ASTRALIAN MACHINERY AND INVESTMENT CO. LTD. V. THE DEPUTY COMMISSIONER OF TAXATION

IN THE HIGH COURT OF AUSTRALIA.

Austral. ery and Inve:

ed

The

REASONS FOR JUDGMENT.

Delivered at...

on_Frida

40358 A. H. Porriren, Activa Govr. Pras.

AUSTRALIAN MACHINERY AND INVESTMENT COME,

fe LIMITED

Vs

THE DEPUTY COMMISSIONER OF TAXATION

JUDGMENT. RICH J.

This appeal from an assessment under the Income Tax the of the parties Assessment Act 1936-1937 was heard on/admissions/and on the oral evidence of E. Watkinson, who was Governing Director of the Appellant Company during the relevant time. The appeal relates only to the financial year 1936/1937» Questions of principle were arsued and at the request of Counsel I reserved any question of quantume The Appellant Company, which is registered in Victoria, acquired interests in certain lands in Western Australia which were ; supposed to contain minerals. It floated twenty-seven subsidiary companies which were registered in Western Australia, and to each of these it sold and transferred some of these lands. The lands and the expenses of floatetion of the comnanies had cost the "Appellant company £52,836/5/8, and it received from the companies. in, payment twenty-seven parcels of fully paid shares of the total nominal value of £3,377, 18. . Page aR

The Appellant company, then in Znglend, sola these. shares to seven English companies, from which it received as consideration

£481,945/2/0 in cash, shares of a nominal value of £1,075,000, "and

ek options to take up shares to the nominsl value of £4 p2u7,

The Appellant company sold a large proportion of the shares

and options acquired by it from the seven

vlish companies) and, a8 so.

a result, its assete, according to its accounts, increased, ln-vilue during the years 1933 and 1936 by £1,613,979/0/7 (aus).

It also transferred to two English companies, the Kookaburr:

company end the Austmac commany, such of the shares in the seven