clr/1986/1986_3_2470.pdf

(1986)1986 September 6 [TRIANTAFYLLIDES» Ρ] IN THE MATTER OF ARTICLE 146 OF THECONSTITUTION SINGER SEWING MACHINE COMPANY, Applicants, v. THE REPUBLIC OF CYPRUS, THROUGH

1. THE MINISTER OFFINANCE,
2. THE COMMISSIONER OF INCOME TAX, Respondents. (Case No. 240/82). Special contribution—Interestpaid on special contributions payable by applicants—Notan expense wholely and ex­ clusivelyincurredin the production of income liable to special contribution—Not deductible in computing the special contributionpayable by the applicants in respect of the period duringwhichsuchpayment was made. 5 This recourse is directed against the refusal of the res­ pondent Commissioner to allow as a deductible expense for special contribution purposes interest paid by the ap­ plicants on the special contributions payable by them for 10 the years 1979 and
3. Held, dismissing the recourse, that as the interest con­ cerned was not an expense wholly and exclusively incurred in the production of income liable to special contribution, it could not, under sections 11 and 13 of the Income Tax 15 Laws, 1961 -
4. be treated as a deductible expense. Recourse dismissed. No order as to costs. 2470 3 C.L.R. Singer Sewing Machine v. Republic Cases referred to: Aipan (Taki BrosJ Fatnagusta Ltd. v. The RepubVc

(1986)3 C.L.R.

1. Recourse. 5 Recourse against the decision of the respondents not to allow as a deductible expense for special contribution purposes interest paid on rhe special contribution payable by applicants for the years 1979 and
2. X. derides, for the applicants. 10 A. Evangelou, Senior Counsel of the' Republic. the respondents. !or Cur. iulv \ ult. 15 20 25 30 ^5 TRIANTAFVLLIDES P. read the following judgment. By means of the present recourse the applicant company challenges the decision of the respondent Commissioner of Income Tax not to allow as a deductible expense for' spe­ cial contribution purposes interest paid en the special con­ tribution pavable by the applicants for the years 1971) and
3. The respondent Commissioner of Income Tax initial!) decided to disallow a deduction of the aforesaid interest both for purposes of income tax and of special contribution, but after considering objections b\ the applicants he'decided. on the 13th May
4. in view of the prov:sions of section 8 of the Special Contribut:on (Temporary Provisions) Law. 1978 {Law 34/78), that interest paid on special contribu­ tion is an allowable deduction for income tax purposes, but not. also, for special contribution purposes, as he consi­ dered that, under the provisions of sections 11 and I .> of «he Income Tax Laws, which arc app!:cablc under sec­ tion 6 of Law 34/
5. such interest is not an expense wholely and exclusively incurred in the production of the in­ ; come in respect of which spec al contribution Ν pa\ab'e. Counsel for 'he applicants has submitted that on the correct* interpretation of sections 11 and 13 of the Income Tax Laws, in conjunction with sections 6 and' 8 of Law 2471 Trientafyltides P. Singer Sewing Machine v. Republic

(1986)34/78, interest paid on special contribution should be treated by the respondent Commissioner of Income Tax as a deductible expense for special contribution purposes. The same issue arose in the case of Alpan (Takis Bros) Famagusta Ltd., v. The Republic (case No. 430/83, in 5 which judgment was delivered on the 5th February 1986 and is not yet reported)*, where it was held by me that the Commissioner of Income Tax rightly found that the interest concerned was not an expenditure wholely and exclusively incurred in the production of income in respect of 10 which special contribution is payable, and. therefore, it could not, under the provisions of sections 11 and 13 of the Income Tax Laws, be treated as a deductible expense for special contribution purposes. I see no reason to depart from my judgment in the case 15 of Alpan (Takis Bros.) Famagusta Ltd., supra, nor can the circumstances of the present case be distinguished from those in that case. I am, therefore, of the view that the Commissioner of Income Tax has correctly arrived at his sub judice decision 20 on the basis of the relevant legislative provisions and as a result the present recourse fails and it is dismissed accordingly; but with no order as to its costs. Recourse dismissed. No order as to costs. * Reported in (19861 3 C.L.R. 2465. 2472 25