Berry v Federal Commissioner of Taxation [1953] HCA 70

89 C.L.R.] OF AUSTRALIA.

[HIGH COURT OF AUSTRALIA.]

BHRIRWG : 6 3 ; ' a : APPELLANT ;

AND

FEDERAL COMMISSIONER OF TAXATION . RESPONDENT.

Income Tax—A ssessable income—Premium on lease—' Consideration in connection with" goodwill—Personal covenant not to compete in business with lessees— Goodwill not expressly assigned—Income Tax Assessment Act 1936-1946 (No. 27 of 1936—No. 6 of 1946), ss. 83, 84.

Upon the granting by him of a lease for the term of three years of certain land owned by him, upon which he conducted a motor service station and garage, and adjoining other land owned by him, the taxpayer received from the lessees the sum of £1,500 as consideration for a covenant by the taxpayer with the lessees against him undertaking or carrying on, or being engaged, concerned, or interested alone or in various other ways in the business of an automobile engineer or garage proprietor within the shire within which the land was situate, and against soliciting orders or seeking to obtain business, or permitting his business name or style to be used for such purpose by any party carrying on or about to carry on such business within the same area. There was not any express assignment of the goodwill of the taxpayer's business or of that business itself. Continuity in the conduct of the business on the premises was an important feature of the transaction.

Held that the sum of £1,500 so received by the taxpayer was " consideration in connection with" the goodwill acquired by the lessees and therefore was properly included in the taxpayer's assessable income as a premium received by him within the meaning of s. 84 of the Income Tax Assessment, Act 1936- 1946.

APPEAL. The Federal Commissioner of Taxation disallowed an objection

by the taxpayer against an assessment of the income tax and social services contribution payable by him in respect of income derived by him during the year ended 30th June 1946.