UNKNOWN

Taranaki Daily News, Volume LIII, Issue 255, 5 January 1911, Page 2

UNKNOWN

ON A POINT OF LAW. By Telegraph.—Press Association. Wellington, Wednesday. Mr. Justice Cooper gave judgment today in the important income tax case Whiterock and Marainanga Estate Companies v. Commissioner of Taxes, claiming a refund of taxes allegedly overpaid. His Honor said this was an action brought to recover from the Commissioner £2050 paid under protest. Geo. D. Greenwood, of Canterbury, in ISJOi? agreed to purchase Whiterocks, Canterbury, from one Nicholls, for £75,000, and stock, etc., for £25,000. Half the purchase money of £IOO,OOO was paia off before it was determined to resell. Greenwood formed a private company with 35,000 shares, and took up all but two shares. The object of the company was to acquire Whiterocks and carry on tho sheep-farming business. Its real object, said Mr. Justice Cooper, was to enable Greenwood to avoid the higher rate for graduated land tax if Teviotdale, which he owned, and Whiterocks were both vested in him. The company then bought the adjoining property ot 558 acres at £0 per acre, and sold the whole of its property at a profit. The Commissioner of Taxes assessed income tax on that profit, and the company paid it under protest, and the Court was asked to decided whether the company was liable to be so assessed.

His Honor said the point of law was an extremely narrow one—was ihe principal business of the company that os dealing in land? In his opinion it was not. The sale of the estate was in the ordinary course of business, and tho purpose of the formation of the company was solely to avoid the graduated tax. Greenwood was a sheep fanner and a wealthy man, and there was-no indication that he was the class cf man hit at by the statute. The persons whom the Legislature intended to affect with liability were land speculators. Judgment was for plaintiffs for the amount claimed, with costs.