INCOME TAX CASE.

Taranaki Herald, Volume LIX, Issue 14398, 4 January 1911, Page 7

INCOME TAX CASE.

JUDGMENT FOR PLAINTIFF. Far Press Association. WELLINGTON, Jan. 4. Mr. Justice Cooper gave judgment to-day in the important income tax case Whiterock and Marainanga Estate Companies v. Commissioner of Taxes, claiming a refund of taxes allegedly overpaid. His Honour said this was an action brought to recover from the Commissioner £2650 paid under protest. Geo. D. Greenwood, of Canterbury, in 1905 agreed to purchase Whitcrocks, Canterbury, from one Nicholls, for £75,000, and stock, etc., for £25,000. Half the purchase money of £100 ? 000 was paid off before it was determined to resell. Greenwood formed a private company with 35,000 shares, and took up all but two shares. The object of the company was to acquire Whiterocks and carry on the sbaap-fannini; business. Its real object, said Mr. Justice Cooper, was to enable Greenwood to avoid the higher rate for graduated land tax if Teviotvalo, which he owned, and Whiterocks were both vested in him. t The company then bought the adjoining property of 558 acres at £5 per acre, and sold the whole of its ’ property at a profit. Tho Commissioner of Taxes assessed income tax on that profit, and tho company paid it under protest, and tho Court was asked to decide whether the company was liable to be so assessed.

His Honour said the point of law was an extremely narrow one—was the principal business of the company that of dealing in land? In his opinion it was not. The sale of the estate was in the ordinary course of business, and the purpose of tho formation of the company w’as solely to avoid the graduated tax." Greenwood was a sheep farmer and a wealthy mar., end there was no indication that he was the class of man hit at by the statute. The persons whom the Legislature intended to affect with liability were land speculators. Judgment was for plaintiffs for the amount claimed, with costs.