INCOME TAX.

Evening Post, Volume LXXXIII, Issue 105, 3 May 1912, Page 8

INCOME TAX.

KAURI AND TAUPO TOTARA TIMBER CO.'S CASES. Judgment was given by ihe Court of Appeal to-day on an important point in income tax law arising in the fdtm o! an application for an order under tho Declaratory Judgments Act, interpreting sections 71, 79, and 87 of the Land and Income Assessment Act, and determining the following question in relation' thereto: "In what cases (if at all) and ■to what extant (if at all) is a company which, in the manner set forth in the statement of f acts, carries on (inter alic) , tho business of cutting, milling, andselling; the eiandkig timber owned by. plaintiff company, entitled, in its assessment for income .tax to deduct from the gross proceeds of itd business tho value of the standing timber so cut by it? " The parties wero the Taupo To&ava Timber Company, Ltd., and the Kauri Timber Company, Ltd., .plaintiffs, and the Commissioner of Taxes, defendant. At the hearing Sir John Fuidlay, K.C., with him Mr. ,T. Logan Stout, appeared for the Taupo Totara Company, Mr. T. Cotter, K.C., with him Mr. C. J. Schnauer, for the Kauri Company, and. Mr. J. W. Salmond, SolicitorGeneral. ,for the Commissioner of Taxes. The judgment of the Court was delivered by Mr. Justice Edwards, in the course of which he said : — "There is, iv our opinion, nothing in the statutes toqualify, so far as concerns the questionnow before, the Court, the meaning of paragraph (c) of section 87 of the Act of ' 1908. Thfe question that remains is, therefore, whether or not the expenditure of money in the purchase of tim-ber-bearing lands, which give the right to remove the timber trees therefrom, is an expenditure of capital' within the meaning of paragraph (c) of section 87 of the Act of 1908, unqualified by any other enactment. Upon this point tho case* before the Court appear to us to be indistinguishable from Coltness Iron Company v. Black, 6 A.C. 315, and Alianza ComDany, Ltd., v. Bdl (1905), 1 K.B. 184: on appeal (1906) A.C. 18. In our opinion, Uierefore, the answer to the question put 'by each of the cases should be. The plaintiff company is not entitled in its assessmont for income tax to deduct from the gross proceeds of iVs business tih<y value of the standing timber out by it, , as «et forth in, the 6pecial 'case*" ' On the application of Sir John Findlay, formal leave to appeal 'to the-Privy Council was granted.