P L D 1976 Lahore 229 (PLP)

MUHAMMAD AKRAM, J.-On the ,3rd of March, 1971 Col. Abid Hussain Shah of Jhang died at Lahore. His widow Syeda Kishwar Sultana and daughter Syeda Abida Hussain filed statement of the estate left by the deceased in form E. D. 1 of the Estate Duty Act, 1950. According to them the declared gross value of the estate was Rs. 5,33,885 only. This was inclusive of the value of the agricultural land left by the deceased fixed at Rs. 1,76,

642. On the 11th of December 1973 the Deputy Controller of Estate Duty' Lahore inter alia assessed the value of the agricultural land at Rs. 3, 82,348 against Rs. 1, 76,642 declared and fixed the net value of the estate left by the deceased at Rs. 8,13,059 only. The accountable persons preferred an appeal against the order before the Income-tax Appellate Tribunal (Pakistan), Lahore under section 59 (3) of the Estate Duty Act. They inter alia objected against the assessment of the value of the agricultural land forming part of the estate of the deceased. On the 17th of April. 1973 the Tribunal accepted their plea in this connection and allowed the appeal. In doing so the Tribunal purported to rely on the pronuoncement of the Supreme Court in Ahmad Khan v. Controller of Estate Duty (PLD 196950123) and estimated the value of the agricultural land in dispute at 10 times its produce index units.

2. In these circumstances the Controller of Estate Duty (Pakistan), Lahore has filed this application under section 59-A (1) of the Estate Duty Act, 1950 referring the following questions of law said to arise out of the appellate order dated 17th of April, 1973 passed by the Tribunal concerning the valuation of the agricultural land left by the deceased:- "(1) Whether the Tribunal was right in holding that the provisions of rule 25-A of the Estate Duty Rules were applicable to the facts of this case even though Col. Syed Abid Hussain had died before the enforcement of this rule ? and (2) Whether on the facts and in the circumstances of this case, the Tribunal was right in holding that the ratio of the Supreme Court judgment in the case of Ahmad Khan v. The Controller of Estate Duty was applicable?"

3. We have heard the learned counsel for the petitioner. Neither the respondents nor their learned counsel appeared before us at the hearing and the proceedings were taken ex parte against them. Section 4 of the Estate Duty Act is the charging section for the levy of estate duty. It lays down that in the case of every person dying after the commencement of this Act, there shall, save as hereinafter expressly provided, be levied and paid upon the "principal value" of all property, settled or not settled, which passes on the death of such a person, a duty called "estate duty" at the rates laid down in the Schedule. In this connection subsection (1) of section 38 of the Act further lays down that the "principal value" of any property shall be estimated to be the price which in the opinion of the Controller it would fetch if sold in the open market at the time of the deceased's death. On the 1st of July, 1971 a proviso was added to this subsection to the effect that where the rules made under this Act, so provide, the principal value of any property shall be determined in the manner prescribed by the rules. Subsection (2) of section 38 provides that in estimating the principal value under this section the Controller shall fix the price of the property according to the market price at the time of the deceased's death. It is, therefore, evident that in the absence of any rules to the contrary framed under the, proviso to subsection (1) of section 38 the market price which a willing buyer is prepared to pay to a willing seller for the property at the time of the death of the deceased has to be computed for the purposes of this Act.

4. In the instant case admittedly Col. Abid Hussain Shah died on the 19th of January, 1971. The proviso to subsection (1) of section 38 was inserted afterwards on the 1st of July 1971. In pursuance to this proviso on 29th October 1971, rule 25-A was inserted in the Estate Duty Rules, 1950 prescribing different modes of valuation of agricultural lands. Sub-rule (1) of this rule lays down that in the area of former Province of West Pakistan the value of agricultural land shall in terms of rupees per acre be the same as is equivalent to ten times the figures of produce index of such land as provided for the purposes of Rehabilitation Settlement Scheme prepared by the Rehabilitation Commissioner, West Pakistan under the Pakistan Rehabilitation Act (XLII of 1956). Obviously, the afore-mentioned proviso and this rule have no retrospective application to the facts of this case. In Sh. Rehmatullah v. The Deputy Settlement Commissioner, Centre "A" Karachi and others (P L D 1963 S C 633) it was held that subordinate legislation like the rules is applicable prospectively and has no retrospective operation. We are, therefore, clear in our mind that rule 25-A of the Estate Duty Rules was not in terms retrospectively applicable to this case. Indeed in this connection the Tribunal itself rightly observed that "there is no quarrel with this proposition which has been confirmed by the Supreme Court". We find that the petitioner has failed to properly appreciate this finding and has misdirected himself in referring the first question reproduced above which does not properly arise out of the Tribunal's order.

5. Nevertheless the Tribunal further remarked that: "However, there is another ruling of the Supreme Court on the point of the valuation of the agricultural land which is very pertinent. In the case of Ahmad Khan v. Controller of Estate Duty the Supreme Court confirmed produce index method for calculating the market price of the agricultural land and this decision was incorporated into the rule subsequently, showing approval of this method by the concerned authorities. In the circumstances, the declared value of agricultural land at 10 times produce index units was correct and should be adopted for the assessment of the estate duty. The plea of the appellant's succeeds here."

6. The above reliance by the Tribunal on the ruling of the Supreme Court in Ahmad Khan v. Controller of Estate Duty is obviously to the case reported as P L D 1969 S C

123. But on a careful consideration we find that the facts in that case are distinguishable and it was decided on its own peculiar facts. 1n that case also a question as to the valuation of the cultivable and uncultivable lands for the purposes of the Estate Duty Act was mooted in appeal before the Supreme Court. In that case it was argued at the hearing by the learned counsel for the appellant before the Supreme Court that at one stage he had even offered to sell the uncultivable lands in dispute to the Government at the rate of one rupee per acre. On this the case was adjourned for the learned counsel for the Controller of Estate Duty to enable him to take instructions in connection with the offer. But eventually the Government did not accept the offer made at the bar. The Supreme Court held that the transactions of sale on which reliance was placed by the High Court could not form the basis for calculating the value of lands in question. They related to small areas and the prices had varied widely. In the opinion of the Supreme Court it was difficult from those sales to come to a definite finding as to the average price of the agricultural land in question. In the circumstances and on these facts the Supreme Court found no reason to discard the report of Mr. Ghulam Ali Alvi, Local Commissioner appointed by the High Court for the purpose to the effect that it would be more appropriate and proper to base the valuation on the produce index value of the land. It is evident from the above that in the first instance the Supreme Court had endeavoured to ascertain the value of the agricultural land with the help of the instance of sales of other lands in the locality. But eventually the Supreme Court found that these instances of sale brought on the record were distinguishable and not at all helpful in ascertaining the market value of the land in question in that case. On these facts and in the circumstances, in the absence of any other reliable evidence forthcoming on the record and merely as a last resort, the Supreme Court in its judgment deemed it proper to rely on the produce index value of the land. With due deference and respect, it is evident that the Supreme Court decided that case before it on its own facts but otherwise it did not lay down any such ratio on a point of law for general application. In the instant case before us the Deputy Controller of Estate Duty, Lahore has relied on the data supplied by the revenue authority in ascertaining the market value of the land in question. But the Tribunal on appeal did j not even advert to this data with any discerning mind. The Tribunal was not justified in blindly ignoring all that material on the record without any discussion and in relying on the judgment of the Supreme Court in Ahmad Khan v. Controller of Estate Duty without first preparing the ground and laying down the foundation for doing so. In another case T. R No. 43 of 1971 "Mst. Wazir Bibi etc. v. Income-tax Appellate Tribunal (Estate Duly), Lahore" a Division Bench of this Court of which one of us (Muhammad Akram, J.) was a member has similarly distinguished Ahmad Khan's case and held that the observations prude by the Supreme Court make it absolutely clear that as no other satisfactory method of valuing the lands involved is that case was found feasible and acceptable and the produce index value method was adopted as the only alternative left behind in the facts and circumstances of that particular case.

7. For the foregoing reasons we are of the opinion that question No. 1 reproduced above does not strictly arise out of the Tribunal's order. Also, the Tribunal was not justified in holding that the ratio of the Supreme Court judgment in Ahmad Khan v. Controller of Estate Duty was applicable to the facts and circumstances of this case and we answer the second question reproduce in the negative. This reference is, therefore, returned as above. But there is no order as to costs in the circumstances of this case. S. Q. Reference answered.