PRIVY COUNCIL CASE

Hokitika Guardian, 6 January 1931, Page 1

PRIVY COUNCIL CASE

TAX COMMISSIONER'S APPEAL DISMISSED.

LONDON, November 25

The Judicial Committee of the Privy Council (present, the Lord Chancellor, Lord iSankey, and Lords Blanesbnrgh, Merrivale, Hanworth, and Russell of Killowen) have, delivered judgment in the case of the Conunisisoner of Taxes v. the British Australian Wool Realisation Association (in liquidation). The appeal was* from a decision of the Supreme Court of Victoria, relating to an assessment of income tax of the company. It arose out of assessments under the Victorian Income Tax Act, 1915, in respect of each of the live financial years beginning on July Ist, 1921-22-23-21 and 1925, respectively. The full Court of the Supremo Court decided that certain amounts which, for the purposes ol the assessments,, had been, included in the taxable income of the company, were not chargeable to income tax, and ordered the assessments to he remitted to the County Court Judge for amendment.

The appellant afterwards obtained leave from the Supreme Court to appeal to the Privy Council. Tile effect of the Supreme Court decision was to reduce the total tax for the five years from tire, amount claimed by the Commissioner ol Taxes ol £78,042 to £B2OO approximately. In the course of the judgment, delivered by Lord Blanesbnrgh, it was stated :

The lost bale of wool sold by tbo Association was sold at Hull in March, 1924. It paid no dividends. With Is still credited on each of its shares, the association its realisation completed, went into voluntary liquidation on July 10th, 1926, and in that liquidation the last remaining Is had been paid off, leaving in the hands of the liqudators the balance of over £4,100000. This sum, after all expenses had been met, would become available for distribution as surplus assets among the contributors of tlve association.

Their Lordships had reached the conclusion that the answer of the majority of the learned Judges of the Supreme Court was the just one. Iho sums by the assessment brought into charge were not profits of the association within the meaning of Section 3o of the Act of 1915.

The facts appear to he that no wool at. all was sold hv the association in Australia, It was the British Board operating outside Victoria that regulated the quaiiitites of wool to he marketed from time to time, and entered into all contracts, and made all deliveries. Every payment for wool .sold was made out of Australia, Tn up sense were the profits “earned” by the association, and even more clearly, if they be possiblv, were they not earned by it “in or derived in or from Victoria.” The appeal, therefore, with regard to this sum also failed. The appeal was dismissed with costs.