| 29/8/2008 |
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| Board of Special Commissioners - Cases |
| Case No. 10/51 |
Decided: 9 July, 1951 |
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Essential elements (the mention of the motives in the Commissioner's decision, the copy of the said decision; the reasons why the decision was not to be upheld), if missing, render an appeal null; an annuity paid for the acquisition of property is of a capital nature and not deductible for income tax purposes - article 11(c), now 26, Income Tax Act;
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Although the merits of the case concerned the question whether an annuity payment was deductible in the hands of the payor, the Commissioner raised a nullity plea. He claimed that the appeal was null as appellant had not attached a copy of the Commissioner's decision and had not brought forward any grounds why such decision was not to be confirmed.
Appellant replied that he had not presented a copy of the Commissioner's decision and had not given any grounds because the Commissioner had not, in the first place, indicated the motives in his decision.
The Board noted that appellant did not seem to distinguish between the Commissioner's decision (which does contain the motives) and the notice of the decision (by which the Commissioner informs taxpayer that his objection has not been accepted). The law does not impose on the Commissioner any obligation to motivate the notice of the decision. Nor does it oblige the Commissioner to send a copy of his decision to the taxpayer. Taxpayers who intend to appeal have to ask for a copy of the decision if they want to know the motives. Even the wording of the appeal form seemed to confirm this interpretation.
The Board cited from a Court decision, which had declared that where missing elements were essential the appeal is rendered null. The Board held that such essential elements in this case included the mention of the motives on which the Commissioner had based his decision, the copy of the said decision and the reasons why such motives were not to be upheld.
The Board also entered into the question whether an annuity payment was, in the hands of the payor, of a revenue (and therefore deducible) or of a capital nature. The Board held that when property is acquired through the setting up of an annuity in favour of the ceding party, the payment of the annuity by the person acquiring the property is of a capital nature in respect of which a deduction is prohibited by article 11(c), irrespective of the fact that the recipient is taxed on the said annuity.
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