Federal Commissioner of Taxation v United Aircraft Corporation [1943] HCA 50

Shining Led v

68 C.L.R.]

UNITED AIRCRAFT CORPORATION .

Folt Foll Pan- Achipae Appl Breen y get oral, ley i Gomreh corp Commissioner 138 § ice Goma 'axation a TOR GA isthe TRB

OF AUSTRALIA.

[HIGH COURT OF AUSTRALIA.]

THE FEDERAL COMMISSIONER OF TAXA- (eas ee

TION of

RESPONDENT,

AND

REsPONDENT. APPELLANT,

Income Tax (Oth.) — Assessment — Non-resident — Income derived directly or

indirectly from sources in Australia—Foreign company —Grant of manufacturing rights to Australian company —Business operations in Australia—Property in Auustralia—Income Tax Assessment Act 1936-1940 (No. 27 of 1936—No. 65 of 1940), ss. 6, 25 (1).

The U. Corporation was incorporated, and had its principal place of business, in the United States of America, where it carried on business as manufacturer and seller of aircraft engines and spare and replacement parts, By an agree. ment between it and an Australian company it purported to license the latter to manufacture and sell certain aireraft engines and parts within Australia, 'The agreement contained various provisions calculated to assist the Australian company in manufacture, e.g., for the delivery to that company, within the

Vity of New York, of drawings and specifications and, f.o.b. Port of New York, of manufacturing equipment ; it also granted the right to use Australian patents and designs registered in Australia, and it was agreed that the validity of the letters patent of the U. Corporation should not be disputed, but there Was no representation or warranty of the rights granted or of the validity of any letters patent, and, in fact, the corporation had no letters patent for any invention in Australia or any designs registered in Australia, Pursuant to the agreement the U. Corporation furnished drawings, specifications and information in America and delivered material f.0.b. Port of New York; it also sent some information and advice direct to the company in Australia, and it lent one of its engineers to the company, which used his services in Australia and paid him as provided in the agreement. 'The agreement provided for payments, called royalties, to be made by the Australian company to the U. Corporation in dollars in New York,