2000 PLP (Trib (PTD)

527 (600 sq.yd) Rs 19,20,000 8-2-1994 Rs.3,200 Shahana Masud Plot No.317-R Rs.20,10,000 Rs.3,350 M. Sadiq Swati Plot in 1-8/3 Rs.20,00,000 Since, the assessee was the owner of the plot and it being free from any encumbrances, no wrong was done by the Assessing Officer in treating and charging this asset to wealth ax in the heading "immovable asset". The learned A.R. also vociferously contested that though the-learned D.R. has referred to a few cases wherein the other allottees sold their plots in the open market, such evidence does not have evidentiary value because sale of such plots had been-made in violation of the agreement between them and the C.D.A.. Thus, the assessee's case could not be roped in so as to place enhanced valuation of the plot. He also pointed out- that the Assessing Officer, while adopting higher value of the plot, admitted in evidence an under stamped sale agreement. which. was inadmissible according to the provisions of section 35 of tire Stamp Act, 1789. Although the registration of an instrument, not duly stamped, is an error of. procedure, nevertheless, it renders the instrument inadmissible in evidence and unable to be acted upon by persons who have authority to receive it in evidence or by a public officer. In fact the Assessing Officer has inflected substantial loss of revenue on the State under the Stamp Act, 1899 as also under section 17 of 'the Registration Act (XVI of 1908). The learned A.R s contention that the evidence produced by the learned D.R. to point out that such plots are being freely sold in the open market does not have any evidentiary value, is devoid of any force. It is well-settled law that an unregistered document, which requires registration under section 17 of the Registration Act, 1908, can be admitted in evidence for a collateral purpose viz; to prove the nature anal character of possession, though the character and nature of the possession cannot be separated from the main transaction evidenced by the document. There is no dearth of case law on this point. Lastly, the learned A.R., objected to the valuation of the plot being made in contravention to the provisions of rule 8(3) of the Wealth Tax Rules. This objection is without any weight because rule (3) of the Wealth Tax Rules. 1963 provides that the value of land and building, is to be determined with due regard to the nature and size of the property, the amenities available and price prevailing for similar property in the same locality or in the, neighborhood of the said locality: First proviso to the said rule is a cap to limit valuation of the property to 10 times on the basis of its gross annual letting value. This proviso further provides that the value determined by the Collector of the District is applicable only in a case wherein property being assessed is the open plot of land. 1n the present case the property in question is an open plot of tend. But no value is notified by the Collector Islamabad for the purpose of calculation or charging of stamp duty under the Stamp Act, 1988 during the years under appeal. So, in this eventuality the value of the plots, falling in the Federal Territory, is to be determined in accordance with the main provisions of rule 8(3) of the Wealth Tax Rules. Since, the value of the plot was determined by the Assessing Officer as per rule 8(3) read with first proviso to this rule, therefore, no illegality was committed by him while determining the value of the plot. Consequently, the order of the Appeal Commissioner stands vacated and. that of the Assessing Officer is restored on the point of valuation of the plot in question. As a result, all the three appeals filed by the Department succeed. (Sd.) (Rasheed Ahmed Sheikh), Judicial Member. MANSOOR AHMED (ACCOUNTANT MEMBER).

I have had the benefit of reading the order proposed my learned brother, the Judicial Member in this appeal. However, with utmost regard for the views of my leaned brother I find myself unable to agree to the enunciation of law and findings on facts reached by him. I would now state my reasons for holding a different opinion. The issue under consideration is whether or not the plot question belongs to the assessee so is to be included to his net wealth tax purposes. There can hardly be any dispute that "belonging of asset does include the concept of "ownership". The question of ownership of', immovable property for the purposes of charge of income-tax on rental income from such property has come under consideration in a number of cases both in Pakistani and Indian jurisdictions. Some of these cases are discussed as follows. In Bachu Bai F.E. Dinshaw v. C.I.T. reported as 1967 PTD 170, the Executors of the Estate of Late F.E. Dinshaw sold that property, received full sale consideration and gave possession of property to the purchaser but no regular .sale-deed was executed. The Executors were held to be the owners of property within the meaning of section 9 of Income Tax Act. The importance of a registered sale-deed in determining the ownership of property was highlighted in the following words:

the question of ownership of property in dispute shall have to be determined on he law administered in Pakistan and no any broader or general notions of ownership. It is well-established general principle that where the law prescribes a mode of transfer compliance with that mode is necessary in order to confer title against third parties. It seems to us that when the law requires a registered instrument title or ownership cannot be conferred by mere -agreement of parties. This is quite clear from the provisions of section 4 of the Transfer of Property Act and section 19 of the Registration Act." In B. D. Avari v. CIT cited as 1989 PTD 670 (H. C. Kar.) the assessee had sold his property to his minor sons through agreement and sale consideration was received by him to registered sale-deed was, however, executed. It. was held that under section 54 of the transfer of Property Act, a contract of sale does not create any right in the property. The right in property is created on registration of sale-deed. Therefore, the assessee was owner of property and liable to pay tax on rental income from the said property There are many similar decisions in Indian jurisdiction. In C.I.T. v. Hans Raj Gupta (1982) 137 ITR 195, the assessee sold his properties to two companies who had paid full sale consideration but registered sale-deeds were not executed. The assessee was held to be liable to be assessed to tax on income from these properties as he remained owner of properties irrespective of the fact that he was not earning any income there from. In another case, cited as C.I.T. v. Zorostrian Building Society Limited, (1976) 102 ITR 499, the assessee had entered into an agreement to sill his property. The buyer had paid full price and taken possession of property. It was held that even though the purchaser was put into possession with all other rights incidental thereto, in the absence of a registered sale-creed, the transferee could not be regarded as owner. Similar decisions were handed down by Bombay High Court in C.I.T. v. Sultan Brothers (Pvt.) Limited, (1983) 142 ITR 249, and by Calcutta High Court in C.I.T. v. Ganga Properties Limited (1970) 77 ITR

637. While considering the meaning of words "belonging to" in section 2(m) of the Wealth Tax Act, my learned brother has observed that whenever the word "owner" is used, it always refers two one who has dominion over a thing, which he has the right to enjoy and to do with it unless he is prevented by some law, agreement fir covenant which restrains his rights. Accordingly, he has reached the conclusion that when the vendor has received full consideration and parted with possession and the vendee has a right to call upon him for execution of the conveyance the property does not belong to the vendor but to the vendee. It appears that my learned brother has equated the beneficial ownership with legal ownership. I am afraid I cannot subscribe to this view because there cannot be two owners of the same property, one the beneficial owner and the other, the legal owner. My learned brother has referred to certain case law, in the context of the meaning he word "owner" but has concluded that in these cases the term "owner" was defined with reference to charging of rental income from property. In other words, he seems to be of the view that the expression "belonging to" tit the Wealth Tax Act carries a different connotation than the word 'owner" used in Income tax Law. Perhaps, the pertinent case would be that of (Late) Nawab Sir Mir Osman Ali Khan v. C.W.T., cited as (1986) 162 ITR 888. in that case, the assessee, the Nizam of Hyderabad, had sold certain immovable properties, had received full consideration and had handed over possession of the properties to the purchasers but registered sale-deeds in favour of vendees had not been executed. The question that arose was whether these properties "belonged" to assessee oil the valuation date for wealth tax purposes. The Supreme Court of India held that for all legal purposes these properties had to be treated as belonging to the assessee within the meaning of section 2(m) of the Wealth Tax Act. In the said judgment, the case of Raja Muhammad Amir Khan v. Municipal Board of Sitapur on which my learned brother has relied in the context of the meaning of the word 'belonging" has also been referred to, but for purposes of wealth tax the Indian Supreme Court has confined the meaning of this expression to legal ownership. Mere possession or joint possession unaccompanied by the right to be in possession or ownership of property was not considered enough to bring such property within the definition of "Net Wealth". It may be profitable to quote the following observation from the said judgment:

"Even though the assessee had a mere husk of title and as against the vendee no reality of title, as against the whole world he was still the legal owner and the real owner." The meaning of the word "belonging" also came tinder consideration before this Tribunal in a case cited as 1996 PTD (Trib.)

905. Relying on some English case law as well as case of (Late) Nawab Mir Osman Ali Khan, it was held that the property "belongs" to a person who owns it. The fact that the Transfer of Property Act has not been extended to the capital territory of Islamabad will not make any material difference because the Registration Act, 1908, is applicable, which required that the sale of immovable property must be through a registered document. Section 49 of the said Act stipulates that unless such document is registered, the right, title or interest of the seller in the property is not extinguished nor that of purchase created. Besides, basic principles of the Transfer of Property Act are generally 'applied even in areas to which the said Act does not extend. Where a law, requires a certain act to be done in the prescribed manner, then the requirement of law as to be fulfilled to lend legality to such act. The law cannot be set aside by mere agreement between parties. Even in a benami transaction, execution of sale-deed is the requirement of law.. It is quite another matter to determine whether the benamidar or some other person is the actual purchaser/transferee. This aspect is not relevant to the issue under consideration in the appeal. For the foregoing reasons, I hold that in the facts and circumstances of the case, the plot in question did not belong to the assessee and consequently could not be included in his et wealth for charge of wealth tax. the issue relating. to valuation requires no adjudication as it is no more relevant. (Sd.) (Mansoor Ahmed), (Accountant Member) MUHAMMAD MUJIBULLAH SIDDIQUI (CHAIRMAN)

This case has been referred to me for resolving the difference of opinion between the learned Judicial Member and the learned Accountant Member. The learned Judicial Member and the learned Accountant Member have narrated the facts in detail and, therefore, for the sake of brevity I would not like to narrate the relevant facts again. The difference of opinion between the learned members has arisen on the interpretation of the expression 'belonging' occurring in section 2(1)(16) of the Wealth Tax Act, 1963 (before amendment introduced by Finance Act, 1997 the relevant provision was numbered as section 2(1)(m). By Finance Act, 1997 the contents of the provisions have been left intact and the provisions have been merely re numbered). Both the learned Members have dealt with the exposition of law in detail which I will consider presently. Heard Mr. Aftab Ahmed, learned representative for the department and Mr. Sikandar Hayat Khan, Advocate for the respanded/as5essee. A perusal of the opinion expressed by the learned Judicial Member shows, that according to him 'the expression 'belonging' is wider term than the expression ownership. According 'to the learned Judicial Member the expression 'belonging' includes the connotation of ownership as well as the absolute right of user. The order as follows:- "So, Whenever the expression 'belong' or 'belonging to' is used in the documents agreements, its meanings are not only confined to denote an absolute title but also possession of an interest." The learned Judicial Member has further concluded on page 8/9 of the order as follows: "From foregoing discussion we are persuaded to come to inescapable conclusion that where possession of the property has been handed over to the purchasers and the purchasers are in rightful possession of the same as against the vendor and in occupation of the property in question and, secondly the entire consideration has been paid and, thirdly, the purchasers were entitled to resist eviction from the property by the vendor in whose favour the legal title vested because conveyance has not yet been executed by him and when the purchaser in possession had a right to call upon the assessee to execute the conveyance, it cannot (sic) be said that the property legally belonged to the vendor within the meaning of expression 'belonging' to as used in section 2(m) of the Wealth Tax Act, 1963." On the other hand the learned Accountant Member is of the view that the expression 'belonging' denotes to legal ownership only and the legal ownership is acquired by execution of an instrument in accordance with the law for the time being in force whereby title is, transferred. The' learned Accountant Member has differed with the views of learned Judicial Member and has observed as follows:

"While considering the meaning of words 'belonging to' in section 2(m) of the Wealth Tax Act, my learned brother has observed that whenever the word 'owner' is used, it always refers to one who has dominion over a thing, which he has the right to enjoy and to do with it unless he is prevented by some law, agreement or covenant which restrains his rights. Accordingly he has reached. the conclusion that when the vendor has received full consideration and parted with possession and the vendee has a right to call upon him for execution of the conveyance the property does not belong to the vendor but to the vendee, It appears that my learned brother has equated the beneficial ownership with- legal ownership. I am afraid I cannot subscribe to this view because there cannot be two owners of the same property, one the beneficial owner and the other, the legal owner." The learned Accountant Member has further referred to the judgment of Indian Supreme out in the case of Nawab Sir Mir Osman Ali. Khan v. -C.W.T. (1986) 162 ITR-888) in which the similar provisions contained in the Indian Wealth " Tax Act came for consideration arid it was held that the. word 'belonging' means the legal ownership. After a careful consideration of the contentions raised on behalf of parties and the case law referred to -by the learned Judicial Member and learned Accountant Member, I am persuaded to agree with the view and opinion expressed by the learned Accountant Member. With all due deference to the pains and labour taken by learned Judicial Member, I am of the opinion that important facts escaped his notice. First, it is not always safe to place total reliance on Dictionary meanings of the words used in particular statute, while giving judicial interpretation, totally ignoring the context in which tile words are used. Although at times assistance can be taken from the Dictionary meaning but if the words have been judicially defined by the Superior Courts, the meaning so assigned required preferential treatment over the simple Dictionary - meaning. Secondly, it was ignored that the words take their shade and color from the context in which they are used, and the law of precedent is to be used with care and caution. The learned Judicial Member in addition to making reference to the Dictionary meanings contained in the Black's Law Dictionary and Webster's Dictionary has also referred to Aiyar's Law Lexicon of British India; 1946 Edition. The learned Judicial Member has also taken guidance from the judgment of Indian Supreme Court in the case of Raja Muhammad Amir Ahmed Khan v. Municipal Board of Sitapur (1965 AIR SC 1923). Judgment of Andhra Pardash High Court in the case of Controller or Estate Duty v. Lstatc of Date Sanka Simhachalam (1975) 99 ITR 370) and Calcutta High Court in the case of Controller of Estate Duty v. Jyotirmoy Raja (1978) 112 ITR 969). The learned Judicial Member has also referred. to the judgment of the Dacca High Court in the case of Salikupa Cooperative Multipurpose Society v. Sehangr (PLD 1957 Dacca 374). In all these judgments the word 'belonging' has been considered but the learned Judicial member failed to notice that the word "belonging' was used in all the statutes under consideration in authority different context and, therefore, it was not proper. to place reliance on the said judgment for the purpose of ascertaining the meaning of word 'belonging' used in the Wealth Tax Act, 1963. The learned Accountant Member has rightly observed that the Supreme Court of India while deciding the case of Nawab Sir Mir Osman Ali khan with reference to the expression 'belonging' used in Wealth Tax Act considered-its own judgment in the case of Raja Muhammad Amir Ahmed Khan Municipal Hoard of Sitapur rind still held that for the purpose of Wealth Tax the expression 'belonging' means legal ownership. So far the judgments of Andhra Pardesh High Court and Calcutta High Court referred to by the learned Judicial Member are concerned, I find that the word 'belonging' came for consideration before the two High Courts with reference to section 33(l)(N) of the Estate Duty Act, 1953 and, therefore, it was held that the word 'belonging' used in section 33(1)(N) of the Estate Duty Act, 1953 was capable of denoting an absolute title yet it is not confined to that sense because even possession of an interest less than that of full ownership could be signified by the word. This opinion was expressed because of the provisions contained to the Estate Duty Act, 1953. Thus, I am of the considered opinion that the word 'belonging' was interpreted by the Supreme Court of India in the case of Raja Muhammad Amir Ahmed Khan and the High Courts of Andhra Pardesh and Calcutta in the context of the relevant laws which came for consideration and shall have no bearing when the word 'belonging' is considered with reference to the provisions contained in the Wealth Tax Act. In this regard the relevant interpretation is as given by the Supreme Court of India in the case of Nawab Sir Mir Osman Ali Khan. So far the reference to the judgment of Dacca High Court is concerned here again the word 'belonging' was used with reference to the provisions contained in Order XXXIII, Rule II, C.P.C. which deals wit the Suits Ay Paupers. The relevant law pertained to the filing of suit by pauper who is trot possessed of sufficient means to enable him to pay the fee prescribed by law for the plaint in such suit. Thus the Dacca High Court's judgment was in entirely different context and, therefore, I am of the considered opinion that the learned Judicial Member fell in error in placing reliance on the judgment in which the expression 'belonging' was used in entirely different context and in doing so the principle of interpretation of statute and the law of precedent totally escaped his consideration. I have carefully considered the judgment of Indian Supreme Court in the case of Nawab Sir Mir Osman Ali. Khan in which similar provisions came for consideration as being considered in this case and I am persuaded to respectfully follow the opinion of Hon'ble Supreme Court of India. For the forgoing reasons and while agreeing with the opinion of learned Accountant Member, it is held that the assessee in this case was not the legal owner of the plot in question as the title therein was not transferred to him and, therefore, it could not be included in his net wealth. The question of including the market value of the plot in the net wealth of the assessee, therefore, does not arise. As the assessee is an individual and all the moveable and immoveable properties held by him are included in the assets for the purpose of wealth tax. therefore, the money invested for acquiring the plot is to be included in his net wealth and not the value of plot which does not belong to him. The issue referred to me is answered as above. Consequent to above findings the appeals at the instance of department are, hereby dismissed. The Assessing Officer while framing the fresh assessment is directed not to include the market value of plot in the net wealth of the assessee but to include only the mount of investment made by him for acquiring the plot under consideration in his net health. C.M.A./M.A.K./89/Tax(Trib.) Appeals dismissed.