Yarra Glen and Lilydale Hunt Club v Federal Commissioner of Taxation [1954] HCA 55

H.C. or A. 1954. Ww

MELBOURNE,

Sept. 17, Oct. 29.

HIGH COURT (1954. ©

(HIGH COURT OF AUSTRALIA.} YARRA GLEN AND LILYDALE HUNT CLUB AppEtiant ; AND FEDERAL COMMISSIONER OF TAXATION RESPONDENT.

Income Tax (Cth.) — Assessable income — Allowable deductions — Expenditure "necessarily incurred in carrying on a business for the purpose of gaining or producing such assessable income "—Hunt and race club—Assessable income from conducting race mectings—Bligibility to conduct race meetings dependent 'on club being a "hunt club" —Bapense of upkeep of pack of hounds—Whether an allowable deduction from such assessable income—Income Tax Assessment Act 1936-1947 (No. 27 of 1936—No. 63 of 1947) s. 51 (1).

A club which was both a hunt club and a race club housed, maintained and trained a pack of hounds. In its financial year ended April 15th 1948 part of the club's assessable income consisted of the profits of a race meeting conducted by it in association with other hunt clubs and part consisted of money received from non-member patrons of a point-to-point meeting conducted by it alone. The pack of hounds was not used at either meeting. Under statute the eligibility of the club to conduct these meetings depended

on it being a hunt club.

Held, that the proportion of the total expenditure incurred in keeping up the pack of hounds applicable to the assessable income derived from conducting the race meetings was an allowable deduction from that assessable income being expenditure "necessarily incurred in carrying on a business for the purpose of gaining" that assessable income within the meaning of s. 51 (1) of the Income Tax Assessment Act 1936-1947.

Apprat under the Income Tax Assessment Act 1936-1947.

Yarra Glen and Lilydale Hunt Club appealed to the High Court from a majority decision of a board of review confirming a decision by the commissioner of taxation that expense incurred by the taxpayer in maintaining a pack of hounds was not an allowable deduction from assessable income received by it, in the year ended 15th April 1948, from conducting a race meeting and a point-to-