2010 PLP (Trib (PTD)

KHALID WAHEED AHMED (JUDICIAL MEMBER).

The above titled departmental appeal is directed against the order, dated 12-5-2003 of CIT/WT(A) Zone-II, Islamabad.

2. Mr. Sikandar Hayat, Advocate, the learned A.R. appeared on behalf of the assessee and Mr. Abdul Shakoor, the learned D.R. appeared on behalf of the department.

3. Brief facts of the case are that proceedings in the case of assessee-respondent an individual were initiated on the basis of infor mation received from CDA that the assessee purchased house in Sector G-9/4 Islamabad on 3-6-1999 for a consideration of Rs.12,00,

000. In compliance of the notice issued under section 56 of the Income Tax Ordinance 1979 (hereinafter referred as repealed Ordinance) returns were filed to declare nil income for the assessment years 1999.-2000 and 2000-2001. Notice under section 61 as well as 62 of the Ordinance requiring the assessee to explain the sources of investment made in the purchase of House No.989, St.108, G-9/4 on 30-6-1999 for a consideration of Rs.12,00,000 were also issued by the Assessing Officer. In response to which the source was explained to be gift received from the husband. Out of the total gift claimed at Rs.12,00,000 an amount of Rs.2,70,000 withdrawn from the joint account maintained by the assessee with her husband was accepted by the Assessing Officer. Gift of the prize bonds of the value of Rs.9,30,000 shown by the assessee was however not accepted by the Assessing Officer and added to the income of the assessee under section 12(18) of the repealed Ordinance for the reason of not having been made through cross cheque. Appeal was filed by the assessee before the First Appellate Authority against the assessment framed by the Assessing Officer to challenge the addition made under section 12(18) of the repealed Ordinance. It was, the contention of the assessee before the First Appellate Authority that gift of prize bond made by the assessee was in accordance with the provisions of Islamic Law. According to contention of AR of the assessee before the First Appellate Authority the Islamic Law being special law over-rided the provision of subsection (18) of section 12 of the repealed Ordinance hence the assessee were not applicable in the case of the assessee-respondent. It was also contended by the AR of the assessee before the first appellate authority that section 12(18) dealt with loans, gift and advances of cash therefore gift of prize bond did not fall within the scope of this section. According to learned AR of the assessee the prize bonds were not considered to be cash in terms of the provisions of section 12(18) of the repealed Ordinance. This plea of the assessee was accepted by the CIT(A) and the impugned addition was deleted by him with the observation that the prize bond did not fall with the ambit of section 12(18) of the Income Tax Ordinance 1979. The above findings of the CIT(A) have been assailed by the department on the following ground:

1. That the learned CIT/WT (A) was not justified to delete the addition made at Rs.930,000 on the ground that the prize bonds were not transferable through banking channel as prize bonds are just equivalent to cash and are freely convertible as cash in the open market. As such these fall under the ambit of section 12(18) of the repealed Income Tax Ordinance, 1979.

4. Learned DR in his arguments supported the contention of the Revenue as per ground of the departmental appeal. Learned AR submitted that the prize bond were equivalent to cash because these were easily convertible to cash in the open market. According to learned DR prize bond being equivalent to cash were covered in the word "sum" used in subsection mentioned above. Learned DR further contended that advances and gifts were of cash which earlier not so required up to the 1st July, 1998 were required to be made through cross cheques with the substitution of section 12(18) through Finance Act 1998. In this regard clarification by CBR on this subject through Circular No.11 of 1998 25th of July, 1998 was also referred by AR of the assessee. Learned AR of the assessee on the other hand in his arguments defended the impugned order of the First Appellate Authority. According to learned AR the CIT(A) was justified in holding that prize bond as such were not cash in itself therefore do not fall within the ambit of section 12(18) of the repealed Ordinance. Learned AR contended that in case of fiscal statute the language used by the legislature was to be strictly followed in its ordinary meaning. To substantiate his contention a decision of Indian jurisdiction reported as (1959) 17 ITR 489 Bombay High Court was also referred by learned A.R. of assessee. According to learned AR the prize bonds were not cash, as such, their transfer which was as essential ingredient of gift, could not be made through banking cannel therefore provisions of section 12(18) were not attracted in the assessee's case. Learned AR submitted that as per Black Law's Dictionary, page 1287 (5th Edition) the meaning of word "Sum" commonly used is money or currency. Learned A.R.. of assessee defended the impugned order by putting forth arguments in respect of all the grounds taken by the assessee in appeal before the First Appellate Authority although the CIT(A) had accepted the assessee's appeal with the observation that gift of prize bonds do not fall within the ambit of section 12(18) of the Ordinance. In addition to his arguments in support of above findings learned AR of assessee contended that gift made under the Mohammedan Law was a valid gift even if it was made orally and in this context cited the decision of honourable Supreme Court of Pakistan reported as 1987 (SCMR) 1403. Another unreported decision of Tribunal dated 17-10-1998 in I.T.A. No.495/IB/1987-88 was also relied upon by learned AR of assessee to substantiate his viewpoint on above mentioned issue. Learned AR further argued that Mohammedan Law was a special law being applicable to Muslims only, as such, it had preference over the Income Tax Ordinance 1979 being a general law. Learned A.R. relying on the decision of honourable Supreme Court of Pakistan reported as PLD 1985 (SC) 159 contended that special law was not to be interfered with by the provisions of general law. Learned AR further contended that in presence of all the ingredients of a valid gift including the availability of prize bonds with the husband of the assessee as well as the offer and acceptance on the part of the donor and donee having not been disputed, there was no justification with the assessing office for not accepting the gift.

5. Arguments of learned representatives of both the parties have been heard and the orders of the authorities below as well as the case law cited by the learned AR of the assessee have also been perused. The CIT(A) deleted the addition under consideration made to the income of the assessee with the following observations:- (i) The arguments put forth by the counsel of the assessee have been considered. I have to observe that the husband of the appellant gifted prize bonds to his wife and prize bonds, as such, do not fall within the ambit of section 12(18) of the Income Tax Ordinance 1979. Since, there is no dispute regarding the fact that the assessee's husband had duly declared these prize bonds in his wealth statement as on 30-6-1998 and the same prize bonds were gifted to his wife, during the period relevant to assessment year appellant for utilization for the purchase of property. In view of these facts. I hold that the assessing officer has erred in invoking the provision of 12(18) ibid. The addition, so made is accordingly deleted. Apart from the meanings defined as "currency of money" in Black's Law Dictionary of the word "sum" used in subsection 18 of section 12, even otherwise the only plausible meaning which can be given to the word "sum" used therein, is cash or money as is obvious from the plain reading of the said subsection which is reproduced hereunder:- Where any sum claimed, or shown, to have been received as loan or advance or gift by an assessee during any income year commencing on or after the first day of July, 1998, from any person, not being a banking company, or a financial institution notified by the CBR for this purpose, otherwise than by a crossed cheque drawn on a bank, or through a banking channel from a person holding a National Tax Number, the said sum shall be deemed to be the income of the assessee for the said income year chargeable to tax under this Ordinance: Provided that, where the said loan as advance or gift is claimed or shown by way of the explanation, referred to in subsection (1) of section 13, in a case to which the first proviso to the said subsection applies the income under this subsection shall relate to the assessment year referred to in the said proviso. The viewpoint expressed by learned AR of assessee that in case of Fiscal statutes language used therein is to be strictly followed also carries weight. The contention of the Revenue as per grounds of Department Appeal is that prize bonds are equivalent to cash which means that even according to viewpoint of the department the prize bonds in itself are not the cash. The provisions of subsection 18 of section 12 require the transaction of loan or advance or gift through a cross cheque drawn on bank or through a banking channel which is only possible in the case of transaction in respect of cash and not otherwise. The word "sum" used in subsection 18 of section 12 cannot to stretched to include the other items, even if those are easily convertible into cash. Under the circumstances we do not find any reason to interfere in the findings of the CIT(A) in holding that prize bond as such do not fall within the ambit of the subsection (18) of the section 12 of the repealed Ordinance. The impugned order of the CIT(A) is therefore maintained.

6. As a result the appeal of the Revenue fails. C.M.A./107/Tax (Trib.) Appeal dismissed.