COURT OF APPEAL

Otago Daily Times, Issue 22069, 27 September 1933, Page 7

COURT OF APPEAL

ASSESSMENT OF INCOME TAX

(Per United Press Association.)

WELLINGTON, September 26.

The Court of Appeal is to-day considering the appeal of Bryant, May, Bell and Co,, Ltd., from the order of Mr Justice MacGregor, made on July 17, 1933, confirming the assessment of the Commissioner of Taxes on appellants’ income for the year 1930. During that . year the appellant company became indebted to Messrs Bryant and May., Ltd., London, to the extent of £55,500 for goods sold, and £24,764 in dividends due. In view of the adverse rate of exchange, the English company agreed to postpone payment of both sums, interest being allowed by the appellant company at 6 per cent. Both 'sums were invested in New Zealand Government income-free 41 per cent, stock. In its return of income for the year ended March 31 ? 1931, the appellant claimed to deduct from its assessable income the interest at 6 per cent, payable to the English company, totalling £1173 16s. As the commissioner disallowed the deduction, application was made by a case stated for the opinion of the Supreme Court, and Mr Justice MacGregor held that, as the deduction claimed was not “interest payable on capital employed in the production of assessable income ” within section 80 (1) (h) of the Land and Income Tax Act, 1923, and not “ expenditure exclusively incurred in the production of assessable income” within section 80 (2) of the same Act, the deduction could not be allowed. The appeal is now brought from this decision.

Mr Hadfield, counsel for the appellant, submitted-that the sum of £82,541 which was kept in New Zealand in 1930 to avoid paying 5 per cent, exchange on London, was the capital used in the production of the assessable income and the interest on such sum was therefore exempt from taxation. If the sum had been invested in 55 per cent. Government stock instead of in 4J per cent, tax free stock the company would have to pay tax on the' interest from it and would therefore be liable to pay tax twice over. He contended further that the sum involved was part of the price of goods purchased by appellant for the purpose of its trade. It was in the nature of circulating capital and for this reason was exempt from income tax. Mr .James, second counsel for the appellant, submitted that “ capital ” in taxing statements meant fixed and- not circulating capital, and “interest” not deductible from assessable income meant interest on fixed and not on circulating capital. He contended that to read “in-" terest” as meaning interest on circulating capital would lead to consequences so unjust that it was impossible to suppose the Legislature intended 'it so to be read.

The Solicitor-general, for the Commissioner of Taxes, was not called upon.

The court reserved its decision,

STRUCK OFF THE ROLLS,

(Per United Press Association.) V .WELLINGTON, September 26. In the case of the Law Society v. Mason, an order was made by consent striking James Murdoch Mason, of Feilding, off the roll of barristers and solicitors of the Dominion.

APPEAL TO PRIVY COUNCIL.

(£eb United Press Association.) WELLINGTON, September 26. Conditional leave to appeal to the Privy Council from, the decision of the Court of Appeal in Vincent v. the Tauranga Electric Power Board, given on July 21, 1933, was granted to Frederick Charles Vincent, of Tauranga, linesman. Security for appeal was fixed at £350, to be given within one month.

SEQUEL TO SLANDER ACTION.

(Per United Press Association.) ' WELLINGTON, September 26. 'Application was made to the Court of Appeal by Reginald Charles Boddie for leave to appeal from the decision of Mr Justice Ostler, -delivered in Wellington on \ June 27, 1933, wherein he awarded |d damages • against James Dickson Sievwright in a claim for £SOO for alleged slander. The application was opposed by the respondent on the grounds that Boddie was worth over £25 exclusive of wearing apparel. ■> Mr C. H. Weston, counsel for the appellant, stated that the appellant had been obliged to ask his wife to live with relations, to put the children in a home, and to live in a single room on one meal per day. , He had debts amounting to over £3OO. His only assets were stock-in-trade consisting of bottles and labels in the Chlorogene Syndicate and the goodwill of the said business. Mr H. F. O’Leary, for the respondent, stated that appellant’s interest in the syndicate alone was valued at well over £SO, and that the appellant was not‘a pauper within the rules. The court was adjourned.