clr/1988/1988_3_915.pdf

(1988)incometaxandspecialcontributionwerenotdulyreasoned. Discretionofadministration—Exerciseof—Judicialcontrol—Principlesapplicable. Thefactsof thiscasesufficiently appearinthejudgmentoftheCourt. Subjudicedecisionannulled. 5 Noorderastocosts. Casesreferredto: Pikisv.TheRepublic

(1965)3C.L.R.131; Coussoumides v.TheRepublic

(1966)3C.L-R.J· 10 Georghiadesv.TheRepublic

(1982)3C-L.R. 659; Mangliv. TheRepublic

(1983)3C.L.R. 52; Co-OperativeSocientyofAlonav. TheRepublic

(1986)3C.L.R.

1. Recourses. Recoursesagainsttheincometaxandthespecialcontribution assessmentsraisedonapplicantsfortheyears 1979-
2. 15 A. Triantafyllides,fortheapplicants. Y.Lazarou, for therespondents. Cur.adv.vult. STYLIANTJDESJ. read the followingjudgment. The applicants bytheserecourses seek theannulment oftheassessments 20 Nos.79/86/03,80/86/03and81/86/03andofthedecisionofthe 916 3 C.L.R. Kiti Beach Ltd. v. Republic Stylianides J. respondents toimposeincome taxon theapplicantsfor the years of assessment 1979, 1980and 1981,theannulmentof thespecial contribution assessment No. IA 4291 for the years 1979, 1980, 1981, and the annulment of the decision of the respondents to 5 consider as taxable income the profit realized by the applicants from thesaleof 8donumsof land toSandy Kitium Co.Ltd., for £40,
3. The applicant is a privatecompany of limited liability. They Ownedinterest inland. In-1968V.P.E.Limited, which wasatthe 10 timefully owned bythemain shareholderofapplicants'company andhisfamHy, gifted totheapplicants 100donumsof land. Eightdonumsoftheaforesaid land wassold bythe applicants to Sandy Kitium Co.Ltd. for £40,000.-. On25.7.1983therespondent examined theapplicants liability 15 to taxfor the yearsof income 1975to 1980 (yearof assessment 1976to 1980),informed sameof adjustments made to the computations submitted andproceeded toraiseassessmentsinter alia for 1979and 1980,whereby an amount of £31,460.-, representingprofits arising from thedisposal of land, wastreated as trad20 ing profit liable toincome tax.The assessment for 1980 wasrevised in the following year by the issue of an additional assessment. The applicants objected to the assessments raised by letters dated 23.8.1983 and 27.9.
4. 25 Following applicants objection therespondent on 28.12.1983 requested certain additional information which was received on 27.2.1984 -(see Appendices G and-H). Therespondent out of theamount of £40,000.-,received over the years 197$to 1981by theapplicants from thedisposal of the 30 aforesaid eightdonumsofland,treated £31,460.- astradingprofit andallocated over these threeyears.He communicated this to the applicantson 9.4.
5. 917 Stylianides J. Kiti Beach Ltd. v. Republic

(1988)Applicants objected to theassessment raised by letterdated 27.4.

1. On24.10.1985therespondentraisedanassessmentontheapplicants in respect of the years 1981 whereby an amount of £13,370.-wastreatedastradingprofit arisingfrom thedisposal 5 ofland. Theapplicantsobjected againsttheassessmentofincometax byletterdated20.11.1985,inwhichinmorethantwopagesthey givedetailed facts onwhichthey basedtheirsaid objection, the applicantscontendedthattheprofitfrom thesaleofthislandwas 10 not atradingprofit. Theyobjected totheassessment for special contribution byletterdated21.11.
2. TherespondentCommissionerdisposedtheobjections,onthe basis of the provisionsof section 20

(5)of theAssessment and Collection ofTaxesLaws, 1978- 1979(LawsNos4/78,23/78 15 and49/79). Thedecision oftherespondent Commissioneriscontainedin the letter dated 25.2.1986 - (Appendix M.),which was sent to applicantstogetherwiththerelevantnoticesoftaxpayable. Theapplicantsbeingaggrievedfiled theserecourses.CaseNo. 20 312/86 refers to the assessment for income tax.and Case No. 311/86tothespecialcontribution. ThepowerofthisCourtislimitedtothescrutinyofthelegality oftheadministrativedecisionandtoascertainwhethertheAdministration hasexceeded theouterlimitsof itspowers.Provided 25 theyconfined theiractionwithintheambitoftheirpower,anorgan ofpublicadministrationremainsthearbiterofthedecisionneces-, sarytogiveeffect tothelaw;andsolongastheymakeacorrect assessmentofthefactual backgroundandactinaccordancewith the notions of sound administration, their decision will not be 30 faulted - (Pikis v. The Republic

(1965)3 C.L.R. , 131,149; Coussoumidesv. The Republic

(1966)3C.L.R., 1;Georghi918 3 C.L.R. Kiti Beach Ltd. v. Republic Stylianides J. odes v.The Republic

(1982)3C.L.R.659 andloulia Mangliv. The Republic

(1983)3C.L.R.52). The sub judice decisions are attacked on more than one grounds. The case for the applicants is that they acquired the 5 property, partof which wassold toSandyKitiumCo.Ltd., as a gift from anothercompany.Thepurposeof acquisition wastodevelop the land for touristpurposes.Thisis,also,the main object of theapplicantcompany,i.e.themain andfirst object appearing in the Memorandum of Association. However, as this declared 10 object oftheapplicantscouldnotbefulfilled, duetocircumstances beyond their control , i.e. lack of water, the applicants disposedofpartof thelandtoSandyKitium BeachCo.Ltd. Thefirstgroundonwhichtheapplicantsrelyisthatthesubjudice decision is faulty, as isnot reasoned at all,or not duly rea15 soned. It is well settled that administrative decisions should be adequatelyreasoned and that thelackofduereasoning rendersthem contrary to law and as taken in access or abuse of power. The reasoning of anadministrative decision may besupplemented by 20 thematerialinthefileofthecase. What is "due reasoning" is a question of degree depending upon thenatureof thedecision concerned.Thereasoning may be ascertained and supplemented from thematerialinthefileof the Administration - (See Co-operative Society ofAlona v.The Re25 public of Cyprus

(1986)3C.L.R.,222andthecasescitedtherein). Inthepresentcasethedecisionoftherespondentcontainedin Appendix M, letter of 25.2.1986, does not satisfy the requirementforreasoningofanadministrativedecision.Furthermore no 30 reasoning could be ascertained from any material which the Administrationplacedbefore theCourt. Learned Counsel for therespondent frankly admitted that the acts challenged by these recourses are not duly reasoned, and, 919 StylianidesJ. Kiti Beach Ltd. v.Republic therefore, theirlegalitycouldnotbesupported.

(1988)Fortheforegoing, thesubjudicedecisionsareherebydeclared nullandvoidandofnoeffect whatsoeverunderArticle 146.4(b) oftheConstitution. Lettherebenoorderastocosts. Subjudicedecisionannulled. Noorderasto costs. 920