Last Updated: Monday May 21, 2007
Following letter was written to Central
Board of Revenue to get the clarification on the levy of Capital Value Tax on
Mortgage Deeds:---
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Nasir Nazir Butt Advocate High Court Advocates & Solicitors |
Phones:
PABX: 0092-42-6280190-2 Telefax: 0092-42-6280187 E-Mails: nnbutt2000@yahoo.com Web Site: www.nnbutt2000.0catch.com
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Residence: House No. 47-D/2, Karnal Pura, Shah Kamal Near Mosque Aouqaf Islamic
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Office: ASGHAR
ALI & ASSOCIATES 22 – First Floor, Shahrah-e-Quaid-e-Azam, The
Mall Islamic
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Mr.
Sajjad Ali
Secretary
(IT Policy)
Phone No. 0092-51-9205561.
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Ref.
No. |
NNB/LH-8/002 |
Date: |
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Subject: Clarification regarding Circular
No. 2 of 2006, dated
Dear Sir îMB·jIË "A îNÀYiË Á¸Î¼§ ÂÝn»A,
Please refer to your letter
No. F.4(1)ITP/2006-CVT, dated
I had submitted a Mortgage
Deed duly executed in favour of Bank Alfalah Limited to DDO(R)/
My query is that whether CVT
is levied on Mortgage Deeds, if so, under which legislation? Can you furnish
its copy? I shall be very thankful to you.
Kindly
expedite the matter.
,îMB·jIË
"A îNÀYiË Á¸Î¼§ ÂÝn»AË
Truly
yours,
---sd---
Nasir Nazir Butt
c. c.: Mr.
Haji Ahmad, Regional Commissioner of Income Tax, Eastern Region,
Following reply has been received which is being reproduced for the benefit of lawyers practicing in corporate sector:---
GOVERNMENT OF
REVENUE DIVISION
CENTRAL BOARD OF REVENUE
****
No.F.4(1)ITP/2006CVT
Subject: CLARIFICATION REGARDING CIRCULAR
NO.2 OF 2006 DATED
I am directed to refer to your letter No.NNB/LH-8/002, dated September 9, 2006 on the subject and to say that the issue as to whether CVT is leviable on mortgage deed has already been considered and was clarified via Board’s letter of even number dated September 14, 2006 (Copy enclosed).
Enclosure: (as above)
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---sd--- (Sajjad Ali) Secretary (IT Policy) Tel: 9205561 |
Mr. Nasir Nazir Butt
Advocate High Court
Asghar Ali & Associates
22 – First Floor,
Shahrah-e-Quaid-e-Azam, The Mall
GOVERNMENT OF
REVENUE DIVISION
CENTRAL BOARD OF REVENUE
****
No.F.4(1)ITP/2006CVT
To : Regional Commissioner of Income Tax
Central Region
Subject: CLARIFICATION REGARDING CIRCULAR
NO.2 OF 2006 DATED
I am directed
to enclose copy of e-mail received from Bank Alfalah,
The matter has been considered in the Board and it is clarified that registration of mortgage deed in favour of a Bank (without power of attorney) does not attract CVT. However, CVT will be charged at the time of actual transfer of asset, in case of default in loan repayment.
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(Sajjad Ali) Secretary (IT Policy) Tel: 9205561 |
Copy for information to all Regional Commissioners of Income Tax and Director Generals of Large Taxpayers Units.
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Secretary (IT Policy) |
Letter above could not
attract the action of
Government of
Central Board of Revenue
Department of Income Tax
Deputy District Officer (Registration)
SUBJECT: CHARGE OF CAPITAL VALUE TAX
Please refer to the above mentioned subject.
I am directed to enclose a copy
of Central Board of Revenue’s letter No. F.4(1)ITP/2006-CVT, dated
-sd---
(FAROOQ AZMAT CHATHA)
Assistant Commissioner of Income Tax
Withholding/ Broadening of Tax Base.
Enclosure: (as above)
Capital Value Tax which has been paid is not refunded whereas it must be refunded without lodging its claim. It may be refunded to the respective local commissions.
Nasir Nazir Butt
Advocate High Court
Advocate & Solicitor
Mr.
Sajjad Ali
Secretary
(IT Policy)
Phone No. 0092-51-9205561.
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Ref.
No. |
NNB/LH-8/004 |
Date: |
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Subject: Levy of CVT on Power of Attorney.
Dear Sir îMB·jIË "A îNÀYiË Á¸Î¼§ ÂÝn»A,
Please recall the legislation and
notifications on the levy of Capital Value Tax on Power of Attorney.
Registration Authorities are consistently
demanding the payment of CVT on Power of Attorneys at the rate of 2% of DC Rate
even where value is not recorded without annexing any support of law.
On the complaint to IT Authorities, they
provide mere their indigestible thinking.
Also please let me know whether any
authority in
Is there any legal document in English
Language supporting the impugned contention of Registration Authorities, as
stated earlier?
Kindly expedite the matter.
,îMB·jIË
"A îNÀYiË Á¸Î¼§ ÂÝn»AË
Truly
yours,
Nasir Nazir Butt
c. c.: 1.
The Chairman, Central Board of Revenue,
2.
The Member, Large Taxpayers Unit, Central Board of Revenue,
3. Mr. Haji Ahmad, Regional
Commissioner of Income Tax, Eastern Region,
4. Mr. Farooq Azmat Chatha,
Assistant Commissioner of Income Tax, Y – Block, Defence Housing Authority,
Page No. 1
of 1
47-D/2,
(: 0333-4076420,
0321-4624078, 042-7553841
Nasir Nazir Butt
Advocate High Court
Advocate & Solicitor
His Excellency
Mr.
Pervaiz Musharraf
President
Islamic
President
House
Phone No. 0092-51-???.
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Ref.
No. |
NNB/LH-8/019 |
Date: |
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Subject: Levy of Capital Value Tax on Power
of Attorney.
Your Excellency îMB·jIË "A îNÀYiË
Á¸Î¼§ ÂÝn»A,
Please recall the legislation
and notifications on the levy of Capital Value Tax on capital value of assets.
Section 7 of the Finance Act,
1990 (as amended from time to time) is reproduced:---
“7. Levy of tax on Capital Value of certain things:- (1) A tax on
the capital value of assets, to be
called the capital value tax, shall be payable by every individual 1[,
association of persons, firm or a company which] acquires by purchase 2[gift, exchange, 3[power of attorney,]
surrender or relinquishment of rights by the owner (whether effected orally or
by deed or obtained through court decree) except by inheritance, or gift from
spouse, parents, grand parents, a brother and a sister] an asset or a right to
the use thereof for more than twenty years, 4[ ] 5[or purchase of modaraba
certificate or a registered instrument of redeemable capital as defined in the
Companies Ordinance, 1984 (XLVII of 1984), or shares of a public company,
listed on a registered stock exchange in Pakistan by a resident person defined
in section 81 of the Income Tax Ordinance, 2001 (XLIX of 2001)] such as is
specified in sub-section (2), 6[at the rates specified in that
sub-section].”
The language of the above
section in English clearly states that Capital Value Tax is not applicable on
Power of Attorney except where assets are acquired through it. Even then
Capital Value Tax is not applicable on Power of Attorney but on the instrument
by which assets are acquired/transferred such as Sale Deed, Gift Deed, Exchange
Deed, Surrender Deed, or Relinquish Deed.
It is understood that Power of Attorney is
not an “acquisition of assets” but mere delegation of power to sign some other
instruments including transfer deeds.
Registration Authorities are consistently
demanding not only the payment of Capital Value Tax on Power of Attorneys but
at the rate of 2% of DC Rate even where value is not recorded, without annexing
any support of law.
On the complaint to IT Authorities, they do
not reply the pubic queries indispensably. Their replies are indigestible
thinking thus not acceptable even to the person of common prudence.
Please take notice whether any authority in
There is no any legal document in English
Language supporting the impugned contention of Registration Authorities, as
stated earlier.
In the light of above, you are therefore,
requested to please bring us out of this dilemma taking measures to stop
illegal practice of charge of Capital Value Tax on Power of Attorneys.
Also please note that what will ensue if it
is presumed that Capital Value Tax has been levied on Power of Attorney?
Following is notable:---
1. It amounts Double Taxation, once at the time
of execution of Power of Attorney which is merely delegation of authority and
secondly at the time of an execution of conveyance deed.
2. Levy of Capital Value Tax on Power of
Attorney amounts taxation without transaction of conveyance.
3. Definition of Urban Areas in Notifications
is not in conformity of earth realities.
4. Cultivation area is also included n the
definition of Urban Area which is undesirable.
5. Under the Notifications of Central Board of
Revenue all the target deeds are conveyance deeds except to Power of Attorney.
6. Power of Attorney is a deed, which can be
revoked at any time on the behest of its Maker or Donor or Principal. What will
be the status of Capital Value Tax when the same will be revoked? Therefore, s
called, levy of Capital Value Tax on Power of Attorney is, in any way, unreasonable and inconsistent.
7. Capital Value Tax is levied in the pretext
of prevention of speculation of land so that its prices may be controlled.
Power of Attorney is not subject mater of such contention of parliament. This
contention was also expressed in News Clippings.
8. Even it is presumed that Power of Attorney
is transfer of property then Capital Value Tax may also be levied on Rent Deeds
and Lease Deeds. It may also be extended on the
Till now Registration Authorities have
collected million of rupees on account of Capital Value Tax on Power of
Attorneys. Central Board of Revenue is on the back of such Registration
Authorities. They have caused huge financial loss to general public. Would you
like to send Reference against these
authorities on appropriate forum?
Kindly expedite the matter being Most Urgent
having public interest.
,îMB·jIË
"A îNÀYiË Á¸Î¼§ ÂÝn»AË
Truly yours,
Nasir
Nazir Butt
c. c.:
1. Mr. Sajjad Ali, Secretary (IT Policy),
Constitution Avenue,
2. The Chairman, Revenue Division, Central
Board of Revenue,
3. The Member, Direct Taxes, Revenue Division,
Central Board of Revenue,
4. Haji Ahmad, Regional Commissioner of Income
Tax, Eastern Region,
5. Mr. Wajid Akram, Additional Commissioner,
(H.QS-II), Regional Tax Office,
6. Mr. Farooq Azmat Chatha, Assistant
Commissioner of Income Tax, Y – Block, Defence Housing Authority,
Page No. 14
of 14
47-D/2,
(: 0333-4076420,
0321-4624078, 042-7553841
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