A-n Ltd v Board of Inland Revenue
| Jurisdiction | Trinidad & Tobago |
| Judge | Kelsick,Chairman,Burke, Member,Waterman, Member |
| Judgment Date | 20 July 1967 |
| Court | Tax Appeal Board (Trinidad and Tobago) |
| Docket Number | No. I 10 to 32 of 1967 |
| Date | 20 July 1967 |
Tax Appeal Board
Kelsick, Chairman; Burke, Member; Waterman, Member
No. I 10 to 32 of 1967
A. Black for appellants
Cox for respondent
Revenue law - Income tax — Appeal against assessment
These fourteen appeals were heard together by virtue of an order of the Appeal Board made on 22nd May, 1967, under Rule 11 of the Appeal Board Rules, 1967.
It was agreed that each of the appellants was a company registered outside of Trinidad and Tobago. Their place of registration was apparently the Bahamas, where, in the income tax returns, they were alleged to have been resident.
No oral evidence was adduced by either side at the hearing but certain documents, including the returns and notices of assessment, were admitted by consent.
The appeals are against assessments to income tax for the year of income 1963.
In each of the returns there appeared a sum of $4,300 derived from taxed dividends received from P Ltd., a company registered in Trinidad and Tobago (hereinafter called “the Trinidad Company”).
In addition, in the returns of three of the appellants (Appeals Nos. 119, 22 and 32) there was included a sum of $227.52 as mortgage interest from a source within Trinidad and Tobago. Although the appellants invested in company shares and three of them lent money on mortgage in Trinidad and Tobago none of them claimed any deductions by way of expenses or outgoings.
We were informed that there were corresponding assessments on two other similar companies (one in each category) but these appeals were not before us.
In their returns the tax of the appellants was calculated at the rate for individuals. Tax had been deducted in each case from the dividends before payment by the Trinidad Company under section 23 of the Income Tax Ordinance (hereinafter referred to as “the Ordinance”) at the rate prevailing in 1961 (40%), and the appellants claimed a set-off or credit for the tax deducted in accordance with section 24 of the Ordinance and a refund (under section 46 of the Ordinance) of the difference between the tax deducted and the tax exigible according to their calculations.
The dividends were stated to have been paid by the Trinidad Company entirely out of its 1961 profits, and this has not been questioned by the respondents. Had any part of the dividends been met out of 1962 profits no refund would have been payable in respect of such part, since non-emolument income received in 1963 was discharged from tax; and the shareholder who receives dividends paid out of 1962 profits of a company is not entitled to a set-off in respect of any tax deducted therefrom by the company. (See sections 76A and 24A of the Ordinance).
The income appeared in the returns under the headings “dividends” and “interest”. When the Commissioner of Income Tax assessed the tax-payers, however, he regarded the income as being gains or profits from a trade or business (see section 5(1)(a) and (d) of the Ordinance); and he levied the tax at the company rate in force in 1963 (42 1/2%), and not at the individual rate.
The question for decision is whether the appellants should have been assessed at the rate for individuals and not that for companies.
The tax position of each of the appellants is conveniently set out in the following table. A(1) and (2) relate to the eleven appellants with dividend income only, singly and collectively; and B(1) and (2) are in respect of the three appellants with added interest income, singly and collectively.
| Chargeable Income | Tax assessment before set off By appellant By respondent | Tax in dispute | |
| $ c. | $ c. $ c. | $ c. | |
| A (1) | 4,300 00 | 544 00 1,827 50 | 1,283 50 |
| (2) | 47,300 00 | 5,984 00 20,102 50 | 14,118 50 |
| B (1) | 4,527 52 | 607 84 1,923 97 | 1,316 13 |
| (2) | 13,582 56 | 1,823 52 5,771 91 | 3,948 39 |
It will therefore be seen that the total tax in dispute is $18,066.89.
These appeals turn on a simple question involving the meaning of section 22 of the Ordinance, read together with the First Schedule thereto which was replaced by Act No. 16 of 1963, and further amended by Act No. 5 of 1964, which latter Act was given retrospective effect from the 1st day of January, 1963.
The relevant provisions are as follows:–
“Rate as per First Schedule” 22. There shall be levied and paid on the chargeable income of every person tax at the rates set forth in the first schedule.
FIRST SCHEDULE
Scales of Scale of rates of Income Tax payable on the Net Chargeable Income
(1) Subject to paragraphs (2) and (3), in the case of a person…………………………………….
(2) Subject to paragraph (3) (which relates to assurance companies), in the case of a company, including a company incorporated or...
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