Nadar v. Attorney-General.
1S40Present: Keuneman J.
NADAR v. ATTORNEY-GENERAL.
143—C. R. Colombo, 51,583.
Income tax—Claim for refund—Double tax relief—Prescription—Income TaxOrdinance, ss. 46 and 84 (Cap. 188).
A claim for relief under section 46 of the Income Tax Ordinance Isbarred by section 34 of the Ordinance.
HIS was an action brought against the Commissioner of Income Taxclaiming a refund of a sum of Rs. 154.80 under section 46 of the
Income Tax Ordinance. The only question tried was whether the claimwas prescribed under section 84 of the Income Tax Ordinance. TheCommissioner of Requests dismissed the plaintiff’s action.
N. Nadarajah (with him K. S. Aiyer and H. A. Koattegoda), for plaintiffs,appellants.—This is an application for relief and not for a refund and istherefore not covered by section 84 of the Income Tax Ordinance. Thepresent claim is under section 46 of the Income Tax Ordinance and is notprescribed within the period mentioned in section 84 but is bound onlyby the Prescription Ordinance. A refund can therefore be claimed atany time within three years from the date of payment.
It is admitted by the Commissioner that a refund is due and that hewould have paid it but for the fact that the claim is made after the periodmentioned in section 84. Section 46 gives an independent right apartfrom the right to refund provided by section 84 and the Commissioner iswrong in thinking that section 84 prevents him from making a refund ofthe amount claimed by way of double tax relief.
380KEUNEMAN J.—Nadar v. Attorney-General.
H. H. Basnayake, C.C., for defendant, respondent.—This is a claim for arefund of income tax overpaid. The only provision under which a refundcan be made is section 84 of the Income Tax Ordinance. Sections 45and 46 of the Ordinance provide for the granting of relief against doubletaxation but do not provide for a refund. An examination of the schemeof the Ordinance indicates clearly that claims for refunds can be admittedonly if made within the period prescribed in section 84. Section 84 is aprovision designed for the benefit of the taxpayer. Under the EnglishIncome Tax Acts too double tax relief is given by refund under theprovision corresponding to our section 84 (Snelling's Dictionary of IncomeTax and. Sur Tax, pp. 74-75, 89 and 135). Were it not for that sectionthe taxpayer would be without a remedy where money is overpaid undera mistake of law (Crown Mines, Ltd. v. Commissioner for Inland RevenueLaw of Income Tax in South Africa by Ingram, p. 237).
The Income Tax Ordinance is a complete Code and any claim for refundof tax must be made under the Ordinance which provides for refund incase of overpayment. If a right is given to an individual by a statuteand the mode of obtaining that right is provided in the statute itself asuit to enforce the right is not maintainable in the Civil Court (1936, A.I.R.Patna, p. 87 at 91 ; Craies on Statute Law, p. 314. 4th ed. : Passmore andOthers v. Oswaldtwisth U. D. C.')
fi. Nadarajah, in reply.—Commissioner is not sole judge even under^section 84. (Sites N 'Ramaswamy Chettiar v. TheAttorney-Gcneral^. "
Cur. adv. vuli.
February"^, 1940. Keuneman J.—
The plaintiffs, who were partners of the firm of Kana Gnavenna Ena& Co., brought this action alleging that they had paid to the Commissionerof Income Tax the sums of Rs. 297.40 and Rs. ’ 342.10 as income taxfor the years ending March 31, 1934, and March 31, 1935, respectively,and that they were entitled to a refund of the sum of Rs. 154.80 undersection 46 of the Income Tax Ordinance. The action was instituted onFebruary 23, 1939. At the trial, it was agreed that if the plaintiffs wereentitled to a refund, the sum to be refunded was Rs. 136.01. The onlyissue framed ran as follows : —
“ Is the plaintiffs’ claim for a refund barred by section 84 of the
Income Tax Ordinance ? ”
The plaintiffs’ action was dismissed with costs, and the plaintiffsappeal.
It is clear that, if section 84 applies, the plaintiffs’ claim is out of time,as it was not made within three years of the end,pf the years of assessment.
It was argued that section 84 did not apply. Under that section, whereany person has paid, by deduction or otherwise, in excess of the amountwith which he is properly cfiargeable for any year, he is entitled to arefund of the amount so paid in excess.
In this case the plaintiffs, who were non-resident partners, haveundoubtedly paid the sums mentioned in the plaint as income tax. They
1 (192$) A. n. mo.- 7.S L-T. 669 at 670.
•os -v. l. n. on.
KEUNEMAN J.—Nadar v. Attorney-General.
claim that they are entitled to relief from Ceylon tax to the extent ofRs. 136.01 in virtue of the fact that they have paid income tax in India inrespect of the corresponding period.
It was argued that section 84 only applied to claims for refunds madein respect of assessments made under section 20 of the Income TaxOrdinance, and did not apply to a refund claimed under section 46. Inother words, it was contended that the plaintiffs were “ properly charge-able^” for the full sums, paid by them, but the claim for refund was madein consequence of the special case created by section 46.
Great stress was laid by Counsel for the appellants on the words“ charge ” and “ chargeable ” which occur in section 20 of the Ordinance.If we look at the Ordinance, we find, under section 5, that income tax,subject to the provisions of this Ordinance, shall be charged at specifiedrates in respect of the income of every person. Under section 6, “ profits ”and “ income ” are defined, and sections 7 and 8 contain certainexemptions.
Chapter III. deals with the “ Ascertainment of Profits and IncomeSection 9 deals with certain deductions which are allowed, and section 10with deductions which are not allowed.
Chapter IV. deals with the “ Ascertainment of Statutory Income ”.Section 11 sets .out what the “ statutory income ” of a person from eachsource of his profits and income in respect of which tax is charged shall be.
Chapter V. sets out in section 13 that the “ assessable income ” of aperson shall be “ the statutory income ” subject to certain deductionswhich are set out.
Chapter VI., in section 14, sets out that the “ taxable income ” of theperson shall be his assessable income, except as provided by the subsequentsections 15 to 19. These latter sections deal with certain exemptions,allowances, &c.
Chapter VII. deals with the charge and rates of tax. Section 20provides that the tax shall be charged upon taxable income at certainrates for resident and non-resident persons. This section i containsseveral phrases such as, “ an individual is chargeable ”, “ no tax ischargeable under sub-section (1) ”, “tax charged”, “tax payable”, &c.
Chapter VIII. refers to special cases, and items A to L—sections 21 to53—related to such special cases. The section with which we areconcerned, namely, section 46, relates to relief in respect of EmpireIncome Tax, and falls within item K, namely, relief in cases of doubletaxation.
A later Chapter XII. deals with payment of tax. Chapter XIV. dealswith repayment and contains section 84.
The argument addressed to me on behalf of the appellants amounted tothis, namely, that the words in section 84, “ in excess of the amount withwhich he was properly chargeable ” for that year, referred only tp thecharges made under section 20 and had no relation to the special caseunder section 46.
In the first place, I find it difficult to understand how the special casesin Chapter VIII. can be regarded otherwise than as supplementary tosection 20, and as amplifying the terms of that section.
KEUNEMAN J.—Nadar v. Attorney-General.
Further,, where this Ordinance has gone out of its way to providemachinery for repayment, I do not think I am justified in placing anyunduly restrictive construction on the words of the section so as to makeit apply only to certain classes of repayment.
Again, taking account of the scheme of the Ordinance and the positionin which section 84 appears in that Ordinance, I am of opinion that thewords, “ amount …. properly chargeable ”, cover the circum-stances of this case. It may be remembered that the word “ chargeable ”is used in several senses even_ in section 20. As pointed out by LordWrenbury with regard to a similar case relating to the Income Tax Actsin England : “ In these Acts it is not possible to rest any conclusion upona particular word. The same word is in one section used in one senseand in another in a different sense ”—King v. The Kensington Income TaxCommissioners l.
On examination of section 46 itself, it will be found that where theperson establishes to the satisfaction of the Commissioner that he haspaid or is liable to pay both Ceylon tax and Empire tax in respect of thesame period of time he “ shall be entitled to relief ” from Ceylon tax forone half of the Ceylon tax or Empire tax whichever is less, subject tocertain provisions. It follows that when the person has established hisclaim to the satisfaction of the Commissioner, he has a statutory right torelief and that the amount of the tax payable by him must be diminishedto that extent. Where he has paid the full amount without the diminu-tion, I think it follows that he has paid “ in excess of the amount withwhich he was properly charge ble ”. I do not think the word“ chargeable ” is used in section 84 in any other sense than “ liable ”.No technical significance should be attached to the word “ chargeable ”so as to restrict the term only to “ charges ” mentioned in section 20.
Counsel for the appellants conceded that at any rate one of the“ special cases ”, namely, section 43 relating to dividends (Item I.),where the tax had been deducted at the source in regard to the dividend,and tax has by inadvertence been paid on the dividend by the individual,a claim for a refund would fall under section 84. This is a typical case of“ payment by deduction ” mentioned in section 84. Now, under section43, where the tax has been deducted at the source, what the person isentitled to is a “ set-off against the tax ”—vide section 43 (3) and (4).
If a person who is entitled to a “ set-off ” and has failed to claim it canbe regarded as having made a payment “ in excess of the amount withwhich he is properly chargeable ”, I fail to understand how a person whohas a statutory right to relief and has failed to claim it can be regarded asfalling into any other category.
I think the argument for the appellants fails, and that section 84 appliesto the present case and that the time limit mentioned therein is operative.
Counsel for the respondent further argued that if section 84 did notapply, the subject was devoid of any remedy. I do not think it is neces-sary for me to consider this argument, nor is it possible for me to do so inview of the single issue which was framed in this case.
The appeal is dismissed with costs-
1 0 Tox. Cutev GIG at G22.
NADAR v. ATTORNEY – GENERAL