Ceylon Petroleum Corporation vs Commissioner General of Inland Revenue – CA TAX APPEAL NO. 01/2011-2017

In the case between Ceylon Petroleum Corporation (Appellant) and the Commissioner General of Inland Revenue (Respondent), the Court addressed the proper basis for computing “deemed dividend tax” under section 33(1)(c) of the Inland Revenue Act No. 28 of 1979 and section 61(1)(c) of the Inland Revenue Act No. 10 of 2006. The issue involved whether the calculation must proceed on the basis of “taxable income,” accounting for brought-forward losses, or strictly “profits” as defined by statute. It was determined that the statutory language intentionally distinguishes “profits” from “taxable income” and that “profits,” as defined and calculated by the Act, serve as the correct base for the tax, regardless of offsetting losses that affect taxable income. The decision reaffirmed strict constructi