Setmil Developers Lanka (Pvt.) Limited. v. The Commissioner General of Inland Revenue – CA TAX/27/2019-2021

In the case between Setmil Developers Lanka (Pvt.) Limited and the Commissioner General of Inland Revenue, the court addressed whether the Inland Revenue Act, No. 10 of 2006 applied to losses incurred by the company prior to the commencement of a BOI tax exemption period, and whether such losses could be deducted from income during the year of assessment 2009/2010. It was held that losses incurred prior to the tax exemption period, as certified by the BOI, are deductible against taxable profits in the first exemption year, even if the profits are not covered by the BOI-approved activity. The principle reaffirmed is that only profits and income exempted under the BOI agreement are not assessable under the Inland Revenue Act, while prior losses from years outside the exemption period remain