INTERNAL REVENUE SERVICE vs. MULTICHOICE (GH) LTD [2004]DLCA987

Date	2004-02-16
Suit No.
Citation No.	[2004]DLCA987

OSEI JA

TWUMASI JA

OMARI-SASU JA

PETER KORNOR FOR THE DEFENDANT-APPELLANT.

ANTHONY FORSON JNR FOR THE PLAINTIFF-RESPONDENT.

[2004]DLCA987
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													<main id="main" class="content" style="min-height: 60rem" ><span style="font-size:12.0pt;line-height:115%;font-family:&quot;Book Antiqua&quot;,&quot;serif&quot;;
mso-fareast-font-family:&quot;Book Antiqua&quot;;mso-bidi-font-family:&quot;Book Antiqua&quot;;
color:#00B0F0">INTERNAL REVENUE SERVICE<o:p></o:p><span style="font-size:12.0pt;line-height:115%;font-family:&quot;Book Antiqua&quot;,&quot;serif&quot;;
mso-fareast-font-family:&quot;Book Antiqua&quot;;mso-bidi-font-family:&quot;Book Antiqua&quot;;
color:#00B0F0">vs.<o:p></o:p><span style="font-size:12.0pt;line-height:115%;font-family:&quot;Book Antiqua&quot;,&quot;serif&quot;;
mso-fareast-font-family:&quot;Book Antiqua&quot;;mso-bidi-font-family:&quot;Book Antiqua&quot;;
color:#00B0F0">MULTICHOICE (GH) LTD<o:p></o:p>[COURT
OF APPEAL, ACCRA]<o:p></o:p>[2003-2005]
1 GLR 78<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
padding:0in 0in 1.0pt 0in">

<p class="MsoNormal" align="right" style="margin-bottom:5.0pt;text-align:right;
mso-pagination:none;border:none;mso-border-bottom-alt:solid windowtext 1.5pt;
padding:0in;mso-padding-alt:0in 0in 1.0pt 0in">Date: 16 February 2004<o:p></o:p>

</div>COUNSEL:<o:p></o:p>PETER
KORNOR FOR THE DEFENDANT-APPELLANT.<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
padding:0in 0in 1.0pt 0in">

ANTHONY
FORSON JNR FOR THE PLAINTIFF-RESPONDENT.
<o:p></o:p>

OSEI,
TWUMASI AND OMARI-SASU JJA<o:p></o:p>

</div>JUGDEMENT<o:p></o:p>Osei JA <o:p></o:p>Delivered
the unanimous decision of the court. The undisputed facts of this appeal are
that: Multichoice (Gh) Ltd, the plaintiff-respondent (hereinafter referred to
as the respondent) 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 respondent without dispute, incurred losses from its
television business as such but made substantial gains from its banking account
by way of interest. The respondent 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 (hereinafter referred to simply as
the appellant) 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 Asiamah JA sitting as an
additional High Court judge in Multichoice (Gh) Ltd v Internal Revenue Service
[2003-2005] 1 GLR 18, he made a very eloquent observation at 20-21 ante as
follows:<o:p></o:p><p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:5.0pt;
margin-left:.5in;text-align:justify;mso-pagination:none;border:none;mso-padding-alt:
31.0pt 31.0pt 31.0pt 31.0pt;mso-border-shadow:yes">“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 deposit at the bank and would form a
fractional portion of the ‘full amount of income’ of the company.”<o:p></o:p>(The
emphasis is ours.) 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 appellant is, as it were, compelling the respondent to
do in the instant case.<o:p></o:p>The
appellant 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, ie sections 1(2)(c) 4, 4(A), 5 and 11(1) of
the Income Tax Decree, 1975 (SMCD) 5) as amended.” According to the appellant that
ground of appeal raises three issues as follows:<o:p></o:p><p class="MsoNormalCxSpMiddle" style="margin-left:.5in;mso-add-space:auto;
text-align:justify;text-indent:-.25in;mso-pagination:none;mso-list:l0 level1 lfo2;
border:none;mso-padding-alt:31.0pt 31.0pt 31.0pt 31.0pt;mso-border-shadow:yes">(1). “Whether on a true and proper
interpretation of sections 1(2)(c), 4, 4A, 5 and 11(1) of SMCD 5, the learned
trial judge was right in declaring the assessments raised by the commissioner
null and void. <o:p></o:p>