Commissioner of Taxation (Cth) v Lutovi Investments Pty Ltd [1978] HCA 55

High Court of Australia Gibbs, Stephen, Mason, Murphy and Aickin JJ. Commissioner of Taxation (Cth) v Lutovi Investments Pty Ltd [1978] HCA 55

ORDER Appeal allowed. Order of the Full Court of the Federal Court (other than that part of the order which relates to the payment of costs) set aside and in lieu thereof order that the appeal to that court be allowed and that the assessment be confirmed in so far as it relates to the receipt of bonus shares capitalized out of the assets revaluation reserve. Order that the appellant pay the respondent's costs of the appeal.

Cur. adv. vult.

The following written judgments were delivered:—

Dec. 19 Gibbs and Mason JJ.

This is an appeal from a majority decision of the Full Court of the Federal Court (Franki and Deane JJ., with Bowen C.J. dissenting) [19] , dismissing an appeal by the Commissioner of Taxation against a judgment of the Supreme Court of New South Wales upholding the respondent taxpayer's objections to its assessment to income tax for the year ended 30th June 1972 [20] . By that assessment the Commissioner included in the respondent's assessable income a sum of $25,915, being the value of certain bonus shares issued by I.C.D. Ltd. to the respondent as a shareholder in that company. The bonus shares included, first, bonus shares capitalized from a share premium reserve, and secondly, bonus shares capitalized from an assets revaluation reserve. It was conceded by the Commissioner that the assessment could not be sustained in so far as it related to the bonus shares which were capitalized from the share premium reserve. However, the Commissioner sought to support the assessment as to a sum of $12,693.36, being the value of the bonus shares capitalized from the assets revaluation reserve.

1. (1978) 20 A.L.R. 157; 8 A.T.R. 689; 78 A.T.C. 4289, 37 F.L.R. 209. 2. (1977) 14 A.L.R. 386; 7 A.T.R. 336; 77 A.T.C. 4130.