3;C.L.R. 1988June28 [A.LOIZOU,P.I INTHEMATTER OFARTICLE 146OFTHECONSTITUTION , ANGEUKISMIRLI, Applicant, v. THE REPUBLICOFCYPRUS,THROUGH THEDIRECTOR OFINLANDREVENUE DEPARTMENT, Respondent. (CaseNo. 435/86). Taxation—Assessmentof—JudicialControl—Principlesapplicable. Taxation—Capitalgains—Conflicting valuationsofexpertsregardingvalueof land asat 27.6.78—In the circumstances, it was reasonably open tothe Commissioner torelyonthevaluation hedidactuallyrely. Thefactsofthiscaseappear sufficiently in theJudgmentof theCourt. Recoursedismissed. No orderastocosts. Casesreferredto: Nicou v.The Republic
(1983)3 C.L.R. 1113. 10 Recourse. Recourseagainstthedecisionof therespondent toimposeon applicant thesumof£660=ascapitalgainstaxinrespectofthe dispositionofhershopatPaphos. 1305 Smirliv.Republic
(1988)Chr. Georghiades,for theapplicant. Y.Lazarou, for therespondent. Cur. adv. vult. A. LOIZOU P.read thefollowingjudgment. Theapplicant wasatall material times theownerofa shopatPaphos.Onthe 5 21st August 1984,she submitted adeclaration ofdispositionof thesaidshop.Accordingtoitthemarketvalueoftheshoponthe 27thJune 1978was£2,000anditssale-price£4,
- TherespondentDirector bymeansof anoticedated the 10th January 1985,(Appendix A),imposed£660ascapitalgainstax 10 inrespectofthedisposition oftheshopinquestion.Inthedeterminationoftheamountoftheabovetaxation therespondentDirectorassessedthemarketvalueoftheshopasat27thJune1978, asbeing£1,
- ITieapplicantobjected totheassessmentandsubmittedthatthe 15 marketvalue of theshopasonthe27thJune, 1978,washigher than £1,500 and that in estimating the gains the respondent wronglytookintoconsiderationthe27thJune 1978,asthematerialdate.In support of herobjection the applicant relied onthe valuation ofMr.AndreasPantazisaqualified valuer.According 20 tohisvaluationthemarketvalueoftheshopasonthe27thJune 1978,was£3,
- The respondent Director by his letter dated the 25th April 1986,(AppendixH),rejected theobjection.Thesaidlettersofar asrelevantreads: "Ihaveconsidered yourallegation thatthemarketvalueof thepropertyyoudisposedonthe13thApril 1984,underRegistration No. 23873 wason the27th June 1978 greater than theonespecified intheabovetaxationandIinformyouthaton thebasisofthematerialbeforemewhichconcernscomparable 30 salesinthesameareaataboutthesame periodoftime,aswell 1306 25 3 C.L.R. Smirli v.'Republic A.Loizou P. r " *' aso therfactors thatIhaveinmindasaffecting themarketval ueof theimmovableproperty, Ihavearrived attheconclusion that myvaluation is aproperoneandIamunable toalterit 5 As againstthedismissal ofhisobjection theapplicantfiledthe presentrecourse praying for adeclaration thatthedecision'em bodied in theabove"letter was unconstitutional,'unlawful, null andvoidandof noeffect whatsoever. •• -1 ' 1 -•"• ' t - . ;· j ' The.recoursewas basedonthefollowing groundsof law: 10 '
(1)Thedecisionof therespondentDirector was foundedon a wrong evaluation of themarketvalue of theproperty as at27th June 1978, thatis tosay herelied ona value which was lower thanthepropervalue andthereforethetaxationwas imposedin a mannercontrary totheprovisions of sections4 and6
(1)(a) of theCapitalGainsTaxLaw, 1980 and/oris theresultof amiscon ceptionof fact andlaw. 15
(2)Thesubjudice decision was not reasoned and/oritsrea soning was not properand lawful. 20 25 30
(3)Thesub -judice decision was issued inabuse and/orexcessof power.
(4)Withoutprejudice totheothergroundsoflaw,additionally and/oralternatively thesubjudice decisionwas founded.upon an unconstitutionallegalprovision that isonsection6of the Capital GainsTax Law, 1980 which,is sofar as thesaid section inthe determinationof thegainrelied onthe marketvalue of theprop erty onthe27th June, 1978,imposes retrospective taxationand it,therefore,violates Article 24
(3)of the Constitution. At the clarification stage, learned counsel for the applicant abandoned grounds of law
(3)and
(4)above as wellas ground
(1)with the exception of misconception of law. Regarding ground of law
(2)he stated thatit does notconstitutea "self1307 ι A. Loizou P. Smirli v. Republic
(1988)contained" ground of law and is covered by the remaining groundsoflaw. Inconsideringtheapplicant'sobjection therespondentDirectorhadbefore him,ontheonehand,thevaluationofMr.Pantazis,(AppendixB),andontheotherhandavaluationofMr.Gr. 5 Mateas,theHeadoftheEstateDutyOffice oftheInlandRevenue Department (Exhibit 1).Thevaluationofthelatterwasbasedon sevencomparablesaleswhichtookplacebetween the 15thMay, 1978andthe21stMay 1983.ThevaluationreportofMr.Pantazisdoesnotrefertoanycomparablesale,butitsimplyarrivesat JQ theconclusion thatthemarketvalueoftheshoponthe27thJune 1978,was£3,800.Itisdeemedpropertoquoteinfull thevaluationreportofMr.Pantazis. "VALUATIONOFPLOT397SHEETPLANLl.2.61V The property is a shop and is situated at Kanaris Street. 15 Veryclose to the property are the Bank of Cyprus, Popular Bankandretailshopsofgreatvarietyofgoods. Theproperty is in Moutallos Quarter Paphos, Sheet Plan LI.2.6.IV,plot397and hasanextentof480sq.ft. Demand ofshopswashighin 1978duetotheexpansioninbusinessof 20 thetown'sshoppingcentreandthescarcityofsupplyofshops intheareaduetotheexistenceofoldbuildingsandthenonredevelopmentinthearea. Havingregardtotheabovefactors whichaffect thepropertythegoodlocation,shortsupplyandhighdemandandpoten- 25 rialsoftheproperty andtheprevailinggoodconditionsofthe propertymarketIamoftheopinionthattheOpenMarketValueofthepropertyasat27.6.1978was-of theorderof£3,800 (Threethousand,eighthundredpounds)." Inconsideringtheonlygroundoflawonwhichtherecourseis 30 based,namelymisconceptionoflawthathasremained,Ihaveto beguidedbytheprinciplesgoverningjudicialcontroloftaxation 1308 3 C.L.R. Smirli v. Republic A.Loizou P. decisions. In thecaseofNicou v.TheRepublic
(1983)3 C.L.R. 1113,1 havedealt atlenght with the aboveprinciples atpp. 1117, 1119 of thereport Atp. 11191said: t , 5 10 15 2Q 2* "Itiswellsettled thatinrecourses againstan assessment of income -tax under Article 146of theConstitution, thisCourt will not interfere with the subjudicedecision of theIncomeTax Authorities when it comes to the conclusion that such a decision wasreasonablyand properly open tothemontheba' sisof thecorrected facts andinthelightof thecorrect application of therelevant legislation andprinciplesof law.The burden of proof to satisfy the Court that it should interfere with such adecision lying alwayson anapplicant. (SeeRallisMar· kides v. The Republic
(1967)3 C.L.R." 147;Clift v. TheRepublic
(1965)3 C.L.R. 285; Christides v. The Republic
(1966)3 C.L.R. 732; Coussoummides v. The Republic
(1966)3C.L.R. 1, adopted and followed inLilian Georghiades v. The Republic
(1980)3 C.L.R. p. 525 at pp. 544 545,.which latter case was approved on appeal by the Full "Bench of this Court, its judgment reported under the same name in
(1982)3 C.L.R. p.659." In thiscaseitisclearthat onthebasisof thematerial thatwas before therespondentDirector andinthelightof thecorrectapplicationof therelevantlegislation,itwasreasonablyopen tohimto reach thesubjudicedecision anditcannot besaidthattheassessmentinquestion wasimposed inamannercontrary tolaw.Moreoverthe subjudice decision isduly and adequately reasoned and isnottheproductof anymisconception of fact orlaw. For all theabove reasons therecourse must fail andis hereby dismissed with noorderastocosts. 30 Recourse dismissed. ' No orderas tocosts. ·.- ' , 1309