clr/1988/1988_3_1137.pdf

(1)—itisnotunconstitutional. Taxation—Excessiveassessment, allegation asto-rSurdenofproof—Itrests ' ontheapplicant. 5 Taxation—AssessmentandcollectionofTaxes—Judicialcontrol—Principles applicable. ' *. ConstitutionalLaw—Taxation—The capital Gains TaxLaw,·1980(Law521 80),section6

(7)—//isnotunconstitutional. !0 The facts of thiscasearesimilarto those inPavlou v.The Republic

(1988)3C.L.R.

1. Recoursedismissed. Noorderastocosts. Recourse. 15 Recourse against the decision of the respondents to impose on applicant capital gains tax amounting to£ 750.- as aresult of the disposition of half of herproperty under Reg.No. D.
2. 1137 Pavlou v.Dir.ofInland Revenue

(1988)C.Loizou,fortheapplicant Y.Lazarou,for therespondent, Cur. adv. vult. SAWIDESJ.readthefollowingjudgment Bythepresentrecourseapplicantchallengesthedecisionoftherespondentdated 5 5th November, 1985 imposing upon her a capital gains tax amountingto£750.-asaresultofthedispositionbyherofhalfa shareofthepropertyunderregistrationD198. ApplicantwastheownerofhalfashareinthefieldunderregistrationD198,sheet/plan 30/367WI,plot227,atDeftera,theoth- 10 erhalf shareofwhichbelongedtoherhusband. On 17thOctober, 1983,therespondentraisedonapplicantan assessmentimposingcapitalgainstaxagainstwhichsheobjected on28thNovember, 1983onthegroundthattheproceedsofthe land which amounted to £50,000.-respresent thevalueof her 15 shareandthatofherhusbandaswellasthevalueofanotherfield underregistration No.D.292belongingtoherhusband,suchvaluebeing £25,000.- and thebalaceof£25,000.- representthe valueofbarracks,plantandmachineryandpipesthereonamountingto£20,000.-andgoodwillamountingto£5,000.20 On5thNovember, 1985therespondentdeterminedapplicant's objection bymaintaining hisoriginalassessment.Hisreasoned decisionwascommunicatedtotheapplicant(Appendix"C"tothe opposition)togetherwiththerelevantnoticesoncapitalgainstax payable.Thereasons given bytherespondentinthesaidletter 25 areasfollows: "After acareful examination of themarket valueof your property underregistrationD198onthe 1stDecember,1980, the date of its disposition as well as on 27th June, 1978,1 havereachedtheconclusion thattheassessmentofitsmarket 30 valuewhichyouhavedeclareddoesnotcorrespondwiththeir 1138 3 C.L.R. Pavlou v. Dir. of Inland Revenue Savvides J. marketvalueontheaforesaid dates. 5 10 15 On thebasisof thematerial before meconcerning salesof othersimilarpropertiesinthesameareaabout thesameperiod, thevaluationoftheLands&SurveysDepartment for thepurpose of collecting of registration fees aswell asother factors which in my mind affect the market value of the immovable property Ihavereachedtheconclusion thatthemarketvalueof yourproperty underregistrationD198on 1stDecember, 1980 was£20,000.- and on 27th June, 1978 £11,250.-." Applicantsasaresultfiled thepresentrecoursechallenging the said assessments. Thegroundsoflawraised andarguedbycounselfor applicant are in fact the same as those in Case No. 17/86 which was filed byherhusband against therespondentchallenging thelatter'sdecisionimposing uponhimacapital gainstaxinrespectof theother half shareof thesameproperty andalsothewhole shareinanotherproperty andinwhich-judgment hasalready beendelivered. Theyare briefly: 20 25 That thesubjudice decision wastaken inexcessand/or abuse ofpowerandunderamisconception oflawandfact andinviolationoftheConstitution;itiscontrary totheacceptedprinciplesof naturaljusticeanditisnotduly reasoned. Counselfor applicantbyhiswritten address inexpoundingon the grounds of law directed his argument on the three following submissions: (a) That the Capital Gains Tax Law, 1980 and in particular section 6

(1)is unconstitutional. (b)That theassessmentswereexcessive. (c)Thattherespondent wrongly applied thelaw and failed to 1139 SavvidesJ. Pavlou v.Dir.of Inland Revenue

(1988)take intoconsideration thefactor of inflation between 1978and

1. Counsel for the respondent in support of his oppositionre­ ferred toavaluationreportpreparedby Mr.Mateas, thethen As­ sistant CommissionerofEstateDutyastothevalue oftheproper- 5 ty ason27thJune,
2. Suchvaluationis basedoncomparable salesof propertyeffected in 1978 and 1979 andafter acompari­ son between thesaid properties andthesubject-matter onesand all necessary readjustments themarketvalueof thewholeproper­ ty underregistrationD198, was assessedat£22,500.- ason27th JQ June, 1978, and applicant's share therein at£11,250.-. He also drew theattentionof theCourttothefact thatapplicant, herhus­ band andthebuyers, at thetimeof thedeclarationeffecting the transfer of bothproperties tothebuyers,declaredtothe Depart­ ment of Lands & Surveys on the declaration of sale that the , agreed pricefor thesaleof thelandwas only£50,000.As mentionedearlier thesame arguments were advanced by counselfor applicantinCaseNo. 17/86insupportof theclaimof applicant's husband andIneednotrepeatthemindetail.Iadopt thereasons giveninthesaid casewhich apply mutatismutandis 2η in thepresentcase,andinbriefly answering thequestions posed for considerationI concludeasfollows: Therelevantprovisions of Law52/80challenged asuncostitutionalonthe groundofretrOspectivityareconstitutionalandvalid andconsequently theobjection raisedonthisgroundfails. «5 As tothesecond groundof law raised,thatthesubject-matter property aswell as theotherproperty of herhusbamdweresold in.1980 for thesum of £50,000.- which included boreholes and fixtures standingthereon,such amountwas theamountdeclared in thedeclaration of sale as thevalue of theproperty.Leaving «Λ aside thequestion thatany structures,wellsandboreholesexist­ ingonthesaidpropertyare"immovable property"within thedef­ initionof theImmovableProperty(Tenure, Registration and Va­ luation)Law, Cap.224 thereis nomentioneitherinthecontract 1140 3 C.L.R. 5 0 - Λ ,* Pavlou v. Dir.of Inland Revenue Savvides J. of saleorinthedeclarationof transfer thatthecapitalvalueofthe property was less than£50.000.- Furthermoreneither theappli­ cant nor her husband produced to therespondent any relevant documentsorotherrelevant material in support of theirconten-· tions.Itis expresslyprovided by law anditis wellsettled thatin taxcases theburdenofproof thatanassessment isexcessive rests on theperson challenging thedecision. Support in this respect may be found in the authorities given in my judgment in Case No. 17/
3. Forthesame reasons as mentionedin CaseNo. 17/861 have cometotheconclusionthatthecontentionof theapplicantthatout of theamountof salea sumof £20,000.- should be deductedin respect of installations existingonthesaid property isuntenable and the applicant failed todischarge theburden cast onherto claim such deduction.Also,as totheamountof £5,000.-repre­ senting goodwillof thelandinquestion suchclaim hasnot been established and,therefore, Ifind thattherespondentrightlyre­ fused toacceptsame. As tothelast legalgroundargued thatanycapitalgain inthis caseis merely anappreciationof the value of theproperty due to inflation and thatsuch appreciation should be deducted I have come to the conclusion that no sound argument has been ad­ vanced in this respect and noauthority in support thereof and, therefore, Ifind thatsuchgroundshouldalsofail. Itis wellsettled by aseriesofcasesreferencetowhichismade in Case No. 17/86 thatinrecourses against assessment of taxes theCourtwillnotinterfere with thedecision of theInlandReve­ nueAuthorities, whenitcomestotheconclusionthatsuchadeci­ sion was reasonably andproperly opentothemon thebasisof therelevant facts andinthelightof theapplicationof therelevant legislation andprinciples of law. Theburden of proof to satisfy theCourtthatitshouldinterfere with suchadecisionliesalways onanapplicant Fromthematerialbefore meIhavecometotheconclusionthat 1141 SavvidesJ. Pavlou v.Dir.ofInland Revenue

(1988)itwasreasonablyopentotherespondentDirectorofInlandRevenueatthetimeandinthelightofthenewlegislationand thematerialbeforehimtoreachthesubject-matter decisionandthatthe assessmentscomplainedofwereneitherarbitrary norcontraryto thelaw.Theapplicanthasfailed todischargetheburdenofsatis- 5 fying thisCourtthatthecaseunderconsideration isaproperone tointerferewiththesubjudicedecisioncomplained of. Therefore,thisrecourefailsandisherebydismissedbutbearinginmindthefactthatIhavealreadyawardedcostsinfavourof respondent in Pavlouv.TheRepublic

(1988)3C.L.R. 1125I shallmakenoorderforcosts. 10 Recoursedismissed. Noorderastocosts. 1142