ICI Australia Ltd v Commissioner of Taxation (Cth) [1972] HCA 75

High Court of Australia Walsh J. Barwick C.J. McTiernan, Menzies and Gibbs JJ. ICI Australia Ltd v Commissioner of Taxation (Cth)

ORDER Appeal dismissed. Cross-appeal allowed only in so far as it concerns the claim of the respondent to a deduction under s. 62AA of the Income Tax Assessment Act 1936-1966 Cth which was disallowed by the appellant. Order made by Mr. Justice Walsh varied by deleting the setting aside of the assessment, and remitting the assessment to the appellant to be amended in conformity with the judgment delivered in the appeal and cross-appeal, including the allowance of a deduction of $44,460 pursuant to s. 62AA. The appellant to pay the respondent's costs of the appeal and cross-appeal.

Cur. adv. vult.

1971, Dec. 16 Walsh J

. delivered the following written judgment:—

The respondent disallowed an objection made by ICI Australia Limited (ICI) to the assessment of its income tax for the year which ended on 30th September 1967. The objection has been treated as an appeal and forwarded to this Court.

The first of the questions raised by the appeal relates to a deduction claimed under div. 10 of Pt III of the Income Tax Assessment Act 1936-1966 Cth (the Act). (The changes made in this division by the amending Act of 1968 are not applicable.) The claim was that ICI had incurred expenditure of a capital nature on necessary plant and on development in connexion with the carrying on of mining operations upon a mining property for the purpose of gaining or producing assessable income. It claimed that its residual capital expenditure, ascertained in accordance with s. 122 of the Act, as at 30th September 1967, was $1,874,767 and that it was entitled to a deduction of one-thirteenth of that sum, that is, $144,213. The number chosen for the purposes of the provisions of sub-s. (2) of s. 122 as "the number of whole years in the estimated life of the mine", as at the end of the year of income, was based upon an estimated total life of fourteen years. The primary dispute between the parties as to the application of s. 122 is that ICI claim and the respondent denies that the operations of the taxpayer in connexion with which the expenditure was incurred were "mining operations upon a mining property".