Galea v The Assessment Review Committee & Anor (Mauritius), [2025] UKPC 17

Whether the taxpayer could deduct his 92% share of the losses incurred by a Mauritius partnership (of which he was the dominant partner) from his other sources of income turned on whether the partnership was carrying on a “business,” whose definition in the Mauritian Income Tax Act 1995 relevantly referred to "any trade, profession, vocation or occupation, manufacture or undertaking, or any other income earning activity, carried on with a view to profit."

The partnership had acquired 200 acres of abandoned mountainous land to which it introduced deer and then employed a staff of around six people in connection with its activity of managing the land and organizing annual hunts for deer, for which it charged fees as well as selling the deer meat. It also derived revenue from the sale of live monkeys.

Before the Board, both parties agreed that, based on three decisions (namely, Grieve, [1984] 1 NZLR 101, Backman, and Ingenious Games), the question as to whether the activities of the partnership were carried on “with a view to profit” turned on the taxpayer’s subjective intention, that the aim to make a profit need not be the sole or main aim and it could be ancillary, and that the taxpayer’s asserted intention to make a profit could justifiably be viewed with circumspection in a case where, looked at realistically, there seemed no real prospect of profit.

Dame Philippa Whipple found that the Supreme Court of Mauritius had committed an error of law in deciding against the taxpayer on the basis that the expression "with a view to profit," although not referring to immediate profit, meant “an activity carried on with a reasonable expectation of making a profit in [the] near future” (quoted at para. 26). Furthermore, she found that the panels below had not taken issue with the credibility of the taxpayer, who had testified that he had an intention of making a profit (although, in fact, the partnership had sustained significant and continued losses for the 10 years under review). Accordingly, the taxpayer's appeal was allowed.

Whether the taxpayer could deduct his 92% share of the losses incurred by a Mauritius partnership (of which he was the dominant partner) from his other sources of income turned on whether the partnership was carrying on a “business,” whose definition in the Mauritian Income Tax Act 1995 relevantly referred to "any trade … or undertaking, or any other income earning activity, carried on with a view to profit."

The partnership employed six people to manage its 200 acres of mountainous terrain and generate revenues from organizing annual hunts for deer on the lands (as well as from sales of live monkeys).

Before the Board, both parties agreed that, based on Grieve, [1984] 1 NZLR 101, Backman, and Ingenious Games (no mention was made of Stewart or Paletta), the question as to whether the activities of the partnership were carried on “with a view to profit” turned on the taxpayer’s subjective intention, and that the aim to make a profit need not be the sole or main aim and it could be ancillary.

Dame Philippa Whipple found that the Supreme Court of Mauritius had committed an error of law in deciding against the taxpayer on the basis that the expression "with a view to profit," although not referring to immediate profit, meant “an activity carried on with a reasonable expectation of making a profit in [the] near future” (quoted at para. 26). Furthermore, she found that the panels below had not taken issue with the credibility of the taxpayer, who had testified that he had an intention of making a profit (although, in fact, the partnership had sustained significant and continued losses for the 10 years under review). Accordingly, the taxpayer's appeal was allowed.