clr/1987/1987_3_1951.pdf

(1976)· interest £10,714, 1978 - interest £10,715 That makes a total of £47.321 It was the case of the respondent Commissioner of Income-Tax that by virtue ofthe DebtorsRelief(Temporary Provisions) Law of 1979, (Law No 24 of 1979) the said interest was not legally due and payable and therefore no deduction thereof should have been made for Income-tax as well as for special contributionpurposes As a result the Commissioner amended accordingly the computations of applicants'income made bytheirauditorsfortheyears 1973-1983 The result was that the adjusted computation for 1980 showed a profit for Special Contribution purposes Hence this recourse It must be noted that at the time the sub judice decision was taken the applicant Company had not as yet been declared under the Debtors' Relief Law a displaced orstncken debtor 1951 Prcmixco Ltd. v. Republic

(1987)However, after the filing of this recourse theapplicants were declared upon application filed bythem against their creditorsinthe Distnct Court of Nicosia under the said law displacedpersons Held, dismissing the recourse The result of the situation as it hasnow developed is that the present recourse has been abated and should be 5 dismissed on the ground that the applicant Company has no longer a legitimateinterestwhich accordingtotheauthonhes mustexistnotonlyatthe bme offilingofthe application,but alsoatthe time ofits heanng Recoursedismissed No order astocosts 1 0 Casesreferred to Papasawas v. The Republic

(1967)3 C LR 111 Papadopoulos ν The Municipalityοf Limassol(\9Ί4}3 C L R 352 Recourse. Recourse against theassessment for thespecial contributionfor 15 the four quarters of theyear 1980 raised on theapplicants. E.Odysseos, for the applicants Y.Lazarou, for the respondents Cur. adv.vult. A. LOIZOU J. read the following judgment. This recourse is 20 against the assessment for the special contnbution for the four quarters of the year 1980 which were raised and determined by the respondent Commissioner of Income-tax as shown in the Schedule (Appendix A to the application) The applicant Company is a private Company with limited 25 liability incorporated on the 9th September 1968 Itsauthonzed share capital was five-hundred thousand shares of one pound each. Its issued shared capital was three-hundred thousand of such shares, held by Christakis Constantinou and Andreas Constantinou who are also its directors. It derived its income 30 during the material time from asphalting business and land development. The applicant Company submitted its returns for the years 1980-1981butnoreturnsfor special contributioninrespect of the four quarters of

1. Some time in 1985, the respondent 35 1952 3 C.L.R. 5 Premtxco Ltd. v.Republic A. Loteou Λ. Commissioner examined theaccounts of the applicant Company fortheyears 1973-1983, including theaccountsandcomputations inrespect of theyear of 1980, thesubject year of thisrecourse.The number of queries arising from the examination were discussed with the auditors of the applicant Company and certain adjustments thereon were agreed with the exception of the treatment of the interest disallowed with which aspect of the case I shall be hereinafter dealing. The applicant Company, deducted theamountinrespect of the 10 interest on loans contracted before 14th August 1984, in each of theyears of 1974-1978as follows: 1974 — interest £4,464; 1975 — interest £10,714; 1977 — interest £10,714; 1978 — interest £10,
2. That makes a total of £47,
3. 15 20 25 30 35 40 Itwas the case of the respondent Commissioner of Income-tax thatby virtue of theDebtorsRelief (Temporary Provisions) Law of 1979, {Law No.24 of 1979) the said interest was not legally due and payable and therefore no deduction thereof should have been made for income-tax, as well as for special contribution purposes. The applicant Company adjusted the total interest debited into the accounts for the years 1974 to 1978, amounting to £47,321, in the year
4. by crediting the Profit and Loss Accounts of thatyear with the sum of £47,321, and so treated that sum as an income receipt in
5. Therespondent Commissioner disagreed on that treatment, holding the view that the deduction made ineach year inrespect of thatinterestshould be disallowed. The respondent Commissioner proceeded with the amendments to the auditor's computations for the years 19731983 and informed the auditors of the applicant Company accordingly by letter dated 2nd February 1985, (Appendices A2 andA3, attachedtotheapplication).Theadjusted computationin respect of all years 1973-1983 showed losses for both income tax and special contribution with the exception of the special contribution computation for the year 1980, which showed a profit for the year after deducting lossbrought forward inthe sum of £32,
6. The respondent Commissioner proceeded then on the 26th February, 1985 and raised special contribution assessments for the four quarters of 1980 (Appendix 4A attached to the application). The applicant Company's auditors, by letter dated the 14th March, 1985, filed an objection on behalf of their Company on the ground that the special contribution for 1980 was not inaccordance with theircomputations. 1953 A.LolzouJ. PramixcoLtd.v.Republic

(1987)The respondent Commissioner rejected the objections and informed the applicants byletterdated 4thApnl 1985(Exhibit Al attached to the Application) and Final Notices of Special Contnbution for the said four quarters of 1980 As set out in the opposition filed on behalf of the respondent 5 Commissioner the acts and/or decisions complained of were properly and lawfully taken after all relevant facts and circumstances were taken into consideration, viz According to the opposition filed on behalf of the respondent Commissioner (a)TheSpecialContnbution assessmentsforthefourquartersof 1980 were levied under sections 3, 6 and 10 of the Special Contnbution (Temporary Provisions) Law 1978, (Law No 34 of 1978) as amended by Laws No 29/79, 12/78 and sections 3, 13

(2)and 23

(1)of the Assessment and Collection of Taxes Law, 15 1978-1979 (b) The objections against the above assessments were determined'under section 20

(5)oftheAssessment and Collection of Taxes Laws, 1978-1979 Before the Turkish invasion the applicant Company was 20 operating in the now occupied parts of Cyprus It had several factones and twoquames inthearea ofMiaMiliaand Kythrea and it left behind a considerable number of machinery, equipment, tools, appliances, spare parts and large quantities of goods According totheir estimate their lossesamounted totwo-hundred 25 thousand pounds The bankers of the applicant Company were the National and Gnndlays Bank Limited Its dealings were in the form of loans, current accounts, a floating charge and other banking transactions On the 15th August 1975, it owed about one- 30 hundred thousand pounds tothe said bankwhichwastaken over by the Cyprus Popular Bank Limited The applicant Company asked both these Banks to recognize that it was a displaced or stricken debtor inaccordance with the DebtorsRelief (Temporary Provisions) Laws 1979 -1985,(hereinafter tobe referred toasthe 35 law) but both Banks refused to recognize them as such and continued todebit them with intereston the loansdue to them 1954 *" 3C.L.R. PremlxcoLtd.v.Republic A.LotzouJ. When the sub-judice decision was taken the applicant Companyhad notasyetbeen declared undertheLawa displaced. or stricken debtor, but it was treated as such by the respondent Commissioner obviously due to its actual financial situation. 5 viewed in the light of the provisions of the Law. Earlyin 1986,theapplicant Company filed intheDistrict Court of Nicosia an application under the Law. and by an Order of the Court dated the 23rd September 1986. photocopy of which has been produced as Exhibit «XX» before me. the applicant 10 CompanywasdeclaredadisplaceddebtorinthesenseoftheLaw. Considerable argument hasbeen advanced on both sidesasto whether the respondent Commissioner, could, without a declaration bythe Courtof the applicant Company asadisplaced or stricken debtor under the Law, conclude that itwas such and 15 therefore not liable to pay interest on its preinvasion debts in question. I need not, however, go into the matter as the situation has radically changed as a result of the aforementioned Order of the Court by which the applicant Company has been declared a 20 displaced debtor, the legal effect of which was to judicially acknowledge that the applicant Company is entitled to the benefits of the said Law and in particular as regards the present recourse, the provisions of Section 4

(1)thereof which provide that «notwithstanding the provisions of any other Lawduring the 25 period mentioned insubsection 1ofsection 3,no interestshallbe charged, debited, orcollected onadebtofadisplaced orstricken debtor». The result of the situation as it has now developed isthat the present recourse hasbeen abated and should bedismissed on the 30 ground that the applicant Company has no longer a legitimate interestwhichaccordingtotheauthorities,itmustexistnotonlyat the time of the filing of the application, but also at the time of its hearing. In this respect reference may be made to the cases of Papasawasv. The Republic {1967)3 C.L.R. I l l ; Papadopoullos 35 v. The Municipality ofLimassoI

(1974)3 C.L.R. 352,and Tsatsos Recourse forAnnulment 3rd Edition p.54. In the result the recourse isdismissed but in the circumstances there willbe no order astocosts. Recourse dismissed t\o orderasto costs. 40 1955