“Any sum or benefit, in money or money’s worth, derived from the carrying on or carrying out of any undertaking or scheme entered into or devised for the purpose of making a profit, irrespective of the time at which the undertaking or scheme was entered into or devised”.
The main issue before the Board in 2004 was whether (i) all or (ii) none or (iii) the part representing profit or gain of the taxpayer’s receipts representing his share of the proceeds of sale of the development land was caught by section 11(1)(h). The Mauritius Revenue Authority (“the MRA”) contended that the whole share was caught; the taxpayer contended for the other extreme; and the Board decided (for reasons set out in paras 32 to 39 of the opinion delivered by Lord Scott) that the intermediate view was correct. The second issue was whether the assessments for 1989 – 90 and 1990 – 91 were out of time, which depended on whether there had been wilful neglect on the part of the taxpayer. The Board held that it was not a case of wilful neglect, and that the two assessments were out of time. They reached this conclusion by applying the time limit in section 130(2) of the 1995 Act.
“It follows that, in their Lordships’ opinion, the assessments for 1989/90 and 1990/91 should be set aside. The question as to what should be done about the other four assessments is not so straightforward. The simple course would simply be to strike out from each of the assessments the entry relating to the taxpayer’s morcellement receipts. The tax due could then be re-calculated accordingly. Alternatively it might be possible to allow the Commissioner to amend the assessments by substituting for the present entries relating to the taxpayer’s morcellement receipts entries representing the Commissioner’s estimate of the profit element in the receipts. He could make this estimate ‘according to the best of his judgment’ by deducting from the receipts a sum equal to 50.04 per cent of the market value of the 75 arpents prior to the implementation of the morcellement scheme. For the avoidance of doubt their Lordships’ opinion is that the sum to be deducted should reflect the then existing development potential of the land. If the taxpayer wishes to challenge the Commissioner’s estimate, the case would have to be remitted to the Tax Appeal Tribunal for that purpose.
“. . . and following the revised assessment, the appellant, of course, will be able to appeal to the Assessment Review Committee if he is dissatisfied with the revised assessment issued.”
Mr Basset said that he had no objection to that, though he had a complaint about the tax paid for the years for which the assessments were out of time. Neither side referred the Court to any provision of the 1995 Act or of the Tax Appeal Tribunal Act 1984. Matadeen J (who was sitting with Domah J) is recorded as having disposed of the matter as follows:
“In the light of the statements from counsel made on behalf of both parties, what we propose to do is simply to remit the matter to the Commissioner of Income Tax for him to proceed in accordance with the guidelines given in the judgment.”
He then repeated the disposal in slightly different words:
“In the light of the statements made by counsel on either side, we remit the matter to the Income Tax Commissioner for re-assessment in the light of the decision of their Lordships of the Privy Council.”
“Following the order of the Supreme Court on 10 October 2005, I herewith enclose a revised computation of the chargeable income and tax payable of [the taxpayer] for above quoted years of assessment.
Please note that the market value of 75A of land at Flic en Flac in 1988 has been estimated at Rs 33,750,000.”
He enclosed two schedules of computations, one including “net trade income” for the four years, and the other showing how that net trade income had been computed as 25.02% of the receipts of capital and income, less an apportioned part of the total cost of Rs16,888,500 (which is fractionally more than half of the government valuer’s estimated 1988 value of Rs33,750,000).
“The Director-General has to deduct 50.04% of Rs33,750,000 from the Applicant’s morcellement receipts to estimate the Applicant’s profit element.”
The taxpayer appealed by way of case stated to the Supreme Court (Matadeen CJ Ag and Chui Yew Cheong J) which dismissed the appeal in a reserved judgment delivered on 11 November 2009.
“(1) Subject to subsection (2), the Commissioner may amend an assessment made under section 129 or 131.
(2) An assessment shall not be amended after four years of assessment from the year of assessment to which the assessment relates.”
This mirrors the time limit for original assessments laid down in section 130, but without any provision for fraud or wilful neglect. Mr Basset argued that the Supreme Court, in giving directions (by consent) on 10 October 2005, had in effect required the Commissioner to do something that he had no power to do, that is to amend an assessment out of time. If that were the correct analysis the Supreme Court would have had reason to feel that they had been given the wrong steer by the (admittedly tentative) observations that the Board made in 2004, and that experienced counsel appearing before them had failed to put the matter right.
“(a) in relation to an individual, on 1 July 1996 in respect of the income year commencing on 1 July 1996 and in respect of every subsequent income year; and
(b) in relation to any other person, on 1 July 1996 in respect of the year of assessment commencing on 1 July 1996 and in respect of every subsequent year of assessment.”
It might have been argued that section 130 of the 1995 Act could not therefore be used to make an assessment in respect of (say) 1994-95. The Supreme Court had already rejected this argument in two decisions which were followed by ARC in a written ruling that it made on 30 May 2007 in the current proceedings, that is Société Bahemia & Co v Commissioner of Income Tax  MR 87 and Hurhangee v Commissioner of Income Tax  SCJ 205.
“In assessing this value [the open market value] the best evidence is comparison with figures from other sales of comparable property.”
It went on to add, at para 7(e):
‘… a spot valuation based upon experiences of the market is more likely to be right than calculations which depend upon many assumptions and forecasts.’”