TAXATION RELIEF

Evening Post, Volume CXXIII, Issue 59, 11 March 1937, Page 11

TAXATION RELIEF

A COMPANY'S SUCCESS.

APPEAL COURT DECISIONS

(From "The Post's" Representative.) j .." LONDON,.February 13. ;

The National Mortgage and Agencj) Company of New Zealand has had twq appeals upheld by the Court of .Appeal! against the decision of Mr. Justice.Fini lay on a case stated by the Special Commissioners. ,of Income Tax,. the! Commissioners of Inland Revenue being the respondents.. The appeal raised the question whether and to*1 what extent the appellants were entitled to relief from- United Kingdom! income tax in respect of the years ended April 5/1925, to April 5, .1931. For the purpose of argument two years; from April 5, 1929, were chosen.

The judgment stated that the CourfJ was once more invited to consider and; apply the provisions of section 27, siilx section 1, .of.,the Finance Act,. 1920* Examining the decision of the. House of Lords in the relevant case of- tha Assam' Railways and Trading Co. v. the! Commissioners of Inland Revenue ,mi 1935, Lord Justice, Rpmer, who read the judgment, said it seemed to establish that the word "income" in the section did not mean\the real income* but the statutory or notional income! by means of which the tax was calculated, that if the statutory income in! the Dominion was A pounds, and ml the United King A plus B pounds, relief would be given in respect .of A! pounds, and that an analysis of thej two statutory incomes for the purpose! of comparing the respective allowances for repairs, or depreciation (for example), was inadmissible.

Applying the considerations in-that! case to the present one, and takingj for assessment purposes the year. 1928^ 29, he said the United Kingdom statui tory income for the whole of the com-* pany's business was £70,017, whichi included income from sources other! than the company's business in Newf Zealand amounting to £25,549. Thef New Zealand statutory income was; £26,592, and the appellants were entitled to relief in respect of that sum*

The'eftect of the New Zealand income tax'law was to exclude from the statutory income a sum equal to the inters est on the debentures and to tax'suchi sum., The debenture interest amounted' to £34,779, and on this sum, said his; lordship, the appellants were also- eiw titled to relief. It was true that thai company were only assessed as agent^ for the debenture-holders, but that wasi immaterial. ■ It was only necessary foci them to show that they had paid United Kingdom income tax on that amount and had proved that they had} paid Dominion tax in respect of thatf very sum. In accordance with thej plain words of section 27, sub-section' 1, of the 1920 Act the company were, in his view, entitled to relief on that sum also;'and both appeals should bei allowed. • - • <

The question of costs was held overt until certain subsidiary points had been! dealt with by the Court in another appeal, the date of which is yet to ba fixed.