COURT OF APPEAL

Hokitika Guardian, 27 September 1933, Page 4

COURT OF APPEAL

DECISION RESERVED. (ter trust Aas cm lation — Coy'jtyhi.) •WELLINGTON, September 20. The Court of Appeal today is" considering the appeal of Bryant, May, Bell and Co., Ltd., from an order of Justice MacGregor, made on July 17, 1933, confirming the. assessment of the Commissioner of Taxes, on appellant's income for the year 1930. During that year the appellant company became indebited to Messrs ' Bryant, May, Ltd., London, to the extent of £55,500 for goods sold, and £24,704 dividends clue. In view of the adverse rate of exchange, the English company agreed to postpone payment of both sums, interest being allowed by the appellant company at 6 per cent. Both sums were invested in New Zealand Government income tax free, 4J per cent stock. In its return of income for the year ended' March 31, 1931, appellant claimed to deduct from its assessable income the . interest at G per cent payable to the English company, totalling £1,173 16s. As the Commissioner disallowed tne deduction, application was made by a.case stated for the opinion of the Supreme Court. Justice MacGregor held that as the deduction claimed was not “interest payable on capital . employed in the production of assessable income,” within S.BO (1), (h), of the Land and Income Tax. Act, 1923, and was not “excenditure ex* . clusively incurred in the production of the assessable income,” ’within S.BO (2), of the same Act, the deduction could not be allowed. An appeal is nov brought from this decision. _ Mr Hadfield, counsel for appellant . submitted the sum of £82,541, kept in. New Zealand in 1930 to avoid paying 5 oer cent exchange on London, was capital used in the production of as- > sessable income and the interest on such sum was therefore exempt from taxation. If the sum had been invested in oi per cent- Government stock , instead of in 44 per cent tax free stock, the company would have to pay the tax on interest from it, and would therefore be liable to pay the tax twice over. He contended further, that the sum involved was part of the price of the goods purchased by an-; - pell a lit for puroses of its trade. It was in tlie nature of circulating capital. and for . this reason was exempt from income tax.

Mr James, second counsel for the appellant, submitted, that “capital” in the taxing statement meant fixed and not circulating, capital, and that the “interest” not deductable from the assessable income meant interest on tlie fixed and interest not on the circulating capital. He contended that to read “interest” as meaning interest on the circulating capital would lead to consequences, so unjust that, it was impossible to suppose the Legislature intended it so to he read. The Solicitor-General for the Commissioner of Taxes, was not called Upon. -■■■'A 1 ; ;:yV..;::r. ' The Court reserved its decision..

SOLICITOR DISQUALIFIED-; WELLINGTON, 'September 26. In the Court -f Appeal, this morning in the Law Societv v. Mason, a n order was made bv consent ,striking James Murlioch Mason, of Peildin.g off .the roll of barristers and solicitors of the Dominion. , • Conditional leave to anneal to the Privy Council, from the decision of the rvurt of Anneal. Vincent v. Tauraun*. TiMpctrio Power Board, given on JMv oi ]933. was granted to, Frederick Charles Vincent, of Tauranga, linesman. Security for appeal was fixed: at £350, to be given within one month..