IN THE COURT OF APPEAL OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA In the matter of an appeal by way of Stated Case on a question of law for the opinion of the Court of Appeal under and in terms of Section 11A of the Tax Appeals Commission Act, No. 23 of 2011 (as amended).

Jetwing Zinc Journeys Lanka (Pvt) Ltd, “Jetwing House”, 46/26, Navam Mawatha, Colombo 02.

APPELLANT CA No. CA/TAX/0001/2023 Tax Appeals Commission No. TAC/IT/022/2018 v.

Commissioner General of Inland Revenue, Department of Inland Revenue, Sir Chittampalam A, Gardiner Mawatha, Colombo 02.

RESPONDENT BEFORE : M. Sampath K. B. Wijeratne J. &

M. Ahsan. R. Marikar J.

COUNSEL : Avindra Rodrigo, PC with Aruna De Silva and Oshani Wijewardena for the Appellant.

M. Jayasinghe, DSG for the Respondent.

ARGUED ON : 27.03.2024 WRITTEN SUBMISSIONS : 18.08.2023 and 09.05.2024 (by the Appellant)

19.04.2024 (by the Respondent)

DECIDED ON : 14.06.2024 M. Sampath K. B. Wijeratne J.

Introduction Jetwing Zinc Journeys Lanka (Pvt) Ltd, the Appellant, is a limited liability company incorporated in Sri Lanka. The primary business of the Appellant was to provide services to Royal Heritage Hotels (Pvt) Ltd and Seashells Hotels (Pvt) Ltd. The Appellant filed its income tax return for the assessment year 2012/2013 with the Inland Revenue Department¹ on 26^th November, 2013. The Assessor rejected this return in a letter dated 23^rd November, 2015, citing reasons under Section 163 (3)² of the Inland Revenue Act No. 10 of 2006, as amended (hereinafter referred as the ‘IR Act’). Consequently, the Assessor issued a Notice of Assessment dated 27^th November 2015, [At pp. 92/148 of the appeal brief.], which the Appellant allegedly received around 15^th December 2015⁴

1 At pp. 152 to 159 of the appeal brief. 2 At pp. 149 to 151 of the appeal brief.

4 Vide pp. 90 and 91 of the appeal brief.

Being aggrieved by the said assessment, the Appellant appealed to the Commissioner General of Inland Revenue (hereinafter referred as the ‘CGIR’) on 22^nd December 2015⁵, in accordance with Section 165 of the IR Act. The CGIR acknowledged the appeal by a letter dated 6^th January 2016, [At page 145 of the appeal brief.]. After hearing the appeal, the CGIR decided on 21^st December 2017, [Vide page 127 of the appeal brief.], under Section 165 (13) of the IR Act, upholding the Assessor's assessment. The reasons for this determination were communicated to the Appellant in a letter dated 27^th December 2017⁸ The aggrieved Appellant lodged an appeal with the Tax Appeals Commission (hereinafter referred to as the ‘TAC’) against the decision of the CGIR, [Vide page 3 of the appeal brief.] Following the hearing of the appeal, the TAC rendered its decision on 25^th October 2022, upholding the CGIR's decision and dismissing the Appellant's appeal.

Being aggrieved by the said determination of the TAC, the Appellant moved the TAC to state a case to this Court on eleven questions of law¹⁰ for the opinion of this Court, in accordance with Section 11A of the Tax Appeals Commission Act.

The eleven questions of law are;

(1) Did the Commission err in law in holding that the Appellant was an “associate company” for purpose of Section 59B (1) of the Inland Revenue Act No. 10 of 2006 (as amended)?

(2) Did the Commission err in law in failing to consider that the Appellant was a joint venture and therefore did not fall within the definition of an “associate company” under Section 217 of the Inland Revenue Act No.

10 of 2006 (as amended)?

5 Vide appeal at pp. 146 and 147 of the appeal brief.

8 At pp. 122 to 126 and 128 of the appeal brief.

10 Vide ‘X4’ annexed to the stated case dated 23rd November 2022.

(3) Did the Commission err in failing and/or neglecting to consider the Appellant’s submission that the Appellant company is a joint venture?

(4) Did the Commission err in law in arriving at the conclusion that holding of 50% shareholding can be considered to be having “significant influence” within the definition of “associate company” under Section

217 of