APPEAL COURT.

Waikato Times, Volume 100, Issue 16749, 16 March 1926, Page 5

APPEAL COURT.

FIRST CASE THIS YEAR. (By Telegraph—Press Association.) WELLINGTON, Monday. The first case this year occupying Iho attention of the Appeal Court is the Commissioner of Taxes, appellant, against William Richard Doughty, respondent. The Court comprised Justices Sim, Stringer and McGregor. The case was stated on an appeal by a stipendiary magistrate under the Land and Income Tax Act of 1916. The case had been filed in the Magistrate's Court at Wellington under the provision of section 23 of the Act mentioned, and was heard in May, 192 i, by a magistrate, who on 24th October, 1924, confirmed the assessment that had been made by the Commissioner of Taxes. On November 2.1, 1924, an action of appeal was filed, and a question of law for the determination of the Court was whether on the facts as they should be determined by the Supreme Court Doughty was assessable, if any and in what respect, for income tax on the sale of the business of George and Doughty to a company called George and Doughty, Ltd., pursuant to an agreement . which was exhibited irf Court. The present respondentr William Richard Doughty, was carrying on business at Wellington and elsewhere as a wholesale soft goods merchant and draper in partnership with Arthur John George. Respondent and partner agreed to sell their business to the company named George and Doughty, Ltd., as a going concern, with goodwill, etc., the price to be i;jS,3S3 6s lOd, which was paid in cash and fully paid-up shares, the shares being supposed to be at their face value. Respondent was othen assessed by appellant for income lax in respect of £6OIO, being his proportionate share of £15,026, the difference between the sum so paid by the company for stock-in-trade and the estimated cost cf such stock-in-trade. Respondent objected to the assessment, and appealed to the Supreme Court. Appellant contended that the difference between the price £43,357 15s lOd and £55,383 6s lOd was profit or gain, which was assessable for income tax. The Chief Justice, Sir Robert Stout, decided that the transaction was not gain from sale of goods or profit derived from the business. It was, as was said in the Australian case Commissioner of Taxes, Western Australia, v. Newman, putting an end to the business. The Supreme Court held that it must follow the .decision in the Australian case; and disallowed the magistrate’s assessment. Against this the Commissioner of Taxes is now appealing. The Court, after hearing legal argument, reserved ils decision.