Law: Wealth Tax Act, (XV of 1963)

Section: 16(3),17B,17H

Wealth Tax Act (XV of 1963)----Second Sched., Cl.7(i) & (ii) [as added by Finance Act (IX of 1996)]---Interpretation of Cl.7 of Second Schedule of the Wealth Tax Act, 1963---Claim of exemption from levy of wealth tax in respect of property having been purchased by the assessee out of foreign remittances---Claim was duly supported by a bank statement of the husband of the assessee---Validity---Concession given by the statute is necessarily relatable to the assets and not to an assessee---Any asset created by an assessee is entitled to enjoy exemption subject to the only condition that it was created out of remittances received in or brought into Pakistan through normal banking channel---Cl.7(i) of second Schedule of the Wealth Tax Act, 1963 does not speak of the recipient of the remittances at all---Asset once having qualified for exemption will remain so even if it changes hands or ownership by way of death, gift or even sale for statutory period---Principles. The interpretation in the present case by the Revenue authorities of sub-clause (i) of clause (7) of the second schedule to the Wealth Tax Act, 1963 as maintained by the Tribunal is necessarily incorrect. Earlier these provisions were part of the statute exactly in the same manner as section 5 of the late Act. The said provision of law was added to the Wealth Tax Act as second schedule by way of Finance Act, 1996. Reading to the said clause allowing exemption leads to conclude, that the concession given by the statute is necessarily relatable to the assets and not to an assessee as wrongly concluded by the members of the Tribunal. The opening part of clause (7) of the second schedule makes it clear that these two sub-clauses (i) and (ii) encompass two different situations. The principle however, remains the same that exemption is relatable to the assets and not to the assessee as such. In the first sub-clause the assets brought or remitted by an assessee into Pakistan or received by him from outside Pakistan are exempted for five years starting from the year in which they were brought, remitted or received. The case of the present assessee obviously is not covered by sub-clause (i) which was again…

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