John Keels Holdings PLC vs Commissioner General of Inland Revenue – CA APPEAL NO. TAX 08/10-2016

In the case between John Keells Holdings PLC and the Commissioner General of Inland Revenue, the court addressed whether Rs. 35,846,409.00 earned from the sale of Treasury Bills in the secondary market for the 1994/1995 assessment year constituted “capital gains” exempt from income tax under Section 14(1)(a)(xxii) of the Inland Revenue Act (as amended). The dispute centered on whether this sum was properly treated as a tax-exempt capital gain or as taxable interest, including whether the Board of Review erred by treating the amount as partly interest and partly gain, and upholding differing rationales for the assessment. It was held that the entire profit qualified as capital gain fully exempt from income tax, reaffirming the principle that fiscal exemptions must be strictly construed and