Mount Isa Mines Ltd v Commissioner of Taxation (Cth) [1954] HCA 53

High Court of Australia Taylor J. Mount Isa Mines Ltd v Commissioner of Taxation (Cth) [1954] HCA 53

ORDER Appeals stood over generally. Each party to have liberty to restore them to the list on seven days' notice.

Cur. adv. vult.

The following written judgment was delivered by:—

Nov. 8 Taylor J.

These two appeals from assessments to income tax upon returns of income for the years ended on 30th June 1950 and 30th June 1951 respectively raise questions of considerable difficulty in relation to the application of s. 122 of the Income Tax Assessment Act 1936-1949. In each appeal the appellant contended that substantial amounts of expenditure of a capital nature which it had incurred were incurred by it on the development of its mining property in western Queensland and, accordingly, it claimed to be entitled to deductions in the years under review in accordance with the provisions of that section. The expenditure in question was incurred over a number of years and the tabulated material put before the Court indicates the diverse nature of the expenditure with some particularity. Nevertheless, it was apparent at an early stage of the proceedings that further evidence might well be necessary after consideration of the questions of principle involved before attempting to deal specifically with many of the items of expenditure. In these circumstances I was invited by the parties to deal with the broad questions which the appeal raises leaving the parties, thereafter, to agree as far as possible upon an appropriate allocation of the various items and, to the extent to which the parties should fail to agree, to reserve the matter for further consideration. The course proposed commended itself to me and the joint hearing proceeded on this basis.

A company known as Mount Isa Mines Ltd. was incorporated on 15th January 1924 by registration pursuant to the Companies Act 1899 N.S.W. and in that year and later years the company became the holder of mineral leases granted by the Government of Queensland under Div. II of Pt. IV of the Mining Act of 1898 of that State. The land the subject of the leases was thought to contain deposits of silver-bearing lead, zinc and copper and, following upon a successful period of exploration and investigation, a new company of the same name was formed in 1931 and commercial production commenced. The latter company has carried on the mining undertaking since that year and is the appellant in these matters. A substantial portion of the expenditure which is said to have been incurred on the development of the mining property was incurred by the old company before 1931, but, by agreement between the parties, the questions involved in the appeals are to be dealt with as if the old and new companies were identical.