Colonial Mutual Life Assurance Society Ltd v Commissioner of Taxation (Cth) [1953] HCA 68

High Court of Australia Williams A.C.J. Webb, Fullagar, Kitto and Taylor JJ. Colonial Mutual Life Assurance Society Ltd v Commissioner of Taxation (Cth) [1953] HCA 68

ORDER Question in the case stated answered: No. Costs of the case stated reserved for the judge disposing of the appeal.

Cur. adv. vult.

The following written judgments were delivered:—

Oct. 13 Williams A.C.J.

This is a case stated by Fullagar J. in an appeal from a decision of a board of review under the provisions of the Income Tax Assessment Act 1936-1943. The case submits a single question, whether a sum of £1,100 is an allowable deduction from the assessable income derived by the appellant in the accounting period ended 31st December 1942.

The sum referred to was part of an amount of £1,183 paid by the appellant in the accounting period to William Just and Herbert Fritz Just, called in the case the Just Brothers. The payment was made in accordance with the terms of two documents, an agreement entered into on 16th February 1934 between the appellant, the Just Brothers and a company called Turners Limited, and an instrument of encumbrance executed by the appellant in pursuance of the agreement. The appellant bases its claim to have the £1,100 treated as an allowable deduction upon s. 51 (1) of the Income Tax Assessment Act, contending that that is the proportion of the £1,183 which should be held to have been incurred in gaining or producing the appellant's assessable income and not to have been an outgoing of capital or of a capital nature, or incurred in relation to the gaining or production of exempt income.

The appellant is a life assurance company. At the time of the agreement of 16th February 1934 it owned a block of land in Adelaide, situated at the corner of King William Street which bounded it on the east, and Hindley Street which bounded it on the north. It desired to erect a modern building occupying not only its own block but also a block owned by the Just Brothers which adjoined it on the south. The new building was intended to provide the appellant with office accommodation for the carrying on of its business, and also, as to a substantial part of it, to provide, for renting to tenants, basement space, shops and approximately 120 offices or professional rooms. Turners Limited was in occupation of a shop on the appellant's land under a lease, and of course that lease had to be got rid of before the building project could be proceeded with. Turners Limited were apparently alleging that there was an agreement of some sort existing between the appellants and themselves, and, in addition, litigation was pending in the Supreme Court of South Australia between the Just Brothers and Turners Limited as plaintiffs and the appellant as defendant.