CATCHWORDS: Taxation - Appeal from Administrative Appeals Tribunal - Whether, on the facts as found by the Tribunal, proceeds from the sale of certain lots of land were assessable income of the Respondent - Whitfords Beach Case distinguished - Whether the Tribunal failed to take into account in its deliberations facts material to its decision - Consideration of the obligation placed upon the Tribunal pursuant to s 413(2B) of the Administrative Appeals Tribunal Act, 1975 - Whether the Tribuna ad misdirected itse in Taw in failing to take into account certain passages of the Myer Emporium Case - Whether the Myer Emporium Case introduced a new category of "income" for consideration — Appeal dismissed. Income Tax Asessment Act, 1936 s. 43 Administrative Appeals Tribunal Act, 1975 Blackwood Hodge (Aust) Pty. Ltd. v. Collector of Customs N.S.W. No. 2 (1983) A.L.D. 35. F.C.T. v. The Myer Emporium Ltd., 87 A.T.C. 4363. Bisle Investmen or & Anor. v. Australian Broadcasting Tribunal & Anor. (ISEz} 4 A.L.R. 233 F.C.T. v. Whittords Beach Pty. Ltd. (1982) 150 C.L.R. 355. COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA v. CLAU: INERO No. G457 of 1987 CORAM ; M. L. FOSTER, J. DATE: 10 MAY, 1988. PLACE: SYDNEY. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION BETWEEN: i CORAM: FOSTER, J. DATE: 10 MAY, 1988. PLACE: SYDNEY. ) No. G457 of 1987 COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Applicant CLAUDE CAINERO Respondent MINUTES OF ORDER THE COURT ORDERS THAT:- 1. The appeal is dismissed. 2. Applicant to pay the respondent's costs. IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G457 of 1987 ) GENERAL DIVISION ) BETWEEN: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Applicant AND: CLAUDE CAINERO Respondent CORAM: FOSTER, J. DATE: TUESDAY, 10 MAY, 1988. PLACE: SYDNEY. REASONS FOR JUDGMENT HIS HONOUR: This is an appeal from the decision of the Taxation Appeals Division of the Administrative Appeals Tribunal, constituted by Mr. P. M. Roach (Senior Member), ("the Tribunal"). The decision, given on the 24th of August, 1987, altered previous decisions of the applicant, the Commissioner of Taxation of the Commonwealth of Australia, dated the 28th July, 1977 and the 2nd of April, 1986, by allowing the respondent's objections to assessments for the income years ending 30th June, 1970; 30th June, 1973; 30th June, 1974; and 30th June, 1984. The objections to the assessments for these years had been directed to the applicant's inclusion in the assessable income of the respondent, of the proceeds of sale of certain lots of land owned by the applicant in the Armidale area in the State of New South Wales. The applicant had included the amounts of these proceeds on the basis that they were assessable under s. 25(1) or under either of the limbs of s. 26(a) of the Income Tax Assessment Act, 1936 ("the Act"). The respondent had disputed their inclusion, claiming that the sales were no more than the realisation of capital assets and asserting that the relevant land had not been acquired for the dominant purpose of profit-making by sale, nor sold in the process of carrying on or carrying out any profitmaking undertaking or scheme. He also denied that the sales took place in the course of his carrying out the business activity of land development. After a hearing occupying seven days, the Tribunal decided in favour of the respondent. It varied the decisions of the applicant by allowing in full the objections of the respondent. In allowing the respondent's objections, the Tribunal exercised its powers under s. 43 of the Administrative Appeals Tribunal Act, 1975 ("the A.A.T. Act") and reviewed on the merits the applicant's decisions disallowing the objections. It gave lengthy reasons in writing for its decision that the objections should be upheld. In so doing, it came under the obligation imposed by s. 43(2)(B) of the A.A.T. Act to include in those written reasons:- "Its findings on material questions of fact and a reference to the evidence or other material on which those findings are based." The applicant brings its appeal to this Court under s. 44 of the A.A.T. Act which provides:- "s. 44(1) A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding." It is clear that the right of appeal so constituted is more limited in character than the right, previously given, of appeal to a State Supreme Court under s. 196 of the Act. Under that section, the whole decision of a Board of Review could be made the subject of an appeal to a Supreme Court provided that the decision involved a question of law. Under s. 44(1) of the A.A.T. Act, however, as held in F.C.T. v. Brixius (1987) 2 A.T.C. 4963, a question of law constitutes the sole subject matter of an appeal from the Tribunal under the section. (See also per Pincus, J. Memorex Pty. Ltd. v. F.C.T., 87 A.T.C. 5034 at 5045). In its first Notice of Appeal, the applicant sought to raise, as a question of law, "Whether the receipts from land sales in the relevant years of income were assessable under s. 25(1) and/or s. 26(a) or 25A of the Income Tax Assessment Act, 1946." Quite clearly, this statement raised no pure question of law justiciable under s. 44(1) of the A.A.T. Act. The Notice of Appeal, however, contained, in the usual way, a 4. statement of grounds in support of the question of law sought to be argued. The following grounds might be thought to raise a question of law:- "4. (a) (i) The Tribunal erred in law in not holding on its findings of fact that the respondent was carrying on a business of dealing in land. (b) (i) The Tribunal erred in law in not holding on its findings of fact that the receipts in the relevant years of income were income within ordinary concepts and usages and thus assessable within Section 25(1) of the Act. (c) (i) The Tribunal erred in law in not holding on its finding of fact that the profits were assessable under ss. 26(a) or 25A of the Act." These grounds would appear to amount to an assertion that the Tribunal's findings of fact impelled, as a matter of law, an ultimate finding that the receipts in question were assessable income under ordinary concepts or under the specific sections of the Act referred to. In other words, that no other result was legally available. However, when the matter came on for hearing, the applicant, by consent, substituted an amended Notice of Appeal which sought to put the matter in a quite different way. Under this amended notice, the following questions of law were raised:- "(a) Whether, in making an ultimate finding of fact that the Respondent did not have a dominant purpose of profit-making by sale, the Tribunal failed to make findings of primary fact as to the Respondent's dominant purpose of acquisition and thereby failed to take account of material facts or misunderstood the law in some relevant particular S. as regards to the first limb of Section 26(a) of the Income Tax Assessment Act, 1936 ("the Act"). (b) Whether, in making an ultimate finding of fact that the lands were acquired as capital assets: not assets to be considered in the way of trading stock or as acquisitions made for the dominant purpose of being resold at a profit, the Tribunal misunderstood the law in some relevant particular as regards Section 25 and the first and second limbs of Section 26(a) of the Act. (c) Whether, in making an ultimate finding of fact that there was a mere realization of an asset, the Tribunal misunderstood the law in some relevant particular as regards Section 25 and the second limb of Section 26(a) of the Act." The supporting grounds were stated as follows:- "(a) The Tribunal erred in law in failing to make findings of primary fact from which the Respondent's dominant purpose of acquisition of the land might be inferred. (b) The Tribunal erred in law in failing to decide whether the profit or gain upon sale of the land was made in the ordinary course of carrying on a business of land development or 1f made otherwise than in the ordinary course of such a business, 1t nevertheless arose from a transaction entered into by the Respondent with the intention or purpose of making a profit or gain. (c) The Tribunal erred in law in failing to make findings of primary fact from which the ultimate fact whether the sale of the land was a mere realization of an asset might be inferred. (d) The Tribunal erred in law in failing to treat the primary facts that the sales occurred as they did; in the parcels they did; at the times they did; with the frequency they did; and with such re-zoning as proceeded and road developments as attended them as material facts from which the ultimate fact that there was no mere realization of an asset might be inferred." During the course of the hearing, leave was sought and granted to substitute the word "should" for the word "might" in the last sentence of ground (d). It appears that ground (a) relates to question of law (a), aS does ground (c) to question of law (c). It appears that ground (b) relates to questions of law (b) and (c). However, in argument, it became clear that the point of law involved was simply whether the Tribunal in approaching the matters set out in those paragraphs, had misdirected itself in law in failing to take into account certain passages in the judgment of the High Court in F.C.T. v. The Myer Emporium Limited, 87 A.T.C. 4363, to which I shall make reference later. Ground (b), ain affect, sets out the substance of that passage and asserts that it introduces into the concept of "income" at general law, a new category for consideration, with the result that if it be not taken into account, error of law is committed. It was conceded that no submission based upon Myer's Case was made to the Tribunal. It appears that ground (d), as ultimately stated, amounts to a contention that, on the facts as found by the Tribunal, it was impelled to hold that, as a matter of law, the receipts in question were income under general concepts or under the specific sections of the Act. As such, it would appear to be a restatement in compendious form of the grounds, already referred to, in the abandoned notice of appeal. It is convenient to deal with the questions raised by grounds (a) and (c) together. 7. The applicant's submissions, in respect of these grounds, were based firstly upon the Tribunal's obligations under s. 43(2)(B) referred to above. It was put that the Tribunal failed to make appropriate findings of primary fact upon which it based its findings of ultimate fact that the respondent did not have the necessary dominant purpose of resale at a profit or of conducting a business of land development or a profit-making undertaking or scheme. Clearly enough, 1f the Tribunal failed to take into account in its deliberations facts material to its decision, it would have committed an error of law (Sullivan v. Department of Transport, (1978) 2 A.L.D. 383 at 408-409 and 412-413; Waterford v. Commonwealth of Australia (1987) 71 A.L.R. 673 at 689). The applicant founds an assertion that the Tribunal failed to take into account material facts by pointing to an alleged failure on its part to comply with the requirements of s. 43(2)(b). It is put, for example, that in coming to an ultimate finding of fact that the Respondent in acquiring the relevant lands did not have the necessary purpose of profit-making by sale, the Tribunal did not make findings of primary fact rendered necessary by the evidence. Such findings, it was submitted, should have related to areas of fact involving the making of subdivision applications to the local council, entering into arrangements for the construction of sub-divisional roads and the like. It is put that because such matters were not made the subject of specific findings in the Tribunal's reasons, it must necessarily be inferred that no findings were made, with the result that the ultimate findings of fact could not be said to be properly based in law. Before considering further these grounds of appeal, it 18 appropriate that I make reference to decided cases in relation to the operation of s. 43(2)(B). In Bisle Investment Corp. & Anor. v. Australian Broadcasting Tribunal & Anor. (1982) 40 A.L.R. 233, Lockhart J. said (at p. 251) in relation to the reasons of the Tribunal which were under consideration in that case:- "I do not accept that the only reasons of the Tribunal for its decision are to be found in those passages; but I agree that they encompass the principal conclusions of the Tribunal. It is for the appellants to satisfy this court that the Tribunal erred in law. There is no presumption that the Tribunal has failed to discharge its duty under s. 43(2). It is true that in the course of its lengthy reasons for decision the Tribunal did not say expressly that it made particular findings of fact; but it referred to many matters of fact relevant to the issues before it. Plainly the Tribunal regarded these matters as relevant and material; otherwise it is difficult, if not impossible, to conceive why any reference was made to them at all. We were referred to no case where it has been held that an administrative tribunal has overlooked or treated as irrelevant or immaterial matters expressly referred to in its reasons for decision and not there expressly stated to have been treated as irrelevant or immaterial. A reading of the reasons of the Tribunal as a whole establishes to my satisfaction that the matters of fact referred to by it in those reasons were considered by it to be both relevant and material. I do not propose to refer to these matters of fact or to summarise them. They were fully canvassed in argument and were summarised by the respondent in written submissions. I am satisfied that the Tribunal's reasons do include findings on material questions of fact and a reference to the evidence on which the findings were based." Quite clearly, in Bisley, the Full Court (Lockhart, Sheppard and Morling, JJ) were of the view that s. 43(2)(B) imposed no requirement upon the Tribunal in its statement of reasons to refer specifically to all findings of fact made by it. It was obviously regarded as sufficient if such findings could reasonably be inferred from the Tribunal's statement of reasons in the context in which they were given. As Sheppard, J. said (at p. 255):- "The section does not impose upon the Tribunal, which is often composed of members who are not trained in the law, any standard of perfection. I consider the provisions of the section to be directory rather than mandatory. Substantial compliance is what is required and clearly that is here present." In Blackwood Hodge (Aust.) Pty. Ltd. v. Collector of Customs N.S.W. No. 2 (1983) A.L.D. 38, a decision of the Full Court of the Federal Court, Fisher, J. said (at p. 49), in relation to a decision of the Administrative Appeals Tribunal telating to Customs Tariff 1966 Schedule 1, as follows:- "It is my firm view that this court when hearing appeals from a Tribunal constituted for the purpose of reviewing decisions of this nature, should adopt a restrained approach. Parliament contemplated that only in exceptional circumstances should the decision of the Tribunal not be the final decision. This does not mean that when an error of law is identified, the court should be reluctant to intervene. In fact, it 18 under a duty to do so. Rather it should heed the comments of Davies L.J. (as he then was) in R. v. Industrial Injuries Commissioner; Ex parte Amalgamated Engineering Union (No. 2) [1966] 2 Q.B. 31 at 50: "I should like to echo the words of my Lord, Lord Denning, M.R., in saying that I deprecate the practice, and hope it would not continue, of 10. attempting to magnify or inflate questions of fact into questions of law and of trying to obtain decisions from the courts on matters which the legislature would appear to have thought suitable for decision by the various bodies and authorities set up under the Act of 1946." As Lord Radcliffe said in Edwards v. Bairstow, supra, at 38: "... by the system that has been set up the commissioners are the first tribunal to try an appeal, and in the interests of the efficient administration of justice their decisions can only be upset on appeal if they have been positively wrong in law. The court is not a second opinion, where there is reasonable ground for the first." (See also Steed v. Minister for Immigration 4 A.C.D. 126 at 127). In reading and considering the Tribunal's extensive reasons in this matter, it is necessary to keep firmly in mind these principles. The hearing, apparently, occupied some seven hearing days. The respondent was extensively and comprehensively cross-examined as to his purposes at relevant times and as to activities undertaken by him on and in relation to the relevant lands. There was considerable reference to sub-divisional activities and relevant applications to council. It is clear that a great deal of cross-examination was directed to the respondent's credit, particularly as to his assertions that he had no dominant purpose of profit-making 1n relation to sales of allotments from the various areas that he acquired over a lengthy period of time. Quite obviously, extensive efforts were made to examine the potential connection between the acquisition of the relevant areas of land, their sub-division into saleable lots, their use in rural enterprises by the respondent and also their use for speculative building enterprises. When it is borne in mind that the respondent's ii. purchases of land in the Armidale area commenced as early as 1966 and continued until 1973, and that over the period of eighteen years only some forty six blocks were in fact sold, it will readily be appreciated that a multitude of factual issues bearing not only upon matters of substance but also upon matters of credit, necessarily arose. It is plain that all such issues were the subject of extensive argument in address. It is not suggested by counsel for the appellant that the Tribunal did not properly and fairly listen to and consider all submissions of fact. His complaint is that many factual issues, some of which were said to have borne upon the credit of the respondent, were not 1rsolated in the Tribunal's reasons and dealt with specfically. It is proper to record that I was asked by counsel, in the presentation of his argument, to engage in a very extensive consideration of the evidence, oral and documentary, before the Tribunal, with a view to counsel advancing his submissions that the Tribunal must have failed to take into account major factual arguments advanced by counsel, it being contended, apparently, that these arguments were of such a compelling nature that the absence of any specific recognition of them in the judgment, must indicate an appellable failure to advert to them. I refused to embark upon this course. I took the view then and now that to do so would necessarily have involved a re-examination of the facts to an extent which would be quite incompatible with an appeal which was specifically restricted only to questions of law. 12. It could not be suggested that the Tribunal was under any obligation to isolate in its reasons every issue of fact and record a specific finding in respect of each of them. It is obviously sufficient, in light of the cases referred to above, and as a matter of commonsense, that a sufficient compliance with the requirement of considering all issues of fact and giving adequate reasons occurs when the reasons themselves provide a sufficient indication that the ultimate facts to be decided have been fully kept in mind and that no significant area of primary fact has been ignored. I am satisfied that the reasons for judgment given by the Tribunal demonstrate no appellable defect in this regard. Thus, at page 778, the Tribunal before embarking upon the task of setting out the history of events in a time span of some twenty years, stated:- "I will set out the facts as I find them to be having considered all of the evidence presented before me..." The complaint was made that in the material that followed, it was not possible to determine whether, at times, the Tribunal was indicating findings of fact or merely setting out the respondent's assertions. In support of this submission it was pointed out that at times in the reasons, which covered over fifty pages, the Tribunal made specific findings as to the acceptance or mnon-acceptance of certain parts of the respondent's case. I do not accept that the existence of these parts of the reasons must lead to conclusion that the other and 13. vastly greater parts of the judgment do not indicate "findings". I consider that the only reasonable reading of the reasons, especially in light of the opening words quoted above, 1s that they are intended to set out, broadly, the version of fact accepted by the Tribunal. Nothing is to be gained by my setting out, even in summary form, the events recounted in the Tribunal's reasons. They record the acquisition of various areas of land at various times, subdivisional activity in relation to those lands, intentions which varied from time to time on the part of the respondent as to the building of a home on portions of the land, the selling of allotments in order to raise money to pay for the acquisition of larger areas or 1n some cases to provide for the cost of the construction of houses to be sold so that the monies could be put to other purposes. At the conclusion of an extensive review of this factual material, the Tribunal set out in the form of a schedule the areas of land, their dates of purchase, and the dates of sale of allotments from these areas with an indication as to which sales were or were not in dispute in the proceedings. The Tribunal also reviewed extensively the use of the land for rural purposes, indicating that significant use had been made of large portions of 1t for the setting up and conducting of a stud cattle breeding enterprise. In his reasons, the Tribunal divided up the lands acquired by the appellant into seven areas, in order of their 14. acquisition. Towards the end of his reasons, the Tribunal made the following observations:- ""(a) That the only sales in dispute relate to Areas 1, 2, 3 and 5, (b) That Area 1 was acquired before the 30th June, 1966; that Areas 2 and 3 were acquired before 30th June, 1967; that Area 5 was acquired before 30th June, 1972. (c) That none of the disputed sales relate to Area 4 acquired before 30th June, 1968. (d) That the profit on sale of seven of the eight residential lots developed out of the two acre portion of Area 1 zoned residential were returned by the Applicant and taxed, despite the assertion that his intention at time of acquisition had been to sell only two such allotments. (e) That the sale of those allotments extended over the years of income ended 30th June, 1969 to 1972 inclusive. (£) That the earliest sale to give rise to any dispute was that relating to Lot 2 (the Applicant's home) sold in the year ended 30th June, 1970. (g) That sales from the rear five acres of Area 1 (purchased June, 1966) did not commence until year ended 30th June, 1973 and did not occur until year ended 30th June, 1984. (h) The first sale from Area 2 (purchased August, 1966) did not occur until the year ended 30th June, 1977. {i) That to 30th June, 1986 only nine residential losts had been sold from the sixteen acres comprising Area 2. (j) That no portion of either Area 3 or Area 5 was sold until year ended 30th June, 1980 when the Church site was sold. (k) That the bulk of Areas 2 and 3; some of Area 5; and all of Areas 4, 6 and 7 remained on hand at 30th June, 1987." The sale of land for a church site referred to in (j) had been the subject of consideration earlier in the reasons. 15. The Tribunal then turned to a consideration of the "Conclusions" to be drawn from a consideration of the material. It is convenient to set out the whole of this part of the Tribunal's reasons for judgment:- "64. I first address the question as to whether any of the profits in issue constituted "profit arising from the sale by the taxpayer of any property acquired by him for the purpose of profit making by sale ...?". If the evidence leads me to the conclusion as a matter of fact that at the time of acquisition the taxpayer did intend to sell the property acquired; did intend to sell the property at a profit; and that those findings constituted the dominant purpose of the taxpayer in relation to the acquisition at the time of acquisition; and that in the years in question there have been sales of some of the property so acquired which has reulted in a profit, then the objections of the Applicant will fail. Conversely, if the evidence leads to a conclusion that one of those elements was not the fact, then, subject to Section 190 (a) of the Act, the taxpayer will be entitled to succeed. If there is no basis at all for any finding as to the taxpayer's purpose, or 1f the evidence of the taxpayer's purpose is such that I am not persuaded one way rather than the other as to those matters on the balance of probabilities, then the Applicant has failed to discharge the burden of proof and for that reason his objections will fail. 65. Having considered the whole of the evidence and the many criticisms of it which can be and have been expressed by Counsel for the Commissioner I am nonetheless persuaded on the balance of probabilities that at the time of acquisition of the parcels in question (Areas 1 - as to the rear 5 acres; 2; 3; and 5) the Applicant did not have a dominant purpose of profit-making by sale. In reaching the conclusion I have applied the principles I expressed in Case S 79: 85 A.T.C. 577 @ 582 ff. 66. The next question to be addressed is whether the profits derived upon the sale of the lands in question constitute assessable income either by reason of them having constituted "profit arising ... from the carrying on or carrying out of any profit making undertaking or scheme" within the meaning of Section 26 (a) of the Act, or simply as constituting assessable income within the meaning of Section 25 of the Act. In my view the answer 15s 16. "no". Having carefully considered all of the evidence I am satisfied that the lands were acquired as capital assets: not as assets to be considered in the way of trading stock or as acquisitions made for the dominant purpose of being re-sold at a profit. That being so, had the Applicant at any time after 30th June, 1966 sold in a single parcel all of the lands included in Areas 1* to 5 (with the exception of some or all of the front 2 areas of Area 1) the transaction would have wholly been of capital. That being so the question which then arises is whether the circumstance that sales occurred as they did; in the parcels they did; at the times they did; in the number they did; with the frequency they did; and with such re-zoning as preceded and road developments as attended them is sufficient to alter the character of what was done so as to constitute it as no longer "the mere realisation of a capital asset" (cf. Scottish Australia Mining co. Ltd. v. F.C.T. (1950) 81 C.L.R. 188; McClelland v. F.C.T. (1970) 120 C.L.R. 487; Steinberg v. F.C.T. (1975) 134 C.L.R. 640; and F.C.T. v. Whitford's Beach Pty. Ltd. (1982) 150 C.L.R. 355). In my view the answer if "no". Just as the substantial profit on the sale of Acacia Hills in 2 parcels constituted a gain otherwise then by way of assessable income, so too the gains realised by the sales in question did not constitute assessable income. 67. Accordingly, the determination of the Commissioner upon the objections should be varied and the objections wholly allowed." The reference to "Acacia Hills" was to a large property purchased by the respondent upon which he ran, for some considerable time, the business of a cattle breeding stud. It is not suggested that, apart from the question raised in ground 4(b) of the Notice of Appeal, that there is any error of principle involved in the Tribunal's statement of the considerations of law set out in the above passage. I am satisfied that when these conclusions are read with the whole of the material appearing in the preceding pages of the Tribunal's reasons, and in the context that all questions of 17. primary fact were fully debated before him, that there has been substantial compliance with the requirements of s. 43(2)(B). I find that no error of law arising from a failure to take into account relevant material has been demonstrated. I therefore dismiss the appeal in respect of grounds 4(a) and (c). The error of law claimed to arise in terms of ground 4(d) was but faintly argued. For this claim to succeed, it 1s necessary that it be demonstrated that on the facts of the case there was no conclusion open but that the land sale profits were assessable income. Reliance was placed upon the decision of the High Court in F.C.T. v. Whitfords Beach Pty. Ltd., (1962) 150 C.L.R. 355. However, in my view, it 1s quite plain that the decision in that case does not impel, in any way, a like decision in the present case. The appellant was, in my view, quite unable to demonstrate that the present facts could be categorised a being so much on all fours with Whitford Beach as to take the land sales out of the description of the mere realisation of a capital asset into the area of a profit-making undertaking or scheme. I am satisfied that no error of law, in this regard, has been demonstrated in the Tribunal's reasoning. There remains the claim that the Tribunal committed an error of law by failing to make the decision referred to in ground 4(b). It was put that the decision of the High Court in F.c.T. v. The Myer Emporium Ltd. (1987) 2 A.T.C. 4363, necessarily required that, in the circumstances of the case, the Tribunal pose for its decision a question in these terms and that its failure to do so constituted an error of law. 18. It 18 quite clear, in my view, that the Tribunal did consider "Whether the profit or gain upon sale of the land was made in the ordinary course of carrying on a business of land development". It quite clearly decided to the contrary. The complaint is, it seems to me, that the Tribunal did not go further and ask whether the profits "If made otherwise than in the ordinary course of such a business nevertheless arose from a transaction entered into by the respondent with the intention or purpose of making a profit or gain." It did not become clear to me in the course of argument whether it was being asserted on the part of the appellant that Myer Emporium established some new principle in the ascertainment of whether a profit made upon the sale of an asset formed part of assessable income or whether it was being asserted merely that, because of certain passages in the judgments of the High Court, a decision-maker would necessarily misdirect himself if he did not formulate for himself a question in these precise terms. For the respondent, it was put that Myer Emporium could not be regarded as authority for any new principle couched in the terms stated. A principle so stated would, it was submitted run counter to many previous decisions on which the Courts had clearly held that transactions entered into by a taxpayer with the intention or purpose of making a profit or gain, amounted to nothing more than the mere realisation, albeit in a manner advantageous to the taxpayer, of a gain of a capital nature on disposed of capital asset (see e.g. Scottish Australian Mining Co. Ltd. v. F.C.T. (1950) 81 C.L.R. 188; 19. Steinberg v. F.C.T. (1975) 134 C.L.R. 640; F.C.T. v. Whitfords Beach Pty. Ltd. (1982) 150 C.L.R. 355). The passage in Myer Emporium which, the appellant relies upon in support of this ground, 1s in the judgment of their Honours (Mason, A.C.J., Wilson Brennan Deane & Dawson, JJ) (at p 4366), as follows:- "Although 1t 1s well settled that a profit or gain made in the ordinary course of carrying on a business constitutes income, it does not follow that a profit or gain made in a transaction entered into otherwise than in the ordinary course of carrying on the taxpayer's business is not income. Because a business 1S carried on with a view to profit, a gain made in the ordinary course of carrying on the business is invested with the profit-making purpose, thereby stamping the profit with the character of income. But a gain made otherwise than in the ordinary course of carrying on the business which nevertheless arises from a transaction entered into by the taxpayer with the intention or purpose of making a profit or gain may well constitute income. Whether it does depends very much on the circumstances of the case. Generally speaking, however, it may be said that if the circumstances are such as to give rise to the inference that the taxpayer's intention or purpose in entering into the transaction was to make a profit or gain, the profit or gain will be income, notwithstanding that the transaction was extraordinary judged by reference to the ordinary course of the taxpayer's business. Nor does the fact that a profit or gain is made as the result of an isolated venture or a "one-off" transaction preclude it from being properly characterized as income (F.C. of T. v. Whitfords Beach Pty. Ltd. 82 A.T.C. 4031 at pp. 4036-4037, 4042; (1982) 150 C.L.R. 355 at pp. 366-367, 376). The authorities establish that a profit or gain so made will constitute income if the property generating the profit or gain was acquired in a business operation or commercial transaction for the purpose of profit-making by the means giving rise to the profit." It is quite clear, in my view, that their Honours were not, in this passage, or elsewhere in their Honours' judgment, 20. seeking to reverse the long line of authority establishing that the mere realisation of a capital asset does not produce assessable income. This is amply demonstrated, in my opinion, from the following passage appearing at p. 4368:- "The proposition that a mere realization or change of investment is not income requires some elaboration. First, the emphasis is on the adjective "mere" (Whitfords Beach, at A.T.C. pp. 4046-4047; C.L.R. p. 383). Secondly, profits made on a realization or change of investments may constitute income if the investments were initially acquired as part of a business with the intention or purpose that they be realized subsequently in order to capture the profit arising from their expected increase in value - see the discussion by Gibbs, 3. in London Australia, at A.T.C. pp. 4403-4404; C.L.R. pp. 116-118. It is one thing if the decision to sell an asset is taken after its acquisition, there having been no intention or purpose at the time of acquisition of acquiring for the purpose of profit-making by sale. Then, if the asset be not a revenue asset on other grounds, the profit made is capital because it proceeds from a mere realization. But it is quite another thing if the decision to sell is taken by way of implementation of an intention or purpose, existing at the time of acquisition, of profit-making by sale, at least in the context of carrying on a business of carrying out a business operation or commercial transaction." In my respectful view, this passage makes it entirely clear that the High Court was not, in Myer Emporium, seeking to introduce some new concept of income into revenue law. The question of whether a profit on sale of an asset falls into the category of income or capital receipt, remains one of fact and degree depending upon the circumstances of each case. I am quite satisfied that the Tribunal was under no constraint to pose for itself a question in the terms set out in ground 4(b) and that, accordingly, the error of law claimed has not been demonstrated. 21. For these reasons, I would dismiss this appeal. in the circumstances, 1t 1S not necessary for me to consider the respondent's further submissions that, having regard to the inordinate delay which occurred between the requests for reference to a Board of Review of the matter of the respondent's objections and the time of their actual reference, relief should be refused to the appellant on the ground of abuse of process. I dismiss the appeal and order the applicant to pay the respondent's costs. I certify that this and the 20 preceding pages are a true copy of the reasons for judgment herein of his Honour, Mr. Justice M. L. Foster. Dated: ce) Mond, IABY. Associate: (fddue