074-NLR-NLR-V-70-COMMISSIONER-OF-INLAND-REVENUE-Appellant-nad-J.-DE-FONSEKA-Respondent.pdf
326 ABEYESITNDERE, J.—Commissioner of Inland Revenue v. De Fonseka
Present: Abeyesundere, J., and G. P. A. Silva, J.
COMMISSIONER OF INLAND REVENUE, Appellant,and J. DE FONSEKA, Respondent
8. C. 1(65—Income Tax BRA j325
Income Tax Ordinance—Section 6—“ Profits from any employment ”—“ Holidaypassage ”.
The value of a free air passage granted as a “ favour ” by Air Ceylon toan employee of that body is not part of his profits from any employmentwithin the meaning of section 6 of the Income Tax Ordinance.
ClASE stated under section 78 of the Income Tax Ordinance.
Tennekoon, Q.C., Solicitor-General, with P. Naguleswaran, CrownCounsel, for the appellant.
H. V. Perera, Q.C., with N. Nadarasa and K. KarUhasamy, for therespondent.
September 15, 1965. Abeyesundere, J.—
The question of law that arises from this case stated under section78 of the Income Tax Ordinance for determination by this court iswhether the value of the free air passage granted by the body calledAir Ceylon to the assessee-respondent, who is an employee of that body,is part of the assessec-respondent’s profits from any employment withinthe meaning of Section 6 of the said Ordinance, and if such value ispart of such profits, what is such value.
The free air passage granted by Air Ceylon to the assessee-respondent isa “holiday passage” according to the appellant who is the Commissionerof Inland Revenue. As Section 6 of the Income Tax Ordinance
ABEYESUNDERE, J.
Commissioner of Inland Revenue v. De Fonseka 327
declares that the expression “ profits from any employment ” includes aholiday passage, the expression “ holiday passage ” must be interpretedby reference not only to that expression but also to the expression“profits from any employment”. If a holiday passage is receivedfrom any employment, its value is part of the profits from thatemployment. It is, therefore, necessary to interpret the meaning of theexpression “from any employment ”. I am of the view that theexpression “ from any employment ” means “ in reference to servicerendered in any employment There is support for this view in thefollowing passage from the judgment of Upjohn, J. in the case ofHochstrasser (II. M. Inspector of Taxes) v. Mayes, which is quoted withapproval by Viscount Simonds, L.J., in his judgment in appeal in thatcase to the House of Lords :—“ In my judgment, the authorities showthat to be a profit arising from the employment the payment must bemade in reference to the services the employee renders by virtue cf hisoffice, and it must be something in the nature of a reward for services” (38 Reports of Tax Cases at page 705).
According to the Staff Travel Scheme set out in the case stated, afree air passage granted under such Scheme is a “ favour ” which isgranted by the officer of Air Ceylon competent to do so under suchScheme to an employee of Air Ceylon who has rendered service for notless than one year or to a member of the family of such employee. Thereference to service for not less than one year is for the purpose of limitingthe class of employees from whom or from whose families the recipient ofsuch favour may be selected. The selection of a recipient of such favouris dependent on the arbitrary choice of the officer of Air Ceylon competentunder such Scheme to grant such favour. Although the employeesof Air Ceylon who are eligible to ask such favour are determined byreference to their services in their employments under Air Ceylon, thegrant of such favour is not in reference to the service of the recipientof such favour in his employment under Air Ceylon. I, therefore, holdthat the grant of the free air passage to the assessee-respondent byAir Ceylon was not in reference to his service in his employment underAir Ceylon and that consequently such free air passage was not receivedby him from any employment within the meaning of the expression“ from any employment ” as interpreted by me above. AccordinglyI am of the opinion that the value of the free air passage granted byAir Ceylon to the assessee-respondent is not part of his profits from anyemployment. In view of this opinion it is unnecessary for me to determinethe value of the froe air passage granted by Air Ceylon to the assessee-respondent.
The assessee-respondent is entitled to his costs of the proceedings inthis Court and such costs shall be paid by the appellant who is theCommissioner of Inland Revenue.
G. P. A. Silva, J.—I agree.
Appeal dismissed.