2002 PLP (Trib (PTD)

3. The I.A.C. issued show-cause notice on the matter and in reply filed the appellant explained that so far as excess liabilities of Rs. 7,17,874 were concerned, here the position had been misconceived insofar as this amount represented the personal capital of Mr. Imtiaz Rafi Butt, Member of A.O.P. and/the same had been reduced from the A.O.P.'s capital as Mr. Imtiaz Rafi Butt had declared the same in his personal case and if the said amount had not been reduced from the A.O.P's capital, there was an apprehension that it might suffer double taxation both in the hands of the A.O.P. as well as the individual member in his personal wealth tax case. As for reduced unsold area of Landmark Project on the valuation date it was explained that the loan was secured against all assets of Mr. Imtiaz Rafi Butt, including the Landmark Project and all these were liable to levy of wealth tax. It was further argued that there was no sanction for partial allowance of claimed liability and the liability was required to be allowed in full or not at all. It was also contended that as per case law from Indian jurisdiction, that there was no sanction in law to restrict a liability claim even where loan obtained is secured against assets that may be partially exempt from levy on wealth tax.

4. Appellant's reply was duly considered by the I.A.C. and found to be unsatisfactory. Accordingly, the I.A.C. calculated that liability claim to the extent of Rs. 1,01,38,361 was inadmissible and had been allowed in excess. The I.A.C. also apparently maintained his initial finding that total liabilities claimed at Rs. 1,61,64,604 in the Return had been wrongly and illegally allowed at Rs. 1,68,82,

478. The assessment for 1995-96 was accordingly cancelled and A.C.W.T. directed to reframe the same in the light of observations recorded in the order passed under section 17-B of the Wealth Tax Act.

5. Before the Tribunal, the appellant has cited copious case law from Indian jurisdiction to substantiate his contention that liability amount cited by appellant in the Wealth Tax Return was correct and had been rightly assessed by the A.C.W.T.

6. The D.R. has been heard.

7. We have heard both sides and have given the matter our earnest consideration and we find that keeping in mind the relevant provisions of the Wealth Tax Act, 1963, the Assessing Officer had failed to recognize that a significant part of the assets against which the bank loan had been obtained did not suffer wealth taxation as they had been sold but before the valuation date. No doubt the appellant has asserted that the entire assets against which the bank loan was secured was "liable" and "chargeable" to wealth tax. However, the catch is that notwithstanding their asserted chargeability to wealth, the sold out portion of the Landmark Project had not actually suffered wealth tax. The appellant apparently feels that this position has not been contrived deliberately and when the loan amount was negotiated the assets subsequently sold out were available and the liability claim should therefore be allowed in full as the department has not established that the assets against which the loan amount was secured were ever "exempt" (either in full or in part) from levy of wealth tax,

8. After looking into the matter in depth, we find that as pert provisions of Pakistan Wealth Tax Law, the assets against which liability contrived by obtaining bank loan is secured must be actually available for levy of wealth tax in order that the liability be admitted for set off' against the total assets declared. The provisions of section 2(16)(ii) of the Wealth Tax Act, 1963, are quite explicit on this score. In the case presently before us wealth tax is "not payable" on part of the, assets of the A.O.P. as these assets have been sold out prior to the valuation date. It is immaterial in our view that the appellant could not have anticipated their sale prior to the valuation date. The fact of the matter remains that as a result of their sale, the appellant did not suffer wealth taxation on these sold out assets which is violative of the fundamental requirement of taxability of assets against which liabilities are secured. It is not enough that these assets be "chargeable" to wealth tax Rather, it is our view that the law requires that these assets be available for charge of wealth tax and where these are not available for any reason that wealth tax demand cannot possibly be raised against them, then the liability claim must be restricted to that extent as per statutory stipulation i.e. section 2(16)(ii) of the Wealth Tax Act. It is pointed out that wealth tax is "payable" only when the assets are available for levy of wealth tax, and where the assets are not available, wealth tax would not be payable.

9. It is to be noted that wealth tax law in India apparently does not have the equivalent of section 2(16)(ii) of the Wealth Tax Act, 1963 in Pakistan. For that reason the Indian case law cited by appellant is not on all fours with appellant's situation in Pakistan. 10, In view of the discussion above, we hold that the provisions of section 17-B of the Wealth Tax Act have been rightly invoked by the Assessing Officer,

11. Resultantly, the appeal fails. C.M.A./M.A.K/140/Tax (Trib.) ????????????????????????????????????????????????????????? Appeal dismissed.