On sale of inherited properties: Tax officers charging advance tax ‘unjustly’

LAHORE: Tax officers are charging advance tax unjustifiably against the sale of inherited properties as they ignore inheritance mutation while registering sale of such properties, said sources.

It may be noted that Section 236-C of the Income Tax Ordinance, 2001, stipulates that any person responsible for registering, recording or attesting transfer of any immovable property shall collect advance tax from the seller or transferor as per the specified rate. But the tax officers do not consider inheritance mutation and prefer to count the possession period of three years from the date of sale of such properties.

Sources said the issue has been adjudicated by the higher courts as well but the revenue officers not only charge advance tax but also the capital gain tax against such sales. They said the inheritance law suggests that mutation of inherited property opens the moment someone who owns property dies and all the legal heirs become owners of their respective shares then and then. Sanction of inheritance mutation and issuance of succession certificate etc are procedural matters regulated by the procedural laws just to make the records straight as well as for the fiscal purposes, they added.

According to them, inherited property gets automatically and immediately vested in the legal heirs and the said vesting is not dependent upon any intervention or any act on the part of the revenue authorities or any other state agencies. Furthermore, they said, it is also an established fact that a mutation does not confer on anyone any right in case of any such property as the revenue record is only maintained for realization of land revenue. It does not confer any title on anyone. The efflux of time does not extinguish any rights or inheritance because on the death of an owner of property, all the co-inheritors, immediately and automatically become co-sharers in the property.

They have further pointed out that succession to the property of propositus becomes a fait accompli soon after his demise. Therefore, it does not need the intervention of any of the functionaries of the Revenue officers, including Patwar, Girdawar and the revenue officer entering in the mutation register. Even the entry of mutation is also not necessary, they added.

However, any such mutation, they said, should be taken as a cutoff date to count three years period of possession before the sale of property which is ignored by the tax officers and they count this period from the date of next mutation once the sale of such property takes place.

Copyright Business Recorder, 2022