Wakilii

Commissioner of Income Tax for Nyasaland v Bandanga Limited (Civil Appeal No. 6 of 1939)

East African Court of Appeal · [1939] EACA 38 · 1939 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Case stated for the opinion of the Court of Appeal pursuant to section 43(9) of the Income Tax Ordinance, following appeal from High Court decision
Decision
Appeal dismissed. Company not liable to income tax for year of assessment 1938-39.

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

A company that carried on no trade or business during the year of assessment 1938-39 was not liable to income tax for that year, notwithstanding that the Ordinance provided for tax to be calculated on the basis of the previous year's profits. If the company had been liable, the tax would have been recoverable from the liquidator as a contingent liability under section 206 of the Companies Consolidation Act 1908.

Outcome

Appeal dismissed. Company not liable to income tax for year of assessment 1938-39.

Facts

Bandanga Limited was registered in Nyasaland in 1908 and carried on business as tea growers until 30 September 1937, when it sold all its business, property and assets to a company of the same name registered in England. The new company, consisting substantially of the same shareholders, carried on the business with the old company's assets. On 28 February 1938, the appellant company went into voluntary liquidation and appointed a liquidator. The company had been assessed for and paid income tax for the years 1925-26 to 1937-38. For the year 1937-38, the company paid £518-5-0 income tax. On 23 July 1938, the Commissioner sent a demand notice for £600 income tax for the year 1938-39 based on the company's income for the year ending 30 September 1937. The company appealed, contending it was not liable as it carried on no trade and had no income during the year of assessment 1938-39.

Issues

  1. Whether a company which carries on no business and has no income during a year of assessment is liable to income tax for that year.
  2. Whether income tax for the year of assessment 1938-39 can be recovered from the liquidator of a company in voluntary liquidation.

Orders

  • Appeal dismissed with costs.
  • Costs in the High Court to be fixed by the trial Judge in accordance with section 43(8) of the Ordinance.

Rules and key headnotes

Tax Law — Income Tax — Liability of Company in Liquidation — Year of Assessment
A company which carries on no trade or business during a year of assessment is not liable to income tax for that year, even though the Income Tax Ordinance provides that tax shall be calculated on the basis of the previous year's income.
Statutory Interpretation — Income Tax Ordinance — Sections 5 and 6 — Retrospective Operation
Sections 5 and 6 of the Income Tax Ordinance must be read together. Section 5 provides that tax is payable on income accruing in the year of assessment, while section 6 furnishes the measure for computation of the tax payable. The previous year's income is used as a basis for calculating tax payable in advance, but does not make the Ordinance retrospective or impose liability for a year in which no income is earned.
Tax Law — Income Tax — Basis of Assessment — Distinction Between Liability and Computation
The previous year's income under section 6 of the Income Tax Ordinance is only a basis or criterion for calculating the amount of tax payable, not the year in respect of which tax is payable. Tax is payable for the year of assessment upon income received in that year, and if no income is received, no tax is payable.
Company Law — Liquidation — Recovery of Tax from Liquidator — Contingent Liability
If a company in voluntary liquidation were liable to income tax for a year of assessment, such liability would constitute a contingent liability admissible in proof under section 206 of the Companies Consolidation Act 1908, and the amount of tax would be recoverable from the liquidator.

Legislation cited (8)

  • Nyasaland Income Tax Ordinance Chapter 49 s.5
  • Nyasaland Income Tax Ordinance Chapter 49 s.6
  • Nyasaland Income Tax Ordinance Chapter 49 s.7
  • Nyasaland Income Tax Ordinance s.33
  • Nyasaland Income Tax Ordinance s.43(8)
  • Nyasaland Income Tax Ordinance s.43(9)
  • Companies Consolidation Act 1908 s.206
  • Companies Consolidation Act 1929 s.261

Full judgment

↓ Download PDF

The original judgment as reported. Read the original PDF before relying on any passage.

Commissioner of Income Tax for Nyasaland v Bandanga Limited (Civil Appeal No. 6 of 1939) [1939] EACA 38 (1 January 1939)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.