Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [1953] HCA 68

Ge Gh ALB. GE Dieu Pp Mu ASH. APP (ALR. BDH,

428 HIGH COURT [1953. Ae FO BU. CUM. fete ff. Fed. 336. Dish 3. ALTE BLD.

Lysrs 14k, C40, (42,

[HIGH COURT OF AUSTRALIA.]

THE COLONIAL MUTUAL LIFE ae APPELLANT ;

ANCE SOCIETY LIMITED . 4 :

AND

THE FEDERAL COMMISSIONER oe RESPONDENT.

TAXATION . : 5 ;

H.C. or A. Income Tax (Cth.)—Assessment—Capital or income—Deduction—Outgoings (not

1953. being of capital or of capital nature) incurred in gaining or producing assessable ex income or necessarily incurred in carrying on business for the purpose of gaining MELBOURNE, or producing such income—Transfer of land—Consideration—Payment to Tune 9, 105 transferor for period of years of percentage of rents actually received by transferee Oct. 13. from building erected on transferred land and other land—Outgoing of capital

nature—Income Tax Assessment Act 1936-1943 (No. 27 of 1936—No. 10 of 1943),.8. 51 (1).

Fullagar,

Kitto and J. Brothers agreed to transfer to a life assurance company a piece of land Mawson dy adjoining land owned by the company, in consideration of a promise by the company to pay to them, for a period of fifty years, an amount equal to ninety per cent of all rents, as and when received, from lessees or tenants of three shops and a basement in a new building to be erected on both the blocks of land. The building having been erected, ninety-three per cent

of it was let to tenants and the remaining seven per cent was occupied by the company itself. In the accounting period ended 3lst December 1942, the rents received by the company in respect of the three shops and basement amounted to £1,314 and the company duly paid to J. Brothers ninety per cent of this sum, viz., £1,183. In its income tax return for the year ended 31st December 1942 the company included the sum of £1,314 in its assessable