Ceylinco Leasing Corporation Ltd vs The Commissioner General of Inland Revenue – CA/TAX/07/2022-2024

In the case between Ceylinco Leasing Corporation Ltd (Plaintiff) and The Commissioner General of Inland Revenue, Department of Inland Revenue (Defendant), the court addressed the issue of the proper attribution of income for tax purposes concerning the Appellant’s derecognition of its Sthaana Vaasi Financing (SVF) Portfolio under Sri Lankan Accounting Standards. The central question was whether the alleged sale of income entitlement under a Participation Agreement effectively removed the income from the Appellant’s taxable income, taking into account continued ownership, lease rental receipts, and statutory obligations. The court held that the Appellant retained the risk and benefits associated with the portfolio, and thus, the income remained attributable for tax purposes. Principles of e