Sri Lanka Law Reports
 2 Sri L.R.
SUREN DE SILVA
THE COMMISSIONER-GENERAL OF INLAND REVENUE
SUPREME COURTG.R.S. DE SILVA, C.J.,
KULATUNGA, J. ANDRAMANATHAN, J.
S.C. APPEAL NO. 35/95.
A APPLICATION NO. 448/94 (REV).
C. COLOMBO NO. 56060/TAX.
JUNE 20, 1995.
Income Tax – Income from lands owned by Assessee's wife – Assesses is liabilityto pay tax – Effect of settlement in appeals against the Assessment – Section 117of the Inland Revenue Act.
On a certificate filed by the Commissioner-General of Inland Revenue against theassessee the District Court ordered that a sum of Rs. 868,730/- being income taxbe recovered from the assessee as a fine. The assessee applied to have the saidorder revised on the ground that the Agricultural lands which producedthe income which was assessed belonged to his wife. Hence it was his wifewho was legally liable to pay tax, even though she had permitted him to enjoythe income.
Suren De Silva v.
SC The Commissioner-General of Inland Revenue (G. R S. De Silva, C.J.)131
The submission of the assessee has no relevance to the case as the claim of theCommissioner of Inland Revenue was based on a settlement of the appealspreferred by the petitioner in terms of section 117 of the Inland Revenue Act. Inany event, it was not a fit matter for the exercise of revisionary jurisdiction.
Cases referred to:
Pondicherry Railway Co., Ltd. v. C.l.T. (1931 AIR P.C. 165).
Sassoon and Co. Ltd. v. C.l.T. (26 i.T.R. 27).
APPEAL from judgment of the Court of Appeal.
Faisz Musthapha, P.C. with R. G. L. de Silva, for petitioner-appellant.
K. Sripavan, S.S.C. for respondent.
Cur. adv. vult.
August 23, 1995.
P. S. DE SILVA, C.J.
The respondent (the Commissioner General of Inland Revenue)filed in the District Court of Colombo a certificate in terms of section130 (1) of the Inland Revenue Act No. 28 of 1979 for the recovery of asum of Rs. 868,730/- as income tax, wealth tax and penalty due fromthe petitioner The relevant years of assessment were 1982/83,1983/84, 1984/85. The assessments were made partly in respect ofagricultural income. The petitioner disputed only the component oftax in respect of the agricultural income which amounted toRs. 80,392/-. He did not dispute his liability to pay the balance sum ofRs. 588,338/- due in terms of the aforesaid certificate.
At the inquiry before the District Court the petitioner objected tothe recovery proceedings under section 130 of the Inland RevenueAct, No. 28 of 1979 on the ground that he was not “duly assessed”.The submission was that he was assessed in respect of agriculturalincome from an estate called “Drunkin Estate” which was not ownedby him. The owners were his wife and his mother. In short, thecontention advanced on behalf of the petitioner was that he wasassessed in respect of agricultural income which he did not earn andwhich did not accrue to him.
The District Court, however, overruled the objection and imposedthe said sum of Rs. 868,730/- as a fine on the petitioner. The
Sri Lanka Law Reports
 2 Sri L.R.
petitioner moved the Court of Appeal by way of revision to set asidethe order of the District Court. The application in revision wasdismissed and hence the present appeal to this court.
It is not disputed that the petitioner is not the owner of “DrunkinEstate" which was the source of the agricultural income. Thepetitioner's wife by her letters R1 and R2 addressed to therespondent categorically stated that it was the petitioner who enjoyedthe income from the estate for the relevant period.
The principal submission of Mr. Musthapha for the petitioner wasthat under our tax law the income must be earned by a person or theincome must arise or accrue to him in order to attract tax in hishands. The mere receipt of income by a person will not attract tax.The fact that the petitioner's wife permitted the petitioner to enjoy theincome did not in law make any difference as to the tax liability of hiswife who was the owner of half share of the estate. The income stillremained the income of his wife and it was she who was liable to taxon the income. It was only if she had “alienated” or “assigned” thesource of her income so that it was no longer her income that shewould not be liable to tax. In the instant case there was no such“alienation" or “assignment" of the source of the income. In supportof these submissions Mr. Musthapha cited the case of PondicherryRailway Co. Ltd., v. C.I.T.m and the case of Sassoon and Co. Ltd. v.
It seems to me that the submissions of Mr. Musthapha though notwithout attraction, have little or no relevance, having regard to theproved facts and circumstances of the instant case. The affidavitof the respondent filed of record makes it clear (a) that the increase inthe net wealth of the petitioner indicated that he had been in receiptof an income in excess of what he had declared in his returns; (b)that the assessment for the year 1982/1983 was computed on thebasis of the net wealth and assessable income agreed upon by thepetitioner and his auditor with the assessor; (c) that the assessmentsfor the years 1983/1984 and 1984/1985 were made in settlement ofthe appeals preferred by the petitioner in terms of section 117 of theInland Revenue Act, No. 28 of 1979. The appeals were settled on the
Suren De Silva v.
The Commissioner-General of Inland Revenue (G.P.S. De Silva, C.J.)133
basis of the agreements entered into by petitioner and his auditorwith the assessor. The notes of interview at which the agreementswere reached were signed by the petitioner. These notes wereproduced marked R3 along with the affidavit of the respondent.
It is not suggested that the agreements entered into bythe petitioner were vitiated by mistake, duress or by any othercircumstance. The agreements were ex facie authorized bythe statute. In this view of the matter, I hold that the contention ofMr. Musthapha that the agreements with the assessor were enteredinto without jurisdiction, is untenable. In any event, this is not afit matter for the exercise of the revisionary jurisdiction of the Courtof Appeal.
For these reasons, the appeal fails and is dismissed but withoutcosts.
KULATUNGA, J. -1 agree.
RAMANATHAN, J. -1 agree.
SUREN DE SILVA v. THE COMMISSIONER-GENERAL OF INLAND REVENUE