' The facts giving rise to this Constitutional petition are that the petitioner, /Wt. Tasneem Sana, and another, namely, Fauzia Adeeb, obtained a piece of land from the Military Estate Officer, Rawalpindi Division, Rawalpindi, on lease. This land is situate in the area of the Rawalpindi Cantonment.
Consideration for the lease was Rs, 9,000. It was created for thirty years and this period could be extended upto ninety years. The annual rent was fixed at Rs, 450. After getting the said land, the lessees transferred it in favor of Mst. Samar Iqbal for a sum of Rs, 35,000 by executing a sale-deed.
The Excise and Taxation Officer, Rawalpindi, did not treat the consideration of Rs, 35,000 as adequate and made the following assessment for the purpose of realizing capital gains tax :- "(1) Cost of the plot Rs, Nil
(2) Payment to M. E.
0. Rs, 4,500
(3) Expenses of construction of Gate and Road to the best judgment Rs, 8,000
(4) Fair Price determined Rs, 2,50,000 ' The petitioner challenged the order of the Excise and Taxation Officer by filing an appeal before the Director, Excise and Taxation, Rawalpindi. The Director reduced the market value (fair price) to Rs, 2,25,000 and also allowed cost amounting to Rs, 25,000. The petitioner was not satisfied with the appellate order and, therefore, filed a revision petition before the Director-General, Excise and Taxation Rawalpindi. The Director-General further reduced the sale price (market value) to Rs, 2,00,000 and accepted the petition to that extent. Feeling aggrieved by the order of the Director- General also the petitioner invoked the Constitutional jurisdiction of this Court.
2. It was contended by learned counsel for the petitioner that the capital gains-tax could be levied on any profits or gains arising from the sale of immovable property and since the transfer of their rights by the lessees, Mst. Tasneem Sana and Mst. Fauzia Adeeb, by means of the aforementioned sale-deed, was not the sale of immovable property, they could not be obliged to pay any capital gains-tax. No case-law was cited by the learned counsel to support his contention.
3. Relevant provisions of the law on which reliance was placed by the learned counsel are contained in subsection (1) of section 16 of the Punjab Finance Act, 1963, and they read as follows :- "(1) A capital gains-tax shall be levied on any profits or gains arising from the sale, exchange or transfer of immovable property effected after the thirtieth day of June, 1963, To my mind, sale of immovable property means the transfer of ownership of immovable property but the transfer of immovable property means the transfer of any right in the immovable property, not necessarily the right of ownership, A which has the effect of its (immovable property's) getting out of the hand of one person and coming into those of another. To hold otherwise would make the words "or transfer" meaningless. And it is a well-settled, principle of interpretation of statutes that the Legislature does not use any word without a purpose. Since in the instant case the lessees had by transferring their rights in the disputed land passed on that land to Mst. Samar Iqbal, the 1c transaction made in this behalf was transfer of immovable property within the11 meaning of section 16 of the Punjab Finance Act.
4. The view taken by me is supported by Traders and Miners Ltd. v. Commissioner of Income-tax Bihar and Orissa (1). In that case the assessee let on lease for ninety-nine years a portion of zamindari acquired by it (assessee). The lease related to the surface right together with nine mica mines located in that area. The consideration for the lease was the payment of a salami and a reserve rent per year. The Income-tax Officer determined the cost to the assessee of the mineral rights and after deducting this amount from the salami he assessed the balance to tax as capital gains under section 12-B of the Income-tax Act, 1922. The argument put forward on behalf of the assessee was that a transaction in the nature of the lease would not amount to a transfer of capital asset. The argument was repelled by Patna High Court in the following words :- "The question at issue depends on the proper interpretation of section 12-B (1) which is in the following terms : 'The tax shall be payable by an assessee under the head 'Capital gains' in respect of any profits or gains arising from the sale, exchange or transfer of a capital asset effected after the 31st day of March 1946, and before the 1st day of April, 1948, and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange or transfer took place The expression 'capital asset' is defined in section 2 (4A) of the Act as "property of any kind held-by an assessee, whether or not connected with his business, profession or vocation, but does not include
(i) any stock-in-trade, consumable stores or raw materials held for the purposes of his business, profession or vocation ; (ii) personal effects, that is to say, movable property ; (iii) any land from which the income derived is agricultural income'. It should be noted in this context that section 6 of the Act has also been amended by including therein an additional head of income and that additional head is `Capital gains'. The contention advanced on behalf of the assessee is that a transfer of a capital asset referred to in section 12-B should be interpreted to mean a permanent and out and out transfer of title and a lease of mineral asset even for a period of 99 years would not come within the ambit of section 12-B. In or opinion there is no warrant for interpreting the expression 'transfer of a capital asset' in section 12-B in this narrow and restricted sense. We think that the expression {{FOOT NOTE}}
(1) (1955) 27 I T R 341 {{FOOT NOTE}} ' transfer' in the section includes not only a permanent transfer but also a temporary transfer of title to the property in question and lease of mines for any period would fall within the ambit of section 12-B of the Act. It was also contended by Mr. Dutt that a transaction of a lease was not tantamount to a transfer of title but that a mere contractual right was created. We do not think that this argument is correct. A lease of land is transfer of interest in the land and creates a right in rem ; and there is a transfer of title in favour of the lessee though the lessor has right of reversion after the period of the lease terminates. For these reasons we are satisfied that the transaction of the lease granted by the assesse Company on the 7th of December, 1946, in favour of Kedarnath Singh was a transfer of a capital asset within ten meaning of section 12-B of the Act and the gains arising to the assesse Company on account of this transfer of the capital asset was rightly taxed by the Income-tax authorities."
' Relevant provisions of section 12-B of the Income-tax Act are similar to those of section 16 of the Punjab Finance Act. In section 12-B also the word "sale" has been used in contradistinction to the word "transfer". 'Section 12-B relates to capital asset while section 16 deals with immovable property. Guidance can, therefore, legitimately sought from the case cited above for resolving the controversy raised in the instant case.
5. Resultantly, I hold that the transaction by' which the petitioner, Mst. Tasneem Sana, and her co- lessee, Mst. Fouzia Adeeb, transferred their rights as lessees of the disputed land amounts to transfer of immovable property and, therefore, they were liable to pay capital gains-tax under section 16 of the Punjab Finance Act. The contention raised by the learned counsel has no merit.
The writ petition is dismissed in limine.