Rowe v The Board of Inland Revenue; Rowe v The Board of Inland Revenue
| Jurisdiction | Trinidad & Tobago |
| Judge | Koylass, C.,Burke, M.,Julumsingh, M. |
| Judgment Date | 22 April 1983 |
| Court | Tax Appeal Board (Trinidad and Tobago) |
| Docket Number | I 45 of 1981, I 123 of 1981 |
| Date | 22 April 1983 |
Tax Appeal Board
Koylass, C., Burke, M., Julumsingh, M.
I 45 of 1981, I 123 of 1981
L. Sankersingh for appellants
E. John — Charles and Miss I. Ramoo for respondent
Revenue Law - Income tax — Appellants claimed as a loss one half of the total sum of $20,735.11 being expenses allegedly incurred in respect of their jointly owned property — Respondent in assessing the appellants had disallowed the loss claims — Appeal was allowed — Assessments were referred back to the respondent for re — assessment by reducing loss claimed for owner occupied property form $10,367.55 to $485.87 for each appellant.
In submitting their separate income tax returns for the year of income 1977 the appellants had each claimed as a loss one half of the total sum of $20,735.11, being expenses allegedly incurred in respect of their jointly owned property at Lot 5, Lady Chancellor Road, Lady Chancellor.
The following statement supporting loss claims of $10,367.55 for each appellant had been submitted with their returns for the year of income 1977:–
“Annual Rateable Value less Deductions:
Land and Building Taxes $.50
House Rates
Land Rent
Water and Sewer Rates
Repairs
Insurance – 971.25
Interest on Mortgage – 19,763.36 – $20,735.11
Net Income (Loss) – $20,735.11
Claimed by G. S. Rowe $10, 367.56
“ P. V. Rowe –, 104367.55
$20,735.11”
The respondent, in assessing the appellants, had disallowed the loss claims. Following upon an objection made by each appellant, the respondent informed them that it had considered their respective objections and had refused to amend the assessments on the ground that –
“you failed to produce documentary evidence to show that your property was assessed in 1977.”
Reference here is to an assessment under the Lands and Buildings Taxes kct, Ch. 76:04 (hereinafter referred to as “the Act”).
The appellants, being dissatisfied with the decision of the respondent, filed separate notices of appeal against the decision. These appeals were consolidated by order of the Court dated 15th July, 1981.
The grounds of appeal were substantially the same in both appeals. These were as follows:–
“(a) Statement of allegations of fact. The Inland Revenue failed to assess my property to Building Tax in 1977; my property was owner-occupied; the expenses claimed relate to both land and building; the building existed and was insured in 1977; I was ready and willing to pay all assessed taxes for 1977; the Revenue received the Notice of Objection on 1/4/80.
(b) Statement of the reasons to be advanced in support of appeal. In assessing the Income Tax, the Revenue did not examine the reasons for non-assessment to Building Tax in 1977; In determining the Objection, the Objection's Section did not await the Warden's reply to the appellant's request for information.
the onus is on the Revenue to assess a property to Building Tax not on the taxpayer; the Revenue's view is that a property is subject to allowances for Income Tax from the date of the Certificate of Completion from the Local Health Authorities, this Certificate reflects only the fact of completion and not the date of completion; additionally, my property's certificate is dated October 1978 but I was assessed for Building Tax from January 1978.”
At the hearing of the appeals the appellant, Pamela Rowe, was granted leave by the Court to argue the additional ground –
“that the notice of objection had not been determined within the period of twelve months pursuant to section 42(8) of the Income Tax Ordinance (hereinafter referred to as “the Ordinance”).”
The respondent, in paragraph 11 of its statement of case filed on the 30th August, 1982, had indicated that it would contend as follows:–
“(i) during the year of income 1977 the appellants whether by themselves or by others on their behalf never used the said property for the purpose of residence or enjoyment or at all. The said property was therefore not a source of income during the said year of income within the meaning of section 5(1)(h) of the Ordinance. Accordingly, the respondent was justified in law and in fact in disallowing the said purported loss.
(ii) alternatively, even if the appellants did use the said property during the year of income 1977 within the meaning of section 5(1)(h) of the Ordinance, there was no annual value fixed which could be reported as income. Accordingly, any expenses purportedly incurred thereon are not allowable deductions.
(iii) the sums claimed as expenses in arriving at the said loss were not wholly and exclusively incurred in the production of income from the said property but rather were employed or intended to be employed as capital. Accordingly, the respondent was justified in disallowing the said sums.
(iv) it is not the responsibility of the respondent to assess any property to building or other taxes. Accordingly, there is no onus upon the respondent to assess any property to building or other taxes.
(v) in any event, the appellants failed to make any return as required by section 6 of the Lands and Buildings Taxes Act Chap. 76:04; alternatively and/or additionally, the building on the said property had not reached the stage of completion during the year of income 1977 sufficient to require the competent authority to fix the annual rateable value thereof as required by section 15 of the said Act. Accordingly, there was no source of income against which expenses incurred thereon could be claimed.”
In a joint answer filed on the 11th November, 1982, the appellants contended –
“1. The appellants were in occupation of the property referred to in paragraph 4 (i) of the Statement of Case during the year of income 1977 and consequently the said property was a source of income within the context of section 5 (1)(H) of the Income Tax Ordinance, Chapter 33 No. 1.
2. The sums claimed as expenses in arriving at the said loss referred to in paragraph 4 (I) of the Statement of Case were wholly and exclusively incurred in the production of income from the said property and the said expenses were not employed or intended to be employed as capital. Further the onus is on the Board of Inland Revenue to show that it was capital. The appellants will refer to S. 15 of the Lands and Buildings Taxes Act Chapter 76:04. And further the property was assessed to land tax and part of the mortgage interest relates thereto.
3. It is the responsibility of the respondent through the District Revenue Services to assess any property to building or other taxes. The appellants intend to produce evidence by the Organization and Management Division that the District Revenue Services falls under the responsibility of the Board of Inland Revenue.
4. The appellants did make the returns as required by section 6 of the Lands and Buildings Taxes Act, Chapter 76:04. Alternatively, since the said property comes under the Real Property Ordinance, then even if the said returns were not filed by the appellants, the assessment could still be made from the lists supplied by the Registrar General under the Lands and Buildings Taxes Act, aforesaid.
5. With respect to the second named appellant the Board of Inland Revenue purported to determine the objection on the 19th December, 1980 but the envelope containing the said determination is postmarked the 29th December, 1980. The determination was therefore not completed until the 8th January 1981 when it was received by the second named appellant. The Board of Inland Revenue has therefore failed to determine the said objection within the one year period as stipulated by section 42(8) of the Income Tax Ordinance notwithstanding Section 66(2) of the said Ordinance.
6. Chapter 76:04 authorises properties to be assessed that have not been assessed in previous periods.
7. The fact that a property has not been assessed under the Lands and Buildings Taxes Act does not mean that it does not have an “Annual Taxable Value” and is not subject to income tax under the Income Tax Ordinance.”
With the leave of the Court, the respondent filed an amended statement of case on the 28th January, 1983. The contentions were stated in paragraph 11 thereof as under —
“(i) during the year of income 1977 the appellants whether by themselves or by others on their behalf never used the said property for the purpose of residence or enjoyment or at all. The said property was therefore not a source of income during the said year of income within the meaning of section 5(1)(h) of the Ordinance. Accordingly, the respondent was justified in law and in fact in disallowing the said purported loss.
(ii) the sums claimed as expenses in arriving at the said loss were employed or intended to be employed as capital. Accordingly, the respondent was justified in disallowing the said sum.
(iii) the sums claimed as expenses in arriving at the said loss were not wholly and exclusively incurred in the production of income from the said property. Accordingly, the respondent was justified in disallowing the said sums.
(iv) in any event, the appellants failed to make any return as required by section 6 of the Lands and Buildings Taxes Act Chap. 76:04; alternatively and/or additionally, the building on the said property had not reached the stage of completion during the year of income 1977 sufficient to require the competent authority to fix the annual rateable value thereof as required by section 15 of the said Act. Accordingly, there was no source of income against which expenses incurred thereon could be claimed.”
No amended answer was filed by the appellants.
The appellant, George Rowe, testified on behalf of his wife and himself. Fazan Ali, a District Revenue Officer, testified on behalf of the respondent.
We deal firstly with the additional ground in regard...
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