Income tax exemption denied for ship income before formal registration despite prior provisional status.

[*811] 1968 August 3

(TRIANTAFYLLIDES, J.)

REVISIONAL JURISDICTION

Branco Salvage Ltd.,

Applicant,

and

The Republic of Cyprus, as successor

to the Greek Communal Chamber, through –

The Attorney-General of the Republic,

The Commissioner of Income Tax,

Respondent.

(Case No.118/67).

Income Tax - Assessments - Merchant Shipping Legislation - Year of assessment 1965 - Exemption from taxation provided for under section 3 of the Merchant Shipping (Taxing Provisions) Law 1963 - Ship provisionally registered as a Cyprus ship since 1962 and registered on 15th July, 1964 - Income derived from the operation of Applicant’s ship for the period of the year 1964 prior to the ship’s registration on 15th. July, 19- Applicant not entitled to the exemption provided under section 3 of the Law in respect of such income as ship not “actually registered” in the sense of the definition of a '‘Cyprus ship” in section 2(1) of the Law.

G. Michaelides, for the Applicant.

Chr. Paschalides, for the Respondent.

JUDGMENT

The following Judgment was delivered by: -

TRIANTAFYLLIDES. J: By this recourse the Applicant challenges the validity of the final determination, by the Respondent Commissioner of Income Tax, of the matter of an income tax assessment in respect of the year of assessment 1965; the notice of such determination is dated the 31st March, 1967, and is exhibit 1 in this case. [*812]

By a letter Gated the 30th March, 1967, the Commissioner has given reasons for the course taken by him in the matter (see exhibit 2).

The Applicant company is the owner of a ship, m/v “Nora”, which was registered as a Cyprus ship on the 15th July, 1964, under the provisions of the Merchant Shipping (Registration of Ships, Sales and Mortgages) Law 1963 (Law 45/63).

With the exemption of a sum of £21, all the income in respect of which the Applicant was taxed by means of the sub judice decision represents profits derived from the operation of m/v "Nora” between the 1st January, 1964 and the 15th July, 1964.

It is common ground that the Applicant was entitled to be, and has been, exempted from the payment of income tax in respect of profits derived from the operation of m/v “Nora”. after the 15th July, 1964 - the date of the registration of the ship - in view of the provisions of section 3 of the Merchant Shipping (Taxing Provisions) Law 1963 (Law 47/63).

Both Laws, 45/63 and 47/63, were amended subsequently in 1965, hut we are not concerned herein with such amendments.

The Applicant claims, in these proceedings, that it is entitled to the exemption, provided for under section 3 of Law 47/63, in respect, also, of the period from 1st January, 1964 to 15th July, 1964, in view of the fact that m/v ’’Nora” was provisionally registered, as a Cyprus ship, since 1962 - before the enactment of the relevant legislation, Law 45/63 and in view, further, of the fact that, after the enactment [*813] of Law 45/63, the Applicant applied, on the 4th November,1963, for proper registration of m/v ’’Nora’1 thereunder; and, as alleged by the Applicant - not unjustifiably, prima facie - such registration was unduly delayed by the authorities concerned and was not affected until the 15th July, 196h (see in this respect the relevant correspondence which has "been produced as exhibit 3).

In order that the owner of a ship may enjoy the exemption from taxation provided for under section 3 of Law 47/63 the ship must be a “Cyprus ship”, as defined in section 2(1) of Law 47/63, namely, a ship registrable in the Republic under the provisions of Law 45/63 "and actually registered thereunder”.

Regarding the exact meaning of the definition of a "Cyprus ship”, for the purposes of section 3 of Law 47/63, I see no reason to disagree with the view adopted by Munir, J., in Branco Salvage Ltd. and The Republic

(1967) 7/8 J.S.C. p. 843; the issue there was closely similar to the one involved in the present case, but it related to a different - the 1964 - year of assessment.

As it appears from the letter of the Commissioner of Income Tax, dated the 30th March, 1967 (exhibit 2). the Branco case (supra) was relied upon by him for the purpose of arriving at his sub judice decision.

The law being as it is I, really, do fail to see how the Commissioner could have acted otherwise than as he did, and-how he could have acceded to the request to exempt from taxation the income of the Applicant from the operation [*814] of m/v “Nora” during the period between the 1st January, 1964 and the 15th July, 1964; because the fact remains that, no matter for what reason, the said ship was not actually registered, in the sense of the definition of a ’’Cyprus ship” in section 2(1) of Law 47/63 and, therefore, the income from such ship could not enjoy the exemption under section 3 of the same Law.

In an effort to persuade me that I should treat the ship as actually registered, since before the 15th July, 1964, learned counsel for the Applicant has referred me to the case In the Estate of Colman (deceased) 1958, 2 All E.R. p. 35; I have not been able to find anything in the Judgment in the said case - which concerns the application to the special facts of that case of the expression” in actual military service” in section 11 of the English Wills Act 1837 (7 Will

4 & 1 Viet. c. 26) - to lead me to the conclusion that I can construe the relevant definition in section 2(1) of Law 47/63 so as to find that m/v "Nora” was actually registered as a “Cyprus ship” before the 15th July, 1964.

Even if it is taken as an established fact that the registration of m/v "Nora" was unduly and unjustifiably delayed by the appropriate authorities, this Court cannot give relief, in this recourse, for such delay. Nor could the Commissioner of Income Tax misapply the relevant legislation in order to give to the Applicant relief for the said delay, through exempting from taxation income-which-could not lawfully be exempted.

The remedy for the delay in registering m/v “Nora”, was, at the appropriate time, a recourse under Article 146 of the Constitution, for failure

- refusal or omission - to [*815] register the ship; and had such recourse been successful then A the Applicant might, under Article 146(6), have claimed damages which could well have amounted to the loss of the benefit of exemption from taxation, under section 3 of Law 47/63, in respect of the whole or part of the period between the 1st January, 1964 and the 15th July, 1964., as the case might be.

In the result, this recourse fails and is dismissed accordingly, but there shall be no order as to costs

Application dismissed.

No order as to costs.