NASIM SIKANDAR, J.- The Lahore Bench of the Income Tax Appellate Tribunal, at the instance of the assessee, an individual, has framed following questions for our consideration and reply:-
(1) "Whether interest amounts out of the deposits made by the assessee's wife and children which was a result of the remittances made by the assessee, could be assessed at the hands of the assessee alone?
(2) Whether in the facts and circumstances of the case the initial presumption was in favour of wife and children of the assessee in whose names the bank accounts stood and the onus to prove that the money belonged to the assessee was on the department?
2. According to the statement of the case on receipt of an information from various banking companies the petitioner was required to file returns for the Assessment Years 1978-79 to 1983-84.
In the returns so filed he disclosed various amounts invested in F.D.R.'s on which interest income accrued to him either separately or. Jointly with his different family members including wife. The assessee jointly claimed and the Revenue accepted that he remained employed as an engineer in U.A.E, from 1957 to 1983 and during this period he made a number of remittances to his family which were partly invested in purchase of F.D.R's on which interest income accrued. The family members of the petitioner in whose name these FDRs were purchased jointly also filed returns to show accrual of 1/2 of the interest income. The assessing officer, however, refused to accept their claim that any income accrued to them from joint FDRs. The reasons for the disallowance being:- "Origin and source of these investments is Undisputedly foreign remittances representing earnings of Mr. Humayyun Hafiz. Joint name is only a protection in the event of any contingency, It does not confer any right of joint ownership as a matter of right as the amount remain the property of the remitter and it was not even formally gifted. Thus interest remade the exclusive income of Mr. Humayyun Hafiz for the purpose of Income Tax assessment and cannot be allowed to be divided among the family members for separate assessments as has been attempted by making separate returns. During the year under assessment no instrument is held even for the sake of name only in any of the family members except NTS, Gulshan Ara. The proposed division is held to be notional. The same is denied. Total income of investment being income of the assessee only is assessed in his hands."
Thereafter he grossed up all the interest income on FDRs and assessed the same in the hands of the assessee.
2. Learned first appellant authority however, agreed with the contention of the appellate that these amounts were wrongly grossed-up. It was pointed out that remittances were made from abroad which were meant to be for further help of the children and wife of the assessee. Also that gifts made from abroad were not assessable in Pakistan and therefore no gift tax was paid. Also it was pointed out that subject-matter of the gift, the FDRs were never taken back by the assessee even after his arrival in Pakistan. Accordingly, the learned first appellate authority agreed that the interest income of the gifted amounts in the form of FDRs should have been assessed in the hands of the donees.
3. The learned Tribunal on further appeal by the revenue, however dis-agreed. It was held that the amounts sent by the assessee from abroad continued to belong to him and he remained their lawful and legal owner. Further that these amounts were held by his wife and children in their respective names on his behalf and therefore grossing up the interest income in the hances of the assessee, as made by the Assessing Officer, was found justified.
4. After hearing the learned counsel for the parties, we will madly agree with the learned counsel for the petitioner that the Assessing Officer unnecessarily attempted to trace out the source of the sums on which interest income had accrued. The assessing officer was not probing the source of investment nor there was any occasion for that. The assessee nor his family members ever disputed that the FDR's were purchased out of the remittances sent by him from abroad. The interest accruing on these sums irrespective of their source had to be assessed in the hands these in whose name the FDR's stood registered. The issue of gift was wrongly introduced at the stage of the Tribunal. It had no relevance to the facts in hand as far the taxability of interest income was concerned. Both the remitter and the remitted had agreed that the sums had been sent from abroad and FDRs were purchased in joint names. The revenue as Collector of Taxes was not at all bothered with the intention of the remitter of the amount. The Tribunal wrongly assumed that all these FDRs were Benami and that it was only the assessee was the remitter who was to be taxed for accrual of any income thereupon. If a person commits the same money to another and that money is invested in the names of two persons including the remitter, the revenue has no business to doubt the claim in of joint FDRs and division of interest income which was filly supported by documentary evidence. The Assessing Officer built the case of the revenue without any foundation and the Tribunal attempted to strengthen it for all the more unconvincing reasons which had no relevancy to the facts in hand.
5. Therefore, our answer to the first question is in the negative while in our view question No. 2 as framed does not arise out of the order of the Tribunal. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.