Supreme Court Tax Appeal By Company Upheld

Press, Volume CII, Issue 30278, 2 November 1963, Page 20

Supreme Court Tax Appeal By Company Upheld

The Commissioner of Inland Revenue had acted incorrectly in including the sum of £21,341 in the assessable income of A. G. Healing and Company, Ltd., for the year ended May 31, 1057. said Mr Justice Wilson in a reserved judgment given in the Supreme Court yester-

day. The Commissioner's action was upheld at an appeal heard in the Magistrate’s Court in July 1961, and the present proceedings were an appeal against that decision. Mr P. H- T. Alpers appeared for the company, and Mr N. W. Williamson for the Commissioner. The company had acquired a piece of land under a will which gave it the right to purchase at £20.000. Some time after the death of the testator the company exercised this right and later sold the property for £47,000, and the sum of £21,341 was the Commissioner’s assessment of the profit.

In the hearing of this case on October 17 Mr Alpers had submitted that the company’s purpose in acquiring the property was to take up the benefit offered under the will, and not to sell for profit. He also contended that the profit from the transaction was in reality the realisation of the benefit conferred on the company by the testator, and that the profit of such a realisation was'not taxable. His Honour in his judgment rejected the first of these submissions, but upheld the. second. The judgment says: "I think that the profit or gain which the appellant made was. in truth, derived from the bounty of the testator and not from the acquisition and disposal of the leasehold property or from the carrying out of a scheme entered into for the purpose of making a profit. The sale by the appellant was nothing more than a realisation of that bounty. “It follows that this appeal succeeds and that the answer to the question asked in the case stated is that the determination of the learned Magistrate, that the respondent acted correctly in including the amount of £21,341 in the assessable income of the appellant, was erroneous in fact and in law. “I have reached a different decision from that of the learned Magistrate mainly as the result of additional evidence,” says his Honour.