Mahfood v The Commissioner of Income Tax

• Jurisdiction: Jamaica
• Judge: Marsh, J.
• Judgment Date: 01 January 1976
• Docket Number: 1 of 1976
• Court: Revenue Court (Jamaica)
• Date: 01 January 1976

Revenue Court

Marsh, J.

1 of 1976

Mahfood

and

The Commissioner of Income Tax

Appearances:

Mr. A.C. Hudson-Phillips and A. Edwards for the appellant.

Mr. H. Hamilton instructed by Crown Solicitor.

Revenue Law - Income Tax — Appeals — Chargeable Invoice

Marsh, J.

1 The appellant is appealing against three Decisions of the respondent which were made on the 8th December, 1975 in respect of is chargeable income for the Years of Assessment 1970 to 1972, inclusive.

2 The facts are not in dispute and are as follows:

• (1) The appellant was at all material times an employee and Director of Messrs. H. Mahfood & Sons Limited, a limited liability company incorporated and registered in Jamaica with its registered office at Harbour Street in the parish of Kingston. (Hereinafter referred to as the company.)

• (2) The appellant's contract of employment with the company stipulated that as part of his remuneration as an employee he would be provided by the company with free housing accommodation. That accommodation consisted of a house standing in its own grounds and described as — “a fully serviced and maintained residence including the services of domestic help” for the residence.

• (3) In accordance with that contract the employer/ company procured premises and provided the necessary domestic staff for its maintenance and upkeep, and the appellant, in due Course, took up residence therein and resided there throughout the period relevant to this Appeal.

• (4) All the expenditure incurred by the company in the provision of this amenity for the appellant was accepted by the respondent as expenditure wholly and exclusively incurred by it in acquiring its income during the years of assessment in question.

• (5) In his return of income for each of those years, the appellant included as Part of his employment by the company, an amount said to represent the taxable value of the free accommodation provided by it as his employer. The actual amount was a sum equal to ten percent of his total salary and bonus for each year respectively. The figures were:

  • (i) For Year of Assessment 1970 — $481

  • (ii) For Year of Assessment 1971 — $538, and

  • (iii) For Year of Assessment 1972 — $635.

    Those figures were, according to the appellant, arrived at in compliance with the Third Proviso to Section 5(1)(c) of the Income Tax Act which states, in effect, that the annual value of any quarters or residence granted in respect of employment — “shall be deemed not to exceed ten percentum of the total emoluments (other than the value of the quarters or residence) paid or payable for the year of assessment”.

• (6) The respondent, however, upon an examination of the appellant's Return, took the view that the provision of domestic staff for maintenance and upkeep of the residence was a separate benefit from the provision of the residence itself, and, therefore, ought not to be included in the estimated annual value of the residence, but separately returned as an additional perquisite accruing from the employment; and raised assessments upon the appellant in accordance with that view.

• (7) The appellant objected to the assessments, arguing that the cost of maintenance and upkeep of the premises could not be separately taxed as a perquisite because that cost had been already included in the estimated annual value of the premises as set out in his Return. He further argued that to so treat the matter would be tantamount to taxing the same income twice. The respondent refused to accept that view and, in due course, issued Decision Notices confirming the assessments.

3 The appellant now appeals.

4 As will be seen from the foregoing, the point is a short one, namely, is the provision of staff for the maintenance and upkeep of the residence occupied by the appellant in the circumstances outlined above, to be separately assessed as an “other allowance granted in respect of employment”; or, is it to be included in the estimated annual value of the residence occupied by the appellant in respect of his employment. It is to be noted that the appellant does not dispute that the provision of free quarters is a taxable perquisite in his hands; he is merely disputing the method adopted by the respondent in computing the quantum thereof.

5 In my judgment, the answer to the question arising on the, foregoing is to be found in the Income Tax (Valuation of Housing Accommodation) Regulations 1964, published on 4th December, 1964 in the Jamaica Gazette Supplement No. 152 — Notice No. 378. Those regulations were published pursuant to a power conferred upon the Minister by, what was then, Section 73(1)(f) of the Act, which provided as follows:

“(1) The Minister may make regulations with respect to the assessment, charge, collection and recovery of Income Tax in respect of emoluments to which paragraph (c) of sub-section (1) of Section 5 of this Law applies, being Income Tax for the year of assessment, and those regulations may, in particular, include provision for –

(f) Determining the factors which may be taken into account by the Commissioner –

• (i) In ascertaining whether or not any value should be attributed to...