WHITE V. COMMISSIONER OF TAXATION

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v. E COMMISSIONER OF T. ON OF THE COMMONWEALTH OF AUS ° QRDER.

Appeal allowed with costs,

Declare that by reason of the provision of s. 170 of the Income Tax Assessment Act 1936-1942 the Commissioner was not empowered to make the amendmer of the appellant's assessment referred to in the notice of amended assessment dated the 7th September 194k.

Qrder that the said amendment be set aside accordingly.

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TRE Comursstom:

The proceeding before me is an appeal instituted by the forwarding to this Court by the Commissioner of Taxation, at the request of a taxpayer, of an objection to an emended assessment of income tax under the provisions of the Income Tax Apsesement Act 1936-1942 (C'with). 'he amended assessment related to income derived by the appellant during the year ended 50th dune 1942, and notice of it was issued to the appellant on 7th September 1944. ihe appellant's objection was lodged on 29th September 1944, and was disallowed by the Commissioner on 16th December 1947. On 2ist January 1948 the appellant requested that the objection be treated as an appeal and forwarded to thie Court, The request was complied with on Sth May 1952.

In his return in respect of the relevant year the appellant dis¢losed income both from personal exertion and from property. he income from property which he disclosed included dividends amounting to 26,800 from Rowden Pty. Itde,

a company incorporated in Victoria. That company hold shares im two companies incorporated in Canada, namely Bulolo Gold Dredging limited ( which will be referred to as Bulolo) and Placer Development Iimited (which will be called Placer), and dividends in respect of these shares constituted the whole of the income of Rowden Pty. Itd. No claim was made in the

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return or otherwise that any portion of the dividends paid by Rowden Pty. Ltd, was excluded from the appellent's assessable income by virtue of any provision of s. 44(2) of the Income fax Assessment Act or was for any reason exempt income. In previous years, however, dividends received by the appellant from Rowden Pty. ltd, had been exoluded by virtue of para. (4) of s. 44(2)(8), which had provided that the assessable income of a shareholder should not include dividends paid wholly and exclusively out of the amount remaining after deducting from income derived from sources out of Australia (not being assessable income of the company) any loans or outgoings inourred in gaining or producing that income which would have been allowable deduotions if that income had been assessable income. The dividends of Rowden Pty. Ltd. which had been treated as falling within this provision had been paid by that company out of dividends which Bulolo and Placer had paid wholly and exclusively out of income derived by them from sources out of Australia.