2001 PLP (Trib (PTD)

S. M. SIBTAIN (ACCOUNTANT MEMBER).

These two appeals are instituted at the instance of the assessee against the orders of the learned C.W.T.(A) for dismissing appellant's contention that value of let out property held by the company is to be determined on the basis of actual rent paid or payable during the year by the tenants to the appellant.

2. We have heard the learned representatives of the two parties.

3. Briefly the facts are that for the assessment year 1997-98, the property has been let out at the rate of Rs.40,000 p.m., from July 1996-97 up to March, 1997. Thereafter, it has remained vacant during the months of April and May, 1997. It has been let out again from 1st June, 1997 at a monthly rent of Rs.57,

000. Thus, the appellant has declared the GARV at Rs.4,17,000 for the assessment year 1997-98. In the assessment year 1998-99 the GARV of the property (supra), has been declared at Rs.6,63,100 for a period of eleven months and nineteen days because it has claimed that after June 19 up to June 30, 1998 the property has remained vacant. In this year GARV of the, shop has been declared at Rs.16,523 at the rate of Rs:138 p.m.

4. The learned DCIT has not accepted the declared GARV of the properties (supra), because according to him GARV means the rental value of property for 12 months. He, therefore, has assessed the GARV of the main property which is an office bearing Nos.507 and 508 at Clifton Centre Karachi at Rs.4,97,000 and in the assessment year 1998-99 at Rs.6;84,

000. The GARY of the shop in the assessment year 1998-99 has been determined at Rs.2.118 on the ground that its GARN' was determined in the preceding year at the same amount.

5. The learned CWT(A) has upheld the two impugned assessments relying upon the reported decision of the Tribunal in 1994 PTD (Trib.) 1403.

6. Mr. Salman Pasha, the learned counsel of the appellant has submitted that the learned CIT(A) has misdirected himself by relying upon a decision of the Tribunal which is not relevant to the instant assessment years, because of an amendment in the Wealth Tax Rules. He submits that the First proviso to sub-rule (3) of Rule 8 of the Wealth Tax Rules provides that the learned DCWT shall not except with the prior approval of the Commissioner determine the value of any property at a sum higher than ten times the gross annual rental value of such property. It is further provided through an explanation that for the purposes of this sub-rule gross annual rental value means the sum for which the property might reasonably be expected to let from year to year.

7. Foregoing provisions of the rule have been applicable till 1991-92 whereafter a further proviso to the explanation, (supra) has been added firstly by Notification No.SRO 360(1)/92, dated May 14, 1992 and subsequently substituted by Notification No.SRO 534(1)/94, dated June 9, 1994 providing that the learned DCWT shall not without the prior approval of I.A.C. estimate the gross annual rental value at a sum higher than the rent paid or payable by the tenant. Mr. Salman Pasha, therefore, submits that for and from assessment year 1992-93 the law requires the Assessing Officer to estimate the GARV at a sum that is actually paid or is payable by the tenant during the year to the assessee unless he chooses to estimate it at a higher sum with prior approval of the I.A.C. In the instant case, Mr. Salman Pasha submits that no such approval has been obtained.

8. On the foregoing facts, we find that the impugned orders of the learned CWT(A) are not sustainable in law; hence vacated and the assessment orders set aside with the directions to accept the declared GARV and assess the value of properties accordingly. C.M.A:/M.A.K./46/Tax (Trib.) Order accordingly.