(1988)1988April30 [PIKIS, J.] ΓΝTHEMATTEROFARTICLE 146OFTHECONSTITUTION LEONIDASD. HADJIMITSIS, Applicant, v. THEREPUBLICOFCYRPUS, THROUGH 1.THEMINISTRY OFFINANCEAND/OR 2. THECOMMISSIONER OFINCOMETAX, Respondents. (CaseNo. 760/86). Taxation—CapitalGainsTaxLaw, 1980(Law52/1980)—Itisnotretrospec tive, butprospective ineffect—Confermentofrightsorimpositionoflia bilitieswithreference toeventsprior totheenactment of the Lawdoes not renderitretrospective—Imprintofretrospectivity ordinarilyderives fromdisturbanceofrightsaccruedandvestedpriorto theenactmentofthe 5 law. Taxation—CapitalGains TaxLaw, 1980(Law52fl980)—Conflicting valua tionastothevalueof the land inquestionason 27.6.78—In the circum stancesitwasreasonablyopentotherespondenttorelyon the valuation madeby thePrincipaloftheDepartmentofEstateDuty. 1g Taxation—CapitalGains Tax Law, 1980(Law 5211980)—Land soldat £64,000—Allegation thatitsmarket value wasless than £64,000to allow for commission,expensesandotherchargesincidentalto thetransaction— In theabsenceof supporting evidence, itwas reasonablyopen tothe re spondenttofindthatnosuchexpenseswereincurred. 15 Thefactsofthiscaseneednotbesummarizedas theyaresufficiently in- 896 3 C.L.R. HadjimiLsis v. Republic dicated inthehereinabove headnote. Recoursedismissed. No orderas tocosts. Casesreferredto: 5 Papaconstantinou andAnother v.TheRepublic
(1986)3 C.L.R. 1672; Santis and Others v. TheRepublic
(1983)3 C.L.R.
- Recourse. Recourse against thedecision of therespondents toimposeon applicant thesum of £6,160,- capital gains tax arising from the 1ο saleof aplotofland. R.Schizas, for theapplicant. Y.Lazarou, for therespondents. Cur. adv. vult. PIKISJ.read thefollowingjudgment. This is an application 15 of Leonidas HadjiMitsis for the review of the decision of the Commissioner of Incometax toimpose onhim£6,160.- capital gains tax arising from thesaleof aplotof land,afield of 2%donums at Yeroskipou. The property had been sold in,1982 for £64,
- Inthestatementsubmittedfor thepurposes of the Capi20 tal GainsTax Law (Law 52/80), theapplicantrecordedthesale price, £64,000.- as evidence of themarket value of the land at thetime,andhis estimation of itsvalue oii'27th June, 1978; the material datefor thediscernment of thevalue of thelandfor the purposes of the law, stated at £58,
- The Commissioner 25 sought information andevidence supporting hisassessment ofthe value of thelandasat27thJune,
- Inresponse theapplicant submitted tothe Commissioner avaluation by Mr. Christofi, a Lands and Surveys Consultant (a Chartered Surveyor) who as sessedthe market value of theland as at 27 thJune, 1978, at 897 Pikis J. Hadjimitsis v. Republic
(1988)£40,000.Forthepurposesofcompleting theinquiryintothevalueofthelandon 27thJune, 1978,theCommissionerobtaineda valuation from Mr. Mateas,aLand Valuer, theprincipal of the Department ofEstateDuty.Mr.Mateasassessedthevalueofthe land at£28,
- Examination of the two valuations reveals a steady upward trent inthev^lueoflandintheareaunderconsiderationbetween theyears197i to 1982,asaresultofwhichlanddoubledinvalue withintherelaJvely shortperiodthateldpsedbetween27thJune, 1978andthedateof sale(10.7.1982).Thedifferences intheas- 10 sessments made by the twovaluers mostly stem from twofactors: 5 (a)TheupwardadjustmentofthevalueofthepropertybyMr. Christofi byamarginof25%reflecting thefavourable characteristicsoftheland;and 15 (b) The adjustment made byMr. Mateas in thevalue of the landbetweenmaterialdatestoreflect thefavourablechangeofthe buildingratiobetween 1978to1982.ByvirtueoftheZoningOrder dated 31st August, 1979,(R.A.A. 197), the building ratio wasincreased from 5%to8%. 20 The25% increase added tothevalueof theproperty byMr. Christofi largelyrestedontheopinionofMr.Christofi.Thereis nomaterialfromwhichanysafeinference canbedrawnrespectingtothebeneficialeffects onthevalueoflandfromtheagreeable shapeoftheproperty,havingthecharacteristicsofthelandofthe 25 applicant. Tomy comprehension, thevaluation of Mr. Mateas paidcloserheedtohardfactsandhadonthewholeasolidfactual foundation. ItwasattheleastreasonablyopentotheCommisioner in theexerciseof the discretion vested inhimby theCapital Gains Tax Legislation (52/80) to accept the assessment of Mr. 30 Mateas and act upon it for thepurpose of discerning the tax,if any,towhich theapplicant wasliable.Theadjustment madeby Mr.Mateas on account of thechange in the building ratio was perfectly warrantedbyitsinevitablebeneficial impactonthevalue ofland. 898 35 3 C.L.R. Hadjimitsis v. Republic Pikis J. Another aspectof,ihe assessment questioned bythe applicant, though with lessvigour, concernsthemarketvalueof theland at thedateof itsdisposal.Applicant suggested itshould becomputed at less than £64,000.- toallowfor commission, expenses and 5 otherchargesincidentaltothetransaction.Theclaimwasrejected by the Commissioner for lack of satisfactory proof. As counsel for the Republicpointed out inhisaddress, theallegations made by the applicant inthis area are riddled with contradictory statements, drawing attention, inter alia, to theallegations made in a 10 civil actionraised bytheapplicantbefore theDistrictCourtof Paphos (Civil Action 1272/86). In propounding his cause on this aspect of the case, the applicant overlooks that the amount of £64,000.- wasdeclared tobethevalue of the land at thedateof saleandwascited asthevalueof landin thedeclaration made for 15 the purposes of Law 52/
- Section 6
(1)(b) of Law 52/80 does allow deductions for expenses wholly and exclusively incurred for the acquisition of the taxable gain, not otherwise deductible under the Income Tax Laws.In this case it was at the least reasonably open totheCommissioner tofindthat nosuch expenses 20 wereincurred in theabsenceof satisfactory supporting evidence. Notwithstanding thedecision inPapaconstantinouandAnotherv. The Republic
(1986)3 C.L.R. 1672, counsel argued that the computation of profit should be determined by reference to the value of the land at thedate of the enactment of the law and the 25 date of sale.The submission ignores thetenorof theabove decision and theimplicationsof prospective legislation.Legislation is prospective so long as it takes effect from thedate of the enactmentof the law.Theconferment of rights and the imposition of liabilities byreference toevents thatoccurred prior tothe enact30 ment of thelaw,doesnotrender thelegislation retrospective.The imprint of retrospectivity ordinarily derives from the disturbance ofrightsthat accrued and vestedprior totheenactmentof thelaw (Santis & Others v. The Republic
(1983)3 C.L.R. 419). Under andinaccordance with theprovisionsof theCapital GainsTaxli35 ability for thepayment of capital gains tax can only arise subsequendy tothedateof theenactment of thelaw;therefore, thelaw is wholly perspective in character and content. Itdoes not make provision for the levying of taxation in respect of any profit earned priortoitsenactment. 899 PikisJ. Hadjimitsis v. Republic
(1988)Therecourse isdismissed. Thesubjudicedecision ishereby confirmed pursuanttotheprovisionsofpara.4(a)ofArticle146 oftheConstitution. Recoursedismissed. 900