given above. Thus, if the contention of Mr. Gangat is accepted the exemption would be available to an asset which has come into existence out of an asset which was created out of remittances received or brought in Pakistan through normal banking channels. But as pointed out earlier the exemption is available to an asset which is created and not which is obtained on conversion of the already created asset. I think it is for this reason that the C.B.R. Circular bearing No. IT.J (24)/85, dated 22nd August, 1985 appears to be compatible and in consonance with the provisions of paragraphs (i) and (ii) of clause (xv) of subsection (1) of section 5 of the Act."

27. In W.T.As. Nos.251-252/HQ of 1990-91 it was held vide order, dated 31-10-1991 that exemption was available to F.E.B.C. which was obtained out of foreign remittances brought within Pakistan through normal banking channels and to the encashment out of such F.E.B.Cs..

28. In the judgment reported as 1995 PTD (Trib.) 1162, a Division Bench of this Tribunal sitting at Lahore considered the issue of asset in form of cash in hand, cash in bank, F.D.R s. and Khas Deposit Certificates created out of foreign remittances through normal banking channels were entitled for exemption. In the said case it was held by the departmental officers that except the cash in hand and in bank, the remaining amount of foreign remittances were out of the plea of exemption. As F.D.Rs. etc. had been created out of said remittances and, thus, to that extent said remittances had ceased to be foreign remittances and, thus, partial disallowance was made. The plea of assessee was that foreign remittances continued to remain within the parameter of exemption available to the assets brought into Pakistan in whatever form they were lying i.e. cash, F.D.Rs., or Khas Deposits etc. It was held as follows:

"We are of the considered view that since money was brought into Pakistan by the assessee through foreign exchange remittances during the relevant period, it remained within the parameter of exemption, available to the assets, for a specified period. Whether it was lying in the form of cash or F.D.Rs. etc. and, thus, cannot be said to have changed its basic character or nature. "

29. In W. T. A. No. 71/KB of 1986-87 exemption was claimed in respect of assets out of encashment of F.E.B.C. for the reason that under S.R.O. 649(1)/85, dated 1-7-1985 the F.E.B.C. was allowed exemption but the asset acquired out of encashment of such F.E.B.Cs were not exempted. It was pleaded on behalf of the assessee that F.E.B.C. was nothing but foreign exchange and their encashment from bank in Pakistan is foreign exchange brought into Pakistan through banking channel, because F. E.B.C s./Foreign Bonds were encashed through bank. It was held vide order, dated 4-5-1995 that under para. (ii) of section 5(1)(xv) of the Wealth Tax Act, 1963 any asset created by an assessee out of remittances received in or brought into Pakistan through normal banking -channels enjoyed exemption. As it was admitted fact that F.E.B.Cs were purchased out of foreign exchange and were encashed through the bank, therefore, the assets acquired by assessee out of encashment of F.E.B.Cs enjoyed exemption.

30. In another Division Bench judgment of the Lahore Bench of this Tribunal reported as 1997 PTD (Trib.) 211, the issue relating to exemption in respect of the assets created on encashment of F.E.B.Cs. came under consideration. The relevant facts were that foreign exchange remittances were received through proper banking channels out of which the F.E.B.Cs. were acquired. Thereafter, the F.E.B.Cs. were encashed and investment was made in share of other assets which were not allowed exemption by the Assessing Officer. By placing reliance on the earlier judgment of this Tribunal reported as 1991 PTD (Trib.) 135 it was held that the exemption was not available. In this judgment it was observed as follows:

"The stress heavily placed upon the fact that these F.E.B.Cs. were issued in Pakistan by a banker on an 'advice' from the remitter of foreign exchange is also hardly of any significance. The fact remains that these were issued in Pakistan by a banker against foreign exchange. Perhaps the learned A.R, wants us to believe that F.E.B.Cs. issued against foreign exchange on 'advice from abroad' continue to remain and enjoy the status of foreign exchange and the amount received on their encashment would be the first asset created out of such remittance. We are not impressed with the far-fetched ideas as the issuance of F.E.B.Cs. in Pakistan has already assumed the form of an asset and their conversion, irrespective of the presence of an advance by the remitter will not clothe the proceeds with any exemption or the status of first asset. No provision of law or practice of the department has been referred to in support of the claim which again appears to have been made for the first time in second appeal. The ratio of the case cited as 1995 PTD (Trib.) 1162 and relied upon by the assessee rather supports the view of the Revenue as F.D.Rs.' and Khas Deposits Certificates purchased out of foreign remittances were held to be the first asset created just like VE.B.C s. purchased by the assessee before us. Neither the facts nor the Principle decided in this case amounts to allow exemption to a second asset created out of foreign remittances."

31. The last judgment which has been cited before us is a Full Bench decision reported as 1997 PTD (Trib.) 1928. (One of us namely Muhammad Mujibullah Siddiqui was also on the Full Bench). This Full Bench was constituted to examine if the Division Bench orders of this Tribunal reported as 1990 PTD (Trib.) 1059 and 1991 PTD (Trib.) 135 need reconsideration. The point for consideration was whether the proceeds obtained on encashment of F.E.B.C. enjoy an exemption from levy of wealth tax. All the impugned orders have been made by placing reliance on this Full Bench judgment of the Tribunal. The author of judgment is Mr. Nasim Sikandar, learned Judicial Member who is the author of judgment reported as 1997 PTD (Trib.) 211, also. Other Members of the Bench agreed with him. It has been observed in this Full Bench judgment that it is only sub-clause (it) o` clause (xv) of section 5 of the Wealth Tax Act which allows one time conversion of the exempt asset i.e. foreign exchange into any other asset. In other words the foreign exchange brought or admitted in prescribed manner enjoys exemption not only itself but also in respect of an asset created out of it. It was further observed that under this provision one time conversion of identifiable foreign exchange to another asset is also permissible 'for exemption.

32. It was further held in this judgment as follows: "The submission that F.E.B.Cs. purchased abroad from foreign exchange and brought to Pakistan are equivalent to foreign exchange remittance is not acceptable both in fact as well as in law. F.E.B.C. is an interest bearing security issued by Government of Pakistan in exercise of powers conferred upon it by section 28 of the Public Debt Act, 1944 (XVII of 1944) as notified through Notification No. SRO 5751(1)/85, dated June 6, 1985. Mere fact that these certificates can be obtained by making payment in foreign exchange cannot change the basic character of these certificates. It may also be remembered that an F.E,B.C. in itself is an exempt asset. The contention of the learned counsel that his case falls under sub-clause (ii) of clause (xv) of section 5(1) of the Wealth Tax Act is also not correct. It is equally wrong to suggest that both sub clauses (i) and (II) of the said section are one and the same thing or that their legal effect is alike. The case of the assessee is squarely covered by the provisions contained in sub-clause (i) as the certificates being an asset were brought to Pakistan after purchasing them abroad from foreign exchange. Nothing in the aforesaid sub clause lends support to the distinction drawn by the learned counsel between the certificates purchased abroad from use of foreign currency and those purchased in Pakistan. The case of the assessee cannot fall in the second category also for the reason that being a bearer security and admittedly purchased outside Pakistan it cannot be said to have been created out of remittances received or brought into Pakistan through normal banking channel. The conditions prescribed in sub-clause (ii) are, therefore, not answered in the case of the assesses. The foreign exchange having been spent abroad and used in purchase of the certificates, nothing was left to be remitted or brought through normal banking channels. These certificates as provided in Rule 7 of the F.E.B.Cs. Rules, 1985, can be purchased abroad from an 'Office of Issue' of the buyer resident abroad may remit foreign exchange equivalent to the face value of the certificates to an office of issue located in Pakistan. The office will then hand over the certificates to an authorised person in Pakistan. According to Rule 6 'If the purchase is made in Pakistan the payment shall be made from a foreign currency account held in Pakistan, travellers' cheques or remittance of the equivalent foreign exchange from abroad in favour of the office of issue. 'It will, therefore, be seen that the kind of distinction drawn by the learned counsel between the certificates purchased within and beyond Pakistan is not contemplated in these rules, nor it is seen anywhere in the said provisions contained in section 5 of the Wealth Tax Act. Therefore, the F.E.B.Cs even if provided to have been purchased abroad from foreign exchange qualify for one time exemption in the original from both in clause (1) as also on account of being an exempt asset in their own sight. Moreover, as observed above it is not a remittance through regular banking channel to make it qualify for one time conversion as contemplated in sub-clause (ii). The position would not have been any different if the assessee had brought the foreign exchange in Pakistan or remitted the same to Pakistan and had then purchased these certificates. An assessee in the scheme of provisions providing for exemption cannot have the best of both. He cannot have an asset created which earns him interest and at the same time remains liquid so as to be treated as good as cash foreign exchange. The word 'remittances' as used in both sub-clauses of section 5(1)(xv) refer not only to the fact of sending of money but also to the money itself. 'Remittance' according to Concise Oxford Dictionary, 9th Edition means 'money sent, especially by post, for goods or services or as an allowance. Also it means the act of sending money. In Chamber's 20th Century Dictionary, New Edition, the word 'remit' inter alia, means to transfer, to transmit as money etc. The word 'remittance' in this Dictionary has beer. described to mean, 'the sending of money etc., to a distance, the sum of things sent.' According to Black's Law Dictionary 5th Edition 'remittance' means 'money sent by one person to another either in specie, bill of exchange, cheque or otherwise,. The word 'remittances' as used in sub-clause (ii) is qualified by the condition that it is 'received in or brought into Pakistan through normal banking channels'. As F.E.B.C. on the other hand is neither money nor it is a popular mode of transfer of foreign exchange from one person to another for any of the above objects. It is not a legal tender within Pakistan or in the country for whose currency it was issued. It is, as said earlier, an interest bearing security issued at home and abroad under the guarantee of Government of Pakistan. The only common character that it shared with money is its transfer by possession. Therefore, by reason of its very character it can be brought or remitted to Pakistan only as an asset covered by sub clause (i). It cannot at any rate be a remittance 'received in or brought into Pakistan through normal Banking Channels."

33. For the foregoing reasons it was finally concluded that the proceeds obtained on encashment of F.E.B.Cs. are not entitled to an exemption as contemplated in the said sub-clauses of section 5(1)(xv) of the Wealth Tax Act, 1963. .

34. The department's case is mainly based on the findings in the above Full Bench judgment.

35. The first point for consideration is, if in view of the law as brought to our notice by the learned representatives for the assessee and their contentions in this behalf, the earlier Division Bench judgments and Full Bench judgment is binding on us as contended by the learned representatives for the department. A resume of the case-law as given above shows that the point that F.E.B.C. is also foreign exchange was earlier raised but the plea was not accepted. However, we find that the relevant law as contained in the Foreign Exchange Regulation Act, 1947 was not considered at all and, therefore, the observations to the effect that F.E.B.C. was not a foreign exchange and that since F.E.B.C. is purchased from the foreign remittances received through normal banking channels or from the foreign exchange acquired locally, a conversion immediately takes place, and the foreign exchange looses its character as such was made without considering the definition of foreign exchange given in the Foreign Exchange Regulation Act, 1947. In this regard we will make reference to the following observation in the Division Bench judgment (authored by Mr. Nasim Sikandar, Judicial Member) reported as 1997 PTD (Trib.)

211. This being so we will re-affirm our view expressed in 1991 PTD (Trib.) 135 as reproduced above that F.E.B.Cs purchased out of remittances from abroad enjoyed exemption beyond any shadow of doubt. However, to claim exemption in respect of asset created on encashment of certificate is not at all proved either from the practice of the department or any provision of law, rule or precedent. Every claim of exemption presupposes the levy but for the concession allowed by law itself. The assessee having failed to bring home any such law, rule or precedent, which goes to exempt the assets created out of encashment of F.E.B.Cs. we will refuse to oblige. The stress heavily placed upon the fact that these F.E.B.Cs. were issued in Pakistan by a banker on an 'advice' from the remitter of foreign exchange is also hardly of any significance. The fact remains that these were issued in Pakistan by a banker against foreign exchange. Perhaps the learned A.R. wants us to believe that F.E.B.Cs. issued against foreign exchange on 'advise from abroad' continue to remain and enjoy the status of foreign exchange and the amount received on their encashment would be the first asset created out of such remittance. We are not impressed with the far-fetched ideas as the issuance of F.E.B.Cs. in Pakistan had already issued the form on an asset and their conversion, irrespective of the presence of an advance by the remitter will not clothe the proceeds with any exemption or the status of first asset. No provision of law or practice of the department has been referred to in support of the claim which again appears to have been made for the first time in second appeal".

36. The Full Bench judgment was also authored by Mr. Nasim Sikandar, the learned Judicial Member who was the author of Division Bench judgment referred to above and in the Full Bench judgment he has referred the above judgment also. In the Full Bench judgment it has been observed that, "an assessee in the scheme of provisions providing for exemption cannot have the best of both. He cannot have an asset created which earns him interest and at the same time retrains liquid so as to be treated as good as cash foreign exchange".

37. It was further observed in the Full Bench judgment that, "an F.E.B.C. on the other hand is neither money nor it is a popular mode of transfer of foreign exchange from one person to another for any of the above objects. It is not a legal tender within Pakistan or in the country for whose currency it was issued. It is, as said earlier, an interest bearing security issued at home and abroad under the guarantee of Government of Pakistan".

38. A perusal of the above observations and findings leaves no room for any doubt that neither the relevant law as raised by the learned representatives for the assessees before us, was produced nor considered and, therefore, we have no hesitation in holding that for the reasons to be given presently the earlier judgments in which it has been held that F.E.B.C. is not a foreign exchange are, per incuriam. The expression per incuriam has been defined to mean to do something inadvertently. We are, therefore, not persuaded to agree with the contentions of the learned representatives for the department that the issue already stands decided by the judgments of earlier Division Benches and Full Bench of this Tribunal which is binding on us. It has been held by the erstwhile West Pakistan High Court, Karachi Bench in the judgment reported as PLD 1963 (W.P.) Karachi 280 that the law of precedent is not applicable to per incuriam decisions, which carry no binding force. This judgment was authored by his Lordship Mr. Justice Wajihuddin Ahmed. The same principle has been reiterated by his Lordship Mr. Justice Wajihuddin Ahmed in the case of Abdul Razzak v. The Collector of Customs 1995 CLC 1453 (Karachi). It has been held by the Hon'ble Sindh High Court as follows:

"A per incuriam decision, even if of the highest Court, does not bind any other Court and it matters little that such Court itself be at the lowest rung in the hierarchy of Courts. " In this case reference was made to the decision of Hon'ble Supreme Court of Pakistan and the plea that obiter dicta of Hon'ble Supreme Court of Pakistan is also binding was not accepted for the reason that even the Supreme Court decision which is 'per incuriam' cannot be treated as obiter dicta. Thus, the earlier judgments of this Tribunal holding that F.E.B.C. is not foreign exchange, having been given without proper assistance on the point of law and without consideration of the relevant provision of law are held to be 'per incuriam' and of no binding effect.

39. Now we proceed to examine if F.E.B.C. is foreign exchange in itself or not. We have already reproduced in extenso the arguments addressed by Mr. Rehan Hassan Naqvi, learned counsel for the appellant. He has dealt with the issue in detail. We are pursuaded to agree with the submission that F.E.B.C. is a foreign currency as well as foreign exchange. The reason being that the learned representatives for the department have conceded that F.E.B.C. is a promissory note as defined in section 4 of Negotiable Instruments Act, 1881. The contention of the learned representatives for the department that F.E.B.C. is a security as defined in section 2(k) of Foreign Exchange Regulation Act, 1947 is of no consequence. A perusal of the definition contained in the above provision shows that it means, shares, stocks, bonds, debentures, debenture stock and Government securities, as defined in the Security Act, 1920, deposit receipts in respect of deposits of securities, and units or sub-units of unit trusts, but does not include bills of exchange or promissory notes other than Government promissory notes". Thus, under this definition the Government promissory note is included in the definition of security and the Government security has been defined in section 2(2) of the Public Debt Act, 1944 to mean, "a security, created and issued for the purpose of raising a public loan in the form of (i) stock transferable by registration in the books of the bank or (ii) a promissory note or (iii) a bearer bond payable to bearer or (iv) a form prescribed in this behalf or notified by Government from time to time". At this stage we would like to clarify that Mr. Imtiaz Ahmad Barakzai has referred to the provision contained in Security Act, 1920 but we will not refer to the provisions contained in the said Act for the reason that it is provided in section 29 of the Public Debt Act, 1944 that", the Security Act, 1920 shall cease to apply to Government security to which this Act applies and to all matters for which provision is made by this Act". The F.E.B.Cs are issued under the rules framed by Federal Government in exercise of powers conferred under section 28 of the Public Debt Act, 1944 and, therefore, the provisions contained in Public Debt Act, 1944 are applicable, which we are presently considering. The F.E.B.C. is, thus, a Government security created and issued for the purpose of raising a public loan and is in the form of bearer bond which is evident from its contents which are re produced below:

GOVERNMENT OF PAKISTAN FOREIGN EXCHANGE BEARER CERTIFICATE FEB-118831 Rupees One thousand FEB-118831 Rs.1,000 Rs.1,000 The bearer of this certificate is entitled to receive payment in accordance with the Foreign Exchange Bearer Certificates Rules, 1985 on presentation at this office or subject to aforesaid rules any other office of issue, the sum payable on the date of presentation as specified on the reverse. By order of the Date & Stamp of Governor Office of Issue State Bank of Pakistan The F.E.B.C falls within the purview of sub-clause (iii) of clause (a) of section 2 of the Public Debt Act, 1944. The contents of section 2 have already been reproduced in earlier part of this order in para.

24. A question may however arise whether this bond can be considered to be a promissory note as defined in section 4 of the Negotiable Instruments Act as an instrument containing an unconditional undertaking to pay on demand to the bearer of the instrument. We are considering this question notwithstanding the fact that the learned representatives for the department have conceded that F.E.B.C. is a promissory note. The reason is that the term promissory note has been used distinctly in sub-clause (ii) of clause (a) of section 2 of Public Debt Act, 1944 but it seems to make a reference only to a promissory note payable to order. Thus, the question is whether a bearer bond payable to bearer is also a promissory note or not. The bond in legal terminology means a certificate of debt, assurance or a promissory note. The bond has been defined in Legal Thesaurus by William C. Burton as follows:-- "Bond, (noun) assurance, certificate of debt, certificate of indebtedness, chirographum, debenture, evidence of a debt, Government paper, guarantee, guaranty, indenture, obligation, promise, promissory note, re-security, security, surety, syngrapha, voucher, warrant, warranty, associated concepts: bank bond, bearer bond, bond discount, bond for costs, bond for deed, bond for title, bond holder, bond issue, bond of matrimony, bond premium, bonded indebtedness, bondsmen, cash bond, construction bond, coupon bond, defence bond, delivery bond, fidelity bond, governmental bond, indemnity bond, interest-free bond, municipal bond, ne exeat, serial bond, state bond, supersedes bond, tax-exempt bond. " A perusal of the above definition shows that the bond is also a promissory note and, therefore, when the definition of Government security as contained in the Public Debt Act, 1944 is read with the definition of promissory note contained in the holding that F.E.B.C. is also promissory note payable to the bearer. This takes care of the contention of Mr. Anisual Hasnain Mausvi that F.E.B.C. is a foreign security as defined in section 2(e) of the Foreign Exchange Regulation Act, 1947 and, therefore, it cannot be treated as foreign exchange. The contention that F.E.B.C. is foreign security and, therefore, it is not foreign exchange does not appear to be tenable for the simple reason that the foreign security also retains its character of being a security, with the only difference that it is issued elsewhere than in Pakistan and any security the principal of or interest on it, is payable in any foreign currency or elsewhere than in Pakistan. This contention is rather destructive of the contention raised by the learned representatives for the department that F.E.B.C. is not a foreign exchange because it is not payable in foreign exchange or foreign currency. The contentions are contradictory in terms. However, we are of the opinion that the F.E.B.C. is no doubt a foreign security also for the reason that the principal or the interest thereon is payable in Pakistan currency as well as foreign currency. It is specifically provided in rule 8 of the Foreign Exchange Bearer Certificates Rules, 1985 that this certificate may be encashed at any office located in Pakistan or abroad, provided that where encashment is made in Pakistan and the bearer desires to receive the amount in foreign exchange the `encashment will be made by those offices which are authorised to deal in foreign exchange. It is further provided in rule 10 that when the encashment is made by bearer at any office of issue located aboard the amount will be payable in convertible foreign exchange at the rate of exchange prevalent on the date of ancashment. In the same rule it is further provided that where the bearer is located in Pakistan, the payment will be made in Pakistan rupees or at the option of the bearer in foreign exchange by issuing Demand Draft, Telegraphic Transfer or Mail Transfer in the name of the beneficiary indicated by him. Even on the reverse of F.E.B.C. tile amount payable in Pakistan Rupees is shown with the note, "or equivalent amount in foreign exchange at the prevailing exchange rate". This discussion also covers the contention of Mr. Anisual Hasnain Mausvi, learned representative for the department that F.E.B.C. is foreign exchange because it is payable in foreign exchange but F.E.B.C. is not foreign exchange as according to him it is not on cashable in foreign exchange. The contention is without any substance because of the specific provision contained in Foreign Exchange Bearer Certificates Rules, 1985.

40. Mr. Mumtaz Ahmad Shaikh, learned Commissioner of Income-tax has raised another issue to the effect that under section 5(1)(xv)(ii) as it stood before Finance Act, 1996 and the provisions contained in clause (7)(ii) of Part-I of the Second Schedule to the Wealth Tax Act, 1963, as inserted by Finance Act, 1996 exemption is available to the asset created by an assessee out of remittances received in or brought into Pakistan through normal banking channels, which means that exemption is available to the asset created out of foreign exchange because foreign exchange is not synonymous with foreign currency and they cannot be equated with each other. His next contention that F.E.B.C. is retrievable in Pakistan currency and is rupee denomination certificate, therefore, it is neither foreign currency nor foreign exchange has already been dealt with by us and the plea has been repelled. A perusal of the provisions contained in section 5(1)(xv)(ii) = clause (7)(ii) of Part I of the Second Schedule to the Wealth Tax Act, 1963 shows that it relates to an asset created by an assessee out of remittances received in or brought into Pakistan through normal banking channels. The words remit and remittance have been defined in Legal Thesaurus by William C. Burton as follows:

"REMIT (Send payment), verb compensate, defray, disburse, discharge, forward payment, make payment, mittero, pay, recompense, remunerates, render, repay, require, satisfy, send money, send payment, settle, tender, transmit payment. REMITTANCE, noun acquittal, defrayal, defrayment, disbursement, expenditure, money, sent, payment, pecunia, quittance, recompense, reimbursement, remuneration, reparation, transmittal. In the Dictionary of Accounting Terms by Derek French the word 'remit' as verb has been defined to send money from one place to another and the word 'remittance' has been defined to mean a sum of money sent from one place to another. In the same Dictionary the word 'money' has been defined as, the means used for discharging debts, making payments and measuring value. The word 'money' has very wide connotation. In short it means that the standard by which the value of commodities is measured, and the medium by which they are bought and sold. According to Dictionary of Banking and Finance by Derrick G. Henson, "money and credit, to which it gave birth, form the basis on which the business of banking has been built up. It is further stated in the article on 'money' in the above Dictionary that all that is necessary for the use of a commodity as money is that it should be accepted as such by a community. There are various aspects of money and in the above Dictionary under the head 'money at call and short notice' it is stated as follows:

"This is one of the main items of liquidity in a bank's balance-sheet. It comprises advances to stockbrokers and jobbers and, more particularly, loans to the money market. Such moneys are payable, either on demand or on a few days' notice. Money lent to the market in this way is fully secured by Treasury bills, commercial bills, certificates of deposit and other forms of short-term paper. Traditionally, money at call was the safety net by which banks met certain outflows of funds." Under the head 'Money Transfer' (Money Transmission) it 'is stated as follows:

"Anyone in the UK wishing to make a money transfer to another person will normally do so by one of the following methods, which are dealt with under their respective headings, in other parts of this work; cash, cheques, bankers drafts, bills of exchange, standing orders, direct debits, credit card, travellers' cheque, National giro Credit, postal order or money order. Anyone wishing to make a payment to someone overseas will normally do so by international travellers' cheques, telegraphic transfer, money orders. All money transfer falls into one of three main categories, cash, paper transfer (cheques and other vouchers) or transfer by electronic means. "

41. According to the, learned author payment. by voucher includes bills of exchange, cheques, standing orders and other paper transfer. In the New Shorter Oxford Dictionary the money has been defined as a current medium of exchange in form of coined and bank notes as well as any objects or materials serving the same purpose as coin. All these definitions show that in short the money can be defined as a medium of exchange. In the modern times the most known medium of exchange is currency and in Foreign Exchange Regulation Act, 1947 currency has been defined to include all coins, currency notes, bank notes, postal notes, money orders, cheques, drafts, traveller's cheque, letters of credit, bills of exchange and promissory note. Under section 2(c) of Foreign Exchange Regulation Act foreign currency has been defined to mean any currency other than Pakistan currency and in the definition of expression foreign currency contained in section 2(d) of the Foreign Exchange Regulation Act, 1947, foreign currency and instruments drawn under clause 8(17) of the State Bank of Pakistan Act, 1956 and other documents enumerated therein are included. This discussion leads to the conclusion that the expression remittance received or brought into Pakistan through normal Banking Channels, accruing in clause (7)(ii) of Part I of the Second Schedule to the Wealth Tax Act, 1963 means sending of money i.e. medium of exchange, recognized and accepted in Pakistan. We are, therefore, of the considered opinion that the distinction sought to be drawn by Mr. Mumtaz Ahmad Shaikh in foreign currency and foreign exchange appears to be far-fetched idea. His contention that F.E.B.C. is neither foreign currency nor foreign exchange is also not in consonance with the law for the time being in force. It is held that in whatever form money is sent through normal banking channels it has been described as foreign remittances and there could be no dispute on the point that foreign remittances whether received or brought in the form of currency or through cheques, money orders, drafts, letters of credit, bills of exchange, traveller's cheque or promissory note are foreign currency and, therefore, foreign exchange. Thus, it is held that any foreign exchange remitted or brought into Pakistan through normal banking channels enjoyed exemption from the levy of wealth tax by virtue of the provisions contained in section 5(1)(xv)(ii) = clause (7((ii) of the Part I of the Second Schedule to the Wealth Tax Act, 1963. Now we will examine the question as to how long the foreign remittances received in or brought into Pakistan retain their status of foreign exchange and when they are converted into another asset for the first time so as to continue to enjoy exemption, if foreign remittances are received through normal banking channels. The expression which has been used by the Legislature, requiring interpretation in these appeals is, "asset created by an assessee out of remittances received in or brought into Pakistan through normal banking channels". The word 'creation' has been defined in New Shorter Oxford Dictionary to mean the action of making, forming, producing, or constituting for the first time or a fresh, invention, causation, production. Thus, the word 'creation' implies coming into existence of something for the first time. Now the question is Wan assessee receives remittances through normal banking channels i.e. foreign exchange, whether by purchasing F.E.B.C. he still continues to hold foreign exchange or any other asset comes into existence for the first time. The asset which will enjoy exemption is that one which comes into existence for the first time out of remittances received in or brought into Pakistan in addition to such remittances. The provision of exemption is not attracted either prior to the creation, is will, coming into existence of a new asset or to an asset which has been acquired out of the newly-created asset. The reason being that prior to coming into existence of a new asset there would be no creation of asset and on second conversion there would be no creation of asset because it would not be for the first time but for one second time and thus the second transaction would not amount to creation out of foreign remittances but it would be a creation out of asset which was already ,created. The exemption is available to the asset which is created out of foreign remittances i.e. foreign exchange/foreign currency and, therefore, it is to be explored as to how long and in what forms the foreign exchange retains its statue and at what point it loses its status of foreign exchange/foreign currency/foreign remittance, thereby giving creation to a new asset. Mr. Rehan Hassan Naqvi has argued that the foreign remittances are in fact foreign exchange as the money sent from outside Pakistan through normal banking channels is foreign exchange and nothing else. We are persuaded to agree with this contention of Mr. Rehan Hassan Naqvi. We are further persuaded to agree with the submission that under para. I of clause (7) of Part I of Second Schedule to the Wealth Tax Act, 1963, an assessee may bring assets from outside Pakistan which is other than money, currency or foreign exchange as well because under this clause no . . . . . . . . . . . . . . . . . . . . . channel of bringing or remitting the asset has been prescribed. However, under para. (ii) of clause (7) with the condition of remitting or. bringing the assets from outside Pakistan, the channel of normal banking has been specified and, therefore, the foreign remittance received through normal banking channels is nothing but foreign exchange which per se enjoys exemption under para. (i) of clause (7) of Part I of the Second Schedule to the Wealth Tax Act, 1963, section 5(1)(xv)(i). The reason being that under para. (i) the asset itself enjoys exemption without any conditionalities or consideration of channel of bringing the paid asset from outset Pakistan. Thus the foreign exchange remitted in any form or brought into Pakistan in any form through any channel including through normal banking channels enjoys exemption from the levy of wealth tax under para. (i) of clause (7) of Part I of the Second Schedule to the Wealth Tax Act, 1963. Once it is held that the foreign exchange remitted in Pakistan or brought into Pakistan through normal banking channels enjoys exemption it will continue to enjoy the exemption for the period specified in the above clause notwithstanding the change of form for the simple reason that foreign exchange is a class of asset which has been allowed exemption. We proceed to examine further question, as to how long the foreign currency or foreign exchange remitted through normal banking channels or otherwise continues to retain the status of foreign exchange. For this purpose we have to examine the definition of foreign exchange contained in section 2(d) of the Foreign Exchange Regulation Act, 1947. We have already discussed this provision to show that it includes promissory note and any instruments drawn, accepted, made or issued under clause (8) of section 17 of the State Bank of Pakistan Act, 1956. We have further referred to the provision contained in the Foreign Exchange Bearer Certificates Rules, 1985 framed in pursuance of the authority vested under Public Debt Act, 1944 and have demonstrated that the F.E.B.C. is issued by the State Bank of Pakistan under the approval/authority of the Federal Government and that F.E.B.C. is a promissory note encashable within or without Pakistan in Pakistan or foreign currency payable to the bearer and, therefore, the F.E.B.C. is foreign exchange for all in tents and purposes as defined in Foreign Exchange Regulation Act, 1947. We are further of the considered opinion that a foreign exchange continues to hold and retain its status of foreign exchange notwithstanding the change of form so long it remains within the purview of definition of foreign exchange as defined in the Foreign Exchange Regulation Act, 1947. We have already held that the F.E.B.C. being a promissory note is currency as defined in section 2(c) of the Foreign Exchange Regulation Act, 1947 and since it is a promissory note purchase able in foreign exchange and encashable in foreign exchange at the option and discretion of the bearers and the principal as well as interest both are encashable in foreign exchange and certificates are transferable by delivery and there are no restrictions on possession, import or export of these certificates, therefore, beyond any shadow of doubt the F.E.B.C. is foreign exchange. Thus. it is further held that if any assessee gets foreign remittances through normal banking channels he received foreign exchange which enjoys exertion from levy of wealth tax under para. (i) of clause (7) of the Second Schedule to the Wealth Tax Act, 1963 and further on purchases of F.E.B.C. the assessee continues to hold the same assets i.e. foreign exchange and continues to enjoy exemption under the same provision from the levy of wealth tax. This exemption shall continue for the period specified in clause (7)(i) so long an assessee retains the assets as foreign exchange as defined in section 2(d) of the Foreign Exchange Regulation Act, 1947. However, as soon as the foreign exchange is converted into any other asset whether in cash or kind or any asset is acquired out of the said foreign exchange brought through normal banking channels in the form of any movable or immovable property, it would amount to creation of an asset which in a new clause of asset. This brings into existence a newly-created asset in the hands of assessee. This newly-created asset shall enjoy exemption under para. (ii) of clause (7) of the Second Schedule to the Wealth Tax Act, 1963 and under section 5(1)(xv)(ii) as it good before Finance Act, 1996. Thereafter, if any new asset is acquired by the assessee it shall not be entitled for exemption as it would not be created out of foreign remittances but it would amount to creation of asset out of an asset which was already created out of foreign remittances and this such newly-created asset will not fall within the purview of clause (7)(ii) of the Second Schedule of the Wealth Tax Act, 1963.

42. Now applying the above principles, findings and conclusions to the facts of the present case, we find substance in the contention of Mr. Rehan Hassan Naqvi that when the appellants purchased F.E.B.Cs. out of the foreign exchange received through normal banking channels, it did not amount to conversion of foreign exchange in any other asset, and the foreign exchange was converted for the first time or in other word assessee created an asset out of foreign remittances when F.E.B.Cs. were encashed in Pak. Rupee, as encashment F.E.B.Cs. in Pak. Rupee is the first conversion of foreign exchange which was received through normal banking channels, therefore, it is held that such asset is entitled for exemption, under para. (ii) of clause (7) of the Second Schedule to the Wealth Tax Act, 1963 and section 5(1)(xv)(ii) of the Wealth Tax Act as it stood prior to the Finance Act, 1996.

43. For the forgoing reasons it is held that the Assessing Officers in the appeals under consideration had rightly allowed exemption from levy of wealth tax to the Pak. Rupees/acquired by the appellant as a result of encashment of F.E.B.Cs. which were purchased out of foreign remittances received through normal banking channels. To this extent the impugned' orders of the learned I.A.C s. in these appeals are hereby vacated and the appeals are allowed accordingly. C.M.A./13/(Trib.) Appeals allowed.