DAVIES & FEHON LTD. V. COMMISIONER OF TAXATION 36/1925

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eemnte as ee

ie : DAVIES & FEHON LTD.

i COMMISSIONSR OF TAKATLON

JUDGMENT. MR. JUSTICE ISAACS.

This is an income tax appeal by Davies and Fehon Limited against a federal assesament for 'inoone tax for the financial year ending June 30th., 1928, 'that is, in respect of income during the year beginning July lst., 1922 and ending June 350th., 1923.

The relevant Assessment Act is Ho. 37. of 1922, with applic-

able anendments.

The appeal comes pefore me under Seetion 51 A of the Ass- essment Act, by forces of Seation 16 of No. 28 'of 1925. The powers of the Court are very wide, extending even to the increase of the Assessment (eub-Seot ion 5). The appellant, however, is limited so far as his objection goes to the grounds stated

(sub-Section 3).

The only concrete matter remaining in issue is this:- Is the Company entitled to a deduction for the year in question of a sum of £12,698 as a bad debt ? _ :

The Commissioner has disallowed the whole of it, and the Company claims the whole of it.

The Company has the burden of establishing its right to all

or some of that amount as a stitutory deduction for bad debts.

The deduction is claimed primarily under Section 23 (1) (a)

as @ "loss not being in the nature of loss of capital."

(2)

And as it is claimed as a "bad debt", it must be shown to come within thé exception mentioned in Section 25 (g), namely, "proved to ba such to the satisfaction of the Commissioner and "to have been incurred in and actually written off by the tax-

"epayer in the year in which the income was derived."

The appellant contends that the whole of the sum of £12,698 ie

satisfies all those conditions. i

The appellant also urged before me that it hae alternatively a right under Section 26 to asduct the sum from the assessable income otherwise taxable, beoanse it was a loss in carrying on a business separats from the business in which the other income