101-NLR-NLR-V-64-COMMISSIONER-OF-INLAND-REVENUE-Appellant-and-A.-H.-V.-MOHAMED-Respondent.pdf
A BE YES UNDE RE, J.—Commissioner of Inland Revenue v. Mohamet!
551
1962Present: Herat, J., and Abeyesundere, J.
COMMISSIONER OF INLAND . REVENUE, Appellant, andA. H. V. MOHAMEP, Respondent
&.C. 4J61 {Income Tax)—B. R. A.294/1
Income lax—Business—Profits or income of the year 1957—Incapacity of proprietorto claim deduction in respect of entertainment expenses—Income Tax Ordinance,as amended by Act No. 13 of 1959, ss. 5, 12 (ab).
The effect of paragraph (ab) of section 12 of the Income Tax Ordinance, nsamended by Act No. 13 of 1953, is that, for the purpose of ascertaining theprofits or income of the year 1957 from a person’s business,'no.deduction shallbe allowed in respect of ontortainmont oxponkes incurred in connection with thatbusiness.
G ASE staged under the Income Tax Ordinance.
A. G. Alles, Deputy Solicitor-General, with E. J). Wikramanayake,Crown Counsel, for the Commissioner of Inland Revenue.
S. Naclesan, Q.C., with Desmond Fernando, for the assessee.
Cur. adv. vuU.
June 0, 1962. Auy.YEStrNDERE, J.—
.4'
Case No. S.C. 4/61 (Income Tax) is a case stated by the Board ofReview at the instance of the Commissioner of Inland Revenue undersection 74 (now section 70) of the Income Tax Ordinance for the opinion,of the Supreme Court on the question of law whether a deduction inrespect of entertainment expenses incurred in the year 1957 in connectionwith the business of the assessee in the case under reference (hereinafterreferred to as " the assessee ”) shall or shall not be allowed for the yearof assessment commencing on April 1,1958, for the purpose of ascertainingthe profits ort income from that business.
Paragraph dab) of section 10 (now section 12) of the Income TaxOrdinance, as amended by Act No. 13 of 1-959, so far as those provisionsthereof that are relevant to the case under reference are concerned,provides that, in respect of entertainment expenses incurred in con-nection with a person’s business, no deduction shall be allowed for theyear of assessment commencing on April 1, 1958, in ascertaining theprofits or income from that business. The deduction that is disallowedis in regard to profits or income ascertained for the aforesaid year ofassessment. It is therefore necessary, fot the purpose of expressing
552 ABEYESUNDERE, J.—Commissioner of Inland Revenue v. Mohamed
an opinion on the question of law in the case under reference, to deter-mine what are the profits or income from the business of the assessecthat are required to be ascertained for the year of assessment com-mencing on April 1, 1956. According to section 5 of the Income TaxOrdinance, the tax to which a person is liable is charged for any yearof. assessment in respect of his profits and income of the year precedingthat year of assessment except in particular cases where the tax is chargedfor a year of assessment in respect of the profits and income of that year.The case under reference is not one of these particular cases. Thereforethe tax to which the assessee is liable as regards the profits or incomefrom his business must be charged for the year of assessment commencingon Xptil 1, 1958, in respect of the profits or income of the year 1957from that business, the accounts of that business being made in respectof each year for the period January 1st to December 31st. Consequentlythe profits or income from the business of the assessee that are requiredto be ascertained for the year of assessment commencing on April 1,1958, are the profits or income of the year 1957 from that business.
I am therefore of the opinion that the effect of paragraph (ab) of section10 (now section 12) of the Income Tax Ordinance, as amended by ActNo. 13 of 1959, is that, for the purpose of ascertaining the profits orincome of the year 1957 from the assessee’s business, no deduction shallbe allowed in respect of entertainment expenses incurred in connectionwith that business. The case shall be remitted to the Board of Reviewwith the opinion expressed by this Court in order that such Board mayrevise the assessment in respect of the assessec as such opinion mayrequire.
Herat, J.—I agree.
Case remitted to the Board .of Review.