| 30/8/2008 |
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| Court of Appeal - Decisions in Income Tax Cases |
| Case No: 3 |
Decided on 26 November 1951 |
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Taxability Of Basis Year 1948 Income. Relevance Of Marginal Notes.
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The Income Tax Act came into force on the 1st January 1949. The tax is payable for each year of assessment, the first of which was the year of assessment 1949. The definition of a year of assessment is "...the period of twelve months commencing on the 1st day of January, 1949 and each subsequent period of twelve months". The taxpayer contended that once the ITA came into force on 1st January 1949, the income for 1948 was only to be used as a measure to tax the actual income of 1949.
This argument was largely based on the section of the law whose marginal note was "Basis of assessment" and which stated that: "Tax shall be charged, levied and collected for each year of assessment upon the chargeable income of any person for the year immediately preceding the year of assessment". The Court held that this wording was very clear and quoted various other provisions of the law (some since repealed) mentioning events happening during 1948 that were to be taken into account for 1949. Although tax is charged for a year of assessment, it is levied on the income of the immediately preceding year.
The Court pointed out that both the person concerned and the relative income existed as on 1st January, 1949. The income ceased in June 1949. Presumably this was why the appeal was filed as no liability would arise if for year of assessment 1949 the actual income of 1949 was taxed. (It is known that the Revenue consequent to this decision raised no assessments for year of assessment 1949 where a person had died during 1948).
The Court held that the appellant could find no solace from the provisions above quoted setting out the basis of assessment. Furthermore, if there was any conflict between the marginal note and the actual text of the section (which there was not), the marginal note could never over-ride the law itself.
BSC Case No: 21/50
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