1988 PLP (Trib (PTD)

rupees. Nine thousand rupees Any income chargeable under the head "income from house property" in respect of building the erection of which is completed at any time between the first day of July, 1981 and the thirtieth day of June, 1988 (both days inclusive) and which (a) is situated within the limits of residential sectors of Islamabad and (b) is intended to be, and is actually used for residential purposes only, for a period of five years from the date of such completion subject to the following limits, namely:- (i) Where the annual value of such building does not exceed twenty The whole of such value. (ii) Where the annual value of such building does exceed twenty thousand rupees. Nine thousand rupees. Any income chargeable under the head" income from house property" in respect of any unit of a building comprising multistoreyed flats, apartments. or apartment houses if the annual value of the unit does not exceed three thousand and six hundred rupees the erection of the building is completed at any time between the first day of July, 1974 and the thirtieth day of June, 1983 (both days inclusive), for a period of five years from the date of such completion. Any income chargeable under the head" Income from house property" in respect of any unit of a building comprising multistoreyed flats, apartments or apartment houses if the annual value of the unit does not exceed twelve thousand rupees and the erection of the building is completed at any time between the first day of July, 1977 and the thirtieth day of June. 1988 (both days inclusive), for a period of five years from the date of such completion." Now after reading clause 68, it appears that any person who has completed or completes a building between the 1st day of July, 1981 and the thirtieth day of June, 1988, with the intention of using it for residential purposes for a period of 5 years from the date of its completion, he would be entitled to exemption if the annual value of such building did not exceed Rs.18,

000. But if it exceeds from Rs.18,000, he would be entitled to claim exemption at Rs.9,000 If I read clause 69, it appears that if a building is completed during the period mentioned in clause 68 of the Schedule but if it is situated within the limits of residential sectors of Islamabad and is intended to be or has actually been used for residential purposes for a period of 5 years, it would also be exempted provided its annual value does not exceed Rs.20,000, however, if it exceeds' Rs.20,000 the exemption would be to 'the extent of Rs.9,000 only. Thus, from the perusal of clauses 68 and 69 it appears that the former deals with building erected anywhere in Pakistan whereas the latter deals specifically with buildings, which are erected in residential sectors in Islamabad. However, one thing is common to both the clauses they deal with income derived from such buildings. Now I come to clauses 70 and 71 and find that both the clauses deal with income derived from any unit of building provided such building consists of multistoreyed flats, apartments or apartment houses and their annual value does not exceed Rs,3600 each in the case of that building which was completed between the first day of July, 1974 and the thirtieth day of June, 1981 and Rs.12,000 in respect of that building which was completed between the first day of July, 1977 and the thirtieth day of June, 1988 From the perusal of both the clauses, it appears, that before the exemption is granted to the assessee, an assessee must prove before the Income Tax Officer that:- (i) he is the owner of a unit of building; (ii) that the building consists of multistoreyed flats, apartments or apartment houses; (iii) that annual value of the unit does not exceed Rs.3600 or Rs.12,000 as the case may be; and (iv) that it was completed either between the first day of July, 1974 and the thirtieth day of June 1988, or between 1st day of July, 197' & the thirtieth day of June. 1980. If he succeeds in establishing these ingredients exemption would be granted to him; With this discussion if I turn to the merits of this appeal, I find that the building of the appellant does not consist of multistoreyed flats, apartments or apartment houses. It is three storeyed building and ground floor consists of six shops, which have been let out on H rent. Flats have been constructed on first and second floors Since ground floors are not used as flats, therefore, the building cannot be said to be a building comprising multistoreyed flats, apartments or apartment houses. The appeal, therefore fails on this ground alone, However, let me examine the issue from another angle also. Mr. Khalid Majeed, learned counsel for the assessee had vehemently argued that the exemption was available to units of the building and the question whether the building belonging to one and the same person, was wholly irrelevant. According to learned authorised representative, multistoreyed building cannot be constructed by individuals hence exemption was granted to the owners of the unit of the building, I have given a careful consideration to his submissions. I think, I can better deal with the arguments by illustrations. Firstly, I take up case of a company or a registered firm etc. which wants to build multistoreyed flats for earning income from rent. Here such company or firm etc, would be the owner of each and every unit of the building. Now I take up the case of a construction company which launches a multistoreyed flats scheme and the same is advertised. The units are booked by individuals who want to own them. They pay cost of the flats to the construction company in various instalments as the construction company starts construction. When the entire building is completed, delivery of the booked flats is given and lease deeds are duly executed in their favour. Thus they become the owners of their units. It is clear from both these illustrations, that in the first case, exemption would not be available except under clauses 68 or 69 if at all they apply to the company or firm etc. Which completes the entire building for letting it out on rent as it would be the owner of the entire building. One who owns the whole also owns each and every part thereof. However, if argument of Mr. Khalid Majid, is accepted then companies and the registered firm etc, of the first illustration would claim exemption regarding every unit as it is the owner of it and thus would not pay tax on the income derived from the whole building. This definitely does not appear to be the intention of the legislature while laid down clauses 70 and

71. However, in the case of second illustration the owners of the flats would be the owners of the units of the building and would be entitled to claim exemption if their case falls under either clause 70 or 71 as the case may be, with this background, I once again revert to the merits of this appeal and find that the submission of Mr. Maqbool Hussain Shah the learned DR carries weight. In my humble opinion, the expression "any number of unit of building" means, any one unit of the building" and not" any number of units of the building" as is contended by. Mr. Khalid Majid. If submission of Mr. Khalid Majid is accepted then) the owner of the entire building would be entitled to exemption regarding the whole of the building claiming exemption. regarding every unit of the building as its owner which definitely does not appear to be the policy of law. It appears that exemption has been granted under clauses 70 and 71 regarding those multistoreyed flats, which are constructed for low income group and which are owned by such individuals. Before parting with this appeal, let me mention here that the expression "unit of building" refers to "a flat" or any apartment" or "apartment house" as these words which have been used in order to explain the entire multistoreyed building in clause 70 and 71 of the second schedule of the Income Tax Ordinance. In view of the discussion made above. I find no force in this appeal, which stands rejected. Order of learned A. A. C. is confirmed. M.B.A./466/T. Appeal dismissed.