IN THE COURT OF APPEAL OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA In the matter of an appeal by way of a Stated Case under section 11A of the Tax Appeals Commission Act, No. 23 of 2011 as amended by Act, No. 29 of 2013.

Central Finance Company PLC, 84, Raja Veediya, Kandy.

Appellant Case No. CA/TAX/0008/2018 Tax Appeals Commission No. TAC/IT/007/2015 Vs.

The Commissioner General of Inland Revenue, Department of Inland Revenue, Sir Chittampalam A. Gardiner Mawatha, Colombo 02. Respondent Before : Dr. Ruwan Fernando J. &

M. Sampath K.B. Wijeratne J.

: Dr. Shivaji Felix with Nayantha Satharasinghe for the Appellant Sumathi Dharmawardena, P.C.. Additional Solicitor General with Amasara Gajadeera and Pramod Perera for the Respondent.

Argued on : 10.12.2011, 31.03.2022, 06.05.2022, 02.11.2022 & 04.05.2023 Written Submissions filed on : 03.01.2019 & 16.05.2023 (by the Appellant)

17.01.2019 & 12.05.2023 (by the Respondent)

Decided on : 19.05.2023 Dr. Ruwan Fernando, J.

Introduction [1] This is an appeal by way of a Case Stated against the determination of the Tax Appeals Commission dated 20.03.2018 confirming the determination made by the Commissioner-General of Inland Revenue on 05.12.2014, and dismissing the Appeal of the Appellant. The taxable period related to the appeal is the year of assessment 2009/2010.

Factual Background [2] The Appellant submitted its return of income for the assessment year 2009/2010 on 30.11.2010, but the assessor by letter dated 26.11.2012 did not accept the return of income and estimated the amount of the assessable income accordingly. The notice of assessment was issued on 30/11.2012 in respect of the year of assessment 2009/2010. The Appellant appealed to the Commissioner-General of Inland Revenue (hereinafter referred to as the . The Respondent by its “Respondent”) against the said assessment determination dated 05.12.2014 confirmed the assessment and dismissed the appeal (pp. 1 and 16-24 of the Tax Appeals Commission brief).

Appeal to the Tax Appeals Commission [3] Being dissatisfied with the said determination of the Respondent, the Appellant appealed to the Tax Appeals Commission, and the Tax Appeals Commission by its determination dated 20.03.2018 confirmed the determination made by the Respondent and dismissed the appeal, subject to the qualification that the Commissioner General should decide on the reasonable amount that can be allowed as bad debts, and also expenses to be allowed as bungalow expenses, business promotion expenses and legal expenses in consultation with the Appellant.

Questions of Law for the Opinion of the Court of Appeal [4] Being dissatisfied with the said determination of the Tax Appeals Commission, the Appellant requested the Tax Appeals Commission to state a case, and the Tax Appeals Commission formulated the following questions of law in the Case Stated for the opinion of the Court of Appeal.

(1) Is the determination of the Tax Appeals Commission time barred?

(2) Is the assessment bad in law in as much as it is time barred?

(3) Is the assessment of income tax and penalty as determined by the Tax Appeals Commission excessive and without lawful justification?

(4) Has the Tax Appeals Commission erred in law when they concluded that the transfer of vehicles to vehicle stock, consequent to a non-performing contract, constitutes a disposal of assets within the contemplation of section 25(7)(v) of the Inland Revenue Act, No. 10 of 2006 (as amended)?

(5) In view of the facts and circumstances of the case, did the Tax Appeals Commission err in law in arriving at the conclusion that they did?

[5] On 10.12.2021, the learned Counsel for the Appellant, Dr. Shivaji Felix, who commenced submissions intimated to Court that the special leave has been granted by the Supreme Court against the decision of the Court of Appeal in Seylan Bank v. Commissioner General of Inland Revenue (CA/Tax No. 23/2013) on the identical issue with regard to the retrospective effect of the amendments made to section 163(5