| 20/5/2012 |
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| Board of Special Commissioners - Cases |
| Case No. 1/77 |
Decided: 25 June, 1979 |
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Special Concession - qualifying income has to satisfy both the positive test and the negative test - articles 5B and 5C, now articles 7 and 8, Income Tax Act
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Taxpayer had received five assessments, two of which were additional assessments bringing to charge arrears of salary, and three original assessments, one of which also bringing to charge arrears of salary. Taxpayer himself had requested that such arrears of salary be taxed in the year to which they referred and not in the year of receipt. On receiving the assessments however, taxpayer objected on the grounds that since he had subsequently filed the Special Concession form and paid the relative tax at 3% on the undeclared capital assets, no further tax was due by him on all the hitherto un-assessed income. Appellant also contended that the arrears of salary were not assessable because the exact amount due to him as arrears had not been specified and consequently such income was covered by the Special Concession.
The Board noted that article 5B of the ITA (now article 7) contains a positive test and a negative test. The positive test refers to the types of income which are to be declared under the Special Concession and applies to "any income omitted by any person from a return submitted by him to the Commissioner before the 27th July 1972 in respect of any year of assessment up to the year of assessment 1972 and to any income not returned to the Commissioner by the said date by any person who has not submitted a return for any year of assessment up to the year of assessment 1972" (Board's underlining). Such income is to be taxed at the beneficial rate of 3c in the lira.
The negative test excludes certain types of income. Now article 5B does not explicitly exclude the income in question, however the fact that the said income is not excluded by article 5B does not mean that it is qualifying income. In other words, it is not enough that the said income is not explicitly excluded by the negative test; it has to satisfy the positive test as well. On his tax return appellant had actually declared income that was subsequently included in his Special Concession form - thus not satisfying the positive test. The Board decided that the income in question was therefore taxable in the relative year and that the tax paid at 3% did not cover the tax due theron.
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