The Commissioner-General of Income Tax v. Dr. Noor Alli Vellani Misc. Civ. App. 22-D-69; 23/6/70; Georges C.J.

The Commissioner-General of Income Tax v. Dr. Noor Alli Vellani Misc. Civ. App. 22-D-69; 23/6/70; Georges C.J.

In 1966 the collection of Income Tax in East Africa from salaried employees was switched to the Pay as you Earn system. Previously tax for each year became due and was paid in the year following. The change-over would have created hardship if employees were expected to pay tax for the current year under the new system and for the previous year under the old system all in one year. To prevent this section 121B was passed which provided as follows:- “Not withstanding anything to the contrary in this Act, where the Commissioner has assessed any individual for either or both of the years of income 1965 and 1966 and the income so assessed included emoluments, the Commissioner shall, subject to subsection (3), remit tax at the standard rate on chargeable emoluments to he extent specified in subsection (2) of this section.” Subsection (2) set out the quantum of remission and ended with this proviso which reads_ “Provided that an individual shall be deemed to be continuously in liable employment notwithstanding such temporary periods of unemployment as the Commissioner may determine to be reasonable and not inconsistent with the claim of such individual to be continuously in liable employment.” The respondent/tax payer was self employed husband of a doctor, employed at the Aga Khan Hospital, earning £4045 a year from her employment there during the relevant period. The respondent claimed remission of tax at the standard rate on the wife’s income under section 121B. The Commissioner ruled that he was not eligible for remission since he was not an individual within the meaning of section 212B. The contention was that the employed wife living with her husband was not a taxable entity. The taxpayer who had claimed the exemption was not the individual who had been in employment as contemplated by subsection (2) of section 121B and who had earned the emoluments. He could not, therefore, be granted remission. The Local Committee ruled against the Commissioner, hence this appeal.

            Held: (1) “It is very likely that the draftsman, in wording this section did not have in mind the employed wife with a self employed husband and the section has to be interpreted to see what results are produced to govern the case.: (2) “My view is that the remission on tax is not made in respect of an individual as such but rather in respect of a category of income when this category forms part of taxable income of an individual. Quite obviously an individual must benefit since income must accrue to an individual and tax be paid by an individual. In my opinion the taxpayer fell very squarely within subsection (1) of section 121B. He was an individual on whose income the Commissioner had assessed tax for the years of income 1965, 1966 and the income so assessed did include emoluments, being emoluments earned by his wife which are deemed to be part of his income for tax purposes by virtue of section 64.” (4) “The counsel for the Commissioner has argued, however, that when one reads subsection (2) it becomes clear that the individual assessed must also be the individual employed if remission is to be made available. It is argued that the individual there referred to must obviously be the same individual referred to in section I, and, therefore, clearly unless the individual is the person who has earned the chargeable emoluments the remission is not possible. Although there is much force in this argument I think that in interpreting the section, the governing purpose must be borne clearly in mind, that is, the remission of tax on certain emoluments. It is possible to effect this particular purpose within the meaning of the word “individual” s is used under subsection (2) of the section. The use of the word in that subsection cannot be taken as restricting the wider meaning which is possible in subsection (1). It means the individual in respect of whose emoluments remission is claimed by the individual who has been assessed by the Commissioner on income which includes these emoluments. There is no reason inherent in logic why these two should be the same person physically once they can be considered one for purposes of tax.” (4) Appeal dismissed.