North Australian Cement Ltd v Commissioner of Taxation (Cth) [1969] HCA 33

High Court of Australia Menzies J. North Australian Cement Ltd v Commissioner of Taxation (Cth) [1969] HCA 33

ORDER Appeal dismissed with costs.

Cur. adv. vult.

Aug. 6 Menzies J. delivered the following written judgment:—

In its return of income for the year ended 30th June 1967, the taxpayer made the following claims for deductions under ss. 122 and 122A of the Income Tax Assessment Act (1936-1967):

Claim under Section 122 Balance to be recouped for Mining Development at 30.6.1966 36,307.80 (See Note 1 below) Add Coral Exploration (See Note 2 below) during year ended 30th June, 1967 13,528.35 49,836.15 Claim under Section 122 1/25th 1,993.45 Balance to be recouped at 30.6.1967 $47,842.70

The estimated life of mine at 30th June 1967 was 25 years.

Note 1—During the year ended 30th June 1964 the company expended $36,307.80 (£18,153 18s.) on exploratory drilling on the mining property and a claim under Section 88 (2) was made in the company's income tax return for that year as regards to that expenditure. The claim was disallowed as the company's mineral leases were viewed as "mining leases" for the purpose of income tax. The application of Division 10 of the Income Tax Assessment Act to this expenditure was requested in a letter to your Department dated February 1966.

The company had appealed to the High Court of Australia as regards the application of Division 10 to certain expenditure incurred during the year ended 30th June 1965, and this expenditure was allowed as a deduction under Division 10 without the necessity of having the appeal heard by the Court.

In view of this the provisions of Section 122 have been applied to the balance to be recouped at 30th June 1966 of the $36,307.80 mining development costs incurred during the year ended 30th June 1964.