Tikva Investments Pty Ltd v Commissioner of Taxation (Cth) [1972] HCA 68

High Court of Australia Stephen J. Tikva Investments Pty Ltd v Commissioner of Taxation (Cth) [1972] HCA 68

ORDER Appeal dismissed with costs. Usual order as to exhibits.

Cur. adv. vult.

Stephen J delivered the following written judgment:—

Dec. 20 Stephen J

In this case the appellant company, Tikva Investments Pty. Ltd. (Tikva), appeals against the inclusion in its assessable income for the year ended 30th June 1969 of a portion of the proceeds of the sale of a property at Mullaloo, some twenty miles north-west of Perth. The Commissioner relies upon s. 25 (1) or, alternatively, s. 26 (a) of the Income Tax Assessment Act as justifying the assessment but Tikva contends that no part of the proceeds of sale is assessable because they represent the proceeds of realisation of a capital asset.

The Mullaloo property comprises over 1,250 acres and was, prior to 1964, owned by a Mr. and Mrs. Glasson; in that year they sold a seven-ninth share as tenants in common to ten persons, including a Mr. J. J. Krasnostein, retaining for themselves the remaining two-ninths share. The contract of sale formed part of a document styled a syndicate agreement which also contained what was described as the constitution and rules of a syndicate, the members of which being the ten purchasers and the two Glassons. This agreement declared the ten purchasers to hold the property as tenants in common with the Glassons in specified shares, Mr. Krasnostein and his two brothers together holding a one ninth share which he stated in evidence to have in turn been held as to one half by his brothers and as to the other half by him. The purchase price of the seven-ninths share was $70,000, equivalent to a price of about $72 per acre, payable by instalments over three years, the date for vacant possession of the property being 30th September 1964.