ARC FINDINGS/RULINGS

CONSTRUCTION COST CONSULTANTS LTD v THE DIRECTOR-GENERAL, MRA, ARC/IT/350-17 – FINDING

FACTS:

The Committee gave its decision in this case and the MRA is to take a stand in the VAT case – ARC/VAT/175-17.
The MRA had issued an assessment totaling Rs 1,515,226 which was later revised to Rs 1,380,724 after the applicant lodged an objection.
In reaching its conclusion, the MRA considered that:
There was insufficient evidence to support the company’s claim that services worth Rs 4,509,454 were neither rendered nor invoiced, and that no payment was received in relation to these services.
A stated income of Rs 2,536,232, allegedly arising from supplies made to a company called EPB Quantity Surveyors Ltd in October 2014 and which had already been declared in the VAT return for the quarter ending 30 June 2012, did not correspond with the invoices declared in the relevant VAT return.
Expenses amounting to Rs 65,459 were private in nature and not incurred in the production of gross income, and therefore inadmissible for tax deduction purposes. However, legal and professional fees amounting to Rs 539,678 for the assessment year 2015/2016 should be allowed.
The company made representations with the ARC to challenge the MRA’s decision, calling for a fair reconsideration of the assessments and urging that due process and legal standards be upheld in the determination of its tax obligations.

ISSUE:

Whether the sum of Rs 4,509,454 should be deemed accrued income and thus taxable.
Whether the sum of Rs 2,536,232 constituted undeclared taxable income.
Whether the sum of Rs 399,027.71 should be treated as income due and therefore taxable income

HELD:

The committee found in favour of the Applicant in view of the factual inconsistencies, procedural shortcomings, and absence of reliable evidence from the MRA to substantiate its claims, and in contrast to the credible, supported, and consistent submissions by the Applicant.

MESSRS M. Z. AMEER & F. AMEER v REGISTRAR-GENERAL, ARC/RG/216-19;217-19 – FINDING

FACTS:

This matter concerned the valuation of a residential property situated at Impasse Serang, Port-Louis.
The property was sold for a declared consideration of Rs 800,000.
However, the Registrar General reassessed the transaction at Rs 2.9 million, thereby triggering additional registration duties payable by the purchaser (Mr. Z. Ameer), and land transfer tax obligations on the part of the vendor (Mr. F. Ameer).
The Registrar General’s office later revised the assessment to Rs 2.2 million.

ISSUE:

Both, the purchaser and the vendor, contested the assessed value of the property and the related tax and duty.

HELD:

The Committee took the view that a valuation of Rs 1.5 million is appropriate and that the applicants are liable to pay Registration duty and Land Transfer Tax based on this market value.
In reaching this decision, the Committee reasoned that the appropriate basis for duty assessment should be the revised valuation of Rs 2.2 million, considering: Exclusion of the first floor; Acceptance of market comparables; Estimation of fair market value as of 2018; and Acknowledgement of the sibling relationship (between Mr. Z. Ameer, Purchaser and Mr. F. Ameer, the vendor), though not qualifying for a statutory exemption.
However, the Committee was of the opinion that a valuation of Rs 1.5 million would be more appropriate based on the limited access to and from the property. The figure, the committee said, incorporated applicant’s evidence along with equitable consideration.

SELECTED SUPREME COURT JUDGMENTS

MAURITIUS REVENUE AUTHORITY, DG v MAURITIUS FREEPORT DEVELOPMENT CO. LTD & ANOR 2025 SCJ 153

FACTS:

This is an appeal case against a decision of the Assessment Review Committee (ARC) delivered on 9 March in Mauritius Freeport Development Co. Ltd v Director-General, Mauritius Revenue Authority, ARC/IT/677-15; ACR/IT/441-16 where the ARC ruled in favour of the first respondent, allowing it to claim annual capital allowances under section 24 of the Income Tax Act (ITA) and Regulation 7(1)(b) of the Income Tax Regulations 1996 in relation to assets acquired in 1995to 2005.
The Appellant contended that annual allowances must be claimed in the income year in which the asset is put to use, and deferral was not permitted under the law.
The first Respondent maintained that s.24 ITA provides flexibility, allowing a taxpayer to choose when to claim allowances, as part of tax planning.
The ARC accepted the first Respondent’s position, holding that claiming the allowance was optional. [emphasis is ours]
The Appellant, aggrieved by the decision, appealed to the Supreme Court.

ISSUE:

Whether s.24 ITA provides a taxpayer with the discretion to claim annual allowances in any income year of their choosing, or whether the allowance must be claimed in the specific income year in which the capital expenditure was incurred and in each of the succeeding years as prescribed.

HELD:

The Court allowed the appeal.
In reaching this decision, the Court relied on the plain and literal wording of s.24 ITA, which provides that allowances shall be allowed “in that income year and in each of the succeeding years.”
The Court emphasised the statutory phrase “in that income year” rather than “any income year”, thereby rejecting the view that taxpayers can choose when to claim.
It held that s.24 ITA imposes a requirement to claim allowances in a prescribed sequence, starting from the year the expenditure was incurred.
The Court rejected the Committee’s reliance on interpretive principles as the statutory language is clear and unambiguous.