LIQUOR POLL SEQUEL.

New Zealand Herald, Volume LVIII, Issue 17843, 26 July 1921, Page 7

LIQUOR POLL SEQUEL.

I MONEY FOR PROPAGANDA. EXPENDITURE BY BREWERS. LIABLE TO INCOME TAX. [BS TELEGRAPH.— press association.] WELLINGTON. Monday. Tie Court of Appeal gave judgment this morning in the ca.se of an appeal by Ward and Co:, brewers, of Christchurch, against the decision of the Commissioner of Taxes whereby he decided that the sum of £2123 3s lid spent by the company in connection with the prohibition campaign, was assessable for income tax. The case was heard on July 5. The judgment of the Court was delivered by Mr. Justice Stringer. In the course of his judgment his Honor said that from a business point of view the expenditure might be prudent and proper. It was, however, h e said, quite clear that the Land and Income Tax Act prohibited many deductions from profits which were proper and prudent from a business point of view. The question for the Court was, " Was tha expenditure exclusively incurred in the production of assessable income?" The answer to that question must be in the negative. The decision of the Commissioner of Taxes was therefore upheld. Coefs on the middle scale were allowed to the Commissioner of Taxes. Conditional leave to appeal to the Privy Council was granted.

In this case the company based its claim to exemption on the ground that the expenditure was legitimate and necessary expenditure to protect the company's revenue and enable it to continue its business, and that the expenditure was exclusively incurred in the production of assessable income. Mr. Blair (for Ward and Co., Ltd.), contended that the expenditure was necessary to put the point of view of the liquor party before the public. The expenditure was incurred for the purpose of assuring the life of the company. It was not, he said, capital expenditure. Mr. MacGregor, K.C., for the Commissioner of Taxes, maintained that the expenditure was not wholly and exclusively incurred in earning income for the year on which the assessment was based, and was therefore liable to taxation. The expenditure, he said, was purely a capital one to obtain protection against a future change in the law, which would destroy the company's business. The influencing of electors was no part of the business of brewing or selling beer.