Federal Commissioner of Taxation v Connolly [1953] HCA 50

90 C.L.R.] OF AUSTRALIA.

[HIGH COURT OF AUSTRALIA.]

FEDERAL COMMISSIONER OF TAXATION APPELLANT ;

AND CONNOLLY : 5 : z : RESPONDENT.

Income Tax (Cth.)—Assessable income—Premium on lease—Consideration * for or in connexion with any goodwill attached to, or connected with land "—Sale of business—Goodwill—Assignment of lease—Restrictive personal covenant— Onus of proof—Income Tax Assessment Act 1936-1947 (No. 27 of 1936—A 63 of 1947), ss. 83 (1), 84 (1), 190 (6).

Section 83 (1) of the Income Tax Assessment Act 1936-1947 provides that premium means, inter alia, "any consideration . . . for or in connexion with any goodwill . . . attached to or connected with land a lease of which is granted assigned or surrendered". Section 84 (1) provides, inter alia, that: "The assessable income of a taxpayer shall include, in addition to rent, any premium received by him in the year of income ".

C. agreed to sell his retail business of a storekeeper and newsagent carried on in premises of which he w:

s the lessee. The lease contained an option of renewal. The purchase price paid to ©. included the sum of £500 for a restrictive personal covenant by C. that for a period of ten years he would not carry on a similar business within a radius of one mile of that sold. No express reference to goodwill was made in the agreement for sale. 'The lease and option of renewal were assigned by C. to the purchaser. No consideration

was expressed for the assignment. The commissioner included the sum of

£500 paid for the restrictive covenant in C.'s assessable income. The Board of Review allowed an appeal from the assessment.

Held, (1) that the sum of £500 paid to ©. for the restrictiv

consideration paid in connection with the goodwill of the busine

covenant was 3 (2) that

was not

C. carried the onus of proving that the goodwill of the busin attached to or connected with the land and the Board of Rev: