Elder's Trustee & Executor Co Ltd v Commissioner of Taxation (Cth) [1961] HCA 1

High Court of Australia Windeyer J. Elder's Trustee & Executor Co Ltd v Commissioner of Taxation (Cth) [1961] HCA 1

ORDER Appeal allowed with costs. Assessment set aside.

Cur. adv. vult.

Windeyer J delivered the following written judgment:—

1961, Jan. 12 Windeyer J

This is an appeal under s. 196 of the Income Tax and Social Services Contribution Assessment Act 1936-1959 from a decision of a Board of Review. The Board disallowed the taxpayers' objection to an assessment of income tax for the year ended 30th June 1956. The appellant taxpayers are the executors of the will of the late Geralda Mary Cook Satchell, who died on 4th October 1954. They were assessed on the basis that a sum of £9,111 was income received by them to which no beneficiary was presently entitled within the meaning of s. 99 of the Act. This sum represented part of the proceeds of the sale during the year ended 30th June 1956, of livestock, assets of a farming and grazing business that Mrs. Satchell and her husband, one of the appellants, had carried on in partnership during her lifetime. The Commissioner's case is that s. 36 (1) of the Act makes the sum in question part of the assessable income of the estate of Mrs. Satchell. That sub-section provides that: "36—(1) Subject to this section, where—(a) a taxpayer disposes by sale, gift, or otherwise of property being trading stock, standing or growing crops, crop-stools, or trees which have been planted and tended for the purpose of sale; (b) that property constitutes or constituted the whole or part of the assets of a business which is or was carried on by the taxpayer; and (c) the disposal was not in the ordinary course of carrying on that business, the value of that property shall be included in the assessable income of the taxpayer, and the person acquiring that property shall be deemed to have purchased it at a price equal to that value." That applies to a sale of the livestock of a grazing business not made in the ordinary course of carrying on that business, because by definition (s. 6) "trading stock" includes such livestock.