The Attorney General v Gordon Grant and Company Ltd
| Jurisdiction | Trinidad & Tobago |
| Judge | Phillips, J.A.,Rees, J.A.,Scott, J.A. |
| Judgment Date | 18 November 1977 |
| Neutral Citation | TT 1977 CA 45 |
| Docket Number | Civil Appeal No. 35 of 1974 |
| Court | Court of Appeal (Trinidad and Tobago) |
| Date | 18 November 1977 |
Court of Appeal
Phillips, J.A.; Rees, J.A.; Scott, J.A.
Civil Appeal No. 35 of 1974
R. Crane, S.C. ( Miller and Kong with him) - for the appellant.
T. Hosein, S.C. ( Armorer and Martineau with him) - for the respondent.
Revenue Law - Income tax — Statutory interpretation.
This appeal raises (to use the words of Rowlatt, J, in Grimson v. Inland Revenue Commissioners, (1930) 2 K.B. 246 at 251, cited at the trial before Braithwaite, J.) “an important point which may not often arise in practice, but which is of a very fundamental character and of great importance.” Apart from the applicability of these words, I have derived no assistance from that case in the determination of the question now in issue. It is as follows:
Prior to the year 1963 the basis for the imposition of income tax on profits made by companies or dividends paid to shareholders of companies was regulated by the provisions of ss. 5 and 6 of the Income Tax Ordinance, Ch.33 No.1 (T. & T.) (as amended) which were to the following effect:
- “Income tax shall, subject to the provisions of this Ordinance, be payable at the rate or rates specified hereafter for each year of assessment upon income of any person accruing in or derived from the Colony [later amended to ‘Trinidad and Tobago'] or elsewhere, and whether received in the Colony or not in respect of –
[inter alia]
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(a) gains or profits from any trade, business, profession, or vocation, for whatever period of time such trade, business, profession, or vocation may have been carried on or exercised;
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………………………………………………………………………………………………………….
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(d) dividends, interests, or discounts;
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………………………………………………………………………………………………………….
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(f) rents, royalties, premiums, and any other profits arising from property;
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(g) any annual gains or profits not falling under any of the foregoing heads:
- “Subject to the provisions of this Ordinance tax shall be charged, levied, and collected for each year of assessment upon the chargeable income of stay person for the year immediately preceding the year of assessment.”
The ordinance, originally passed in 1938, and amended on numerous occasions, has remained up to this date the foundation of the income tax legislation of this country. Significant milestones in the amending process were the Income Tax (Amendment) Ordinance, 1957, which introduced the P.A.Y.E. system in relation to emolument income and the Income Tax (Amendment) Act, 1963, the object of which was to establish an analogous system in respect of all non-emolument income.
By this Act, which was assented to on June 25, 1963 but s substantially deemed (s. 49) to have come into operation on January 1, 1963, the scheme of the legislation was altered so as to empower the Revenue authorities to make charges of income tax in respect of the current year, the “year of income” and not (as was previously the case) the year immediately preceding the year of imposition of the charge, i.e. the “year of assessment”. This alteration was effected (inter alia) by
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(1) deleting the definition of “year of assessment” and substituting therefor the following definition:
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“year of income” means the period of twelve months commencing on the 1st January in each year;
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(2) repealing and replacing s. 6 of the ordinance by the following provision:
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6. “Tax shall be charged for each year of income upon the chargeable income of any person for that year.”
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The substantial effect of these amendments was to make the year of imposition of tax on company profits or dividends paid to a shareholder co-incide with the year of income. The charging process was to take place concomitantly with the making of the income and not in the subsequent year, and the legal concept of the “year of assessment” following the “year of income” disappeared from the statute-book.
For the purpose of regulating the basis of the imposition and collection of tax under the new system the following additional provisions (inter alia) were introduced into the ordinance by s. 44 of the Act (hereafter called “the 1963 Act”):
s.76A (1) “Notwithstanding anything contained in this ordinance, other than the provisions of section 76, but subject to this section, income tax on all income (other than income tax on all emoluments within the meaning of section 53C), that would have been chargeable to tax for what would have been the year of assessment, 1963, had the Income Tax (Amendment) Act, 1963 not been passed, is hereby discharged.
(2) Where the tax payable by any person for tax year of income 1963 is less than the tax that would have been payable for what would have been the year of assessment 1963 had the Income Tax (Amendment) Act, 1963 not been passed, the amount of tax to be discharged shall not exceed the amount of tax assessed and paid for the year of income 1963, if
(a) such person was in receipt of income for part only of the year of income 1963; or
(b) such person was in receipt of income for part or the whole of the year of income 1963, but the income
(i) did not include income from such of the sources from which the total income far what would have been the year of assessment 1963, had the said Act not been passed, was derived, as the Commissioner may in any case determine; or
(ii) was income arising, accruing in, derived from or received in Trinidad and Tobago in respect of a business, trade, profession or vocation that, in the opinion of the Commissioner, has been voluntarily curtailed or reduced by such person.”
It must be stated here, in parenthesis, that the Income Tax (Amendment) Act, 1964 introduced the following amendment to s. 76A:
s.76A(6) “Where the amount of tax to be discharged as determined by sub-section (2) is less than the tax that would have been payable for what would have been the year of assessment 1963, had the Income Tax (Amendment) Act, 1963, not been passed, the remainder of the tax that would have been so payable shall be deemed to be the tax payable in respect of the year of income 1963.”
s.76C. “Notwithstanding that any assessment has been made upon any person before the Income Tax (Amendment) Act, 1963 was paused in respect of his chargeable income for what would have been the year of assessment 1963, had that Act not been passed, the provisions of this Ordinance shall have effect in relation to that income and the Commissioner may refund the amount paid, if any, in respect of the tax discharged by this Ordinance, or instead of making a refund may, where the person is liable or about to become liable to make a payment under this ordinance for the year of income 1963 apply any part of that amount to that other liability and refund any balance to such person and notify such person of that action,”
The respondent to this appeal (hereafter called “the plaintiff”) was at all material tames a shareholder of three companies, viz: Caribbean Development Co., Ltd., Bermudez Biscuit Co., Ltd. and Cordon Grant & Co. (Tobago) Ltd. In the year 1962 the plaintiff received from these companies an aggregate sum of $24,564.00 representing net dividends payable to the plaintiff after deduction by the respective companies of amounts payable bar them as income tax on the said dividends. It is not in dispute that the total amount deducted for this purpose was $16,376.00.
It is now necessary to quote the provisions of the ordinance applicable to the deductions thus made by the paying companies. They are as follows:
s.23(1) “Every company which is incorporated in Trinidad and Tobago, or which though incorporated outside Trinidad and Tobago, is registered under the provisions of section 298 of the Companies Ordinance, shall be entitled to deduct from the amount of any dividend paid to any shareholder tax at the rate paid or payable by the company (double taxation relief being left out of account) an the income out of which such dividend is paid:
Provided that where tax is not paid or payable by the company on the whole income out of which the dividend is paid the deduction shall be restricted to that portion of the dividend which is paid out of income on which tax is paid or payable by the company.”
s.23A. “A dividend paid by a company shall be deemed for all the purposes of this Ordinance, to represent income of such an amount as would, after such deduction of tax as is authorised by subsection (1) of section 23, be equal to the net amount received.”
s.23B(1) “Where any dividend from which deduction of tax is authorised by sub-section (1) of section 23 is paid without deduction of tax, the amount received in respect thereof shall for the purposes of this ordinances be deemed to be a net amount received in respect of a dividend from the gross amount of which such deduction as is authorised by the said subsection (1) has been made, and the provisions of section 23A shall apply accordingly.
(2) The provisions of this section shall apply inhere, though a deduction is made from a dividend, that deduction is less than the full amount authorised as it applies where no deduction is made.”
s.24 “Any toy which a company has deducted or is entitled to deduct under the last preceding section from a dividend paid to a shareholder, and any tax applicable to the share to which any person is entitled in the income of a body of persons assessed under this ordinance, shall, when such dividend or share is included in the chargeable income of such shareholder or persons be set off for the purposes of collection against the tax charged on that chargeable income.”
s.24A (1) “Notwithstanding section 24,
(a) where a dividend is paid to a shareholder, and
(b) where a share to which a person is entitled in the income of a. body of persons assessed under this Ordinance is paid to that person, out of the income of a company or other body at...
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