LAW REPORTS.

Dominion, Volume 3, Issue 858, 2 July 1910, Page 7

LAW REPORTS.

TAXED PROFITS: FERRY BUSINESS AND A SIDE LINE. DAY'S BAY LAND. An income tax caso was heard before Mr. Justice Cooper in the Supremo Court yesterday. This was an action brought by tho Wellington Steam Ferry Company, Ltd., against tiio Commissioner of Taxes, Wellington. Mr. F. G. Dalziell appeared for tho plaintiff company; Mr. J. W. Salmond (SolicitorGeneral) and Mr. T. Neavo for tho Commissioner of Taxes.

Mr. Dalziell stated that at ono time the ferry business had been conducted by Mr. J. H. Williams who also purchased 757' acres of land at Day's Bay with the object, apparently, of attracting picnic parties. While Mr. Williams had charge of tho business, the-land at Day's Bay was not , used for any other purpose than to assist the ferry traffic. In March, 1900, tho plaintiff company was . formed,, for the express piirpose of acquiring t'lie ferry business, and the land was still used as an adjunct tp the traffic. Since 1879, tho laJids had been held and occupied by Mr. Williams, solely in connection with that business-.

His Honour: He could not occupy tho whole 757 acres.

Mr. Dakiell: Yes. The public were allowed tearoam over tho whole area. No part of* it was set aside. Ml". -Dalziell .went oh to say that the .company extended the attractions .by erecting ' buildings, and laying down hockey grounds and tennis courts. In March, 1906, the company transferred its' business to a now company, the Wellington Harbour Ferries, Ltd., which was formed for the purpose of acquiring the steamers of ii °-<r- and the steamers of ,the Miramar Forry Company. The company had paid land tax, but the Commissioner of Taxes had made a claim for income tax also. The question for tho_ Cou;-t was whether the company, which had been paying 'land tax for some years upon the increased value of the land, had also to pay income tax upon that increase in value when the property was realised. His Honour remarked that he had to consider principally whether the company was dealing or trafficking in land. The question .was whether income tax was payable by the company, on profits obtained by the sale of land. If he answered, "Yes," he had nothing to do with tho fixing of tho amount OJ the tax." Tho case involved a question of law, depending : upon thq -construction of tho company's articles of association, -and upon the construction of the statute, coupled ■> witli the fact IJr o c , on, P an y had been selling land. ■Mr. Salmond referred to tho Land and Income Assessment Act, which state! that: "The incomo derived from a business inSluded the profits derived rom or received by any taxpayer frcm the following sources: (1) The purchase, sale, or other disposition of real property, if tile taxpayer's ordinary , business comprises dealing in such.property, - ii ! °k "thcrwise." The question was whether these profits .made by the sale or land were made by. a company whose ordinary business comprised dealing in real property. There were two matters which showed the positifin: (1) '/The objects for which the company was formed, and (2) the actual course of the company's business. One of the four main purposes for which tho company had been formed, said Mr.' Salmond, was of association expressly said"so!"-' fpr '' v ; Dealing with the -*meaniii&"'(if ' the word "comprise," ' as" 'iisetP in ..statute, Mr. Salmond pointed out that dealing in. land need not' be the only business of tjie. compaiiy. . One.might :say, .without any reflection 'upon - a. man's, sobriety, that his ordinary diet "comprised" whisky and • soda. This did not mean that he lived chiefly on whisky and soda. (Laughter.) His Honour reserved judgment.