Coburg Investment Co Pty Ltd v Commissioner of Taxation (Cth) [1960] HCA 90

High Court of Australia Windeyer J. Coburg Investment Co Pty Ltd v Commissioner of Taxation (Cth) [1960] HCA 90

ORDER Appeal dismissed with costs. Assessments confirmed.

Cur. adv. vult.

Dec. 9 Windeyer J. delivered the following written judgment:—

This is an appeal by Coburg Investment Company Proprietary Limited, a taxpayer, against amended income tax assessments in respect of the years of income ended on 30th June 1950, 1953 and 1954. Two objections are made in respect of each of the first two years: one to the assessment of the taxpayer's liability for income tax and social services contribution; the other in respect of additional tax assessed under Div. 7 of the Act. In respect of the year 1954 the objection is only to the income tax and social services contribution. The main question is whether a profit that the taxpayer company made when an area of approximately eighty acres of land at North Coburg, of which it was the owner, was resumed by the Housing Commission of Victoria formed part of the company's assessable income. This land was part of an area of about one hundred and thirty-five acres that the company had acquired in 1939. The basic question of fact is for what purpose was it then acquired. The Commissioner's contention is that the profit, which arose from the receipt of money as compensation on resumption, was caught by s. 26 of the Income Tax and Social Services Contribution Assessment Act as being a profit arising from the sale by the taxpayer of property acquired by it for the purpose of profitmaking by sale or from the carrying out of a profit-making scheme. For the taxpayer two main contentions were made. First, it was said that the land had not been acquired for the purpose of profitmaking by sale; and secondly, that the compulsory acquisition was not a sale within the meaning of the section. There is also a subsidiary question concerning a sum received by way of interest on the moneys payable upon resumption.