THE COMMISSIONER INTERNAL REVENUE SERVICE vs. MULTI CHOICE GH. LTD. [2004]DLCA6599

Date	2004-02-16
Suit No.	H1/16/2004
Citation No.	[2004]DLCA6599

P.K. TWUMASI JA

OMARI-SASU JA

J.A. OSEI JA

PETER KORNOR FOR APPELLANT

ANTHONY FORSEN JNR. FOR RESPONDENT

[2004]DLCA6599
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													<main id="main" class="content" style="min-height: 60rem" >THE
COMMISSIONER INTERNAL REVENUE SERVICE<o:p></o:p>(DEFENDANT/APPELLANT)<o:p></o:p>vs.<o:p></o:p>MULTI CHOICE
GH. LTD.<o:p></o:p>(PLAINTIFF/RESPONDENT)<o:p></o:p><o:p>&nbsp;</o:p>[COURT OF APPEAL, ACCRA]<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
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<p class="MsoNormal" align="center" style="margin-bottom:0in;margin-bottom:.0001pt;
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padding:0in;mso-padding-alt:0in 0in 1.0pt 0in">H1/16/2004&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; DATE: 16TH FEBRUARY, 2004<o:p></o:p>

<p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align:
justify;line-height:115%;border:none;mso-border-bottom-alt:solid windowtext 1.5pt;
padding:0in;mso-padding-alt:0in 0in 1.0pt 0in">ANTHONY FORSEN JNR. FOR
RESPONDENT. <o:p></o:p>

<p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height:
115%;mso-outline-level:1;border:none;mso-border-bottom-alt:solid windowtext 1.5pt;
padding:0in;mso-padding-alt:0in 0in 1.0pt 0in">P.K. TWUMASI JA OMARI-SASU
JA AND J.A. OSEI JA<o:p></o:p>

</div><o:p>&nbsp;</o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
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</div>OSEI,
JA. <o:p></o:p>The
undisputed facts of this appeal are that: MULTICHOICE GHANA LIMITED
[Plaintiff/Respondent hereinafter referred to simply as Plaintiff] is a
Television Company operating in Ghana. It serves its customers in return for
their subscriptions which subscriptions the Company saves in a banking account
and, as expected earns interest income thereon. From the year 1994 to 1999, the
company, without dispute, incurred losses from its Television business as such
but made substantial gains from its Banking Account by way of interest. The
plaintiff company [Multichoice Ghana Ltd.] then sought to set off its losses
incurred from its Television business as such against the interest income
earned from the Banking Account. The [Defendant/Appellant] the [Commissioner]
[hereinafter referred to simply as Defendant] disallowed that move as illegal
and insisted that the income derived from the television business, and the
interest accruing to the Bank Account should be taxed separately as being two
separate sources of income. When the matter came before my learned brother
Asiama JA [then sitting as additional High Court Judge] he made a very eloquent
observation as follows:— <o:p></o:p>"In
our present volatile economy where the national currency is very susceptible to
frequent depreciation, prudent business practice would dictate that part of the
floating capital of an on-going business would be deposited in a banking
institution to earn some interest so as to constantly be able to keep up its
circulating capital and thereby remain in business. Any financial benefit which
might accrue to the money so deposited would be an income derived from the
operations of the business which made the deposits at the bank and would form a
fractional portion of the full amount of income of the Company". In other
words, such an interest must be deemed and treated as part of the income
produced by the business: namely, the Television business and not considered as
constituting a separate source of income which should be taxed separately as
the defendant is, as it were compelling the plaintiff to do in the instant case
<o:p></o:p>The
Defendant has appealed and has based his appeal solely on one major ground of
appeal which reads: that the judgment is not supported by the relevant
provisions of the applicable law i.e., Section 1(2)(c) 4, 4A, 5 and "(1)
of the Income Tax Decree of 1975 (as amended) SMCD 5" And according to the
Appellant that ground of appeal raises three issues as follows:— <o:p></o:p>(1)
whether on a true and proper interpretation of Sections 1(2)(c) 4, 4A, 5 and
"(1) the learned trial Judge was right in declaring the assessments raised
by the Commissioner null and void." <o:p></o:p>(2)
Whether on a true and proper interpretation of Section 1(2) (c), the Plaintiff
had two sources of income for the years of assessment relevant to this action
i.e. 1994, 1995, 1996, 1997, 1998 and 1999. <o:p></o:p>(3)
Whether on a true and proper interpretation of Sections 1(2)C, 4, 4A, 5 and
11(1) plaintiff is entitled to deduct expenses, wholly, exclusively and
necessarily incurred in its Television business as a source of income from
another source of income, namely interested income. <o:p></o:p>In
support of issue 2 namely whether or not the plaintiff had two sources of
income over the relevant period, Counsel for the Appellant refers to Section
1(2) of the relevant law SMCD 5 which provides as follows: <o:p></o:p>"The
tax shall be payable upon the income of any person accruing in, derived from,
brought into or received in Ghana in respect of <o:p></o:p>(a)
gains or profits from any trade, business, profession or vocation for whatever
period of time such trade, business, profession or vocation may have been
carried on or exercised. <o:p></o:p>(b)
gains or profits from any emp</main>