APPEAL COURT

Evening Star, Issue 19198, 15 March 1926, Page 8

APPEAL COURT

INCOME TAX CASE ' - [Pek United Pkkss Association.] WELLINGTON, March 15. The first case this year occupying the attention of the Appeal Court is the Commissioner of Taxes (appellant) against William Richard Doughty (respondent). Tiro court comprised their Honors Mu - Justice Sim, Mr Justice Stringer, and Mr Justice MacGregor. The case was stated on appeal by the stipendiary magistrate under the Land and Income Tak Act, 1910. The case had been filed in the Magistrate’s Court, Wellington, under the provisions of section 23 of the Act mentioned, and was heard at the end of May, 1924, by a magistrate, who, on October 24, 1924, confirmed the assessment that had been made by the Commissioner of Taxes. Then, on November 21, 1921, notice of appeal was filed, and the question of law lor the determination of the court was whether, on fads as they should bo detenuiacd by the Supremo Court, Doughty was assessable in any way, and in what respect, lor income tax on the sale of the business of George and Doughty to a company called George and Doughty, Ltd. Pursuant to an agreement which was exhibited in the court, tlio present respondent, William Richard Doughty, was carrying on business iu Wellington and elsewhere as a wholesale soltgoods _ merchant and draper, in partnership with Arthur John George. Respondent and his partner agreed to sell their business to the company named George and Doughty, Ltd., as a going concern, with goodwill, etc., at the price of £58,383 6s lOd, and which was paid hi cash and in fully-paid-np shares, being supposed to be at their lace value. Respondent was thou assessed by appellant for income tax in respect of £6,010, being bis proportionate share of £15,026, the difference between the sum paid by the company lor the slock in trade and Ibo estimated cost ol such stock-in-trade. Respondent objected to tlio assessment, and appealed to the Supreme Court. Appellant contended that the difference between tlie price ol £43,357 15s JUd and £58,383 6s lOd was profit or gain, which was assessable tor income tax. The Chief Justice (Sir Robert Stout) 'decided that the transaction was not gain from the sale of goods nor profit derived from the business. Jt was, as was said in the Australian case, the Commissioner of 'Taxes for Western Australia versus Newman, putting an end io the business. The Supreme Court held it must follow the decision in the Australian ease, and disallowed the magistrate’s assessment. Against this the Commissioner of Tuxes is now appealing.