Commissioner Of Income Tax & Wealth Tax, Peshawar vs Haji Masood-Ur-
This matter comes before the Supreme Court of Pakistan upon a petition for leave to appeal filed by the Commissioner of Income Tax & Wealth Tax, Peshawar, challenging the judgment dated 23rd December, 2003, of the Peshawar High Court. The core legal question revolves around the correct methodology and statutory interpretation of Rule 8(3) of the Wealth Tax Rules, 1963, regarding the assessment of the value of immovable properties and buildings for wealth tax purposes, specifically whether the valuation requires determining the market value and adopting the lower of the competing values as established by the Income Tax Appellate Tribunal. The Supreme Court granted leave to appeal to examine the contentions raised by the learned Attorney General that the criteria adopted by the Tribunal and upheld by the High Court run contrary to the explicit provisions and provisos of the Wealth Tax Rules, 1963. The appeal was directed to be prepared and fixed for hearing.
- How are buildings or vacant sites to be assessed for the purpose of wealth tax under Rule 8(3) of the Wealth Tax Rules, 1963?
- Whether the valuation of immovable property for wealth tax requires first determining its market value?
- Whether the lower of the market value and the value determined on the basis of gross annual rental value is to be adopted for wealth tax purposes?
- Rule 8(3), Wealth Tax Rules 1963
- Wealth Tax Act 1963
ORDER
IFTIKHAR MUHAMMAD CHAUDHRY, C.J,-- The petitioner has prayed for leave to appeal against judgment 23rd December, 2003, of the Peshawar High Court, Peshawar.
2. Relevant para therefrom is reproduced below:- "We have gone through the relevant provision. Rule 8(3) provides a methodology/scheme as to how buildings or vacant sites are to be assessed for the. Purpose of wealth tax. The plain reading of the said rule alongwith first proviso leave nothing in doubt to be debated upon and the view taken by the L.I.T.A.T, is perfectly in accord with law and rules, it has followed the same in its true letter and spirit and has rightly perceived the true intent and object of the law. As no provision of law has been violated by the L.I.T.A.T. (Peshawar Camp), therefore, after due consideration of all the facts and after reading the provision of law we are of the firm view that no exception, can be taken to the view taken by the L.I.T.A.T. Thus the question is answered' in the affirmative and the impugned judgment is maintained. All these appeals are accordingly dismissed."
A perusal of the above paragraph indicates that leamed High Court had relied upon a judgment of Income Tax Appellate Tribunal, decided by it in (1998) 78-Tax-319 (Tribunal), according to which following guidelines have been provided for assessment of value of immovable property:- "(i) The first-important and necessary step is to determine the market value of property, whether it is an open plot or a constructed property (building).
(ii) Thereafter, in the case of a building the value is to be determined on the basis of gross annual rental value as laid down in the first proviso to the said rule.
(iii) The lower of the two values, determined is to be adopted for wealth tax purposes.
(iv) in the case of an open plot of land also the market value is first to be determined. Therefore, the valuation is to be determined as per the provisions of the first proviso, if applicable.
(v) The lower of the two values is to be adopted. Valuation of immovable property, without first determining its market value is not permissible."
3. The learned Attorney General relying upon sub-rule (3) of Rule 8 of the Wealth Tax Act, 1963, stated that criteria laid down by the Tribunal in the above case is contrary to the provisions of Rules because according to it the assessm ent has, to be made "with due regard to the nature and size of the property, amenities available and price prevailing for similar property in the same locality or in the neighborhood of the said locality", it is further stated that exception to these Rules has been provided in provisos 1 and 2 attached thereto. On having into consideration the arguments put forth by learned Attorney General, relevant law on the subject as well as the impugned judgment, we are inclined to grant leave to appeal to examine, inter alia, the points so raised by him:
4. The office is directed to prepare appeals arising out of the listed petitions on the same record with liberty to the parties to file additional documents, if need be Appeals be fixed for hearing during fortnight commencing 13th February, 2006.