TELEGRAMS AND INCOME TAX

New Zealand Mail, Issue 1802, 19 September 1906, Page 19

TELEGRAMS AND INCOME TAX

A NEW ZEALAND PRIVY COUNCIL - CASE.

THE GOVERNMENT APPEAL

DISMISSED

(From Our Special Correspondent.) LONDON, July 27. The judgment of the Judicial Com ittee of the Privy Council in the case of the Commissioner of ’faxes for New Zealand vonsus the Esstern Extension Telegraph Company was delivered on Wednesday last. This was an appeal from a judgment of the New Zea and Cour. of Appeal of August 25th, 1904, varying a decision of Mr Justice Cooper’s. Mr Rufus Isaacs, K.C., Mr W. J. Nar pier (of the New Zealand Bar), and Mr George R. Northcote were counsel for the appellant; Sir Robert Finlay, K.C., Mr Eldon Banks, K.C., aqd Mr E. C. Bliss for the l-espondent co pany. The arguments were recently hea’d by a board, composed of the Earl of Halsbury, Lord Davey. Sir Arthur Wilson, and Sir Alfred Wills, when judgment was reserved.

Lord Davey ixow delivered their Lordships’ judgment, dismissing the appeal; the appellant to pay costs. Stated .shortly, the question involved in the appeal was whether the respondent company was liable to be assessed for income tax in reepeot of all the profits made by it in relation to the transmission of telegraphic messages from New Zealand to places outside the Australasian colonies, or only xxpon so much of such profits as was attributable to th© transmission of such messages over its cable between New Zealand and Australia.

The present claim related to the period of eleven months ending March 315t,1901, During that period the ordinary course of business in transmission of telegrams from New Zealand to places beyond Australia was as follows: —The Government (as owner of the telegraph liuee in New Zealand) received the message from the sender, together with the -entire charges (being at the rate of 5s 2d per word), and transmitted it over its own lines to Wakapuaka. It was there handed to the respondent company and transmitted by it to La Perouse (the charge for which was 3d a word), and handed to the Government of New 'South Wales The Government of New Zealand deducted Id and (by arrangement with the respondent company) 3d. and credited the New South Wales Government with the balance of 4s lOd. New South Wales in its turn transmitted the message to Adelaide, the charge for which was Id. and credited th© South Australian Government with the balance of 4s 9d. The South Australian Government transmitted the message to (say) Port Darwin, the charge for which was 7d, and ei'edited the respondent company with the balance of 4s 2d. The company sent th© message over Us cable to Madras, where the Indian Government took, charge of it. receiving the balance of the charge. And so on. The appellant in this case sought to charge the respondent company with income tax on the profits derived bv it from transmitting messages from Port Darwin to Madras. No part of these profits was ever received by the respondent company in New Zealand. The only question, therefore, was whether they were piofits dei'ived from New Zealand within the meaning of the Land and Income Assessment Act of 1900. Th© appellant maintained the affirmative on three alternative grounds respondent company contracted with hb« Now Zealand Government to carry the message to it« ultimate destination; (2) that the Government contracted with th© sender to transmit the telegram to it© destination, as agent for and on bdielf of the l-esuondent company; and (3) that the message was carried at any rate from Port Darwin or Roebuck Bav in performance of an obligation undertaken by the r company in New Zealand. Their lordships held that there wan no evidence to support the first suggestion; no part of the total charge was paid op credited to the New r Zealand Government beyond the 3d per word for transmission to La Perouse. The second suggestion was equally lacking in foundation. indeed, their lordships had great doubt whether the Government itself entered into anv obligation to do more th*n start the telegram on its journey, and hand it ov->r to the owners of the next stage. This observation applied eqxxally to fhe appellant’s third mode of put-ting his case, but apart from that they not find any evidence from which to infer or imply any such contract a<? suggested. In the result they think that the profits of ti'ansmitting the telegram from Port Daiuvin or Roebuck Bay were derived from South Australia, or West Australia, as the case might be. and not from New Zealand, or business don© there.