2002 PLP (Trib (PTD)

Ahmed Kamal, D.R. for Respondent Date of hearing: 11th May, 2002. MUHAMMAD SHARIF CHAUDHRY (ACCOUNTANT MEMBER). ‑‑‑Appeal has been filed by a wealth tax assessee to call in question appellate order dated 21‑9‑2001 passed by Commissioner Income Tax/Wealth Tax Appeal Zone‑IV, Lahore for the year 2000‑2001 under section 23 of the Wealth Tax Act. It has been contended in the grounds of appeal that the learned Commissioner was not justified to uphold the disallowance of liabilities. According to the appellant, his claim of liabilities is in the form of securities which have been received from the tenants and which are refundable to the tenants at the time of vacation of property by them and, therefore, the liabilities are admissible as deduction from wealth.

2. It has been submitted by the AR of the appellant that the judgments of the ITAT relied upon by the Wealth Tax Officer for disallowing assessee's claim are not applicable to his case. In the quoted judgments, it has been pointed out by the AR, the ITAT had disallowed claim of unadjusted advance rent as liability, whereas in assessee's case the claim is not that of unadjusted advance rent but the claim relates to amount of securities which was received by him and which are payable to the tenants when they vacate assessee's property. It has also been submitted by the AR that in the preceding years i.e. in the years from 1994‑95 to 1999‑2000 the liability in question has been allowed to the assessee.

3. The contentions of the assessee and the arguments of the AR have been strongly opposed by the learned DR. According to him Commissioner (Appeals) as well as the Wealth Tax Officer have rightly disallowed assessee's claim of liabilities relying upon the judgments of the ITAT.

4. We have considered the view‑point of both the parties in the light of the facts available on record and in the light of the judgments of the ITAT quoted by the Wealth Tax Officer in his assessment order. Both the judgments of the ITAT reported as 1995 PTD (Trib.) 942 and 1993 PTD (Trib.) 1378 relate to unadjusted advance rent. It was held by the ITAT that liability towards the tenant in respect of the unadjusted rent is neither a debt owed nor'it can be equated with loan or advance and hence it cannot be allowed as admissible deduction from wealth. However, the case of the assessee is totally different and distinguishable. The assessee has received securities from the tenants which are refundable to the tenants when they vacate assessee' premises. In proof thereof agreements with the tenants and rent deeds have been produced wherein the amounts of securities received have been mentioned separately from the rent with clear commitment that the same would be refunded to the tenants when the tenants vacate the property of the assessee. Since the nature of refundable securities is quite different from the unadjusted advance lent, both cannot be treated alike and disallowed under the cover of ITAT judgments. It would, therefore, meet the ends of justice if assessee's appeals accepted and claim or refundable amount of securities is allowed as an admissible liability.

5. Consequently appeal filed by the assessee succeeds C.M.A./M.A.K./448/Tax(Trib.) Appeal accepted.