INCOME TAX ASSESSMENT.

Shannon News, 16 March 1926, Page 3

INCOME TAX ASSESSMENT.

CASE IN COURT OF APPEAR. WELLINGTON, March 15. The first case this year occupying the attention of the Appeal Court is Commissioner of Taxes, appealant, against William Richard Doughty, respondent. The' Court comprised Justices Sim, Stringer and McGregor. The case was stated on appeal by the Stipendiary Magistrate under the Land and Income Tax Act, 1916. The case had been filed in. the Magistrate’s Court, Wellington, under the provisions of section 23 of the Act mentioned and heard at the end off May, 1924, by a Magistrate, who on the 24th of October, 1924, confirmed the assessment 'that had been made by the Commissioner off Taxes. Then on 2CLst November, 1924, notice off appeal was filed and the question of law for determination of the Court was whether on the facts as they should'be determined by the Supreme Court, Doughty was assessable in any and in -what respect for income tax on the sale of the business of George and Doughty to the company called George and Doughty, Ltd., pursuant to agreement which was exhibited in Court, lhe present respondent William Richard Doughty was carrying on business in Wellington and elsewhere, as a wholesale soft goods merchant and Draper in partnerships.with Arthur John George. Respondent and partner agreed to sell their business to a company named George and Doughty, Ltd., as a going concern with goodwill, etc., at a price off £58,383 6s lOd which was paid in cash and fully paid up shares, the shares being supposed to be at their face value. Respondent was then assessed by appellant for income tax 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 of such stock in trade. The respondent objected to tliis assessment and .appealed ,to the Supreme Court. Appellant, contended that the difference between the price £43,357 15s 10d and £58,383 6s lOd was profit or gain which was assessable for income tax. The Chief Justice, Sir Robert Stout, decided the transaction was not gain from the sale of goods ‘nor profit derived from the business. 'lt was as was said in an Australian case, Commissioner of Taxes of Western Australia versus Newman, putting an end to a business. The Supreme Court held it must follow the decision in the Australian case and disallow the magistrate’s assessment. Against this the Commissioner of Taxes is now appealing.