ORDER Through this order we propose to decide WTA- 35/2003, WTA-154/2001, WTA-155/2001, WTA- 156/2001, WTA-157/2001, WTA-158/2001, WTA-159/2001, WTA- 160/2001, WTA-161/2001, WTA-198/2001, WTA-339/2002, WTA-340/20C2, WTA-341/2002 and WTA-342/2002.
2. The instant Wealth Tax Appeal bearing No. 180/2001 arises out of the order dated 21.6.2001 passed by the ITAT and the following question of law has been referred to this Court, for expression of opinion and decision thereupon:-- "Whether on the facts and circumstances of the case the learned ITAT was justified in holding that the assets purchased out of encashment of FEBC's enjoy exemption from wealth tax u/S. 5(xv) of Wealth Tax Act, 1963?"
3. The respondent-assessee had claimed exemption from the incidence of Wealth Tax upon shares in a private limited company purchased through the encashment of FEBC's acquired from the proceeds of remittance receive^ in Pakistan through normal Banking channels. The Assessing Officer declined to grant such exemption under Section 5 of the Wealth Tax Act, 1963 by relying upon clause (9) of Part-1 of Second Schedule to the Wealth Tax Act, 1963 on the ground that the exemption extended only to the FEBC's and not to assets created from the proceeds of the encashment thereof.
4. Being aggrieved, the respondent assessee filed an appeal before th^ Commissioner (Appeal)
Zone-I, Lahore, who allowed the exemption claimed. The department invoked the jurisdiction of the ITAT, however, the appeal of the department was dismissed vide impugned order dated 21.6.2001.
5. It is contended on behalf of the Revenue that Clause (9) of Part-1 of the Second Schedule of the Wealth Tax Act, 1963 is applicable and in terms thereof the exemption is limited to FEBC's alone and such exemption does not extend to assets created from the proceeds thereof. There can be no cavil with the proposition that the exemption under Clause (9) ibid is limited to a specific: species of assets i.e. FEBC's. And if, the assets loose the said character the exemption would not apply.
However, ir the instant case, exemption has been claimed under Clause 7(i) and 7(ii) of the Second Schedule of the Wealth Tax Act, 1963, which reads as follows:-- "Assets....... (i) brought or remitted by an assessee into Pakistan, or received by an assessee from outside Pakistan, in the year in which they are brought, remitted or received and the following five years;
(ii) created by an assessee out of remittance received in, or brought into Pakistan, through normal Banking channels, during the period referred to in sub-clause (i);"
6. The aforesaid exemption extends to all assets brought or remitted to Pakistan by the assessee for the period specified and such exemption is not limited to oi dependant upon the nature of the assets which fact is irrelevant for the purpose of the applicability of Clause 7(i). However, with regard to foreign remittance received through normal Banking channels, Clause 7(ii) provides that any asset created from the proceeds of such remittance would also be exempted from the incidence of Wealth Tax for the period specified under Clause 7(i) ibid. An analysis of the aforesaid provision of law would make it clear and obvious that the primary basis for the applicability of the exemption under Clause 7(i) and 7(ii) is not the nature of the assets. The decisive factors are, the origin of the assets or funds, the mode of transmission (of funds only) and the period of exemption i.e. The period specified in the said clause. There is nothing in the said provisions, which can explicitly oi impliedly lead to the conclusion that the assessee can only claim exemption with regard to assets acquired through one: conversion only. The exemption extends to converted or reconverted assets during the currency and tenure of the? Exemption as long as the source of the original funds remains the foreign remittance received through normal Banking channels, in this view of the matter, the ITAT was wholly justified in holding that the shares in question were exempt from the incidence of Wealth Tax. Hence, the question of law as framed is answered in affirmative.
7. In the connected appeals, mentioned at Para. 1 above, the assets in respect whereof the exemption has been claimed by the assessee had been created or recreated from funds, which were the proceeds of the foreign remittances received through normal Banking channels such funds at the first instance were utilized for procuring FEBC's thereafter encashed during the exempt period to create the assets in question, in the aforesaid cases, the ITAT had also validly held that assets were exempt from the incidence of Wealth Tax.
8. In the aforesaid perspective, the identical questions of law as referred too are answered accordingly.
9.In view of the above, all the appeals mentioned in Para. 1 above, alongwith the instant appeal are dismissed accordingly.