Australian Mercantile Land and Finance Company Limited v Federal Commissioner of Taxation [1929] HCA 8

42 C.L.R.] OF AUSTRALIA. 145,

{HIGH COURT OF AUSTRALIA.}

AUSTRALIAN MERCANTILE LAND AND

FINANCE COMPANY LIMITED eerie

AND

THE FEDERAL COMMISSIONER OF TAXATION Responpenr.

Income Tax (Cth.)— Lessee — Pastoral leases — Indebtedness of original lessees 14.0, or A. to company—Surrender of leases to company in consideration of release of 1999, debt—Surrender by company of pastoral leases to Crown—Acquisition by company of new leases under Western Lands Acts (N.S.W.) for extended term—Original Meinovrne, pastoral leases expiring in 1918—Western Lands leases expiring in 1943— Mar, 4-8, 15. Deduction for 1922-1923—Whether surrender of leases constituted "any fine, premium or foregift" paid in respect of the Western Lands leases—'* Payment of an amount"—Meaning of —Interpretation of Act—Misdirection of Commis- sioner—Form of order to be made by Court—Income Tax Assessment Act 1922 (Wo. 37 of 1922), secs. 23 (1) (h) (ii.), 25 (i).

Rich J.

The appellant was a company to which between 1891 and 1904 persons entitled to pastoral Jeases in the Western District of New South Wales were indebted, which indebtedness was secured over (inter alia) the debtors' right to the pastoral leases. 'The debtors, save in two cases (one being where the appellant foreclosed), assigned the equity of redemption in the leases to the company in consideration of a release of the liability. Subsequently the appellant caused the leases, which would otherwise have expired in 1918, to be brought under the Western Lands Acts (N.S.W.), and thereby obtained an extension of the terms until 1943. As a result the Crown issued to the appellant a "Western Lands lease" in respect of each leasehold, which recited (inter alia) that the appellant had surrendered to the Crown the lands comprised in the former leases, and proceeded to grant to the appellant a new lease of the land in question. 'These leases were still in force, and the appellant, which was still the leaseholder, sought to deduct some allowance from its taxable income for the financial year 1922-1923 in respect of the consideration which it gave for ite present right in the land.