APPEAL DISMISSED

Southland Times, Issue 21772, 29 July 1932, Page 5

APPEAL DISMISSED

ASPRO v. COMMISSIONER OF

TAXES.

(United Press Assn.—Telegraph Copyright.) London, July 28. The Privy Council dismissed, with costs, the appeal of the Aspro Company versus the Commissioner ot Taxes in New Zealand.

This was an appeal under the Lana and Income Tax Act of 1923 from a determination of the Magistrate s Court at Wellington, removed by a consent order into the Court of Appeal. The material facts were not in dispute. Messrs G. R. H. Nicholas and A. W. Nicholas, manufacturers of and traders in the proprietary article known as Aspro incorporated the appellant in 1923 as a private company under the Companies Act, 1908. The consideration for the assets required by the company was £70,000, of which £20,000 was paid in shares of £1 each and £50,000 by the issue of debentures bearing interest at 10 per cent. The capital of the company was _ £20,000, represented by the shares which were issued by Messrs Nicholas, each of them being the holder of one-half of the capital. The Messrs Nicholas were and had been throughout the company’s existence the sole directors as well as the sole shareholders of the company. For the first period of trading (a period of nine months) ending March 31, 1924, the company paid by way of directors’ fees a sum of £l5OO each, after payment of which there was a net profit of £l4lB made by the company; for the year ending March 31, 1925, the company paid by way of directors’ fees a sum of £2500 each, and there was a net profit of £2616; for the year ending March 31, 1926, the company paid by way of directors’ fees the sum of £3250 each, and there remained a net profit of £3170; for the year ending March 31, 1927, the directors’ fees were £5OOO each, after which there was a net profit of £4924; and for the year ending March 31, 1928, the company paid directors’ fees of £5OOO each, and there remained a net profit of £5145. In making his assessment of tax as against the company for the year last mentioned, the Commissioner of Taxes disallowed £BOOO, part of the £lO,OOO that was paid by way of directors’ fees. To that assessment the company objected, and the magistrate decided in favour of the Commissioner. When the case came before the Court of Appeal the appeal was dismissed by a majority of two to one, and the matter was then referred to the Privy Council.