INCOME-TAX DECISION

Hokitika Guardian, 12 July 1928, Page 2

INCOME-TAX DECISION

SMAND AND 00. WINS CASK.

CHRISTCHURCH, July 11

An important decision relating to tlio payment of income tax was given in tlio Supreme Court yesterday by his Honour Air Justice Adamas, when he cancelled an assessment by the Commissioner of Taxes of £IOOO profit made by Sliand and Co., wine and spii'it merchants, on the sale of the West Oxford Hotel. The appellants bought a third interest in the hotel for £iso. The hotel was sold against the wish of the appellant for £0250, Sliand and Co. receiving £1750 as their share. The Commissioner included the profit oT £IOOO in 'Sliand and Co’s assessable income. Sliand and Co. appealed to the Supreme Court against the assessment, on tlie ground that the sum was accretion to fixed capital rather than assessable income. It was stated that for 20 years the company had been purchasing interests in licensed premises with the solo object of increasing sales of wines and spirits. In most cases it acquired only a share in the properties, the remainder of the shares being held by a brewer. It was customary to lease- a property to a tenant, who held the license and to allow a rebate on the rent if the lessee purchased wines and spirits consumed on the premises from Shond and Co. Ilis Honour said that in the Land and Income Assessment Act, of 1908, as amended in 1912. the word business” was defined ns including “trade, manufacture, adventure, undertaking and concern; and in the case of a oompainy, includes 'its •business of whatever nature, as set forth in its articles and memorandum of association.” The definition of “business” in the present Act read thus: “Business includes any profession, trade, manufacture, or undertaking carried on for pecuniary profit.” It first appeared in the Act of 1916. The main purpose or object of the Company was that of a wine and spirit merchant and the other clauses of the memorandum were ancillary to that purpose. The company’s interest in the AVest Oxford property having been acquired with the sole object of increasing its sales of wines and spirits, its retention was necessary. The sale defeated the purpose pro. tan to. The reason for the sale was that the Crown Brewery Co., owning a twothirds interest, insisted upon it, as it was entitled to do.

The answer to the question was, therefore, that the sum of £IOOO in question was not a profit or gain assessable for income tax. The assessment was, therefore, cancelled, and the appellant was allowed the costs of the appeal, £2l and disbursements. At the hearing, Mr A. A. Cuthhert appeared for .the appellants and Mr A. T. Donnelly for the respondent.