INCOME ASSESSMENT CASE. WELLINGTON. October 20.

Otago Witness, Issue 2902, 27 October 1909, Page 37

INCOME ASSESSMENT CASE. WELLINGTON. October 20.

The Full Bench of Urn Supreme Court to-day henid the ca-e Thomas Borthwick ;>nd h'on* (Australasia), Ltd., v. the Cominivioner of Taxes. This was an appeal from a decision of the stipendiary magi<;tiate at CluiMchurch di?mis=in^ objections by the appellants to the a: segment of income tax upon the income derived by Ihe appellants as agents For Thomas Jiorthwick and Sons (Ltd.), London, from the buMne?*, of the latter firm in New Zealand during tlie yoa^ ending the ZOth September, 1906, 30th Sc-ptcmKer, 1907. and 50th September, 1908. The appellants weip called upon by the CommLstioner to furnish returns for those

years, but made no returns, a,nd gave no information to the Commissioner as to the volume of business of the London company in New Zealand. The Commissioner therefore assessed the income of the London company for the purpose of the income tax for those years at the sums of £77,491, £66,225, and £47,666 l^espectively, Tho appellants objected to> these assessments upon various technical grounds, and it was these objections, which were dismissed by the magistrate. The following facts* irere stated ia the case on appeal for the information of the court : — That tho London company was registered in London on the 2nd October, 1905 ; that the Australasian company was registered in London on the lgfc July, 1905 ; and that the London company carried on business in New Zealand: through the Australasian company as its. agent ; that the directors of the two- ' companies were the same, and that tbosharebolders of the two companies were j substantially the same; that the Austral* j asian company, besides carrying on bnsi*ness in New Zealand as agents for th©. • London company, also owned an«i operated two freezing works in- t-he Dominion—-* j one at Pakipaki and one at Waitaraj j that the London company sold fat and ox tongues and tails to the freezing com- ■ panics in New Zealand through the Aus— •■ tralasian company and to that company ; that there was a wholesale market in. ( New Zealand for the purchase and sale(of frozen mutton. The appellants' objections were: (1) That for the years mentioned thei*e were no profits proved tohave been derived from, or received by, . appellants in New Zealand in respect of ■ any of the transactions mentioned, which, were sales within N«w Zealand. Tben&, were other objections of a> technical! nature, founded upon the wording of" | various sections of " The ■ Land and Income Assessment Act, 1908." Mr j Hosking. K.C., and Mr George Harperappeared for the appellants, and MrStringer, K.C., and Mr Myers for th© re- | spondents. Mr Hosking contended that the only/ profit of the London company upon which , income tax was assessable was the differi ence between the cost of the live sheepI it bought in New Zealand plus the ooste- ; of freezing and preparing and shipping and the value of the carcases ready forshipping. That was the only profit derived from the busiuess of the London company in New Zealand within themea,ning of section 71 of " The Land and' Income Assessment Act, 1908." i Mr Stringer: That is all iho Commissioner claims, but he has never been able■to g.et the return from the company of" , that profit, and therefore he had to assessths estimated profit under section 10 (f). . Mr Hosking : That return could be sup-* . plied. I Mr Justice Williams (Acting Chief' ! Justice) : There seems to be really noj difference between you. As it is ! o'clock, the court will adjourn till 2, and meanwhile you might confer with aview to a settlement. Upon resuming at 2 o'clock, Mr Hoskinginh'mated that the parties had not been able to come to any settlement, and hei proceeded to contend that- the Comraisi sioner had no power to a£ssf3 the appel- ! lants under rection 10, clause (f), of theI act. That faction applied only to nonresident trr..dcr3 who s-cnt agents to effect' sales in th>3 Dominion. That was made? clear by the regulations m-ado under theaet. It dealt only with sales, and not ' with purchases. ' Mr Justice Edwards : What does it ; matter if the Comm issionei' can assessyoxi ur.d#-r wot ion 19? Mr Hosking rontendtd that in that ca c e, upon appeal, the appellants could bring evidence to reduce the assessment jiiccording to the real profits made/ whereas if the Commissioner made the assessment under section 10 (f) the magistrate had ! no discretion to reduce that assessmentbelow 5 per cent, of the gross proceeds. j Mr St linger admitted that the-magis-trate lr?.d power upon an appeal from thoassessment under section 10 (f) to Teducethe assessment below 5 per cent, of the gro.»is proceeds. Mr Hoskin'.' stated that th.it admission to,i all his client <va.s fighting for. ' Mv Harper also shortly addressed fchecourt. Mr Stringer statad that if the appellants made the returns the Commissionei--would not ha\p m l^ default in the a^M?."«n->ent at all. Two companies had b2-e.n formed in order to evade payment of the income tax. Their Horn r< exprp c^ed the opinion that' there was an appeal from the assessment under s-ection 10 (f), and the magistrateupon that app?al had power to reducethe a.-se. c .^ment below 5 per cent, of the gro>-. procf-ads if the appellant could show thai hi-s profits ivei-.s Less. The court adjourned consideration of what older should bs made until tomoirow marning. WELLINGTON. Octobc/r 21. Upon the court resuming to-day, MrJustice Williams stated that they Ikad uranimously come to the conclusion^ that Bo" thwick's appeal ought to be dismissed 1 . There was no doubt that the magistratehad not heard t.he ca=e upon the assumption that he could not reduce the assessment below 5 per cent, of the gross amount of purchases, and therefore, having properly heard the case, the court had, no power to send it back for reconsideration. The appeal was dismissed, with' £10 costs. The court then heard the case of Att/orn&y-general v. Ruritana and others. The Crown took certain lands, part of a block near Rotorua, f'n* electric lighting purposes, but Mr Justice Edwards decided that it was not validly taken, and defendants re-onteTod the larnd. The questions for the court ire: 11) Are the lands native lands within the meaning of "The Public Works Act. 1905"? (2) Have they been lawfully taken under that act, and are thoy vested in the Crown ? Mr Chapman appeared for pla.ini.iiJ. Amd Mr Earl for

•defendants. The latter stated tlhat lie also proposed to argue that, even- assuming the laiid -was native land, it was not vaHdily taken, because notice had not been gazetted for a month beforehand, and the land was taken before the expiration of a month. — After hearing argument for the j plaintiff, the court, without calling on the \ defendants, gave judgment for the latter, j with costs on the highest scale. I In the case Rex v. Smith, the prisoner, ■John William Smith, had made a wrong i declaration of the loss of a pawn ticket j under the Justices of the Peace Act, andi ! the words "And by virtue of the Justices 1 of the Peace Act," which ought to have followed, were omitted. The iury con- . victed him of making a false declaration, -and the court was now asked to determine % whether the declaration was valid. The court held tihat as an essential part of the prescribed form had been omitted, it was not a declaration under tlve act. and. as the accused had been convicted of making a fake 4eelarafcion under that act. ' -the conviction must be quashed.