Maharaj v Board of Inland Revenue
| Jurisdiction | Trinidad & Tobago |
| Judge | Koylass, C. |
| Judgment Date | 31 January 1985 |
| Court | Tax Appeal Board (Trinidad and Tobago) |
| Docket Number | I 98 of 1980 |
| Date | 31 January 1985 |
Tax Appeal Board
Koylass, C.; Burke, M.; Julumsingh, M.
I 98 of 1980
S. Shivarattan for appellant
B. Roopnarine for respondent
Revenue Law - Income tax — Appeal v. assessment to income tax — Whether appellant's gambling activity constituted a business, the profits of which were taxable under s. 5(1) (c) of the Income Tax Ordinance — Whether appellant had declared full details of winnings from betting on local horse racing — Law regarding taxation of gambling winnings — Unreported income upheld but amount sent back for reassessment — Appellant had failed to establish source of income or that it was not taxable
The appellant appealed against an assessment to income tax in the sun of $44,020.50 for the year of income 1973, consequent upon a best judgment assessment made by the respondent, whereby additional income of $84,302.00 had been imputed by the respondent. The additional income had been arrived at as follows:
Bank deposits for January to October and December 1973 — $60,777.00
(add) Estimated bank deposits for November 1973 — $5.525.00
– $66,302.00
Estimated living expenses met by cash — $18,000.00
Commission — $7,200.00
– $91,502.00
Less: Commission returned — $7,200.00
Income understated — $84,302.00
The grounds of appeal were as follows:
“(a) Statement of allegation of fact:
The Respondent has imputed to the appellant additional income of $84,302.00 which he did not in fact earn.
(b) Statement of reasons to be advanced in support of appeal:
The assessment is arbitrary and excessive and unjustifiable and/or unreasonable in the circumstances.”
The contentions of the respondent were set out in paragraph 12 of the statement of case as follows:
“(i) That the Income Tax Return submitted by the appellant for the year of income 1973 did not reflect the true income of the appellant.
(ii) That in accordance with the provisions of Section 39 — of the Income Tax Ordinance Chapter 33 No. 1, it has refused to accept the said return and has, in the best of its judgment, determined the amount chargeable income of the appellant and assessed him accordingly.
(iii) That the appellant has failed to provide any evidence to show that the tax assessed by the Respondent is excessive or wrong.
(iv) That the assessment of the appellant is justifiable in law and fact.”
For the appellant, Derek Cozier testified. He was the Racing Secretary of the Trinidad and Tobago Racing Authority. The following exhibits were put in through him:
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D.C.1 — Trinidad and Tobago Racing Guide for 1972
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D.C.2 — Trinidad and Tobago Racing Guide for 1973.
He stated that exhibits D.C.1 and D.C.2 had been compiled by the Trinidad Turf Club and represented records of racing activities for the years 1972 and 1973. D.C.1 comprised results of race meetings held in Trinidad and Tobago from 29th January, 1972 to 20th January, 1973, while D.C.2 comprised results of meetings during the period 10th February, 1973 to 12th January, 1974.
In cross-examination, the witness was referred to page 16 of D.C.2 in which the results of race 72, the Elite Shirt Factory Handicap, run on 9th June, 1973, were shown. On being questioned about the trainer and the owner of the horse, “Fire Fire”, which had won the race, he stated that R. Francis was shown as the trainer and Mrs, S. Maharaj was shown as the person in whose name the horse had run. He stated that he would not necessarily have been the sole owner, but would have been a part owner.
His attention was drawn to an entry on page 18 of D.C.2 under the heading “Trainers winning over 530,000 for 1973”, which reads as under –
“M. Bobby Maharaj — Starts 84 — Wins 16 — Total $50,719.50”.
He identified the person named as being the appellant and stated that he had been the fourth most successful trainer in 1973. He testified that the total prize money of $50,719.50 would not have been paid to the trainer, but to the person in whose name the horse had run.
The witness testified that a trainer could be licensed as a public or a private trainer. The former could train horses for anyone, while the latter could train only horses in which he held a share of 50 per cent or more. The appellant had been issued a licence as a public trainer in 1976, and before that if he had held a licence it would have been as a private trainer.
The appellant testified as follows:
During the year of income he was employed as Manager of Winners Pool, St. James, and was paid on a commission basis. The commission was calculated at the end of the year on total winnings and amounted to $7,200 for 1973. During the year he had owned horses, which had been trained by him as the holder of a private trainer's licence, and he had also indulged in gambling on horse racing.
During the course of an audit of his tax affairs in 1979, his bank had furnished the respondent, at his request, with monthly statements of his account for the year of income 1973, except for the month of November which could not be located.
Following an objection made by him to the assessment, he had been requested by a letter dated 4th March, 1980 to furnish, inter alia, a statement showing full details of winnings from betting on local horse racing, which he claimed had been deposited to his bank account, and available documentary evidence in support of the winnings. He replied by letter dated 24th March, 1980, in which he provided a statement of his winnings on bets placed at betting shops (hereinafter referred to as “the statement”). The statement had been prepared from memory and by reference to exhibits D.C.1 and D.C.2.
The appellant, on refreshing his memory from the statement, referred to the horses and races in D.C.1 and D.C.2 on which he had placed bets. He had placed bets on his horses only, except for forecast bets in which he might have included another horse with one owned by him.
He could not produce his winning tickets as these had been surrendered to the betting shops to receive payment. He had not produced losing tickets upon request by the respondent during the audit, as during that period, while he was moving from Dundonald Street to Coblentz in Cascade, he had taken the tickets, which were in a drawer, to his mother's home at El Socorro. Most of the losing tickets had been destroyed by rats and cockroaches.
Objection was taken to the appellant tendering in evidence certain tickets which, he stated, he had found. The objection was overruled and the tickets were admitted and marked as follows:
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(a) Diamante Racing Service MM1 — MM 6
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(b) Track Investors Racing Service MM 7 — MM 12
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(c) Winners Pool MM 13 — MM 19
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(d) Amin's Racing Service MM 20 — MM 34
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(e) Tote Investments MM 35 — MM 47.
A list of the losing tickets prepared by the appellant was admitted in evidence as MM 48 (pages 1 — 4). In the preparation of that list he had obtained the names of the horses from the original programme as the tickets showed only the numbers of the horses. We observe that according to this exhibit, losing bets had been placed to an extent of $915 on 6th January, 1973.
In cross-examination, the witness stated that he could not tell the total number of bets he had placed on 6th January, 1973, but he could recall that he had spent $3,000 on bets that day. In order to obtain the best odds he had placed bets in small amounts at the different pools. The bets were placed on his behalf by two employees of Winners Pool. Without looking at the statement he could not name the pool at which bets had been placed or the amounts he had won. When the statement was prepared, he was able to recall the bets placed, the races run and the payments made by a perusal of D.C.1 and D.C.2. Regarding winnings of $30,050 on his horse, “Fire Fire”, on 25th August, 1973, shown as the last item on the statement, he stated that the bet had been placed on his behalf by his brother in Tobago at Amin's Racing Service after the pools in Trinidad had refused to accept his bets. He had started betting at the race track on his horses in July 1973, after the pools had refused to accept his bets.
Regarding the amount of $5,525.00 estimated as bank deposits for November 1973, the appellant stated that he had made no deposit during that month, and drew attention to the fact that during the months of September, October and December of that year no deposit had been made to his account. The reason advanced was that the bank manager had been changed and the new manager wanted him to pay off his overdraft and had started applying deposits towards reduction of his overdraft account. He, therefore, stopped making deposits. Deposits for the year amounted to $60,777.00, and the difference between that amount and his commission of $7,200 had come from gambling. He had not deposited all his winnings as he had retained cash for gambling and he was unable to identify any of his winnings shown in the statement as deposits in his bank account. His living expenses were met by his commission and money won in gambling.
He estimated his living expenses to have been between $7,000.00 and $8,000.00 for that year, as against $18,000 estimated by the respondent in its assessment. He had a wife and five children. The eldest child was twenty years and the youngest eight years. The eldest, a girl, was then at a nursing school in England and he had incurred no expenses for her support. The other children attended schools in Trinidad. The only school fees he had paid was $100 per month for his last child. He and his wife each had a car. The cars had been traded at the end of each year for new cars on payment of $500 on each car. His grocery bill, he said, had been $40 per week.
A breakdown of his living expenses for that year, when totalled, amounted to $8,819. To the total amount, he admitted, should...
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