Marie Henri Dominique Galea v The Assessment Review Committee and another (Mauritius)

Whether an activity is a business carried on “with a view to profit” is determined by the taxpayer’s subjective intention. Profit need not be the sole or main aim; an ancillary profit-making purpose is sufficient. The court may examine the asserted intention with circumspection where, realistically, there appears to be no real prospect of profit. An objective requirement of a reasonable expectation of profit, or of profit in the near future, cannot be read into the statutory test. Persistent losses, including losses exceeding the initial investment, do not by themselves negate an intention to make a profit. Future plans may be relevant when assessing intention during the relevant tax periods.

The appellant sought to deduct losses incurred by a Mauritian partnership, Société Agricole de Mont sur Mont, from other gross income under the Mauritian Income Tax Act 1995. The Assessment Review Committee dismissed his appeal, holding that the partnership’s activities were not carried on with a reasonable expectation of profit. The Supreme Court of Mauritius dismissed a further appeal on 15 March 2023, endorsing that reasoning. The Privy Council considered whether “with a view to profit” required an objective reasonable expectation of profit, particularly in the near future, and whether the Board should remake the decision if an error of law were established.

1. The appeal was allowed. The decisions of the Assessment Review Committee and the Supreme Court of Mauritius were set aside.
2. Dame Philippa Whipple, delivering the judgment of the Board, held that section 2 of the Mauritian Income Tax Act 1995 imposes a test of subjective intention. The aim to make a profit may be ancillary rather than the sole or main aim. The statutory test contains no requirement of a reasonable expectation of profit or of profit in the near future. The likely timing of profit may nevertheless be relevant evidence when applying the correct subjective test.
3. The Board rejected the submission that the Committee had applied, or substantially applied, the correct test. Read in context, its conclusion that the appellant could not seriously contend that the activity was a business reflected the erroneous objective test.
4. The Committee’s reasoning about the sale of meat and monkeys could not be preserved as a separate finding of fact. That reasoning formed part of its rejection of the appeal by reference to the wrong legal test. The Supreme Court’s endorsement of the Committee’s reasoning was therefore also vitiated by the error of law.
5. In remaking the decision, the Board treated the nature and period of the activities, their scale and transactions, the commitment of time, money and effort, and the financial results as relevant considerations. The Board accepted that the partnership had invested in the land, employed staff, pursued several income-generating ventures, and achieved some income with an upward trend. Persistent losses and the limited productive capacity of the land were relevant but did not determine subjective intention.
6. The appellant’s evidence of intention had not apparently been challenged before the primary decision-maker. Basic fairness therefore weighed against rejecting it for lack of credibility without giving him an opportunity to address that issue. The evidence was also consistent with the partnership’s various attempts to generate income.
7. Future plans were relevant to whether the partnership intended to make a profit during the relevant tax periods. On the available evidence, the Board accepted the appellant’s evidence as credible, found that the partnership intended to make a profit, and held that it was carrying on a business within section 2.

• Privy Council: The appeal from the Supreme Court of Mauritius was allowed on 8 April 2025. The decisions of the Supreme Court and the Assessment Review Committee were set aside, and the Board remade the decision in the appellant’s favour.
• Supreme Court of Mauritius: Appeal dismissed by judgment dated 15 March 2023.
• Assessment Review Committee: Appeal dismissed on 11 November 2013.