1981 PLP 217 (PTD)

‑‑ Art. 199 read with Wealth Tax Act (XV of 1963)‑‑Question whether property in dispute liable to assessment of wealth tax and to what extent‑‑To be determined, in first instance, by Assessing Authority -Held, available remedies under ordinary law to be exhausted before invoking extraordinary jurisdiction of High Court in Constitutional petition. Pakistan to rough Secretary, Ministry of Defence v. Province of Punjab and others P L D 1975 S C 37 and Messrs Gulzar Cinema etc. v. Government of Pakistan and 4 others P L D 1978 S C 500 ref. Managing Director, Pakistan Agricultural Storage Service Corporation Limited, Lahore and another v. Nawab Din and 2 others 1981 C L C 284 distinguished. Naimur Rehman for Petitioner. N. A. Forooqi for Respondents. Date of hearing : 27th April, 1981. G. M. KOUREJO, J.‑The facts giving rise to the filing of this constitutional petition briefly stated are, that the petitioners are carrying on business of manufacturing Bread and other items of confectionary and for that purpose they acquired property of Plot No. A/30 S. I. T. E., Karachi, and constructed a factory for the purpose of the business above‑mentioned. The petitioners being a company were not liable to wealth tax under sec tion 3 of the Wealth Tax Act, 1963 before the assessment year 1979‑80 commencing from 1st of July, 1979. By the Wealth Tax Amendment Ordinance, 1980, which was to come into effect on 28th of June, 1980, the definition of the word "assets" in section 2(e) (ii) was amended and the corresponding amendment in section 3 of the Wealth Tax Act was also made, making a company liable to Wealth Tax in respect of its "immovable assets" as defined in section 2(e) (ii). By this amendment assets of a company included "immovable property held for the purpose of business of construction and sale, or letting out of property" Though the petitioners constructed the factory for the purpose of their business, since all the business premises were not always occupied, they licensed out certain spare spaces on the basis of square foot. Consequently they licensed out to outsiders certain godowns which were not occupied for the business purpose. In view of the amendment above‑mentioned the respondent NO.1 considered the let out property subject to assessment of Wealth Tax and issued notices to the petitioners. The petitioners appeared before the respondent No 1, but before the completion of the inquiry in exercise of the jurisdiction by the respondent No. 1, they came in this constitutional petition.

2. The contention raised on behalf of the respondents mainly is, that in accordance with the Wealth Tax Amendment Ordinance, 1980, since admittedly some of the property is let out to the outsiders the petitioners are liable to assessment of wealth tax in respect of the property let out and that since they have failed to exercise the jurisdiction in accordance with the provisions of the Wealth Tax Act, mere assumption of the jurisdiction on their part shall not give rise to cause of action to the petitioners to invoke the constitutional jurisdiction of the High Court in this constitutional petition. J. On the basis of the pleas raised the petition would involve the questions of interpretation of amended section 2(e) (ii) of the Wealth Tax Act as well as of the jurisdiction of this Court in this constitutional petition.

4. The answer to the question raised in the petition with regard to the interpretation of amended section 2(e) (H) lies in finding out as to whether the word "or" in‑between,' immovable property held for the purpose of the business of construction and sale "and" letting out of property" in the amended section 2(e) (ii) defining "assets" has been used in conjunctive or in disjunctive sense. Section 2(e) (ii) reads as follows :‑ "Assets include" "1n the case of a firm and association of persons or a body of individuals, whether incorporated or not, and a Company, immovable property held for the purpose of the business of construction and sale, or letting out of property."

5. The meaning of the word "held" in Law Terms & Phrases judicially interpreted by Mokal is "lawfully held" In Webester's New 20th Century Dictionary (2nd Edition), it is stated that In legal parlance the word "held" means "to possess" by "legal title". In other words" word "held" is technically understood to mean "to possess" by legal title". Reference in that respect is invited also in the case of Budhan Singh and another v. Nabi Bakhsh and another. The further question for consider ation would be as to whether the word "or" between the "business of construction and sale" and "letting out" has been used in a conjunctive or disjunctive sense. Ordinarily "or" is used in disjunctive sense. The Governing rule, however, is to carry out the intention of the Legislature. It may be found necessary to read the conjunctions 'or' and 'and' one for the other depending on the consequences intended by the Legislature.

5. Applying the rule stated above we find no evidence of the intention on the part of the Legislature in the amended clause 'or' used for "and". On the contrary the plain meaning of the clause for the purpose of "business of construction and sale or subletting" is "for the purpose of business of construction of sale" or "for the purpose of business" of subletting of the property". Therefore, very clearly the two clauses have been intended by Legislature to be used in disjunctive sense. The reasonable interpretation put on the amended clause therefore would be that assets would include immovable property" held" or "possessed" for the purpose of the business of construction or sale or letting out of property. Whether the original purpose of the property within the meaning of the memorandum of company association may be, it may subsequently change to suit the purpose from time to time. It has been contended on behalf of the petitioners that the original purpose of the company's business was purely confectionery making and that the business due to circumstances having received a set‑back, they have licensed out some of the godowns which were originally constructed for the purpose of the business of the confectionary and therefore, the property cannot be assessed under the Wealth Tax Act as a property. We have been referred in that respect to the memorandum of association of the Company Annexure II and clarification issued by the Central Board of Revenue Annexure IV. We have given a very careful consideration to these documents but we are unable to find anything to support the contention of the petitioners to the effect that the word "or" between the words "construction and sale" and "letting out the property" has been used in a conjunctive sense. Mr. Nasim Ahmed Farooqi, the learned counsel for the respondents has drawn our attention to the case of Salehon and others v. The State A I R 1970 S C 1880, in support of the view that word 'or' ordinarily is used in a disjunctive sense and in any case the intention of the Legislature is to be gathered from the plain reading of statute and the surrounding circumstances. Judging in that light we have no doubt in our mind that the word 'or' has been used in the amended clause 2(e)(ii) in disjunctive sense and the immovable property held or possessed by petitioners for the purpose of business of letting, out of property, is included in the assets of the Company within the meaning o section 2(e) (ii) and that it would he subject to assessment under the Wealth Tax Act, 1963.

6. Coming to the question of jurisdiction of this Court in this Constitu tional Petition, Mr. Naimur Rehman, the learned counsel for the petitioners, has mainly relied on the case of Managing Director, Pakistan Agricultural Storage Service Corporation Limited, Lahore and another v. Nawab Din and 2 others 1981 C L C 284, in support of the contention that even assumption of jurisdiction by the Taxing Authority would confer jurisdiction on this Court in this Constitutional petition. The facts and circumstances of that case are dis tinguishable from those of the instant case which involves the question of assessment of taxes by the Assessing Authority. Mr. Nasim Ahmed Farooqui, the learned counsel for the respondents has in that respect relied on the case of Pakistan through Secretary, Ministry of Defence v. Province of Punjab and others P L D 1975 S C 37, wherein it was held that the question as to whether the particular property is exempted under these acts will be a question of fact to be consid ered by the Assessing Authority in each case. He has further relied on the Division Bench decision in the case of Messrs Gulzar Cinema etc. v. Govern ment of Pakistan and 4 others P L D 1978 S C 500, wherein the above authority of the Supreme Court was relied on and it was held that the question whether the property is exempted from. property tax will have to be decided in each case with reference to relevant documents and this question of fact will have to be considered by the Assessing Authority in each case. It was further held by the learned Judges of the High Court that it was not open to them to grant the petitioners any exemption on this ground for that question will have to be determined by the relevant Assessing Authority. The above‑mentioned authorities have a direct bearing to the relevant circumstances of the present case. They clearly lay down that in such a situation an illegality in the exercise of jurisdiction by the Assessing Authority would confer jurisdiction on this Court in the Constitution petition rather than an assumption of jurisdiction alone as has been done in the instant case. It would therefore, be clear that the Assessing Authority would in the firs instance exercise jurisdiction on the basis of the evidence and the document before it as to whether the property in question is liable to assessment o taxes and to what extent and that the available remedies are exhausted under the ordinary law before the extra ordinary jurisdiction of this Court is invoked in the Constitutional petition.

7. The result, therefore, is that the petition fails on both the pleas and is dismissed accordingly with no order as to costs. Petition dismissed.