Précis of Decision.

The members of the Association were
individuals and bodies concerned with or
interested in the study and practice of
music and in the promotion and pursuit
of education and the arts. Among its
other activities, the Association organ-
ised annually a competition festival at
which choirs and individual singers
(who paid a small entrance fee) competed
for trophies, diplomas and certificates,
their efforts being judged by professional
musicians who were paid for their
services. The greater part of the
Association's income was derived from
members' subscriptions and sums paid
by the public for admission to the
festival, and the whole of the income
was devoted exclusively to the objects
of the Association. Held (i) that the
Association was a body established for
charitable purposes only within the
meaning of section 37 (1) (b) of the
Income Tax Act, 1918, and (ii) that it
carried on a trade the work in con-
nection with which was mainly carried
on by beneficiaries of the charity within
the meaning of section 30 (1) (c) of the
Finance Act, 1921.

1926.

30th June,
1926.

(First Division)

King's 10 T.C. 758.
Bench
Division.

Court of Appeal.

42 T.L.R. 685.

It is competent for the Commissioners of | 28th June,
Inland Revenue to accept an undertaking
to pay a sum in composition for penalties
incurred under the Income Tax Acts, |
including amounts in respect of lost
Income Tax and interest thereon,
although proceedings have not been
commenced for recovery of the penalties.
Income Tax was rightly deducted from
certain awards made to an inventor by
the Royal Commission on Awards to
Inventors in respect of the user by the
Government of his invention.
The director of a private limited company 30th June, Court
was held to be assessable to Income Tax
under Schedule E, and not under
Schedule D, for years prior to the
Finance Act, 1922, as holding a public
office or employment of profit, the
assessments for the years in question
having been properly made by virtue
of Section 18, Subsections (1) and (6)
of the said Act.

An Association was incorporated as a
company limited by guarantee-with-
out shareholders-for the purposes of
indemnifying its members (who were all
coal owners) and its members only,
against liability for compensation in
respect of fatal accidents to workmen
in their employment. The funds of the
Association, including a reserve fund,
were built up from calls made upon its
members in proportion to the wages
respectively paid by them, and on the
winding-up of the company or his own
retirement the share of a member in the
reserve fund, proportionate to his con-
tributions, would be returnable to him
wholly or in part. Held (1) that the i
payments made to the Association by
members were entirely premiums of
insurance, and were admissible deduc-
tions in computing members' profits
for assessment to Income Tax, not-
withstanding that such payments were
partly applied in accumulating a fund
which might in certain events be return-
able to them wholly or in part, and (2)
that the surplus of the Association's
income from calls on its members and
from its investments over its expendi-
ture in meeting claims and re-insuring
its risks did not constitute profits
arising from a trade carried on by the
Association, and that it was not liable
to Income Tax in respect thereof.

1926.

of

Appeal.

95 L.J.K.B. 959.

6th July,
1926.

Court
of

[1927] 1 K.B.

33.

Appeal.

1

In re Lang Propeller, The Crown is not entitled, in the winding, 6th July,
Ltd.

up of a company, to be paid in priority
to the other debts of the company (under
Section 209 (1) of the Companies (Con-
solidation) Act, 1908, or otherwise)
Income Tax deducted by the company
under Rule 21 of the General Rules,
Income Tax Act, 1918, from mortgage
interest not paid out of profits or gains
brought into charge.

1926.

Nielsen Andersen &

Co. v. Collins (H.M. Inspector of Taxes). Tarn v. Scanlan (H.M. Inspector of Taxes).

Two English companies of general shipping
agents acted as agents at Newcastle
and Hull respectively for a Danish
steamship company running a regular
service between England and Denmark
in conjunction with other companies.
The agents quoted rates for freight,
accepted goods from English consignors
for shipment to Danish ports, and put
the goods on board. No written con-
tracts were usually entered into prior
to the bills of lading which were signed
"for the master" by an employee of
the agents lent to the master for the
purpose. The agents collected the
freights on outward traffic and on
inward traffic where not paid in Den-
mark. Held (i) that the Danish
company was exercising a trade within
the United Kingdom to the extent to
which goods were taken on board its
ships here; (ii) that the English com-
panies at Newcastle and Hull must
be regarded as authorised persons
carrying on its regular agency, and as
having the receipt of the profits arising
from such trade; and (iii) that the
Danish Company was assessable to
Income Tax in the names of the said
agents in respect of the profits resulting
from cargoes shipped from this country
through the agents (a) as regards years
prior to the 6th April, 1915, so far as
the agents received the freights, and
(b) subsequently, whether the agents
received the freights or not.

Levene v. Commissioners of Inland Revenue.

In March, 1918, a British subject sur-
rendered the lease, which he had held,
of a house in London and sold his
furniture. Thereafter he had no fixed
abode and stayed in hotels in Great
Britain or abroad. In December, 1919,
he went abroad until July, 1920, and
subsequently spent four or five months
each year in the United Kingdom for
domestic reasons and to take part in
certain Jewish religious observances
and to deal with his Income Tax
affairs. In January, 1925, he leased a
flat abroad and expected to continue
to visit the United Kingdom each year.
Held that he was chargeable to Income
Tax from 1920-21 to 1924-25 as a
person resident and ordinarily resident
in the United Kingdom.

William H. Muller &
Co. (London), Ltd.
v. Lethem (H.M.
Inspector of Taxes).

A British company was appointed to be
London agent for a line of steamships,
trading between London and Rotterdam,
by the Dutch firm who were the
managers and agents of the two Dutch
ship-owning companies whose vessels
constituted the line. The British
company did everything that was
required to be done in connection with
the line in London, selling tickets to
passengers, accepting and delivering
goods, and collecting freights if shipped
c.i.f. in London or f.o.b. in Rotterdam.
It received its remuneration and all
instructions from the Dutch firm to
whom it accounted for such freights
and fares as it collected. Held that the
two Dutch ship-owning companies were
carrying on trade in the United Kingdom
through the British company as their
agent, and that they were assessable
to Income Tax in the name of that
company in respect of the profits
derived from all contracts made in the
United Kingdom for the carriage of
goods and passengers, except contracts
made with non-residents by the Dutch
companies through the agency of the
British company where such profits
were not received by the British
company.

1st Nov.,
1926.

1927.

On an appeal by a limited company against
an estimated additional Schedule D
assessment the General Commissioners
issued a precept requiring production 24th Jan.,
of, inter alia, the private bank books
of each of the six shareholders. The
company refused to comply with
the precept as being ultra vires. Evi-
dence was given by the company's
accountants to the effect that the
accounts upon which the first assessment
had been made were in accordance
with the books, but no evidence was
tendered as to the correctness of the
books. The Commissioners, not being
satisfied on the evidence offered by the
company that the assessment was
excessive, dismissed the appeal. A
case having been stated, the Appellants
were not satisfied that the case as
stated correctly raised the points of law
involved, and they applied by summons
for an order to remit the case to the
General Commissioners for specific
amendment. No order was made in
the King's Bench Division, but leave
to appeal was given. Held in the
Court of Appeal, dismissing the appeal
against the refusal to make the Order,
that the onus lay on the Appellants
to satisfy the Commissioners by evidence
that the assessment was excessive, that
not being so satisfied on the evidence
before them the Commissioners were
justified in confirming the assessment,
and that the case as stated adequately
set out the questions involved.

A company held two-thirds of the shares
in a subsidiary company which was
formed to act as buying agent for the
parent company. The subsidiary com-
pany went into liquidation and the
parent company had to pay £8,000 as
its share of the uncalled capital. Held
that the parent company was not entitled
to deduct the £8,000 in computing its
liability to Income Tax.

2nd Nov.,
1926.

King's 11 T.C. 221.

Bench I

Division.

Alabama Coal, Iron, Land & Colonisation Co., Ltd. v. Mylam (H.M. Inspector of Taxes).

Daphne v. Shaw(H.M.
Inspectorof Taxes).

Thomas Borthwick &
Sons, Ltd. v. Nolder
(H.M. Inspector of
Taxes).

Michael Faraday,
Rodgers & Eller v.
Carter (H.M. In-
spector of Taxes).

The Birkenhead School
Ltd. v. Dring (H.M.
Inspector of Taxes).

(29598)

The executors of a will were directed to
pay over the residue of the testator's
estate to the Governors of London
Hospital who were directed by the will
to hold such residue and to apply the
income thereof for the benefit of a
charitable society. Held that certain
payments made by the executors to
the society out of the income of the
testator's estate which had accrued
before the residue had been ascertained
was not income of the society in respect
of which it could claim exemption from
Income Tax.

A State having defaulted in respect of a
loan transferred lands to trustees for
the benefit of bondholders who sur-
rendered their rights. A company was
formed to establish itself as the repre-
sentative of all such bondholders, and
to raise money in order to put their
interests into marketable form. Of the
company's capital issued for cash 56
percent. was subscribed by bondholders.
The company proceeded to dispose of
lands, purchasing other lands where
necessary to develop the trust property.
Held that the company was carrying
on a trade and not merely realising
capital assets.

A solicitor was held not to be entitled to
a deduction, in computing his Income
Tax liability, in respect of wear and
tear or obsolescence of books forming
part of his law library, such books not
being machinery or plant.

From 1905 to 1920 inclusive a company
had made up its accounts to 30th
September each year. Accounts were
then made up for 11 months to 31st
August, 1921, and for 7 months to
31st March, 1922. For 1922-23 the
company was assessed on the average,
profits of the three years ended 30th
September, 1921, i.e., the profits of the
2 years to 30th September, 1920, of the
11 months to 31st August, 1921, and
one-seventh of the profits of the 7
months to 31st March, 1922. Held |
that the assessment was correct, the
30th September being properly taken
as the date to which the accounts had
usually been made up.

The General Commissioners having come
to certain conclusions on the question
of the date of dissolution of a partner-
ship and of the succession to the busi-
ness, the Court held that there was
evidence on which the Commissioners
could come to their conclusions, and
that their findings could not be disturbed.

4th Nov.,

1926.

King's
Bench
Division.

43 T.L.R. 23.

A secondary school of about 450 boys was 12th Nov.,
owned and carried on by a limited 1926.
company, the governing body con- |
sisting of not more than fourteen
governors elected by the shareholders,
with three governors nominated by the
Crown. All the governors were directors
of the company. By the articles of
association shareholders could not
receive any dividend or profit, but
shares changed hands frequently
because extra fees were charged for
boys who were sons of non-shareholders
or were not nominated by a share-
holder. Practically the whole of the
company's receipts arose from fees
paid for pupils. Held that the company
was not exempt from tax under Schedule
A as a public school.

King's 43 T.L.R. 48.
Bench
Division.

C

Name of Case.

Précis of Decision.

Date
of
Judgment.

Court.

Where reported.

Huxham (H.M. Inspector of Taxes) v. Johnson.

Commissioners of In

land Revenue v. The
Trustees of the
Roberts Marine
Mansions.

The Respondent was tenant of a farm
and kept cows thereon, selling the
milk in small quantities and disposing
of the cows at a loss as they became
dry. Owing to the poor quality of
the soil, it was not possible to grow
sufficient food for the cows and feeding
stuffs had to be purchased to the extent
of about 70 per cent. of the total cost
of feed. Held that the Respondent
was a seller of milk within the meaning
of Rule 4 of Case III of Schedule D;
that the lands were insufficient for
the keep of the cattle, but that it was
necessary to remit the case to the
Commissioners to determine a further
question of fact, namely, whether the
annual value of the land afforded a
just estimate of the profits.

Certain property and investments were
conveyed to trustees to establish and
maintain a home for persons engaged
in certain trades who required a rest
for the benefit of their health, the fees
payable being as small as possible
consistently with proper management.
The trustees had power to reduce or
dispense with fees in individual cases.
Held, in the Court of Appeal, reversing
the decision in the King's Bench
Division, that the trust was established
for charitable purposes only and was
entitled to exemption from tax in
respect of its investment income and
in respect of property owned and
occupied by it.

Lysaght v. Commissioners of Inland Revenue.

Todd (H.M. Inspector of Taxes) v. Egyptian Delta Land & Investment Co., Ltd.

17th Nov.,

1926.

In 1919 the managing director of a British
company partially retired but retained
the post of advisory director at a yearly
salary of £1,500. He sold his English 11th Mar.,
residence and in 1920 he went to live 1927.
with his family in Ireland. He subse-
quently paid monthly visits to England
for the purpose of attending directors'
meetings, and remained in the country
about seven days on each occasion,
usually staying at hotels. During the
years 1922-23 and 1923-24 he made
several extensive trips abroad on com-
pany's business but otherwise lived in
Ireland. Held in the Court of Appeal,
reversing the decision in the King's
Bench Division. that the appellant
was neither resident nor ordinarily
resident in the United Kingdom in
the years in question.

1926.

1927.

43 T.L.R. 70.

Bench
Division.
Court
of
Appeal.

43 T.L.R. 275

A company incorporated in England under 23rd Nov., King's
the Companies Acts for the purpose
of developing land in Egypt was con-
trolled and managed in Egypt. The 18th Feb.,
directors and Secretary General resided
in Cairo, where the company's seal,
books and banking account were kept
and where all shareholders' and directors
meetings were held. To comply with
the statutory requirements of the Com-
panies Acts a London Secretary was
appointed who made the necessary
Returns to the Registrar and provided
the company with a Registered Office
at his own business address in London
where the registers of members, direc-
tors, etc., were kept. Held that the
company was resident in the United
Kingdom.