1. ' NASIM HASAN SHAH, J.- The facts, which form the background briefly stated, are that the appellant, inter alia, owned some agricultural land in Tehsil Okara District Sahiwal.
2. ' On the 28th April, 1971, the appellant made a gift of 269 kanals 5 marlas of agricultural land in Chak No, 423-R Tehsil Okara, District Sahiwal in favour of Mst. Silwat Begum, Sheryar Ali Khan, Bakht Ali Khan, Mehr Ali Khan, Asad Yar Ali Khan and Shahwaz Bano, ' The Gift Tax Officer completed the assessment for the Assessment year 1971-72 by order dated 26- 6-1975 passed under section 15(5) of the Gift Tax Act, 1963. The Gift Tax Officer valued the land at Rs,2,500 per acre and thus determined the value of the gifted land at Rs,6,45,000 and determined the tax payable at Rs,1,02,000.
3. ' Feeling aggrieved by the orders dated 26-6-1975 the appellant filed an appeal before the Appellate Tribunal which was disposed of by an order dated 21-2-1977. Before the learned Members of the Appellate Tribunal the appellant's counsel urged that sub-rule (3B) of Rule 9 of the Gift Tax Rules by Notification No,292/(i)/71, could be invoked and, at any rate, the principles laid down therein should be applicable in completing the assessment against the appellant. The learned Members of the appellate Tribunal, however, did not accept this plea and by order dated 21-6-1977 dismissed the appeal.
4. ' Dissatisfied by the order of the learned Tribunal the appellant filed an application under subsection (1) of section 26 of the Gift Tax Act, 1963 before the High Court referring the questions of law for its decision. The questions of law as set out in the amended petition read as under:-
(1) Whether on the facts and in the circumstances, the Tribunal misdirected itself at law in assuming that the rule 9(3B) notified by SRO 292(1)/71, dated 29th July 1971 would not apply to the adjudication by the learned Gift Tax Officer on 26-6-1975 overlooking the fact that the rule was procedural in nature and would have retrospective operation?
(2) Whether in facts and in the circumstances of the case, the Tribunal was right in holding that the principles laid down in sub-rule (3B) of Rule 9 notified by SRO 292(1)/71, dated 29th July, 1971 could not be invoked in determining the value of the agricultural land which was gifted on 28th April 1971 and whether its decision is not vitiated as being arbitrary?
5. ' The appellant's application came up before a Division Bench of the Lahore High Court but the said application was dismissed by the learned Judges of the Division Bench vide order dated 20-9-1977.
6. ' Leave was granted by this Court on 27-11-1985 to examine the following question:-- "Whether on the facts and circumstances of the case the value of the land gifted by the petitioner on 28-4-1971 was liable to be determined in terms of rule 9(3B) notified by SRO 292(1)/71, dated 29th of July, 1971?"
7. ' In order to appreciate the basis of the order passed by the High Court the following, though somewhat longish, extract may be reproduced hereunder:- "The law on the subject as existing on the date of gift was follows:- "Section 6.-(1) The value of any property other than cash transferred by way of gift shall, subject to the provisions of subsections (2) and (3) be estimated to be the price which in the opinion of the Gift-tax Officer it would fetch if sold in the open market on the date on which gift was made.
(2) Where a person makes a gift which is not revocable for a specified period, the value of the property gifted shall be the capitalised value of the income from the property gifted during the period for which the gift is not revocable.
(3) Where the value of any property cannot be estimated under subsection (1) because it is not saleable in the open market or where the rules made under this Act provide for the manner in which the value of any property shall be determined the value shall be determined in the prescribed manner.
8. ' Rule 3-B was introduced by Notification No,SRO-292(1)/71, dated 29th July, 1971 and the relevant clause is (i) which reads as under:- "(i) In the areas of the 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 figure of produce index of such land as provided for the purposes of the Rehabilitation Settlement Scheme prepared by the Rehabilitation Commissioner, West Pakistan, under the Pakistan Rehabilitation Act, 1956 (XIII of 1956), and the Balochistan Rehabilitation Regulation, 1950 (II of 1950). Reading this rule with section 6, subsections (1) and (3) it follows that only where the value could not be estimated under subsection (1) of section 6, because the property was not saleable in the open market; that the manner prescribed in the rules could be availed of. Such was not the position in the case of the land gifted by the petitioner. Hence this rule could not be applied even if it had a retrospective application.
9. ' The amendment in section 6 itself was introduced by Finance Ordinance of 1972 which was enforced from 1-7-1972 but it was given retrospective effect from 1-7-1971. It amended subsection
(3) of section 6 and after such amendment this subsection reads as hereunder:-
(3) Where the value of any property cannot be estimated under subsection (1) because it is not saleable in the open market or where the rules made under this Act provide for the manner in which the value of any property shall be determined, the value shall be determined in the prescribed manner".
10. ' On the strength of such an amendment and its retrospectivity from 1-7-1971 the rules framed with regard to the valuation of any property had to be necessarily resorted to as a matter of requirement of law. But again going by the rule of interpretation of fiscal statutes this being a charging provision had to be given a prospective effect unless there be an express intention to apply it retrospectively and the retrospectivity did not go beyond 1-7-1971, not in any case, to the date of gift i,e, 28-4-1971. The learned counsel is in error in assuming that subsection (1) or (3) of section 6 of Rule (3-B) is a machinery or procedural provision and the entire reasoning based on the rule of interpretation applied to procedural provisions is misconceived and out of place. The material date being the date of gift and the latter not permitting resort to subsection (3), the land being saleable in the open market, subsequent recourse to charging rule prescribed under subsection (3) and applicable from 29-7-1971 is of no avail to the petitioner." (underlining is ours)
11. ' In support of this appeal Mr. Muhammad Amin Butt, learned counsel for the appellant, has been heard.
12. ' The expression "assessm ent year is defined in clause (iv) of section 2 of the Gift Tax Act as below: "assessm ent year" means the year for which tax is chargeable under section 3"
13. ' Section 3 provides as follows: "Charge of Gift-tax.-- Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the Ist day of July, 1963, a tax (hereinafter referred to as gift-tax) in respect of the gifts, if any, made by a person during the previous year (other than gifts made before the 8th day of June, 1963) at the rate or rates specified in the Schedule".
14. In other words, this provision lays down that subject to the other provisions contained in the Act there shall be charged for every financial year commencing on and,from first day of July 1963 a tax in respect of the gift, if any, made by a person during the previous year at the rate or rates specified in the Schedule. Previous year in relation to any assessm ent year means 12 months ending on 30th June immediately preceding the assessment year.
15. ' The Scheme of the Gift Tax appears to be that in respect of all gifts made during the "previous year", tax must be calculated on these gifts at the rate specified in the Schedule which is in force on the first day of the assessm ent year following the previous year. In other words, the tax is to be paid for the "assessm ent year" and not for the "accounting year". In this case, the gift having been made on 28-4-1971 the accounting year thereof was from 1-7-1970 to 30-6-1971 whereas the assessment year was from 1-7-1971 to 30-6-1972. Thus, the tax to he calculated on the gift made on 28-4-1971 was liable to be calculated at the rate specified in the Schedule which was in force as from the 1st day of the assessm ent year following the previous year namely in force on 1-7-1971. Accordingly, the question whether Notification No,SRO-292(1)/71, dated 29th July, 1971 could be given retrospective effect does not really arise in this case. The question simply was whether the value of the land gifted by the appellant on 28-4-1971 was liable to be determined in terms of Rule (3-B) inserted by Notification No,292(1)/71, dated 29th July, 1971 (which became a part of Rule 9(3)(b) of the Gift Tax Rules, 1963 as from 1-7-1971). Since the assessment was to be made according to the rates in force for the assessm ent year following the previous year the calculation of the assessm ent would be as per rates in force as from 1-7-1971 and that under section 6(3) of the Act it was the terms of the above notification which would constitute the basis for determination of the value of the gift.
16. The learned Judges of the High Court fell into error because they thought that the charging section of the Act was section 6 whereas in fact the said section dealt merely with the mode of determining the value for purposes of the levy of tax; while section 3 in fact was the charging section which imposed the liability to pay gift tax in regard to the sum total of gifts made by any person during the "previous year".
17. ' The upshot is that the orders of the Gift Tax Authorities as also of the High Court are not sustainable in law and must, accordingly, be set aside. This appeal is accepted with the result that the respondent will determine the value of the gifted land in terms of Rule 9 (3B) notified by Notification No,SRO292(1)/71, dated 29th July, 1971. Since no one has appeared to oppose this appeal, there shall be no order as to costs.