KUMARARATNE

Vs.

COMMISSIONER GENERAL OF INLAND REVENUE

COURT OF APPEAL
OBEYESEKERE, J.(P/CA)
COREA. J.
CA/TAX/APPEAL/1/2007
FEBRUARY 23, 2021

Inland Revenue Act, No. 28 of 1979, sections 7(1)(a), 7(1)(g), 7(2)(a), 7(2)(f) Income tax on capital gains-Corporate merger or amalgamation Issuing of new shares in exchange for shares of the company being acquired-Companies Act, No. 17 of 1982-Companies Act, No. 7 of 2007, Part VIII

The appellant was a director and shareholder of FWL. FWL merged with another company, TOC, and the appellant and the other shareholders of FWL were issued new shares and share warrants in TOC in exchange for their shares in FWL. The appellant submitted his tax return where he stated that he was not liable to income tax on capital gains since he received no money in exchange for his shares. The return was rejected by the assessor and the appellant was directed to pay income tax assessed on the capital gains and a further sum as surcharge. The appellant appealed to the Commissioner General of Inland Revenue, who referred the appeal directly to the Board of Review which confirmed the assessment. The Board of Review referred the matter by wa