Director-General, Mauritius Revenue Authority and another (Respondents) v Mauritius Freeport Development Co. Ltd (Appellant) (Mauritius)

Case summary

Case ID

JCPC/2025/0113

Jurisdiction

Mauritius

Parties

Appellant(s)

Mauritius Freeport Development Co. Ltd

Respondent(s)

The Director-General Mauritius Revenue Authority

The Assessment Review Committee

Issue

On a proper construction of s24 Income Tax Act, is a person allowed to compute annual allowances in respect of capital expenditure which it has incurred in any year and in any amount which it deems fit (subject to maximum thresholds set out in the Income Tax Regulations)?

Facts

The appellant (the Mauritius Freeport Development Co Ltd) is a freeport developer providing logistics, warehousing and distribution facilities in Mauritius. This appeal is concerned with the appellant’s entitlement to claim capital allowances under s24 Income Tax Act. Section 24 of the Income Tax Act provides that when in an income year a person has incurred capital expenditure on (amongst other things) the acquisition of plant or machinery or the acquisition, construction or extension of any industrial premises, the person “shall be allowed a deduction of the capital expenditure so incurred by way of an annual allowance in that income year and in each of the succeeding years at such rate as may be prescribed.” In respect of the 2012 accounting year, the appellant claimed capital allowances on expenditure which it had incurred during the income years ended 31 December 1995 to 31 December 2005. These allowances amounted to Rs 84,698,483 (“the disputed allowances”). The appellant claimed the disputed allowances in the 2012 accounting year as part of a strategy whereby it did not claim capital allowance in less profitable years, and instead claimed allowances in later (more profitable years) based upon higher figures of the written down values of the relevant machinery, plant or buildings. By a letter in June 2015, the Director-General of the Mauritius Revenue Authority (the respondent) informed the appellant that since the appellant had used the assets in the income years ended 31 December 1995 to 31 December 2005 to derive income, in accordance with s24 the annual allowances should have been claimed in those accounting years. The respondent therefore disallowed the appellant’s claim to those capital allowances in the 2012 accounting year. The appellant objected to this. The dispute was initially heard by the Assessment Review Committee (“ARC”). The ARC delivered its finding on 9 March 2023. It accepted the appellant’s argument, and concluded that it was optional for a taxpayer to claim or not claim annual allowance in and for each year. The taxpayer therefore had a choice as to the timing and computation of allowances under s24. The ARC concluded that the motives for exercising this choice were not relevant for the purposes of the law, and that the appellant was entitled to claim the disputed capital allowances in the 2012 accounting year. The respondent lodged an appeal against the ARC’s decision. The appeal was heard by the Supreme Court of Mauritius, which allowed the appeal. The Supreme Court held that the respondent was right to disallow the annual allowance on assets acquired in the 1995-2005 period and claimed in 2012. The Supreme Court granted the appellant leave to appeal to the Board.

Date of issue

11 November 2025

Case origin

Appeal As of Right

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