(1988)1988 January 22 [PIKIS. J.] l.s THEMATTEROFARTICLE 146OFTHECONSTITUTION MAROULLAGEORGfflOU CHARALAMBOUS, Applicant, v. THEREPUBLICOFCYPRUS,THROUGH 1.THEDIRECTOROFTHEDEPARTMENTOFINLAND REVENUE, 2.THEATTORNEY-GENERALOFTHEREPUBLIC. Respondents. (CaseNo.473/86). Taxation—Capital GainsTax—The Capital GainsTaxLaw52/80, section5
(1)—Assessment ofprofitfromprevioussale notchallengedintimebya recourse—Suchassessmentwastaken intoaccountincalculatingthereliefundersection5
(1)inrespectofanewsale—Uponarecoursechallengingthedecisionimposingtaxontheprofitfromthesecondsale, theCourt 5 cannotexaminethevalidityofthefirstassessment. Judicialcontrol—Taxation—CapitalGains—TheCapitalGainsTaxLaw52/ 80—Principlesapplicable. Thisrecourseisdirectedagainstthedecisiontotaxtheapplicant£300.oncapitalgainsderivedfromthesaleofaplotoflandon 11.7.
- ^0 The applicant complained of: (a) Undervaluation of the plot as at 27.6.78,and(b)Failureoromissiontoafford theapplicantthebenefitsof theexemptionprovidedforins.5(l)ofLaw52/
- On 5.5.81theapplicant had transferred another plot of land,butallegedthatsuchplotwassoldpriortotheenactmentofLaw52/80.Heral- 15 legation wasturned downon21.6.85.Shedidnotchallengethedecision 68 3 C.L.R. Charalambous v. Republic by arecoursetothisCourt.Objection (b)abovewas basedontheconten tionthattherespondentshouldnothave takenintoconsiderationtheprof itof thefirsttransaction. 5 Having heardevidence, theCourtfound thatthedecision of 21.6.85 was properly broughttoapplicant'sknowledgeandthatthe administration didnotmislead herinany way. 10 Held,dismissing therecourse:
(1)Thejurisdiction of theCourtincas esof taxreview is confined toareviewof thelegalityof theactionof the Administration within thecompassof theirauthority. Provided theyoperatewithin theframework of theirpowers, the Administration is thearbiter of thefact-finding process.Andsolongastheinquiry into the factual back groundisadequateandthedecisiononereasonably opentothem, theCourt willsustain itasavalidexerciseof theirpowers. 15
(2)Thereis nomaterialjustifying interference with thefinding inrespectof thevalueof thelandasat 27.6.78.
(3)Thevalidity of thedecision of 21.6.85 is notin issue in thisre course.Consequently,theapplicant'ssecondcomplaintisdoomedtofail ure. Recoursedismissed. 20 Casesreferredto: Georghiades v. Republic
(1982)3C.L.R.659. Recourse. Recourse against the decision of therespondents to impose on applicant the sum of £300.- as capital gains tax. 25 Μ. Vasiliades, for the applicant. Y. Lazarou, for the respondents. Cur. adv. vult. PIKIS, J. read the following judgment. The present applica- 69 Pikis J. Charalambous v. Republic
(1988)tionraisesforreviewadecisionoftheDirectoroftheDepartment ofInlandRevenuetaxingtheapplicanttopay£300-capitalgains tax,plusinterest,undertheCapitalGainsTaxLaw(Law52/80). Itiscommon groundthatapplicantsoldon 11thJuly, 1983,a plot of landfor £3,500.—.Asthesale waseffected after theen- 5 actmentofthelawitwassubjecttoitsprovisions;andadeclaration was submitted pursuant to its provisions. Briefly, thelaw provides that dispositions of immovable property are liable to capital gains taxin accordancewiththeruleslaiddowntherein. The yardstick of taxation is thedifference between thevalueof io the land at the date of its disposition (s.10) and, its value on 27.6.78 (s. 6
(1)). Profit realised from a disposition or dispositionsofpropertyupto£5,000.--isexemptedfrom taxation(s.5). Applicantobjected tothetaxationoftwogrounds(a)Undervaluation ofthepropertyasat27.6.78and 15 (b)failure oromission to afford the applicant the benefits of theexemptionprovidedforins.5(l). Tocompletethefactual background,thepropertysoldin1983 wasvaluedat£2,000.-asat27.6.78. Notwithstanding thedisagreementoftheapplicantwithvalue 20 put on herproperty on 27.6.78,nothing wasplaced before the Authoritiestocontrovert theirfindings orcastdoubtsontheadequacyof theirinquiry.Norwassuchanattemptmadebeforethe Courteither.Thedecisionoftherespondentswasbasedonavaluationofanexpertinthefieldoflandvaluation,namelyMr.Ma- 25 teas, who founded his valuation on what may be described as athorough searchintothevalueoftheproperty.Wemayremind thatthejurisdiction oftheCourtincasesoftaxreviewisnodifferent from thatinanyotherfield of administrativeaction*.Itis confined toareviewofthelegalityoftheactionoftheAdministr- 30 *Georghiadesv.TheRepublic
(1982)3C.L.R.
- 70 3 C.L.R. Charalambous v. Republic Pikis J. ation withinthecompassof their authority.Provided they operate within the framework of their powers the Administration is the arbiterof thefact-finding process.Andsolong astheinquiry into thefactual background is adequate and thedecision onereasona5 bly open to them, the Court will sustain it as a valid exercise of their powers. On aconsideration of the facts founding thedecision to value theproperty at £2,
- — as at 27.6.78, I find no ground whateverjustifying interference with it. Toappreciatetheothercontentiousissue,namely theallegation 10 offailure onthepartof therespondentstoafford theapplicantthe relief envisaged bys.5,wemustrefer toanother saleof property bytheapplicant,and herliability tocapital gainstax. On5.5.81theapplicant transferred apieceof land for the sale ofwhich she submitted adeclaration undertheCapital GainsTax 15 Law. In her declaration she asserted that the property had been sold prior to the enactment of the law, that is on 17.4.79, and consequently the transaction was not caught by its provisions. TheDirectorrefuted thecontention and found thatthe disposition was subject to the provisions of the law (Decision of 21.6.85). 20 But inasmuch as the profit realised amounted to no more than £5,000 -- applicant was relieved from the payment of tax being entitled to the benefits of s.5(l) of Law 52/
- Respondents maintainedthatapplicant wassoonafterwards notified of thedecision butyetfailed tochallenge itbefore theCourt.Therefore, the 25 decision isaclosedchapterthatcannotbereopenedinviewofthe provisionsof article 146.3of theConstitution.Applicant doubted thecontention of therespondents thatthedecision of 21.6.85 was brought to their notice. In an affidavit sworn to by her husband the allegation was made that he had no certain recollection of 30 whether they had been notifed of the decision of 21.6.
- In cross-examination before mehemodified hispositiononthesubject, saying "possibly I did receive notice and have forgotten about itIdo not insist that Idid notreceivenotice."On theother hand,theevidenceof Mr.Omirou leavesmeinnodoubtthatno- 71 PikisJ. Charalambous v.Republic
(1988)riceofthedecisionof21.6.85wasdulygiventotheapplicant.In the absenceof achallengewithinthe75-dayperiodenvisaged by para. 3of article 146,wehavenojurisdiction to gointothe validity of thatact.Applicantsubmitted thatthereisyetanother reason for ignoring the decision of 21.6.85,deriving from the 5 conduct of theAdministration in thematter. Inhisaffidavit the husband of theapplicant maintained thattheofficer -in-charge of theOffice of theIncomeTaxDepartment atPaphos,left him with the impression by statements madeat their interview that their department would acceptasgenuinethesaleagreementof 10 17.4.79andontheamountexemptthetransaction from theprovisions of Law 52/80.Oncemore c^eaffiant modified hisposition in cross - examination, agreeing with the suggestion that all that Mr. Theocharides had told him was that his claim for exemption would be forwarded to the Commissioner who 15 would in time decide whether it was subject to the provisions of the law. Theevidence of Mr.Theocharides leaves nodoubt about what had happended atthatmeeting.Hemade it clearto the husband of the applicant that decision did not not lie with him though he himself had recommended acceptance of ge- 20 nuineness of the agreement of 17.4.79. Iamsatisfied thattheAdministrationdidnotmisleadtheapplicantorherhusbandastoeithertheirrightsortheirposition.The conduct oftheAdministration wasinnowayreprehensible.Had thevalidity of thedecision of21.6.85beenopenfor review,the 25 applicantmighthaveachanceofsuccess.Butthatisnotanissue before me.Nothingfurther needbesaidonthesubject. Inthelightoftheabove,therecoursecannotbutbedismissed. Furthermore,thesub-judicedecisionisconfirmed pursuanttothe provisionsofarticle146.4(a)oftheConstitution. 30 Recoursedismissed. 72