Tucker v Board of Inland Revenue

• Jurisdiction: Trinidad & Tobago
• Judge: Barnes, J.,Burke, J.,Knights, J.
• Judgment Date: 29 July 1988
• Court: Tax Appeal Board (Trinidad and Tobago)
• Docket Number: Nos. I 50 & I 51 of 1982; Nos. I 5 to I 8 of 1983; Nos. I 119 to I 120 of 1983
• Date: 29 July 1988

Tax Appeal Board

Barnes, J.; Burke, J.; Knights, J.

Nos. I 50 & I 51 of 1982; Nos. I 5 to I 8 of 1983; Nos. I 119 to I 120 of 1983

Tucker

and

Board of Inland Revenue

Messrs T. Hosein Q.C., R. Roopnarine, N. Mohammed for appellant.

Mrs. M. Robinson-Walters and Miss A. West for respondent.

Revenue law - Income tax — Appeal against assessments to income tax and unemployment levy — Whether special account held by appellant was a personal account — Whether income was returned in respect of earnings from generator rentals — Assessment to be reviewed.

1 These appeals relate to assessments to income tax and unemployment levy for years of income 1974 1975, 1976 and 1977 and were consolidated by an order of this Court dated 10th April 1986. The relevant law is the Income Tax Ordinance Ch. 33 No. 1 since replaced by the Income Tax Act Chap. 75:01 (hereinafter referred to as “the Act “).

2 The appeals followed objections by the appellant to additional assessments raised by the respondent on the basis of adjustments arising out of a tax audit carried out in 1979, following consideration of which the chargeable income of the appellant was increased as under:

Year	Original Assessment	Adjusted Assessment	Increase
	$	$	$
1974	15,138	127,334	112,196
1975	16,873	132,698	115,825
1976	17,743	710,186	692,443
1977	56,067	1,103,484	1,047,417

3 On 23rd February, 1988 the parties entered into an agreement under which both made concessions and as a consequence of items conceded by the respondent, the adjusted assessments were reduced by $56,576, $549,211 and $209,729 for years of income 1975, 1976 and 1977 respectively. The remaining items including those accepted by the appellant under the agreement are as shown in the table below:

4 TABLE

	1974	1975	1976	1977	TOTAL
	$	$	$	$	$
1. A.R.V. Shorelands	4,260	5,688	5,688	5,688	21,324
2. Interest	1,990	6,656	2,372	—	11,018
3. Glen Tucker Special Loan Account	9,254	—	85,000	735,327	829,581
4. Unexplained Bank deposits	12,440	23,076	7,343	82,844	125,703
5. Personal Account Tucker Trust	—	—	21,000	—	21,000
6. Loan to Tucker Trust	84,473	—	—	—	84,473
7. Generator for rentals	—	24,400	22,000	14,000	60,000
	112,417	59,420	143,403	837,859	1,153,099
8. Less Allowances for Insurance	(221)	(171)	(171)	(171)	(734)
Total	112,196	59,249	143,232	837,688	1,152,365

5 By the agreement of 23rd February, 1988 the appellant accepted adjustments as at (1) (2) and (8) in the table above, except that the figure for interest for 1976 is shown as $6,792 instead of $2,372.

6 The tax auditor's findings resulting in the adjustments are set out in paragraph 18 of the respondent's statement of case of 1st July 1986 as under:–

“18. During the audit it was discovered –

• (1) that the appellant during the period under audit occupied as residence rent free property at Shorelands owned by the Tucker Trust Ltd.

• (2) that in respect of the years 1974, 1975 and 1976 the appellant received bank interest in the amount of $1,989.95, $6,656 and $2,472 from First National City Bank which he did not report;

• (3) that in all the years the appellant had failed to claim the full entitlement in respect of life insurance premiums.

• (4) that during the years 1975, 1976 and 1977 amounts of $24,000, $22,000 and $14,000 in respect of generator rentals paid by Baroid Trinidad Services Ltd. to Industrial Agencies were credited to the Glen Tucker Special Loan Account with Industrial Agencies Ltd.

• (5) that of deposits placed in Barclays Bank Ltd. during the years of income 1974, 1975, 1976 and 1977 the sources of the amounts of $12,440, $23,076, $7343 and $122,844 respectively were not satisfactorily established by the appellant;

• (6) that the appellant had an account with the company called the ‘Special Loan Account’ to which were debited and credited payments made and sums received by the company on his behalf. That during the period under audit the following amounts were credited to the Glen Tucker Special Loan Account in the books of Industrial Agencies Ltd. –

  (a)	1974 —	$9,254.00
  (b)	1976 —	85,000.00
  (c)	1977 —	199,770.00 representing a transfer of a credit balance in the books of Industrial Agencies Ltd, owed to Tidewater Marine Services
  (d)	1977 —	Three sums of $24,433, $56,385 and $71,523 by way of Journal entry all representing payments to companies in the U.S.A.
  (e)	1977 —	two sums of $68,000 and $25,144
  (f)	1977 —	$290,063 which was transferred from the Foreign Currency Account in the books of Industrial Agencies Ltd. 4/(7) that in the year.,

• (7) that in the year 1976 amounts totalling $21,000 were credited to the appellant's Personal Account with the Glen Tucker Trust Ltd;

• (8) that in the year 1974 an amount of $84,473 was credited to the appellant's Account T 103 in the books and records of the Company Alvin Tucker Trust Ltd.;

• (9) that in the year 1975 the appellant received dividends from Baroid Trinidad Services Ltd. in the amount of $56,576.00;

• (10) that in the year 1976 the appellant placed on fixed deposit with the Royal Bank of Trinidad & Tobago the sum of $549,211.00;

• (11) that in the year 1977 the appellant placed on fixed deposit with Royal Bank of Trinidad & Tobago the sum of $169,729.00;

• (12) that the appellant held inter alia, 20 ordinary shares in Industrial Agencies Ltd. 19,397 ordinary shares in Baroid T'dad Services Ltd. and 976 ordinary shares in Glen Tucker Trust.”

7 In paragraph 41 of the statement of case, the respondent's contentions are stated as under:

• “(1) that the income tax returns of the appellant for the years 1974, 1975, 1976 and 1977 did not reflect the true income of they appellant for the years in question;

• (2) that as a result of an audit of the appellant's tax affairs it appeared to the respondent that the appellant had been assessed at a lesser amount than that which ought to have been charged and the respondent is entitled to assess him at such additional amount as according to its judgment ought to have been charged;

• (3) that the appellant failed to satisfy the respondent that the various sums referred to in paragraph 18 herein credited to the Glen Tucker Special Loan Account in the books of Industrial Agencies Ltd. during the years 1974, 1976 and 1977 were not undisclosed income on which he is assessable to income tax;

• (4) that the appellant failed to establish to the satisfaction of the respondent the source of I amount of $12,440, $23,076, $7,343 and $122,844 placed on deposits during the years 1974-1977 with Barclays Bank and as a result the respondent correctly treated the sums as incomes;

• (5) that the respondent was of the view that dividends paid by Baroid T'dad Services Ltd. in 1975, 1976 and 1977 were not exempt income and therefore any such dividends placed on fixed deposit fall to be taxed under the Income Tax Act;

• (6) that the appellant failed to establish to the satisfaction of the respondent that the sum of $21,000 credited to the appellant's personal account with the Glen Tucker Trust Ltd. during the year 1976 or the amounts totalling $84,473 credited to the appellant's accounts with the Alvin Tucker Trust Ltd. during the year 1974 were not income of the appellant;

• (7) that the appellant failed to satisfy the respondent that payments of $24,000; $22,000 and $14,000 received by the appellant during the years 1975 — 1977 in respect of generator rentals were not his income;

• (8) that the rent free occupation by the appellant of the house at Shorelands is a benefit accruing to the appellant and is chargeable by virtue of S. 134 of the Income Tax Act Chap, 75:01.”

8 By the agreement of 23rd February, 1988, the respondent conceded in regard to those items referred to at paragraph 41(5) regarding paragraphs 18(9), 18(10), 18(11) of the statement of cases and also agreed to a reduction of $40,000.00 in respect of the sum of $122,884 placed on deposit with Barclays Bank in 1977 — see paragraph 41(4) of the statement of case. By an amendment to its statement of case, the respondent, contended with reference to paragraph 18(6) (c) — see above that “the sum of $199,700 was correctly treated as a capital distribution of the assets of the company.”

9 For the appellant, Martin Parr and Peter Ganteaume testified. Both witnesses are Chartered Accountants, the former is an employee of the appellant and also of Industrial Agencies Ltd. (hereinafter referred to as “IAL”) and other companies controlled by the appellant. He had taken up these appointments subsequent to the period during which the respondent had carried out the tax audit on the appellant and on IAL. He had had access to books and records of companies in which the appellant was the principal shareholder as well as such as related to the appellant personally. He had examined various records and prepared exhibits and analyses for purposes of the appeal. Fifty-four exhibits were put in through Parr.

10 Gateaume, a partner in the firm of Price Waterhouse & Co., Chartered Accountant gave expert evidence. Deonarine Mohess a tax auditor on the staff of the respondent who had been responsible for the tax audit resulting in the appeals testified for the respondent. He had been assisted in the tax audit by Mrs. Gwen Nurse. She also testified. Mohess had also conducted an audit on IAL which had resulted in appeals to this Court. Nurse had examined books of records of a Trust Company of which the appellant had been chairman and major shareholder. Affidavits were furnished by the appellant and by R. Granger. The latter had been a Director/Accountant of IAL at the relevant time.

11 We shall be commenting on the evidence as it relates to and is...